----

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549***————————————————————*******Form 20-F**

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

|      |   | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)        or (g) OF THE SECURITIES EXCHANGE ACT OF 1934                                                              |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| OR   |
| **** |   | **ANNUAL REPORT        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        EXCHANGE ACT OF 1934         For the fiscal year ended December 31, 2010**         |
| OR   |
|      |   | TRANSITION REPORT PURSUANT        TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF        1934        For the transition period from _____ to _____        |
| OR   |
|      |   | SHELL COMPANY REPORT        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        EXCHANGE ACT OF 1934        Date of event requiring this shell company report |

**Commission file number:1-14090*****——————————*********Eni SpA**(Exact name ofRegistrant as specified in its charter) **Republic of Italy**(Jurisdiction ofincorporation or organization) **1, piazzaleEnrico Mattei - 00144 Roma - Italy**(Address of principal executive offices)**Alessandro BerniniEni SpA1, piazza Ezio Vanoni20097 San Donato Milanese (Milano) - ItalyTel +39 02 52041730 - Fax +39 02 52041765**(Name, Telephone, Email and/or Facsimile number and Addressof Company Contact Person)***————————————————————*****Securitiesregistered or to be registered pursuant to Section 12(b) of theAct.

| Title of each class                                      |    | Name of each exchange on        which registered                                                                                                                                            |
|----------------------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Shares        American Depositary Shares**             |    | **New York Stock Exchange*        New York Stock Exchange**                                                                                                                                 |
| (Which represent the right to receive two        Shares) |    | * Not for        trading, but only in connection with the registration of        American Depositary Shares, pursuant to the requirements        of the Securities and Exchange Commission. |

Securities registered or to beregistered pursuant to Section 12(g) of the Act:**None**Securities for which there is a reporting obligation pursuantto Section 15(d) of the Act:**None**

Indicate the number of outstanding shares ofeach of the issuer’s classes of capital or common stock asof the close of the period covered by the annual report.                                        **Ordinary sharesof euro 1.00 each**                                                                                                                                                                **4,005,358,876**

| Indicate by check mark if        the registrant is a well-known seasoned issuer, as        defined in Rule 405 of the Securities Act. |
|---------------------------------------------------------------------------------------------------------------------------------------|

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

|          If this report is an annual or transition report,        indicate by check mark if the registrant is not required        to file reports pursuant to Section 13 or 15(d) of the        Securities Exchange Act of 1934. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| Note - Checking the box        above will not relieve any registrant required to file        reports pursuant to Section 13 or 15(d) of the Securities        Exchange Act of 1934 from their obligations under those        Sections.        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  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

|          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  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

|          Indicate by check mark whether the registrant have        submitted electronically and posted on their corporate        Web sites, if any, every Interactive Data File required        to be submitted and posted pursuant to Rule 405 of        Regulation S-T (§ 232.405 of this chapter) during the        preceding 12 months (or for such shorter period that the        registrant was required to submit and post such files).* |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| * This requirement does        not apply to the registrants until their fiscal year        ending December 31, 2011.         Indicate by check mark if the registrant is a large        accelerated filer, an accelerated filer, or a non        accelerated filer. See definition of "accelerated        filer and large accelerated filer" in Rule 12b-2 of        the Exchange Act. (Check one): |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|          Indicate by check mark which basis of accounting the        registrant has used to prepare the financial statements        included in this filing: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| U.S. GAAP |  | International Financial        Reporting Standards as issued by the International        Accounting Standards Board |  | Other |  |
|-----------|--|---------------------------------------------------------------------------------------------------------------------|--|-------|--|

|          If "Other" has been checked in response to the        previous question, indicate by check mark which financial        statement item the registrant has elected to follow. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|          If this is an annual report, indicate by check mark        whether the registrant is a shell company (as defined in        Rule 12b-2 of the Exchange Act). |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

|                                            | I | **Page** |
|-------------------------------------------------|---|----------|
| Certain Defined Terms                           | I | ii       |
| Presentation of Financial and Other Information | I | ii       |
| Statements Regarding Competitive Position       | I | ii       |
| Glossary                                        | I | iii      |
| Abbreviations and Conversion Table              | I | vi       |

| II | I | I | III | I |
|----|---|---|-----|---|

| **PART I**   | I |                                                                                                                                                       | I |   |
|--------------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------|
| Item 1.      | I | IDENTITY OF        DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                                                                                               | I | 1      |
| Item 2.      | I | OFFER        STATISTICS AND EXPECTED TIMETABLE                                                                                                             | I | 1      |
| Item 3.      | I | KEY        INFORMATION                                                                                                                                     | I | 1      |
| I            | I | Selected        Financial Information                                                                                                                      | I | 1      |
| I            | I | Selected        Operating Information                                                                                                                      | I | 3      |
| I            | I | Exchange        Rates                                                                                                                                      | I | 5      |
| I            | I | Risk Factors                                                                                                                                               | I | 5      |
| Item 4.      | I | INFORMATION        ON THE COMPANY                                                                                                                          | I | 22     |
| I            | I | History and        Development of the Company                                                                                                              | I | 22     |
| I            | I | Business        Overview                                                                                                                                   | I | 26     |
| I            | I | Exploration        & Production                                                                                                                        | I | 26     |
| I            | I | Gas &        Power                                                                                                                                     | I | 54     |
| I            | I | Refining        & Marketing                                                                                                                            | I | 68     |
| I            | I | Engineering        & Construction                                                                                                                      | I | 76     |
| I            | I | Petrochemicals                                                                                                                                             | I | 78     |
| I            | I | Corporate and        Other activities                                                                                                                      | I | 80     |
| I            | I | Research and        Development                                                                                                                            | I | 81     |
| I            | I | Insurance                                                                                                                                                  | I | 86     |
| I            | I | Environmental        Matters                                                                                                                               | I | 87     |
| I            | I | Regulation of        Eni’s Businesses                                                                                                                 | I | 93     |
| I            | I | Property,        Plant and Equipment                                                                                                                       | I | 102    |
| I            | I | Organizational        Structure                                                                                                                            | I | 102    |
| Item 4A.     | I | UNRESOLVED        STAFF COMMENTS                                                                                                                           | I | 102    |
| Item 5.      | I | OPERATING AND        FINANCIAL REVIEW AND PROSPECTS                                                                                                        | I | 102    |
| I            | I | Executive        Summary                                                                                                                                   | I | 102    |
| I            | I | Critical        Accounting Estimates                                                                                                                       | I | 104    |
| I            | I | 2008-2010        Group Results of Operations                                                                                                               | I | 108    |
| I            | I | Liquidity and        Capital Resources                                                                                                                     | I | 119    |
| I            | I | Recent        Developments                                                                                                                                 | I | 126    |
| I            | I | Outlook                                                                                                                                                    | I | 127    |
| Item 6.      | I | DIRECTORS,        SENIOR MANAGEMENT AND EMPLOYEES                                                                                                          | I | 134    |
| I            | I | Directors and        Senior Management                                                                                                                     | I | 134    |
| I            | I | Compensation                                                                                                                                               | I | 138    |
| I            | I | Board        Practices                                                                                                                                     | I | 146    |
| I            | I | Employees                                                                                                                                                  | I | 151    |
| I            | I | Share        Ownership                                                                                                                                     | I | 152    |
| Item 7.      | I | MAJOR        SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                                                                                   | I | 153    |
| I            | I | Major        Shareholders                                                                                                                                  | I | 153    |
| I            | I | Related Party        Transactions                                                                                                                          | I | 153    |
| Item 8.      | I | FINANCIAL        INFORMATION                                                                                                                               | I | 154    |
| I            | I | Consolidated        Statements and Other Financial Information                                                                                             | I | 154    |
| I            | I | Significant        Changes                                                                                                                                 | I | 154    |
| Item 9.      | I | THE OFFER AND        THE LISTING                                                                                                                           | I | 154    |
| I            | I | Offer and        Listing Details                                                                                                                           | I | 154    |
| I            | I | Markets                                                                                                                                                    | I | 156    |
| Item 10.     | I | ADDITIONAL        INFORMATION                                                                                                                              | I | 157    |
| I            | I | Memorandum        and Articles of Association                                                                                                              | I | 157    |
| I            | I | Material        Contracts                                                                                                                                  | I | 163    |
| I            | I | Exchange        Controls                                                                                                                                   | I | 163    |
| I            | I | Taxation                                                                                                                                                   | I | 163    |
| I            | I | Documents on        Display                                                                                                                                | I | 167    |
| Item 11.     | I | QUANTITATIVE        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                          | I | 168    |
| Item 12.     | I | DESCRIPTION        OF SECURITIES OTHER THAN EQUITY SECURITIES                                                                                              | I | 169    |
| 12A.         | I | Debt        Securities                                                                                                                                     | I | 169    |
| 12B.         | I | Warrants and        Rights                                                                                                                                 | I | 169    |
| 12C.         | I | Other        Securities                                                                                                                                    | I | 169    |
| 12D.         | I | American        Depositary Shares                                                                                                                          | I | 169    |
| II           | I | I                                                                                                                                                          | I | I      |
| **PART II**  | I | I                                                                                                                                                          | I | I      |
| Item 13.     | I | DEFAULTS,        DIVIDEND ARREARAGES AND DELINQUENCIES                                                                                                     | I | 171    |
| Item 14.     | I | MATERIAL        MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE        OF PROCEEDS                                                                 | I | I      |
| Item 15.     | I | CONTROLS AND        PROCEDURES                                                                                                                             | I | 171    |
| Item 16.     | I | I                                                                                                                                                          | I | II     |
| 16A.         | I | Board of        Statutory Auditors Financial Expert                                                                                                        | I | 172    |
| 16B.         | I | Code of        Ethics                                                                                                                                      | I | 172    |
| 16C.         | I | Principal        Accountant Fees and Services                                                                                                              | I | 172    |
| 16D.         | I | Exemptions        from the Listing Standards for Audit Committees                                                                                          | I | 173    |
| 16E.         | I | Purchases of        Equity Securities by the Issuer and Affiliated Purchasers                                                                              | I | 173    |
| 16F.         | I | Change in        Registrant’s Certifying Accountant                                                                                                   | I | 174    |
| 16G.         | I | Significant        Differences in Corporate Governance Practices as per        Section 303A.11 of the New York Stock Exchange Listed        Company Manual | I | II     |
| II           | I | I                                                                                                                                                          | I | II     |
| **PART III** | I | I                                                                                                                                                          | I | II     |
| Item 17.     | I | FINANCIAL        STATEMENTS                                                                                                                                | I | 177    |
| Item 18.     | I | FINANCIAL        STATEMENTS                                                                                                                                | I | 177    |
| Item 19.     | I | EXHIBITS                                                                                                                                                   | I | 177    |

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##### Table of Contents

*Certain disclosures contained herein including, withoutlimitation, information appearing in "Item 4 –Information on the Company", and in particular "Item 4– Exploration & Production", "Item 5 –Operating and Financial Review and Prospects" and "Item11 – Quantitative and Qualitative Disclosures about MarketRisk" contain forward-looking statements regarding futureevents and the future results of Eni that are based on currentexpectations, estimates, forecasts, and projections about theindustries in which Eni operates and the beliefs and assumptionsof the management of Eni. Eni may also make forward-lookingstatements in other written materials, including other documentsfiled with or furnished to the U.S. Securities and ExchangeCommission (the "SEC"). In* *addition,Eni’s senior management may make forward-looking statementsorally to analysts, investors, representatives of the media andothers. In particular, among other statements, certain statementswith regard to management objectives, trends in results ofoperations, margins, costs, return on capital, risk managementand competition are forward looking in nature. Words such as‘expects’, ‘anticipates’,‘targets’, ‘goals’, ‘projects’,‘intends’, ‘plans’, ‘believes’,‘seeks’, ‘estimates’, variations of suchwords, and similar expressions are intended to identify suchforward-looking statements. These forward-looking statements areonly predictions and are subject to risks, uncertainties, andassumptions that are difficult to predict because they relate toevents and depend on circumstances that will occur in the future.Therefore, Eni’s actual results may differ materially andadversely from those expressed or implied in any forward-lookingstatements. Factors that might cause or contribute to suchdifferences include, but are not limited to, those discussed inthis Annual Report on Form 20-F under the section entitled"Risk Factors" and elsewhere. Any forward-lookingstatements made by or on behalf of Eni speak only as of the datethey are made. Eni does not undertake to update forward-lookingstatements to reflect any changes in Eni’s expectations withregard thereto or any changes in events, conditions orcircumstances on which any such statement is based. The readershould, however, consult any further disclosures Eni may make indocuments it files with the SEC.*

 

**CERTAIN DEFINED TERMS**

In this Form 20-F, the terms "Eni", the"Group", or the "Company" refer to the parentcompany Eni SpA and its consolidated subsidiaries and, unless thecontext otherwise requires, their respective predecessorcompanies. All references to "Italy" or the"State" are references to the Republic of Italy, allreferences to the "Government" are references to thegovernment of the Republic of Italy. For definitions of certainoil and gas terms used herein and certain conversions, see"Glossary" and "Conversion Table".

 

**PRESENTATION OF FINANCIAL AND OTHERINFORMATION**

The Consolidated Financial Statements of Eni, included in thisannual report, have been prepared in accordance withInternational Financial Reporting Standards (IFRS) issued by theInternational Accounting Standards Board (IASB). 

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

Unless otherwise specified or the context otherwise requires,references herein to "dollars", "$","U.S. dollars" and "U.S. $" are to thecurrency of the United States, and references to "euro"and "€" are to the currency of the EuropeanMonetary Union.

Unless otherwise specified or the context otherwise requires,references herein to "division" and "segment"are to Eni’s business activities: Exploration &Production, Gas & Power, Refining & Marketing,Engineering & Construction, Petrochemicals and otheractivities.

 

**STATEMENTS REGARDINGCOMPETITIVE POSITION**

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

 

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##### Table of Contents

****GLOSSARY****

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

| ***Financial        terms***                      |               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Leverage*                                        |               | A non-GAAP measure of the        Company’s financial condition, calculated as the        ratio between net borrowings and shareholders’        equity, including non-controlling interest. For a        discussion of management’s view of the usefulness of        this measure and its reconciliation with the most        directly comparable GAAP measure which in the case of the        Company refers to IFRS, see "Item 5 – Financial        Condition".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Net borrowings*                                  |               | Eni evaluates its financial        condition by reference to "net borrowings",        which is a non-GAAP measure. Eni calculates net        borrowings as total finance debt less: cash, cash        equivalents and certain very liquid investments not        related to operations, including among others        non-operating financing receivables and securities not        related to operations. Non-operating financing        receivables consist of amounts due to Eni’s        financing subsidiaries from banks and other financing        institutions and amounts due to other subsidiaries from        banks for investing purposes and deposits in escrow.        Securities not related to operations consist primarily of        government and corporate securities. For a discussion of        management’s view of the usefulness of this measure        and its reconciliation with the most directly comparable        GAAP measure which in the case of the Company refers to        IFRS, see "Item 5 – Financial Condition". |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ***Business        terms***                       |               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *AEEG (Authority for        Electricity and Gas)* |               | The Regulatory Authority for        Electricity and Gas is the Italian independent body which        regulates, controls and monitors the electricity and gas        sectors and markets in Italy. The Authority’s role        and purpose is to protect the interests of users and        consumers, promote competition and ensure efficient,        cost-effective and profitable nationwide services with        satisfactory quality levels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Associated gas*                                  |               | Associated gas is a natural        gas found in contact with or dissolved in crude oil in        the reservoir. It can be further categorized as Gas-Cap        Gas or Solution Gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Average reserve life        index*               |               | Ratio between the amount of        reserves at the end of the year and total production for        the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Barrel/BBL*                                      |               | Volume unit corresponding to        159 liters. A barrel of oil corresponds to about 0.137        metric tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *BOE*                                             |               | Barrel of Oil Equivalent. It        is used as a standard unit measure for oil and natural        gas. The latter is converted from standard cubic meters        into barrels of oil equivalent using a certain        coefficient (see "Conversion Table").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Concession contracts*                            |               | Contracts currently applied        mainly in Western countries regulating relationships        between states and oil companies with regards to        hydrocarbon exploration and production. The company        holding the mining concession has an exclusive on        exploration, development and production activities and        for this reason it acquires a right to hydrocarbons        extracted against the payment of royalties on production        and taxes on oil revenues to the state.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Condensates*                                     |               | Condensates is a mixture of        hydrocarbons that exists in the gaseous phase at original        reservoir temperature and pressure, but that, when        produced, is in the liquid phase at surface pressure and        temperature.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Contingent resources*                            |               | Contingent resources are        those quantities of petroleum estimated, as of a given        date, to be potentially recoverable from known        accumulations, but the applied project(s) are not yet        considered mature enough for commercial development due        to one or more contingencies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Conversion capacity*                             |               | Maximum amount of feedstock        that can be processed in certain dedicated facilities of        a refinery to obtain finished products. Conversion        facilities include catalytic crackers, hydrocrackers,        visbreaking units, and coking units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Conversion index*                                |               | Ratio of capacity of        conversion facilities to primary distillation capacity.        The higher the ratio, the higher is the capacity of a        refinery to obtain high value products from the heavy        residue of primary distillation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Deep waters*                                     |               | Waters deeper than 200        meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| *Development*                                     |               | Drilling and other        post-exploration activities aimed at the production of        oil and gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| *Enhanced recovery*                                     |               | Techniques used to increase        or stretch over time the production of wells.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *EPC*                                                   |               | Engineering, Procurement and        Construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *EPIC*                                                  |               | Engineering, Procurement,        Installation and Construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Exploration*                                           |               | Oil and natural gas        exploration that includes land surveys, geological and        geophysical studies, seismic data gathering and analysis        and well drilling.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *FPSO*                                                  |               | Floating Production Storage        and Offloading System.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *FSO*                                                   |               | Floating Storage and        Offloading System.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Infilling wells*                                       |               | Infilling wells are wells        drilled in a producing area in order to improve the        recovery of hydrocarbons from the field and to maintain        and/or increase production levels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *LNG*                                                   |               | Liquefied Natural Gas        obtained through the cooling of natural gas to minus 160        °C at normal pressure. The gas is liquefied to allow        transportation from the place of extraction to the sites        at which it is transformed back into its natural gaseous        state and consumed. One tonne of LNG corresponds to 1,400        cubic meters of gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *LPG*                                                   |               | Liquefied Petroleum Gas, a        mix of light petroleum fractions, gaseous at normal        pressure and easily liquefied at room temperature through        limited compression.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Margin*                                                |               | The difference between the        average selling price and direct acquisition cost of a        finished product or raw material excluding other        production costs (e.g. refining margin, margin on        distribution of natural gas and petroleum products or        margin of petrochemical products). Margin trends reflect        the trading environment and are, to a certain extent, a        gauge of industry profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Mineral Potential*                                     |               | (Potentially        recoverable hydrocarbon volumes) Estimated recoverable        volumes which cannot be defined as reserves due to a        number of reasons, such as the temporary lack of viable        markets, a possible commercial recovery dependent on the        development of new technologies, or for their location in        accumulations yet to be developed or where evaluation of        known accumulations is still at an early stage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Mineral Storage*                                       |               | According to Legislative        Decree No. 164/2000, these are volumes required for        allowing optimal operation of natural gas fields in Italy        for technical and economic reasons. The purpose is to        ensure production flexibility as required by long-term        purchase contracts as well as to cover technical risks        associated with production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Modulation Storage*                                    |               | According to Legislative        Decree No. 164/2000, these are volumes required for        meeting hourly, daily and seasonal swings in demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Natural gas liquids (NGL)*                             |               | Liquid or liquefied        hydrocarbons recovered from natural gas through        separation equipment or natural gas treatment plants.        Propane, normal-butane and isobutane, isopentane and        pentane plus, that were previously defined as natural        gasoline, are natural gas liquids.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Network Code*                                          |               | A code containing norms and        regulations for access to, management and operation of        natural gas pipelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Over/Under lifting*                                    |               | Agreements stipulated        between partners which regulate the right of each to its        share in the production for a set period of time. Amounts        lifted by a partner different from the agreed amounts        determine temporary Over/Under lifting situations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Possible reserves*                                     |               | Possible reserves are those        additional reserves that are less certain to be recovered        than probable reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Probable reserves*                                     |               | Probable reserves are those        additional reserves that are less certain to be recovered        than proved reserves but which, together with proved        reserves, are as likely as not to be recovered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Primary balanced refining        capacity*             |               | Maximum amount of feedstock        that can be processed in a refinery to obtain finished        products measured in BBL/d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                          |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| *Production Sharing        Agreement ("PSA")* |               | Contract in use in African,        Middle Eastern, Far Eastern and Latin American countries,        among others, regulating relationships between states and        oil companies with regard to the exploration and        production of hydrocarbons. The mineral right is awarded        to the national oil company jointly with the foreign oil        company that has an exclusive right to perform        exploration, development and production activities and        can enter into agreements with other local or        international entities. In this type of contract the        national oil company assigns to the international        contractor the task of performing exploration and        production with the contractor’s equipment and        financial resources. Exploration risks are borne by the        contractor and production is divided into two portions:        "cost oil" is used to recover costs borne by        the contractor and "profit oil" is |

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|                        |               | divided between the        contractor and the national company according to variable        schemes and represents the profit deriving from        exploration and production. Further terms and conditions        of these contracts may vary from country to country.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----------------------------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Proved reserves*           |               | Proved oil and gas reserves        are those quantities of oil and gas, which, by analysis        of geoscience and engineering data, can be estimated with        reasonable certainty to be economically producible, from        a given date forward, from known reservoirs, and under        existing economic conditions, operating methods, and        government regulations, prior to the time at which        contracts providing the right to operate expire, unless        evidence indicates that renewal is reasonably certain,        regardless of whether deterministic or probabilistic        methods are used for the estimation. The project to        extract the hydrocarbons must have commenced or the        operator must be reasonably certain that it will commence        the project within a reasonable time. Existing economic        conditions include prices and costs at which economic        producibility from a reservoir is to be determined. The        price shall be the average price during the 12-month        period prior to the ending date of the period covered by        the report, determined as an unweighted arithmetic        average of the first-day-of-the-month price for each        month within such period, unless prices are defined by        contractual arrangements, excluding escalations based        upon future conditions. Reserves are classified as either        developed and undeveloped. Proved developed oil and gas        reserves are reserves that can be expected to be        recovered through existing wells with existing equipment        and operating methods or in which the cost of the        required equipment is relatively minor compared to the        cost of a new well, and through installed extraction        equipment and infrastructure operational at the time of        the reserves estimate if the extraction is by means not        involving a well. Proved undeveloped oil and gas reserves        are reserves of any category that are expected to be        recovered from new wells on undrilled acreage, or from        existing wells where a relatively major expenditure is        required for recompletion. |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Reserves*                  |               | Reserves are estimated        remaining quantities of oil and gas and related        substances anticipated to be economically producible, as        of a given date, by application of development projects        to known accumulations. In addition, there must exist, or        there must be a reasonable expectation that there will        exist, the legal right to produce or a revenue interest        in the production, installed means of delivering oil and        gas or related substances to market, and all permits and        financing required to implement the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Reserve life index*        |               | Ratio between the amount of        proved reserves at the end of the year and total        production for the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Reserve replacement ratio* |               | Measure of the reserves        produced replaced by proved reserves. Indicates the        company’s ability to add new reserves through        exploration and purchase of property. A rate higher than        100% indicates that more reserves were added than        produced in the period. The ratio should be averaged on a        three-year period in order to reduce the distortion        deriving from the purchase of proved property, the        revision of previous estimates, enhanced recovery,        improvement in recovery rates and changes in the amount        of reserves – in PSAs – due to changes in        international oil prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Ship-or-pay*               |               | Clause included in natural        gas transportation contracts according to which the        customer is requested to pay for the transportation of        gas whether or not the gas is actually transported.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Strategic Storage*         |               | According to current Italian        regulation, these are volumes required for covering lack        or reduction of supplies from extra-European sources or        crises in the natural gas system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Take-or-pay*               |               | Clause included in natural        gas supply contracts according to which the purchaser is        bound to pay the contractual price or a fraction of such        price for a minimum quantity of gas set in the contract        whether or not the gas is collected by the purchaser. The        purchaser has the option of collecting the gas paid for        and not delivered at a price equal to the residual        fraction of the price set in the contract in subsequent        contract years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *Upstream/Downstream*       |               | The term upstream refers to        all hydrocarbon exploration and production activities.        The term downstream includes all activities inherent to        the oil and gas sector that are downstream of exploration        and production activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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**ABBREVIATIONS**

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

 

**CONVERSION TABLE**

| 1 acre                               | =                  | 0.405 hectares                                         |               |                                                                                  |
|--------------------------------------|--------------------|--------------------------------------------------------|--------------------|---------------------------------------------------------------------------------------|
|                       |     |                                         |     |                                                                        |
| 1 barrel                             | =                  | 42 U.S. gallons                                        |               |                                                                                  |
|                       |     |                                         |     |                                                                        |
| 1 BOE                                | =                  | 1 barrel of crude oil                                  | =                  | 5,550 cubic feet of natural        gas*                                               |
|                       |     |                                         |     |                                                                        |
| 1 barrel of crude oil per        day | =                  | approximately 50 tonnes of        crude oil per year   |               |                                                                                  |
|                       |     |                                         |     |                                                                        |
| 1 cubic meter of natural gas         | =                  | 35.3147 cubic feet of        natural gas               |               |                                                                                  |
|                       |     |                                         |     |                                                                        |
| 1 cubic meter of natural gas         | =                  | approximately 0.00615        barrels of oil equivalent |               |                                                                                  |
|                       |     |                                         |     |                                                                        |
| 1 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) |

 

----

| (*) |   | In this        Annual Report on Form 20-F, the Company presents oil and        gas production volumes and reserves expressed in barrels        of oil-equivalent whereby natural gas volumes are        converted on the base of an equivalency. In 2010, Eni        updated the natural gas conversion factor from 5,742 to        5,550 standard cubic feet of gas per barrel of oil        equivalent. This update reflected changes in Eni’s        gas properties that took place in recent years and was        assessed by collecting data on the heating power of gas        in all Eni’s 230 gas fields on stream at the end of        2009. The effect of this update on production expressed        in BOE was 26 KBOE/d for the full year 2010 and on the        initial reserves balances as of January 1, 2010 amounted        to 106 mmBOE. Other per-BOE indicators were only        marginally affected by the update (e.g. realization        prices, costs per BOE) and also negligible was the impact        on depletion charges. Other oil companies may use        different conversion rates. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**PART I**

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

NOT APPLICABLE

 

**Item 2. OFFER STATISTICS AND EXPECTEDTIMETABLE**

NOT APPLICABLE

 

**Item 3. KEY INFORMATION**

**Selected Financial Information**

The Consolidated Financial Statements of Eni have beenprepared in accordance with IFRS issued by the InternationalAccounting Standards Board (IASB). The tables below show Eniselected historical financial data prepared in accordance withIFRS as of and for the years ended December 31, 2006, 2007, 2008,2009 and 2010. The selected historical financial data presentedherein are derived from Eni’s Consolidated FinancialStatements included in Item 18.

All such data should be read in connection with theConsolidated Financial Statements and the related notes theretoincluded in Item 18.

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

|   | **2006** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

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

| **CONSOLIDATED PROFIT AND LOSS STATEMENT DATA**                                             |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| Net sales        from operations                                                            |   | 86,105 |   |   | 87,204 |   |   | 108,082 |   |   | 83,227 |   |   | 98,523 |   |
| Operating profit by segment (1)                                                             |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
|      Exploration        & Production                           |   | 15,580 |   |   | 13,433 |   |   | 16,239  |   |   | 9,120  |   |   | 13,866 |   |
|      Gas & Power                                               |   | 3,802  |   |   | 4,465  |   |   | 4,030   |   |   | 3,687  |   |   | 2,896  |   |
|      Refining        & Marketing                               |   | 319    |   |   | 686    |   |   | (988    | )      |   | (102   | )      |   | 149    |   |
|      Petrochemicals                                                |   | 172    |   |   | 100    |   |   | (845    | )      |   | (675   | )      |   | (86    | )      |
|      Engineering        & Construction                         |   | 505    |   |   | 837    |   |   | 1,045   |   |   | 881    |   |   | 1,302  |   |
|      Other activities        (2)                                   |   | (622   | )      |   | (444   | )      |   | (466    | )      |   | (436   | )      |   | (1,384 | )      |
|      Corporate        and financial companies (2)                  |   | (296   | )      |   | (312   | )      |   | (623    | )      |   | (420   | )      |   | (361   | )      |
|      Impact of        unrealized intragroup profit elimination (3) |   | (133   | )      |   | (26    | )      |   | 125     |   |   |   |   |   | (271   | )      |
| Operating        profit                                                                     |   | 19,327 |   |   | 18,739 |   |   | 18,517  |   |   | 12,055 |   |   | 16,111 |   |
| Net profit attributable to Eni                                                              |   | 9,217  |   |   | 10,011 |   |   | 8,825   |   |   | 4,367  |   |   | 6,318  |   |
| **Data        per ordinary share**(euro)(4)                                                 |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
| Operating profit:                                                                           |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
| - basic                                                                                     |   | 5.23   |   |   | 5.11   |   |   | 5.09    |   |   | 3.33   |   |   | 4.45   |   |
| - diluted                                                                                   |   | 5.22   |   |   | 5.11   |   |   | 5.09    |   |   | 3.33   |   |   | 4.45   |   |
| Net profit        attributable to Eni basic and diluted                                     |   | 2.49   |   |   | 2.73   |   |   | 2.43    |   |   | 1.21   |   |   | 1.74   |   |
| **Data per ADR**($) (4) (5)                                                                 |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
| Operating        profit:                                                                    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
| - basic                                                                                     |   | 13.13  |   |   | 14.01  |   |   | 14.97   |   |   | 9.27   |   |   | 11.81  |   |
| - diluted                                                                                   |   | 13.12  |   |   | 14.00  |   |   | 14.97   |   |   | 9.27   |   |   | 11.81  |   |
| Net profit attributable to Eni basic and diluted                                            |   | 6.26   |   |   | 7.48   |   |   | 7.14    |   |   | 3.36   |   |   | 4.62   |   |
|                                                                                        |   |        |        |   |        |        |   |         |        |   |        |        |   |        |        |

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##### Table of Contents

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

|   | **2006** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

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

| **CONSOLIDATED BALANCE SHEET DATA**                                                                   |   |   |   |    |   |    |   |    |   |    |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|---------|--------|---------|--------|---------|--------|---------|
| Total        assets                                                                                   |   | 88,312 |   | 101,460 |   | 116,673 |   | 117,529 |   | 131,860 |
| Short-term and long-term debt                                                                         |   | 11,699 |   | 19,830  |   | 20,837  |   | 24,800  |   | 27,783  |
| Capital        stock issued                                                                           |   | 4,005  |   | 4,005   |   | 4,005   |   | 4,005   |   | 4,005   |
| Non-controlling interest                                                                              |   | 2,170  |   | 2,439   |   | 4,074   |   | 3,978   |   | 4,522   |
| Shareholders’        equity - Eni share                                                          |   | 39,029 |   | 40,428  |   | 44,436  |   | 46,073  |   | 51,206  |
| Capital expenditures                                                                                  |   | 7,833  |   | 10,593  |   | 14,562  |   | 13,695  |   | 13,870  |
| Weighted        average number of ordinary shares outstanding (fully        diluted - shares million) |   | 3,701  |   | 3,668   |   | 3,639   |   | 3,622   |   | 3,622   |
| Dividend per share (euro)                                                                             |   | 1.25   |   | 1.30    |   | 1.30    |   | 1.00    |   | 1.00    |
| Dividend        per ADR ($)(4)                                                                        |   | 3.24   |   | 3.74    |   | 3.72    |   | 2.91    |   | 2.64    |
|                                                                                                  |   |        |   |         |   |         |   |         |   |         |

----

| (1) | i | From 2009,        gains and losses on non-hedging commodity derivative        instruments, including both fair value re-measurement and        gains and losses on settled transactions are reported as        items of operating profit. Also results of the gas        storage business are reported within the Gas & Power        segment reporting unit, as part of the regulated        businesses results, following the restructuring of        Eni’s regulated gas businesses in Italy. In past        years, results of the gas storage business were reported        within the Exploration & Production segment. Data for        the years ended December 31, 2008 and 2007 have been        restated. Prior year data have not been restated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | i | From 2010        certain environmental provisions incurred by the Parent        Company Eni SpA due to inter-company guarantees on behalf        of Syndial have been reported within the segment        reporting unit "Other activities". Data for the        years 2008 and 2009 have been restated by increasing the        operating loss of the "Other activities"        segment by euro 120 million and euro 54 million,        respectively. Prior-year data have not been restated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (3) | i | This item        mainly pertained to intra-group sales of commodities,        services and capital goods recorded in the assets of the        purchasing business segment as of the end of the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (4) | i | Euro per        share or U.S. dollars per American Depositary Receipt        (ADR), as the case may be. One ADR represents two Eni        shares. The dividend amount for 2010 is based on the        proposal of Eni’s management which is submitted to        approval of the Annual General Shareholders’ Meeting        scheduled on April 29 and May 5, 2011 on first and second        calls, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (5) | i | Eni’s        financial statements are stated in euro. The translations        of certain euro amounts into U.S. dollars are included        solely for the convenience of the reader. The convenient        translations should not be construed as representations        that the amounts in euro have been, could have been, or        could in the future be, converted into U.S. dollars at        this or any other rate of exchange. Data per ADR, with        the exception of dividends, were translated at the        EUR/U.S. $ average exchange rate as recorded by in the        Federal Reserve Board official statistics for each year        presented (see the table on page 5). Dividends per ADR        for the years 2006 through 2009 were translated into U.S.        dollars for each year presented using the Noon Buying        Rate on payment dates, as recorded on the payment date of        the interim dividend and of the balance to the full-year        dividend, respectively. The dividend for 2010 based on        the management’s proposal to the General        Shareholders’ Meeting and subject to approval was        translated as per the portion related to the interim        dividend (euro 1 per ADR) at the Noon Buying Rate        recorded on the payment date on September 30, 2010, while        the balance of euro 1 per ADR was translated at the Noon        Buying Rate as recorded on December 31, 2010. The balance        dividend for 2010 once the full-year dividend is approved        by the Annual General Shareholders’ Meeting is        payable on May 26, 2011 to holders of Eni shares, being        the ex-dividend date May 23, while ADRs holders will be        paid late in May 2011. |

2

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##### Table of Contents

**Selected Operating Information**

The tables below set forth selected operating information withrespect to Eni’s proved reserves, developed and undeveloped,of crude oil (including condensates and natural gas liquids) andnatural gas, as well as other data as of and for the years endedDecember 31, 2006, 2007, 2008, 2009 and 2010. Data on productionof oil and natural gas and hydrocarbon production sold includesEni’s share of production of affiliates and joint venturesaccounted for under the equity or cost method of accounting. Inpresenting data on production volumes and reserves for totalhydrocarbons, natural gas volumes have been converted tooil-equivalent barrels on the basis of a certain equivalency. In2010, Eni updated the natural gas conversion factor from 5,742 to5,550 standard cubic feet of gas per barrel of oil equivalent.This update reflected changes in Eni’s gas properties thattook place in recent years and was assessed by collecting data onthe heating power of gas in all Eni’s 230 gas fields onstream at the end of 2009. The effect of this update onproduction expressed in boe was 26 KBOE/d for the full year 2010and on the initial reserves balances as of January 1, 2010amounted to 106 mmBOE. Prior-year converted amounts were notrestated. Other per-boe indicators were only marginally affectedby the update (e.g. realization prices, costs per boe) and alsonegligible was the impact on depletion charges. Other oilcompanies may use different conversion rates.

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

|   | **2006** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

| Proved reserves of liquids of consolidated        subsidiaries at period end (mmBBL)           |   | 3,457    |   | 3,127    |   | 3,243    |   | 3,377    |   | 3,415    |
|------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
| *of        which developed*                                                                    |   | *2,126*  |   | *1,953*  |   | *2,009*  |   | *2,001*  |   | *1,951*  |
| Proved reserves of liquids of equity-accounted        entities at period end (mmBBL)           |   | 24       |   | 142      |   | 142      |   | 86       |   | 208      |
| *of        which developed*                                                                    |   | *18*     |   | *26*     |   | *33*     |   | *34*     |   | *52*     |
| Proved reserves of natural gas of consolidated        subsidiariesat period end (BCF)          |   | 16,897   |   | 16,549   |   | 17,214   |   | 16,262   |   | 16,198   |
| *of        which developed*                                                                    |   | *10,949* |   | *10,967* |   | *11,138* |   | *11,650* |   | *10,965* |
| Proved reserves of natural gas of        equity-accounted entities at period end (BCF)         |   | 68       |   | 3,022    |   | 3,015    |   | 1,588    |   | 1,684    |
| *of        which developed*                                                                    |   | *48*     |   | *428*    |   | *420*    |   | *234*    |   | *246*    |
| Proved reserves of hydrocarbons of consolidated        subsidiaries in mmBOE at period end (1) |   | 6,400    |   | 6,010    |   | 6,242    |   | 6,209    |   | 6,332    |
| *of        which developed*                                                                    |   | *4,032*  |   | *3,862*  |   | *3,948*  |   | *4,030*  |   | *3,926*  |
| Proved reserves of hydrocarbons of        equity-accounted entities in mmBOE at period end (a) |   | 36       |   | 668      |   | 666      |   | 362      |   | 511      |
| *of        which developed*                                                                    |   | *27*     |   | *101*    |   | *107*    |   | *74*     |   | *96*     |
| Reserve replacement ratio (2)                                                                  |   | 38       |   | 38       |   | 136      |   | 95       |   | 104      |
| Average        daily production of liquids (KBBL/d)                                            |   | 1,079    |   | 1,020    |   | 1,026    |   | 1,007    |   | 997      |
| Average daily production of natural gas        available for sale (mmCF/d) (3)                 |   | 3,679    |   | 3,819    |   | 4,143    |   | 4,074    |   | 4,222    |
| Average        daily production of hydrocarbonsavailable for sale (KBOE/d) (3)                 |   | 1,720    |   | 1,684    |   | 1,748    |   | 1,716    |   | 1,757    |
| Hydrocarbon production sold (mmBOE)                                                            |   | 625.1    |   | 611.4    |   | 632.0    |   | 622.8    |   | 638.0    |
| Oil and        gas production costs per BOE (4)                                                |   | 5.79     |   | 6.90     |   | 7.65     |   | 7.41     |   | 8.89     |
| Profit per barrel of oil equivalent (5)                                                        |   | 15.03    |   | 14.19    |   | 16.00    |   | 8.14     |   | 11.91    |
|                                                                                           |   |          |   |          |   |          |   |          |   |          |

----

| (a) |   | Proved gas        reserve of equity-accounted entities mainly pertained to        three Russian companies that were jointly purchased with        the Italian partner Enel in 2007 (Eni’s interest in        the venture being 60%). In 2009 following the divestment        of a 51% interest to Gazprom upon exercise of a call        option arrangement, Eni’s interest in the venture        decreased to 29.4%.                                                                                                                                                                                                                                              |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | i      | Includes        approximately 754, 749, 746, 769 and 767 BCF of natural        gas held in storage in Italy as of December 31, 2006,        2007, 2008, 2009 and 2010, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (2) |   | Referred to        Eni’s subsidiaries. Consists of: (i) the increase in        proved reserves of consolidated subsidiaries attributable        to: (a) purchases of minerals in place; (b) revisions of        previous estimates; (c) improved recovery; and (d)        extensions and discoveries, less sales of minerals in        place; divided by (ii) production during the year as set        forth in the reserve tables, in each case prepared in        accordance with Topic 932. See the unaudited supplemental        oil and gas information in Item 18 – Notes to the        Consolidated Financial Statements. Expressed as a        percentage. |
| (3) | i      | Natural gas        production volumes exclude gas consumed in operations        (286, 296, 281, 300 and 318 mmCF/d in 2006, 2007, 2008,        2009 and 2010, respectively).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4) |   | Expressed in        U.S. dollars. Consists of production costs of        consolidated subsidiaries (costs incurred to operate and        maintain wells and field equipment including also        royalties) prepared in accordance with IFRS divided by        production on an available-for-sale basis, expressed in        barrels of oil equivalent. See the unaudited supplemental        oil and gas information in "Item 18 – Notes to        the Consolidated Financial Statements".                                                                                                                                                                 |
| (5) |   | Expressed in        U.S. dollars. Results of operations from oil and gas        producing activities of consolidated subsidiaries,        divided by actual sold production, in each case prepared        in accordance with IFRS to meet ongoing U.S. reporting        obligations under Topic 932. See the unaudited        supplemental oil and gas information in "Item 18        – Notes to the Consolidated Financial        Statements" for a calculation of results of        operations from oil and gas producing activities.                                                                                                                       |

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##### Table of Contents

**Selected Operating Information*******continued*

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

|   | **2006** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

| Sales of natural gas to third parties (5)                                                       |   | 79.63  |   | 78.75  |   | 83.69  |   | 83.79  |   | 75.81  |
|-------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Natural        gas consumed by Eni (5)                                                          |   | 6.13   |   | 6.08   |   | 5.63   |   | 5.81   |   | 6.19   |
| Sales of natural gas of affiliates (Eni’s        share) (5)                                |   | 7.65   |   | 8.74   |   | 8.91   |   | 7.95   |   | 9.41   |
| Total        sales and own consumption of natural gas of the Gas &        Power segment (5) |   | 93.41  |   | 93.57  |   | 98.23  |   | 97.55  |   | 91.41  |
| E&P natural gas sales in Europe and in the        Gulf of Mexico (5)                        |   | 4.69   |   | 5.39   |   | 6.00   |   | 6.17   |   | 5.65   |
| Worldwide        natural gas sales (5)                                                          |   | 98.10  |   | 98.96  |   | 104.23 |   | 103.72 |   | 97.06  |
| Transport of natural gas for third parties in        Italy (5)                                  |   | 30.90  |   | 30.89  |   | 33.84  |   | 37.32  |   | 47.87  |
| Length of        natural gas transport network in Italy at period end (6)                       |   | 30.9   |   | 31.1   |   | 31.5   |   | 31.5   |   | 31.6   |
| Electricity sold (7)                                                                            |   | 31.03  |   | 33.19  |   | 29.93  |   | 33.96  |   | 39.54  |
| Refinery        throughputs (8)                                                                 |   | 36.27  |   | 37.15  |   | 35.84  |   | 34.55  |   | 34.80  |
| Balanced capacity of wholly-owned refineries (9)                                                |   | 534    |   | 544    |   | 544    |   | 554    |   | 564    |
| Retail        sales (in Italy and rest of Europe) (8)                                           |   | 12.48  |   | 11.80  |   | 12.03  |   | 12.02  |   | 11.73  |
| Number of service stations at period end (in        Italy and rest of Europe)                   |   | 6,294  |   | 6,441  |   | 5,956  |   | 5,986  |   | 6,167  |
| Average        throughput per service station (in Italy and rest of        Europe) (10)         |   | 2,470  |   | 2,486  |   | 2,502  |   | 2,477  |   | 2,353  |
| Petrochemical production (8)                                                                    |   | 7.07   |   | 8.80   |   | 7.37   |   | 6.52   |   | 7.22   |
| Engineering        & Construction order backlog at period end (11)                          |   | 13,191 |   | 15,390 |   | 19,105 |   | 18,730 |   | 20,505 |
| Employees at period end (units)                                                                 |   | 72,850 |   | 75,125 |   | 78,094 |   | 77,718 |   | 79,941 |
|                                                                                            |   |        |   |        |   |        |   |        |   |        |

----

| (6)  | i | Expressed in        BCM.                 |
|------|---|------------------------------------------|
| (7)  | i | Expressed in        thousand kilometers. |
| (8)  | i | Expressed in        TWh.                 |
| (9)  | i | Expressed in        mmtonnes.            |
| (10) | i | Expressed in        KBBL/d.              |
| (11) | i | Expressed in        euro million.        |

 

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##### Table of Contents

**Exchange Rates**

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

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

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

| Year ended December 31, |   |   |   |   |   |   |   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2006                    |   | 1.33   |   | 1.19   |   | 1.26   |   | 1.32   |
| 2007                    |   | 1.49   |   | 1.29   |   | 1.37   |   | 1.46   |
| 2008                    |   | 1.60   |   | 1.24   |   | 1.47   |   | 1.39   |
| 2009                    |   | 1.51   |   | 1.25   |   | 1.39   |   | 1.43   |
| 2010                    |   | 1.46   |   | 1.19   |   | 1.33   |   | 1.34   |
|                    |   |        |   |        |   |        |   |        |

----

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

 

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

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

| October 2010         |   | 1.41 |   | 1.37 |   | 1.39 |
|----------------------|--------|------|--------|------|--------|------|
| November        2010 |   | 1.42 |   | 1.30 |   | 1.30 |
| December 2010        |   | 1.34 |   | 1.31 |   | 1.34 |
| January        2011  |   | 1.34 |   | 1.29 |   | 1.34 |
| February 2011        |   | 1.38 |   | 1.34 |   | 1.35 |
| March 2011           |   | 1.42 |   | 1.38 |   | 1.42 |
|                 |   |      |   |      |   |      |

Fluctuations in the exchange rate between the euro and theU.S. dollar affect the dollar equivalent of the euro price of theShares on the Mercato Telematico Azionario (Electronic ShareMarket or "MTA") and the U.S. dollar price of the ADRson the NYSE. Exchange rate fluctuations also affect the U.S.dollar amounts received by owners of ADRs upon conversion by theDepository of cash dividends paid in euro on the underlyingShares. The Noon Buying Rate on March 31, 2011 was $1.42 per euro1.00.

 

**Risk Factors**

> 
***Competition***

*There is strong competition worldwide, both within the    oil industry and with other industries, to supply energy to    the industrial, commercial and residential energy markets*

Eni faces strong competition in each of its business segments.

| • |   | In the Exploration &        Production business, Eni faces competition from both        international oil companies and state-owned oil companies        for obtaining exploration and development rights, and        developing and applying new technologies to maximize        hydrocarbon recovery. Furthermore, Eni may face a        competitive disadvantage in many of these markets because        of its relatively smaller size compared to other        international oil companies, particularly when bidding        for large scale or capital intensive projects, and may be        exposed to industry-wide cost increases to a greater        extent compared to its larger competitors given its        potentially smaller market power with respect to        suppliers. If, as a result of those competitive        pressures, Eni fails to obtain new exploration and        development acreage, to apply and develop new        technologies, and to control cost increases, its growth        prospects and future results of operations and cash flows        may be adversely affected. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In its natural gas business,        Eni faces increasingly strong competition on both the        Italian market and the European market driven by moderate        growth prospects for demand over the short and        medium-term, in the face of large gas availability on the        marketplace. The latter was driven by material        investments to expand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

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|   |   | import capacity to Europe        via pipeline which have been made by a number of        operators, including Eni, in recent years. Also large        availability of LNG on a worldwide scale has found an        outlet at the European continental hubs driving the        development of highly liquid spot gas markets. LNG        availability was fuelled by the ramp-up of important        upstream projects worldwide (new treatment trains in        Qatar, Yemen and Russia) and commercial development of        non-conventional gas resources in the USA which have        reduced dependence on LNG imports. As natural gas is a        commodity, gas oversupplies have caused suppliers to        compete more aggressively on pricing thus pressuring gas        margins in the whole sector. Management believes that a        better balance between demand and supply on the European        market will not be achieved until 2014 at the earliest.        The described trends may negatively affect the        Company’s future results of operations and cash flow        in its natural gas business, also taking into account the        Company’s contractual obligations to off-take        minimum annual volumes of natural gas in accordance to        its long-term gas supply contracts that include        take-or-pay clauses. See the sector-specific risk section        below. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Eni also faces competition        from large, well-established European utilities and other        international oil and gas companies in growing its market        share and acquiring or retaining clients. A number of        large clients, particularly electricity producers, in        both the domestic market and other European markets have        entered the wholesale market of natural gas by directly        purchasing gas from producers and reselling it to        wholesale or retail markets. At the same time, a number        of national gas producers from countries with large gas        reserves are planning to sell natural gas directly to        final clients, which would threaten the market position        of companies like Eni which resell gas purchased from        producing countries to final customers. These        developments may increase the level of competition in        both the Italian and other European markets for natural        gas and reduce Eni’s operating profit and cash        flows.                                                                                                                                                                                                                                                                                                                                                                  |
| • |   | In its domestic electricity        business, Eni competes with other producers and traders        from Italy or outside of Italy who sell electricity on        the Italian market. The Company expects in the near        future that increasing competition due to the weak GDP        growth expected in Italy and Europe over the next one to        two years will cause outside players to place excess        production on the Italian market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • |   | In retail marketing of        refined products both in and outside Italy, Eni competes        with third parties (including international oil companies        and local operators such as supermarket chains) to obtain        concessions to establish and operate service stations.        Once established, Eni’s service stations compete        primarily on the basis of pricing, services and        availability of non-petroleum products. In Italy, there        is pressure from political and administrative entities,        including the Italian Antitrust Authority, to increase        levels of competition in the retail marketing of fuels.        Eni expects developments on this issue to further        increase pressure on selling margins in the retail        marketing of fuels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | In the Petrochemical        segment, we face intense competition from        well-established international players and state-owned        petrochemical companies, particularly in the most        commoditized market segments. Many of those competitors        may benefit from cost advantages due to larger scale,        looser environmental regulations, availability of        oil-based feedstock, and more favorable location and        proximity to end-markets. Excess capacity and sluggish        economic growth may exacerbate competitive pressures. The        Company expects continuing margin pressures in the        foreseeable future as a result of those trends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • |   | Competition in the oil field        services, construction and engineering industries is        primarily based on technical expertise, quality and        number of services and availability of technologically        advanced facilities (for example, vessels for offshore        construction). Lower oil prices could result in lower        margins and lower demand for oil services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

The Company’s failure or inability to respond effectivelyto competition could adversely impact the Company’s growthprospects, future results of operations and cash flows.

 

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

The exploration and production of oil and natural gas requireshigh levels of capital expenditures and entails particulareconomic risks. It is subject to natural hazards and otheruncertainties including those relating to the physicalcharacteristics of oil and natural gas fields.

Eni’s results depend on its ability to identify andmitigate the risks and hazards inherent to operating in the crudeoil and natural gas industry. The Company seeks to minimize theseoperational risks by carefully designing and building itsfacilities and conducting its operations in a safe and reliablemanner. However, failure to manage these risks effectively couldresult in unexpected incidents, including releases, explosions ormechanical failures resulting in personal injury, loss of life,environmental damage, loss of revenues, legal liability and/ordisruption to operations. As recent events in the Gulf of Mexicohave shown, exploration and production carries certain inherentrisks, especially deep water drilling. Accidents at a single wellcan lead to loss of life, environmental damage and consequentlypotential economic losses that could have a material and adverseeffect on the business, results of operation and prospects of theGroup. Eni has implemented and maintains a system of policies,procedures and compliance mechanisms to manage safety, health,environmental, reliability and efficiency risks; to verifycompliance with applicable laws and policies; and to respond toand learn from unexpected incidents. Nonetheless, 

6

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in certain situations where Eni is not the operator, theCompany may have limited influence and control over thirdparties, which may limit its ability to manage and control suchrisks. Eni maintains insurance coverage that include coverage forphysical damage to our assets, third party liability,workers’ compensation, pollution and other damage to theenvironment and other coverage. Our insurance is subject to caps,exclusion and limitation, and there is no assurance that suchcoverage will adequately protect us against liabilities from allpotential consequences and damages. In light of the accident atthe Macondo well in the Gulf of Mexico, we may not be able tosecure similar coverage for the same costs. Future insurancecoverage for our industry could increase in cost and may includehigher retentions. Also, some forms of insurance may becomeunavailable in the future or unavailable on terms that we believeare economically acceptable.

The production of oil and natural gas is highly regulated andis subject to conditions imposed by governments throughout theworld in matters such as the award of exploration and productioninterests, the imposition of specific drilling and other workobligations, income taxes and taxes on production, environmentalprotection measures, control over the development and abandonmentof fields and installations, and restrictions on production.

 

> 
*Exploratory drilling efforts may be unsuccessful*

Drilling for oil and gas involves numerous risks including therisk of dry holes or failure to find commercial quantities ofhydrocarbons. The costs of drilling, completing and operatingwells are often uncertain, and drilling operations may beunsuccessful as a result of a variety of factors, includingunexpected drilling conditions, pressure or irregularities informations, equipment failures or fires, blow-outs and variousforms of accidents, marine risks such as collisions and adverseweather conditions and shortages or delays in the delivery ofequipment. Exploring or drilling in offshore areas, particularlyin deep waters, is generally more complex and riskier than inonshore areas; the same is true for exploratory activity inremote areas or in challenging environmental conditions such asthose we are experiencing in the Caspian region or Alaska.Failure to discover commercial quantities of oil and natural gascould have an adverse impact on Eni’s future growthprospects, results of operations and liquidity. Because Eni plansto invest significant capital expenditures in executing high riskexploration projects, it is likely that Eni will incursignificant exploration and dry hole expenses in future years.Eni plans to explore for oil and gas offshore; a number ofprojects are planned in deep and ultra-deep waters or at deepdrilling depths, where operations are more difficult and costlythan in other areas. Deep water operations generally require asignificant amount of time before commercial production ofreserves can commence, increasing both the operational andfinancial risks associated with these activities. The Companyplans to conduct risky exploration projects offshore the Gulf ofMexico, Egypt, Angola, Italy, Australia, Nigeria and Norway. In2010, the Company invested approximately euro 1 billion inexecuting exploration projects and it plans to spendapproximately euro 0.9 billion per annum on average over the nextfour years.

Furthermore, shortage of deep water rigs and failure to findadditional commercial reserves could reduce future production ofoil and natural gas which is highly dependent on the rate ofsuccess of exploratory activity.

 

> 
*The oil and gas industry may face increased regulation    both in the USA and elsewhere that could increase the cost of    regulatory compliance and may require changes to our drilling    operations and exploration and development plans and may lead    to higher royalties and taxes*

The recent incident at the BP-operated Macondo well in theGulf of Mexico is likely to result in more stringent regulationof oil and gas activities in the U.S. and elsewhere, particularlyrelating to environmental and health and safety protectioncontrols and oversight of drilling operations, as well as accessto new drilling areas. The U.S. Government had imposed asix-month moratorium, which was suspended in October 2010, oncertain offshore drilling activities. The moratorium forcedEni’s management to reschedule certain projects and causeddelays in linking a few wells to production facilities, which hada negligible impact on the Company’s production for theyear. In addition, the Group incurred operating costs related toinactivity or redeployment of certain drilling rigs which werebooked before the moratorium. During the first months of 2011,Eni expects to resume the operations that had been previouslyauthorized and then suspended following the moratorium. Plannedactivities for which authorizations have still to be granted maybe rescheduled due to uncertainties in the timing of obtainingthe necessary authorizations from the U.S. Authorities. Similaractions have been taken by governments elsewhere in the world.The European Parliament has increased regulations in the area ofenvironmental protection in the field of hydrocarbon extractionand Italian Authorities have passed legislation that wouldintroduce certain restrictions to activities for exploring andproducing hydrocarbons. These new regulations and legislation, aswell as evolving practices, could increase the cost of complianceand may require changes to our drilling operations andexploration and development plans and may lead to higherroyalties and taxes.

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

Eni is involved in a number of development projects forproducing hydrocarbon reserves. Certain projects are planned todevelop reserves in high risk areas, particularly offshore and inremote and hostile environments. Eni’s future results ofoperations and liquidity rely upon its ability to develop andoperate major projects as planned. Key factors that may affectthe economics of these projects include:

| • |   | the outcome of negotiations        with co-venturers, governments, suppliers, customers or        others including, for example, Eni’s ability to        negotiate favorable long-term contracts with customers;        the development of reliable spot markets that may be        necessary to support the development of particular        production projects, or commercial arrangements for        pipelines and related equipment to transport and market        hydrocarbons. Furthermore, projects executed with        partners and co-venturers reduce the ability of the        Company to manage risks and costs, and Eni could have        limited influence over and control of the operations,        behaviors and performance of its partners; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | timely issuance of permits        and licenses by government agencies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | the Company’s relative        size compared to its main competitors which may prevent        it from affording opportunities to participate in        large-scale projects or affect its ability to reap        benefits associated with economies of scale, for example        by obtaining more favorable contractual terms by        suppliers of goods and services;                                                                                                                                                                                                                                                                                                                                                                                         |
| • |   | the ability to design        development projects so as to prevent the occurrence of        technical inconvenience;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| • |   | delays in manufacturing and        delivery of critical equipment, or shortages in the        availability of such equipment, causing cost overruns and        delays;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | risks associated with the        use of new technologies and the inability to develop        advanced technologies to maximize the recoverability rate        of hydrocarbons or gain access to previously inaccessible        reservoirs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| • |   | changes in operating        conditions and costs. The industry has been impacted for        a few years to date by rising trends in the cost for        certain critical productive factors including specialized        labor, procurement costs and costs for leasing third        party equipment or purchase services such as drilling        rigs as a result of industry-wide cost inflation. The        Company expects that costs in its upstream operations        will continue to rise in the foreseeable future;                                                                                                                                                                                                                                          |
| • |   | the actual performance of        the reservoir and natural field decline; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| • |   | the ability and time        necessary to build suitable transport infrastructures to        export production to final markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

Furthermore, deep waters and other hostile environments, wherethe majority of Eni’s planned and existing developmentprojects are located, can exacerbate these problems. Delays anddifferences between scheduled and actual timing of criticalevents, as well as cost overruns may adversely affect actualreturns of development projects. Finally, developing andmarketing hydrocarbons reserves typically requires several yearsafter a discovery is made. This is because a development projectinvolves an array of complex and lengthy activities, includingappraising a discovery in order to evaluate its commercialpotential, sanctioning a development project and building andcommissioning related facilities. As a consequence, rates ofreturn for such long-lead-time projects are exposed to thevolatility of oil and gas prices which may be substantially lowerwith respect to prices assumed when the investment decision wasactually made, leading to lower rates of return. For example, wehave experienced material cost overruns and a substantial delayin the scheduling of production start-up at the Kashagan field,where development is ongoing. Those negative trends were drivenby a number of factors including depreciation of the U.S. dollarversus the euro and other currencies; cost escalation of goodsand services required to execute the project; an originalunderestimation of the costs and complexity to operate in theNorth Caspian Sea due to lack of benchmarks; design changes toenhance the operability and safety standards of the offshorefacilities. The partners of the venture are currently discussingan update of the expenditures and time schedule to complete thePhase 1 which were included in the development plan approved in2008 by the relevant Kazakh Authorities. The Consortium continuesto target the achievement of first commercial oil production byend of 2012. However, the timely delivery of Phase 1 depends on anumber of factors which are presently under review.

See "Item 4 – Exploration & Production –Caspian Sea" for a full description of the material terms ofthe Kashagan project.

In the event the Company is unable to develop and operatemajor projects as planned, particularly if the Company fails toaccomplish budgeted costs and time schedules, it could incursignificant impairment charges associated with reduced futurecash flows of those projects on capitalized costs.

 

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

Eni’s results of operations and financial condition aresubstantially dependent on its ability to develop and sell oiland natural gas. Unless the Company is able to replace producedoil and natural gas, its reserves will decline.

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In addition to being a function of production, revisions andnew discoveries, the Company’s reserve replacement is alsoaffected by the entitlement mechanism in its Production SharingAgreements ("PSAs") and similar contractual schemes. Inaccordance with such contracts, Eni is entitled to a portion of afield’s reserves, the sale of which is intended to coverexpenditures incurred by the Company to develop and operate thefield. The higher the reference prices for Brent crude oil usedto estimate Eni’s proved reserves, the lower the number ofbarrels necessary to recover the same amount of expenditures. In2010, the Company’s reserve replacement was negativelyaffected by lower entitlements in its PSAs for an estimatedamount of 80 mmBOE, which however did not impair theCompany’s ability to fully replace reserves produced in theyear. Due to ongoing trends in crude oil prices, the Companyexpects a risk of lower production and reserve entitlementrelating to its PSA contracts to occur in 2011. See "Item 4– Business Overview – Exploration &Production" and "Item 5 – Management’sExpectations of Operations". Future oil and gas productionis dependent on the Company’s ability to access new reservesthrough new discoveries, application of improved techniques,success in development activity, negotiation with countries andother owners of known reserves and acquisitions. An inability toreplace reserves could adversely impact future production levelsand growth prospects, thus negatively affecting Eni’s futureresults of operations and financial condition.

 

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

The exploration and production of oil and gas is a commoditybusiness with a history of price volatility. The single largestvariable that affects the Company’s results of operationsand financial condition is crude oil prices. Lower crude oilprices have an adverse impact on Eni’s results of operationsand cash flow. Eni generally does not hedge exposure tofluctuations in future cash flows due to crude oil pricemovements. As a consequence, Eni’s profitability dependsheavily on crude oil and natural gas prices.

Crude oil and natural gas prices are subject to internationalsupply and demand and other factors that are beyond Eni’scontrol, including among other things:

| (i)   |   | the control on production        exerted by the Organization of the Petroleum Exporting        Countries ("OPEC") member countries which        control a significant portion of the world’s supply        of oil and can exercise substantial influence on price        levels;                     |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | global geopolitical and        economic developments, including sanctions imposed on        certain oil-producing countries on the basis of        resolutions of the United Nations or bilateral sanctions;                                                                                                        |
| (iii) |   | global and regional dynamics        of demand and supply of oil and gas; in the current        economic downturn we have experienced a significant        reduction in worldwide demand for crude oil and in the        European gas demand which have negatively impacted crude        oil and natural gas prices; |
| (iv)  |   | prices and availability of        alternative sources of energy;                                                                                                                                                                                                                                                    |
| (v)   |   | governmental and        intergovernmental regulations, including the        implementation of national or international laws or        regulations intended to limit greenhouse gas emissions,        which could impact the prices of hydrocarbons; and                                                            |
| (vi)  |   | success in developing and        applying new technology.                                                                                                                                                                                                                                                           |

All these factors can affect the global balance between demandand supply for oil and prices of oil. Such factors can alsoaffect the prices of natural gas because natural gas prices forthe major part of our supplies are typically indexed to theprices of crude oil and certain refined petroleum products.

Furthermore, lower oil and gas prices over prolonged periodsmay also adversely affect Eni’s results of operations andcash flow by: (i) reducing rates of return of developmentprojects either planned or being implemented, leading the Companyto reschedule, postpone or cancel development projects, or accepta lower rate of return on such projects; (ii) reducing theGroup’s liquidity, entailing lower resources to fundexpansion projects, further dampening the Company’s abilityto grow future production and revenues; and (iii) triggering areview of future recoverability of the Company’s carryingamounts of oil and gas properties, which could lead to therecognition of significant impairments charges.

 

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

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

| • |   | the quality of available        geological, technical and economic data and their        interpretation and judgment;                                                                                            |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | projections regarding future        rates of production and timing of development        expenditures;                                                                                                           |
| • |   | whether the prevailing tax        rules, other government regulations and contractual        conditions will remain the same as on the date estimates        are made;                                           |
| • |   | results of drilling, testing        and the actual production performance of Eni’s        reservoirs after the date of the estimates which may        require substantial upward or downward revisions; and |

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| • |   | changes in oil and natural        gas prices which could affect the quantities of        Eni’s proved reserves since the estimates of        reserves are based on prices and costs existing as of the        date when those estimates are made. In particular the        reserves estimates are subject to revisions as prices        fluctuate due to the cost recovery mechanism under the        Company’s PSAs and similar contractual schemes. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Many of these factors, assumptions and variables involved inestimating proved reserves are beyond Eni’s control and maychange over time and impact the estimates of oil and natural gasreserves. Accordingly, the estimated reserves could besignificantly different from the quantities of oil and naturalgas that will ultimately be recovered. Additionally, any downwardrevision in Eni’s estimated quantities of proved reserveswould indicate lower future production volumes, which couldadversely impact Eni’s results of operations and financialcondition.

 

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

The oil and gas industry is subject to the payment ofroyalties and income taxes which tend to be higher than thosepayable in many other commercial activities. In addition, inrecent years, Eni has experienced adverse changes in the taxregimes applicable to oil and gas operations in a number ofcountries where the Company conducts its upstream operations. Asa result of those trends, management estimates that the tax rateapplicable to the Company’s oil and gas operations ismaterially higher than the Italian statutory tax rate of 38%. In2010, management estimates that the tax rate of theCompany’s Exploration & Production segment wasapproximately 60%.

Management believes that the marginal tax rate in the oil andgas industry tends to increase in correlation with higher oilprices which could make it difficult for Eni to translate higheroil prices into increased net profit. However, the Company doesnot expect that the marginal tax rate will decrease in responseto falling oil prices. Adverse changes in the tax rate applicableto the Group profit before income taxes in its oil and gasoperations would have a negative impact on Eni’s futureresults of operations and cash flows.

 

> 
***Political Considerations***

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

Substantial portions of Eni’s hydrocarbon reserves arelocated in countries outside the EU and North America, some ofwhich may be politically or economically less stable than EU orNorth American countries. As of December 31, 2010, approximately80% of Eni’s proved hydrocarbon reserves were located insuch countries. Similarly, a substantial portion of Eni’snatural gas supplies comes from countries outside the EU andNorth America. In 2010, approximately 60% of Eni’s suppliesof natural gas came from such countries. See "Item 4 –Gas & Power – Natural Gas Supplies". Adversepolitical, social and economic developments in any of thosecountries may affect Eni’s ability to continue operating inan economic way, either temporarily or permanently, andEni’s ability to access oil and gas reserves. ParticularlyEni faces risks in connection with the following issues:

| (i)    |   | lack of well-established and        reliable legal systems and uncertainties surrounding        enforcement of contractual rights;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)   |   | unfavorable developments in        laws, regulations and contractual arrangements leading,        for example, to expropriations or forced divestitures of        assets and unilateral cancellation or modification of        contractual terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   | Eni is facing increasing        competition from state-owned oil companies who are        partnering Eni in a number of oil and gas projects and        properties in the host countries where Eni conducts its        upstream operations. These state-owned oil companies can        change contractual terms and other conditions of oil and        gas projects in order to obtain a larger profit share        from a given project, thereby reducing Eni’s profit        share. For example, Sonatrach, the Algerian national oil        company, is seeking to modify the contractual terms of        certain PSAs in which Eni is a party to achieve a        redistribution of the tax burden of such PSAs. Sonatrach        alleges that it is currently bearing part of the tax        burden attributable to Eni following the enactment of        certain modifications to the country’s tax regime.        In case those negotiations result in a negative outcome        for Eni, the future profitability of certain of        Eni’s PSAs in Algeria will be reduced. For more        information on this matter see "Item 4 –        Exploration & Production – Algeria". |
|   |   | Furthermore, as of the        balance sheet date receivables for euro 482 million        relating cost recovery under a petroleum contract in a        non-OECD country were the subject of an arbitration        proceeding. Similar issues are also being experienced in        Kazakhstan where there is a dispute in relation to        certain unresolved items of expenditure incurred by the        operating company Karachaganak Petroleum Operating BV        which has led to the Kazakh Authorities making certain        claims against the company on the base of audits        performed relating to prior years 2003-2007. Parties are        negotiating in order to settle the dispute;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (iii)  |   | restrictions on exploration,        production, imports and exports;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (iv)   |   | tax or royalty increases        (including retroactive claims); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| (v) |   | civil and social unrest        leading to sabotages, acts of violence and incidents. |
|-----|--------|--------------------------------------------------------------------------------------|

See "Item 4 – Exploration & Production –Oil and Natural Gas Reserves". While the occurrence of thoseevents is unpredictable, it is likely that the occurrence of suchevents could cause Eni to incur material losses or facilitydisruptions, by this way adversely impacting Eni’s resultsof operations and cash flows.

 

> 
*Risks associated with continuing political instability    in North Africa and Middle East*

In recent months, several North African and Middle Eastern oilproducing countries have experienced and continue to experiencean extreme level of political instability that has resulted inchanges in governments, unrest and violence and consequentialeconomic disruptions. Further material changes are likely butlargely unpredictable. Such instability is affecting, inparticular, Libya. In 2010, approximately 15% of Eni’sproduction originated from Libya and a material amount ofEni’s proved reserves were located in Libya. Followingsuspension of activities at several of Eni’s producing sitesin Libya and the closure of the GreenStream pipeline transportinggas from Libya to Italy, Eni’s production in Libya as of endof March 2011, was flowing at a rate ranging from 70 to 75 KBOE/dcompared to an expected level for 2011 of approximately 280KBOE/d. Production is continuing to decline. Closure of theGreenStream pipeline has also been impacting our gas sales in theGas & Power Division. The majority of Eni’s employees inLibya have left the country. Due to the outbreak of politicalunrest in Libya, in February and March 2011, the US, the UN, theEU and several countries implemented certain sanctions inrelation to Libya. Future developments in Libya, which we arecurrently unable to predict, may have a material adverse effecton Eni’s financial condition, results of operations andLibyan assets. Please see Item 4 for additional details of ouroperations in Libya and the impact of recent developments on ouroperations.

 

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

Eni is currently conducting oil and gas operations in Iran.The legislation and other regulations of the USA that target Iranand persons who have certain dealings with Iran may lead to theimposition of sanctions on any persons doing business in Iran orwith Iranian counterparties.

The USA enacted the Iran Sanctions Act of 1996 (as amended,"ISA"), which required the President of the USA toimpose sanctions against any entity that is determined to haveengaged in certain activities, including investment inIran’s petroleum sector. The ISA was amended in July 2010 bythe Comprehensive Iran Sanctions, Accountability and DivestmentAct of 2010 ("CISADA"). As a result, in addition tosanctions for knowingly investing in Iran’s petroleumsector, parties engaging in business activities in Iran now maybe sanctioned under the ISA for knowingly providing to Iranrefined petroleum products, and for knowingly providing to Irangoods, services, technology, information or support that coulddirectly and significantly either (i) facilitate the maintenanceor expansion of Iran’s domestic production of refinedpetroleum products, or (ii) contribute to the enhancement ofIran’s ability to import refined petroleum products. CISADAalso expanded the menu of sanctions available to the President ofthe USA by three, from six to nine, and requires the President toimpose three of the nine sanctions, as opposed to two of six, ifthe President has determined that a party has engaged insanctionable conduct. The new sanctions include a prohibition ontransactions in foreign exchange by the sanctioned company, aprohibition of any transfers of credit or payments between, by,through or to any financial institution to the extent theinterest of a sanctioned company is involved, and a requirementto "block" or "freeze" any property of thesanctioned company that is subject to the jurisdiction of theUSA. Investments in the petroleum sector that commenced prior tothe adoption of CISADA appear to remain subject to thepre-amended version of the ISA, except for the mandatoryinvestigation requirements described below, but no definitiveguidance has been given. The new sanctions added by CISADA wouldbe available to the President with respect to new investments inthe petroleum sector or any other sanctionable activity occurringon or after July 1, 2010.

CISADA also adopted measures designed to reduce thePresident’s discretion in enforcement under the ISA,including a requirement for the President to undertake aninvestigation upon being presented with credible evidence that aperson is engaged in sanctionable activity. CISADA also added tothe ISA provisions that an investigation need not be initiated,and may be terminated once begun, if the President certifies inwriting to the U.S. Congress that the person whose activities inIran were the basis for the investigation is no longer engagingin those activities or has taken significant steps towardstopping the activities, and that the President has receivedreliable assurances that the person will not knowingly engage inany sanctionable activity in the future. The President also maywaive sanctions, subject to certain conditions and limitations.

The USA maintains broad and comprehensive economic sanctionstargeting Iran that are administrated by the U.S. TreasuryDepartment’s Office of Foreign Assets Control ("OFACsanctions"). These sanctions generally restrict the dealingsof U.S. citizens and persons subject to the jurisdiction of theUSA. In addition, we are aware of initiatives by certain U.S.states and U.S. institutional investors, such as pension funds,to adopt or consider adopting 

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laws, regulations or policies requiring divestment from, orreporting of interests in, companies that do business withcountries designated as states sponsoring terrorism. CISADAspecifically authorized certain state and local Iran-relateddivestment initiatives. If our operations in Iran are determinedto fall within the scope of divestment laws or policies, salesresulting from such divestment laws and policies, if significant,could have an adverse effect on our share price. Even if ouractivities in and with respect to Iran do not subject us tosanctions or divestment, companies with investments in the oiland gas sectors in Iran may suffer reputational harm as a resultof increased international scrutiny.

Other sanctions programs have been adopted by variousgovernments and regulators with respect to Iran, including aseries of resolutions from the United Nations Security Council,and measures imposed by various countries based on and toimplement these United Nations Security Council resolutions. OnJuly 26, 2010, the European Union adopted new restrictivemeasures regarding Iran (referred to as the "EUmeasures"). Among other things, the supply of equipment andtechnology in the following sectors of the oil and gas industryin Iran are prohibited: refining, liquefied natural gas,exploration and production. The prohibition extends to technicalassistance, training and financing and financial assistance inconnection with such items. Extension of loans or credit to,acquisition of shares in, entry into joint ventures with or otherparticipation in enterprises in Iran (or Iranian-ownedenterprises outside of Iran) engaged in any of the targetedsectors also is prohibited.

Eni Exploration & Production Division has been operatingin Iran for several years under four Service Contracts (SouthPars, Darquain, Dorood and Balal, these latter two projects beingoperated by another international oil company) entered into withthe National Iranian Oil Co (NIOC) between 1999 and 2001, and noother exploration and development contracts have been enteredinto since then. Under such Service Contracts, Eni has carriedout development operations in respect of certain oil fields, andis entitled to recovery of expenditures made, as well as aservice fee. The service contracts do not provide for payments tobe made by Eni, as contractor, to the Iranian Government (e.g.leasing fees, bonuses, significant amounts of local taxes); allmaterial future cash flows relate to the payment to Eni of itsdues. All projects mentioned above have been completed orsubstantially completed; the last one, the Darquain project, isin the process of final commissioning and is being handed over tothe NIOC. Eni Exploration & Production projects in Iran arecurrently in the cost recovery phase. Therefore, Eni has ceasedmaking any further investment in the country and is not planningto make additional capital expenditures in Iran in any yearsubsequent to 2010. Eni’s other significant involvement inIran is that, from time to time, Eni may purchase Iranian-origincrude oil. Eni has no involvement in Iran’s refinedpetroleum sector, and does not export refined petroleum to Iran.In addition, we have occasionally entered into licensingagreement with certain Iranian counterparties for the supply oftechnologies in the petrochemical sector. In 2010, Eni’sproduction in Iran averaged 21 KBOE/d, representing approximately1% of the Eni Group’s total production for the year.Eni’s entitlement in 2010 represented less than 10% of theoverall production from the oil and gas fields that we havedeveloped in Iran. Eni does not believe that the results from itsIranian activities have or will have a material impact on the EniGroup’s results.

After passage of CISADA, Eni engaged in discussions withofficials of the U.S. State Department, which administers theISA, regarding Eni’s activities in Iran. On September 30,2010, the U.S. State Department announced that the U.S.Government, pursuant to a provision of the ISA added by CISADAthat allows it to avoid making a determination of sanctionabilityunder the ISA with respect to any party that provides certainassurances, would not make such a determination with respect toEni based on Eni’s commitment to end its investments inIran’s energy sector and not to undertake new energy-relatedactivity. The U.S. State Department further indicated at thattime that, as long as Eni acts in accordance with thesecommitments, we will not be regarded as a company of concern forour past Iran-related activities.

With respect to segments other than Exploration &Production, our Refining & Marketing segment has historicallypurchased amounts of Iranian crude oil under a term contract withthe NIOC and on a spot basis. We purchased 1.42 mmtonnes, 980ktonnes and 1.63 mmtonnes in 2008, 2009 and 2010, respectively.We paid NIOC $953 million in 2008, $419 million in 2009 and $888million in 2010 for those purchases.

In addition in the three-year period 2008-2010 we purchasedcrude oil from international traders and oil companies who, basedon bills of loading and shipping documentation available to us,we believe purchased the crude oil from Iranian companies.Purchases were mainly on spot basis. In 2008, we purchased 1.3mmtonnes of crude oil amounting to $830 million; in 2009, wepurchased 278 ktonnes of crude oil amounting to $147 million andin 2010, we purchased 2.09 mmtonnes of crude oil amounting to$1.1 billion.

We will continue to monitor closely legislative and otherdevelopments in the USA and the European Union in order todetermine whether our remaining interests in Iran could subjectus to application of either current or future sanctions under theOFAC sanctions, the ISA, the EU Measures or otherwise. If any ofour activities in and with respect to Iran are found to be inviolation of any Iran-related sanctions, and sanctions areimposed on Eni, it could have an adverse effect on our business,plans to raise financing, sales and reputation.

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> 
*We have commercial transactions with Syria where we    mainly purchase from time to time volumes of crude oil*

Our operations in Syria have mainly been limited totransactions carried out by our Refining & Marketing Divisionwith Syrian Petrol Company, an entity controlled by the SyrianGovernment, for the purchase of crude oil under term purchasecontracts or on a spot basis, based on prevailing marketconditions.

We purchased 329 ktonnes, 241 ktonnes and 321 ktonnes in 2008,2009 and 2010, respectively. We paid Syrian Petrol Company $227million in 2008, $92 million in 2009 and $163 million in 2010 forthose purchases.

In 2008, we also purchased 184 ktonnes of crude oil amountingto $73 million and in 2010 we purchased 115 ktonnes of crude oilamounting to $59 million, in each case from international traderswho, based on bills of loading and shipping documentationavailable to us, we believe purchased those raw materials fromSyrian companies.

Other than as described above, Eni is not currently investingin the country, and it has no contractual arrangements in placeto invest in the country. However, we have recently beenexploring investment opportunities in Syria.

 

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

The petrochemical industry is subject to cyclical fluctuationsin demand in response to economic cycles, with consequentialeffects on prices and profitability exacerbated by the highlycompetitive environment of this industry. Eni’spetrochemical operations have been in the past and may beadversely affected in the future by worldwide economic slowdowns,intense competitive pressures and excess installed productioncapacity. Furthermore, Eni’s petrochemical operations faceincreasing competition from Asian companies and national oilcompanies’ petrochemical divisions which can leverage onlong-term competitive advantages in terms of lower operatingcosts and feedstock purchase costs. Particularly, Eni’spetrochemical operations are located mainly in Italy and WesternEurope where the regulatory framework and public environmentalsensitivity are generally more stringent than in other countries,especially Far East countries, resulting in higher operatingcosts of our petrochemical operation compared to theCompany’s Asiatic competitors due to the need to comply withapplicable laws and regulations in environmental and otherrelated matters. Additionally, our petrochemical operations lacksufficient scale and competitiveness in a number of sites. Due toweak industry fundamentals, intense competitive pressures andhigh feedstock costs, our petrochemicals operations incurredsubstantial operating losses in both 2009 and 2008 of euro 675million and euro 845 million, respectively. However, results in2010 improved substantially and operating loss diminished to euro86 million due to demand recovery, cost efficiencies and betterunit margins, while the overall profitability was impaired byhigher oil-based feedstock costs. Looking forward, managementexpects that while any strengthening in the global recovery maybenefit demand for our products, continuing increases in the costof oil represent a risk to the profitability of theCompany’s petrochemicals operation as it may be difficulttransferring higher feedstock costs to end-prices of products dueto the high level of competition in the industry and thecommoditized nature of many of Eni’s products.

 

> 
***Risks in the Company Gas & Power business    segment***

***i) Risks associated with the Trading Environment and    Competition in the Industry***

*In 2010, the Company’s results of operations and    cash flow were negatively affected by lower sales volumes and    reduced unit margins due to increasing competitive pressures    arising from large gas availability on the marketplace. We    expect continuing competitive pressures and oversupply to    affect our results in 2011 and beyond*

In 2010, gas demand in Italy and Europe rebounded from thedepressed levels registered in the previous year, growing by 6%and 4%, respectively. Consumption volumes, however, remainedbelow the pre-crisis levels seen in 2007. The Eni gas businessfailed to benefit from demand growth in 2010 as sales volumesdeclined by 6.4% from 2009 with Italy posting the largestdecrease, with direct sales to customers down by 14.4% and salesto importers to Italy down by 19.5% driven by rising competitivepressures which also dragged down unit selling margins on gassales in Italy. The Company’s results in its Europeanmarkets business unit were affected by lowering average gasselling margins as gas spot prices at continental hubs weredragged down by large availability of LNG and competitivepressures. While spot prices have increasingly been adopted ascontractual benchmarks in selling formulae outside Italy, theCompany’s cost of supplies remained linked to trends in oilprices as provided by its long-term contractual arrangements topurchase gas from suppliers. As a result the Company’s unitmargins outside Italy fell sharply in 2010. Management believesthat those trends will continue weighing on the gasbusiness’ future results of operations and cash flows overthe next three years.

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> 
*A recovery in profitability of the Company’s    marketing business depends heavily on the management’s    assumption to be able to renegotiate better contractual terms    within the Company’s long-term gas supply contracts*

The industrial and financial forecasts for the next four-yearplan of the gas business as well as the amount of the impairmentloss recognized in 2010 Consolidated Financial Statements bothtake into consideration management assumptions that theCompany’s long-term gas purchase contracts will berenegotiated at better economic terms for Eni, so as to restorethe competitiveness of the Company’s cost position in thecurrent depressed scenario for the gas sector. The renegotiationof revised contractual terms, including any price revisions andcontractual flexibility, is established by such contractualclauses whereby parties are held to bring the contract back tothe economic equilibrium in case of significant changes in themarket environment, like the ones that have been occurring sincethe second half 2008. In the course of 2010, Eni has finalized anumber of important contractual renegotiations by obtainingimproved economic conditions for supplies and wider contractualflexibility with a benefit to its commercial programs. A numberof renegotiations have been commenced or are due to commence inthe upcoming months involving all the Company’s mainsuppliers of gas based on long-term contracts. Should the outcomeof those renegotiations fall short of management’sexpectations and absent a solid recovery in fundamentals of thegas sector, management believes that future results of operationsand cash flows of the Company’s gas business will benegatively affected with further consequences in terms ofrecoverability of the carrying amounts of the gas businessassets. In 2010 Consolidated Financial Statements, the Companyrecorded an impairment loss of euro 425 million related to itsgoodwill in the European gas business; for further informationsee "Item 5 – Operating and Financial Review andProspects – Group Results of Operations".

 

> 
*We expect that current imbalances between demand and    supply in the European gas market will persist for sometime*

Management estimates that long-term demand growth will achievean average rate of 1.7% and 1.1% in Italy and Europe,respectively, until 2020. Those estimates have been revised downfrom previous management projections to factor in the expectedimpacts associated with a number of ongoing trends:

| • |   | uncertainties and volatility        in the current macroeconomic cycle;                                                                                                                                                                |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | growing adoption of        consumption patterns and life-style characterized by        wider sensitivity to energy efficiency;                                                                                                         |
| • |   | EU policies intend to        reducing GHG emissions and promoting renewable energy        source. For further information about the Company’s        outlook for gas demand see "Item 4 – Gas &        Power". |

The projected moderate dynamics in demand development will notbe sufficient to balance current oversupplies on the marketplaceover the next three years according to management’sestimates. Gas oversupplies have been increasing in recent yearsas new, large investments to upgrade import pipelines to Europehave come online from Russia, Libya and Algeria, and largeavailability of LNG on a worldwide scale has found an outlet atthe European continental hubs driving the development of veryliquid spot gas markets. Also, certain Eni’s competitors arecurrently assessing the economic feasibility of new gas importinfrastructures, targeting 5-10 BCM of capacity expansion onlinefrom 2015-2016 according to management’s assumptions.

Management believes that a better balance between demand andsupply will not be achieved until 2014, at the earliest. Thosetrends represent risks to the Company’s future results ofoperations and cash flows in its gas business.

 

> 
*Current, negative trends in gas demands and supplies    may impair the Company’s ability to fulfill its minimum    off-take obligations in connection with its take-or-pay,    long-term gas supply contracts*

In order to secure long-term access to gas availability,particularly with a view of supplying the Italian gas market, Enihas signed a number of long-term gas supply contracts with keyproducing countries that supply the European gas markets. Thosecontracts have been ensuring approximately 80 BCM of gasavailability from 2010 (including the Distrigas portfolio ofsupplies) with a residual life of approximately 19 years and apricing mechanism indexed to the price of crude oil and itsderivatives (gasoil, fuel oil, etc.). The contracts providetake-or-pay clauses whereby the Company is required to collectminimum pre-determined volumes of gas in each year of thecontractual term or, in case of failure, to pay the whole price,or a fraction of that price, applied to uncollected volumes up tothe minimum contractual quantity. The take-or-pay clause entitlesthe Company to collect pre-paid volumes of gas in later yearsduring the period of contract execution. Amounts of cashpre-payments and time schedules for collecting pre-paid gas varyfrom contract to contract. Generally, cash pre-payments arecalculated on the basis of the energy prices current in the yearof non-fulfillment with the balance due in the year when the gasis actually collected. Amounts of pre-payments range from 10 to100 percent of the full price. The right to collect pre-paid gasexpires within a ten-year term in some contracts or remains inplace until contract expiration in other arrangements. Inaddition, rights to collect pre-paid gas in future years can beexercised provided that the Company

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has fulfilled its minimum take obligation in a given year andwithin the limit of the maximum annual quantity that can becollected in each contractual year. In this case, Eni will paythe residual price calculating it as the percentage thatcomplements 100%, based on the arithmetical average of monthlybase prices current in the year of the off-take. Similarconsiderations apply to ship-or-pay contractual obligations.

Management believes that the current outlook for moderate gasdemand growth and large gas availability on the marketplace, thepossible evolution of sector-specific regulation, as well as thede-coupling between trends in gas prices indexed to oil versusgas benchmark prices at spot markets, represent risks factors tothe Company’s ability to fulfill its minimum takeobligations associated with its long-term supply contracts.

In 2009 and 2010, Eni incurred the take-or-pay clause as theCompany collected lower volumes than its minimum take obligationsin each of those years accumulating deferred costs for an amountof euro 1.44 billion as of December 31, 2010. The Company’sability to recover those pre-paid volumes within contractualterms will depend in future years on a number of factors,including the possible evolution of the market environment andthe competitiveness of Eni’s cost position, with this latterbeing influenced by the Company’s ability to renegotiatebetter contractual terms of its long-term purchase contracts (seeparagraph above).

In case Eni fails to off-take the contractual minimum amounts,it will be exposed to a price risk, because the purchase priceEni will ultimately be required to pay is based on pricesprevailing after the date on which the off-take obligation arose.In addition, Eni is subject to the risk of not being able todispose of pre-paid volumes. The Company also expects to incurfinancing costs to pay cash advances corresponding to contractualminimum amounts. As a result, the Company’s selling margins,results of operations and cash flow may be negatively affected.

For further information on the Company’s take-or-paycontracts see "Item 4 – Gas & Power –Purchases".

 

> 
*Eni plans to increase natural gas sales in Europe. If    Eni fails to achieve projected growth targets, this could    adversely impact future results of operations and liquidity*

Over the medium-term, Eni plans to increase its natural gassales in Europe leveraging on its natural gas availability undertake-or-pay purchase contracts, availability of transport rightsand storage capacity, and widespread commercial presence inEurope which benefited from synergies from integrating theBelgian gas operator Distrigas acquired in 2009. Should Eni failto increase natural gas sales in Europe as planned due to poorstrategy execution or competition, Eni’s future growthprospects, results of operations and cash flows might beadversely affected also taking account that Eni might be unableto fulfill its contractual obligations to purchase certainminimum amounts of natural gas based on its take-or-pay purchasecontracts currently in force.

 

> 
***ii) Risks associated with sector-specific    regulations in Italy***

*The natural gas market in Italy is highly regulated in    order to favor the opening of the market and development of    competition*

In 2010, the regulated period for gas antitrust thresholdsdefined by Legislative Decree No. 164 of May 23, 2000 expired.Those thresholds defined maximum allowed limits of gas volumes(imported or domestically produced) input into the nationaltransport network and marketed to final customers, applicable toeach operator.

That system of antitrust thresholds was replaced with amechanism of market shares enacted by Legislative Decree No. 130of August 13, 2010. The Decree introduced a 40% ceiling to thewholesale market share of each Italian gas operator. This ceilingcan be raised to 55.9% in case an operator commits itself tobuilding new storage capacity in Italy for a total of 4 BCMwithin five years. The new capacity shall be allocated toindustrial and power generation customers. In case of breachingthe mandatory thresholds, an operator is obliged to execute gasrelease measures at regulated prices. Eni plans to build newstorage capacity and, in the meantime, intends to adopt measuresand bear the associated expenses to make 50% of that plannedcapacity available to requesting customers (for furtherinformation see "Operating Review of the Gas & PowerDivision – Paragraph Regulation"). Eni believes thatthis new gas regulation will increase competitiveness in thewholesale natural gas market in Italy.

Further material aspects regarding the Italian gas sectorregulations are regulated access to infrastructures (transportbackbones, storage fields, distribution networks and LNGterminals), the unbundling of activities relating toinfrastructures within vertically-integrated group companies,from July 1, 2008 (as defined by Decision No. 11/2007 and updatedby Resolution No. 253/2007 of the Authority for Electricity andGas). Also the Italian Authority for Electricity and Gas isentrusted with certain powers in the matters of setting tariffsfor transport, distribution, storage and re-gasificationservices, as well as in approving specific codes for eachregulated activity, 

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monitoring natural gas prices and setting pricing mechanismsfor supplies to residential users consuming less than 200,000CM/y. See next paragraph.

 

> 
*Risks associated with the regulatory powers entrusted    to the Italian Authority for Electricity and Gas in the    matter of pricing to residential customers*

The Authority for Electricity and Gas is entrusted withcertain powers in the matters of natural gas pricing.Specifically, the Authority for Electricity and Gas holds ageneral surveillance power on pricing in the natural gas marketin Italy and the power to establish selling tariffs for thesupply of natural gas to residential and commercial usersconsuming less than 200,000 CM/y (qualified as non eligiblecustomers as of December 31, 2002 as defined by LegislativeDecree No. 164/2000) taking into account the public goal ofcontaining the inflationary pressure due to rising energy costs.Accordingly, decisions of the Authority for Electricity and Gason these matters may limit the ability of Eni to pass an increasein the cost of the raw material onto final consumers of naturalgas. The indexation mechanism set by the Authority forElectricity and Gas with Resolution No. 64/2009 basicallyprovides that the cost of the raw material in pricing formulae tothe residential sector be indexed to movements in a basket ofhydrocarbons. In 2010, the Authority for Electricity and Gas withResolution ARG/gas 89/10 amended that indexation mechanism andestablished a fixed reduction of 7.5% of the raw material costcomponent in the final price of supplies to residential users beapplied in the thermal year October 1, 2010-September 30, 2011.This resolution will negatively affect Eni’s future resultsof operations and cash flows, considering the negative impact onunit margins in sales to residential customers. Administrativeappeals against the Authority’s resolution, which have beenfiled by many operators including Eni, might possibly impact thatmatter.

Management cannot exclude the possibility that in the futurethe Authority for Electricity and Gas could implement furthermeasures in this matter which may negatively affect Eni resultsof operations and liquidity.

 

> 
*Due to the regulated access to natural gas transport    infrastructures in Italy, Eni may not be able to sell in    Italy all the natural gas volumes it planned to import and,    as a consequence, the Company may be unable to sell all the    natural gas volumes which it is committed to purchase under    take-or-pay contract obligations*

Other risk factors deriving from the regulatory framework areassociated with regulation of the access to the Italian gastransport network that is currently set by Decision No. 137/2002of the Authority for Electricity and Gas. The decision isfully-incorporated into the network code presently in force asprepared by the system’s operator. The decision setspriority criteria for transport capacity entitlements at pointswhere the Italian transport network connects with internationalimport pipelines (the so-called entry points to the Italiantransport system). Specifically, operators that are party totake-or-pay contracts, as in the case of Eni, are entitled to apriority in allocating available transport capacity within thelimit of average daily contractual volumes. Gas volumes exceedingaverage daily contractual volumes are not entitled to anypriority and, in case of congestion at any entry points, they areentitled available capacity on a proportionate basis togetherwith all pending requests for capacity assignments. Under itstake-or-pay purchase contracts, Eni may off-take daily volumes inexcess of average daily contractual volumes. This flexibility isimportant to Eni’s commercial programs as it is used whendemand peaks, usually during the wintertime. In the eventcongestion occurs at entry points to the Italian transportnetwork, based on current regulations, available transportcapacity would be entitled firstly to operators having a priorityright, i.e. holders of take-or-pay contracts within the limits ofaverage daily contractual volumes. Then any residual availabletransport capacity would be allocated in proportion to allpending capacity requests. Eni believes that Decision No.137/2002 is in contrast with the rationale of the Europeanregulatory framework on the gas market as provided in EuropeanDirective No. 2003/55/EC. The Company, based on that belief, hascommenced an administrative procedure to repeal Decision No.137/2002 before an administrative court which recently confirmedin part Eni’s position. An administrative appeals court alsoconfirmed the Company’s position. Specifically, the Courtstated that the purchase of the contractual flexibility is anobligation on part of the importer, which responds to acollective interest. According to the Court, there is noreasonable motivation whereby volumes corresponding to suchcontractual flexibility should not be granted priority in accessto the network, also in case congestion occurs. At the moment,however, no case of congestion occurred at entry points to theItalian transport infrastructure such to impairing Eni’smarketing plans.

Management believes that Eni’s results of operations andcash flows could be adversely affected should a combination ofmarket conditions and regulatory constraints prevent Eni fromfulfilling its minimum take contract obligations. See "Item5 – Outlook".

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> 
*A number of mandatory gas release measures and other    administrative measures have been recently implemented in    Italy resulting in a negative impact on Eni’s results of    operations and liquidity. It is possible that similar    measures will be implemented in future years*

Gas release measures are administrative acts whereby Eni isobliged to dispose of certain amounts of gas at set prices andconditions as provided in the relevant gas release measure. Thosemeasures are intended to increase flexibility and liquidity inthe gas market. This measure strongly affected Eni’smarketing activity in Italy. In 2007, Eni agreed to adhere to agas release program involving 4 BCM which were disposed of in atwo-year period (from October 1, 2007 to September 30, 2009). Forthermal year 2009/2010 Italian Law No. 99/2009 obliged Eni todispose of 5 BCM of gas in yearly and half-yearly amounts.Although the allotment procedure (bid) was based on a minimumprice set by the Ministry for Economic Development, only 1.1 BCMwere awarded out of the planned 5 BCM. The price set by theMinistry was lower than the average price of Eni’s sales inItaly.

For the next few years, based on indications made by the AEEG(in a report to the Parliament on the situation of the gas andelectricity market in Italy as provided in Resolution PAS3/2010), Eni cannot exclude the possibility that the Company maybe obliged to implement new gas release programs. As aconsequence, future results and cash flows could be negativelyaffected.

In 2010, a national trading platform was implemented where gasimporters must trade volumes of gas corresponding to a legalobligation on part of Italian importers and producers. Underthose provisions, importers from extra-EU countries are requiredto supply a set percentage of imported volumes in a given thermalyear and to trade them at the national trading platform on a spotbasis. Fulfillment of that obligation is a condition for theimporter to be permitted to import gas from extra-EU countries.Also royalties in-kind owed to the Italian State on gasproduction are to be traded on that trading platform. The newtrading platform is expected to develop a spot market for naturalgas in Italy.

 

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

Italian administrative and governmental institutions andpolitical forces are urging a higher degree of competition in theItalian natural gas market and this may produce significantdevelopments in this area.

In 2003, Law No. 290 was enacted in Italy which prohibits Enifrom holding an interest higher than 20% in undertakings owningnatural gas transport infrastructures in Italy (Eni currentlyholds a 52.54% interest in Snam Rete Gas). A decree is expectedto be enacted by the Italian Prime Minister to establish therelevant provisions to implement this mandatory disposal. Thedeadline for the disposal, which was initially scheduled forDecember 31, 2008, is to be rescheduled in a 24-month deadlinefollowing enactment of the decree from the Italian PrimeMinister. Currently, Eni is unable to predict any development ofthis matter.

In recent years, both the Italian Authority for Electricityand Gas and the Italian Antitrust Authority (the "AntitrustAuthority") have conducted several reviews and inquiries onthe status of Italian natural gas market, targeting the overalllevel of competition, the degree of opening to competition of theresidential sector, levels of entry-exit barriers, and otherareas such as sub-investment in the storage sector. Both theAuthority for Electricity and Gas and the Antitrust Authoritybelieve that the vertical integration of Eni in the supply,transport, distribution, storage and marketing of gas may hamperdevelopment of a competitive gas market in Italy.

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

For more information on these issues see "Item 4 –Regulation – Gas & Power".

 

> 
***Antitrust and competition law***

The Group’s activities are subject to antitrust andcompetition laws and regulations in many countries of operations,especially in Europe. In the years prior to 2008, Eni recordedsignificant loss provisions due to unfavorable developments incertain antitrust proceedings before the Italian AntitrustAuthority, and the European Commission. It is possible that theGroup may incur significant loss provisions in future yearsrelating ongoing antitrust proceedings or new proceedings thatmay possibly arise. The Group is particularly exposed to thisrisk in its natural gas and refining and marketing activities dueto the fact that Eni is the incumbent operator in those marketsin Italy and a large European gas player. See Note 34 to theConsolidated Financial Statements for a full description ofEni’s main pending antitrust proceedings.

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Furthermore, based on the findings of antitrust proceedings,plaintiffs could seek payment to compensate for any allegeddamages as a result of antitrust business practices on part ofEni. Both these risks could adversely affect the Group’sfuture results of operations and cash flows.

 

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

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

Eni is subject to numerous EU, international, national,regional and local environmental, health and safety laws andregulations concerning its oil and gas operations, products andother activities. Generally, these laws and regulations requirethe acquisition of a permit before drilling for hydrocarbons maycommence, restrict the types, quantities and concentration ofvarious substances that can be released into the environment inconnection with exploration, drilling and production activities,as well as refining, petrochemicals and other Group operations,limit or prohibit drilling activities in certain protected areas,provide for measures to be taken to protect the safety of theworkplace and health of communities involved by theCompany’s activities, and impose criminal or civilliabilities for polluting the environment or harming employees orcommunities health and safety resulting from oil, natural gas,refining, petrochemical and other Group’s operations.

These laws and regulations also regulate emissions ofsubstances and pollutants, handling of hazardous materials anddischarges to surface and subsurface water resulting from theoperation of oil and natural gas extraction and processingplants, petrochemical plants, refineries, service stations,vessels, oil carriers, pipeline systems and other facilitiesowned by Eni. In addition, Eni’s operations are subject tolaws and regulations relating to the production, handling,transportation, storage, disposal and treatment of wastematerials. In 2009, new regulations were enacted in Italyrelating to monitoring the route of waste from production up toits disposal/recycling, also prosecuting any unlawful conducts.The Company anticipates that it will incur operating costs tocomply with this new regulation in 2011 when the new system ofmonitoring waste becomes fully-operational. Breach ofenvironmental, health and safety laws exposes the Company’semployees to criminal and civil liability and the Company to theincurrence of liabilities associated with compensation forenvironment health or safety damage. Additionally, in the case ofviolation of certain rules regarding safety in the workplace, theCompany can be liable as provided for by a general EU rule onbusinesses liability due to negligent or willful conduct on partof their employees as adopted in Italy with Law Decree No.231/2001.

Environmental, health and safety laws and regulations have asubstantial impact on Eni’s operations. Management expectsthat the Group will continue to incur significant amounts ofoperating expenses and expenditures to comply with environmental,health and safety laws and regulations, also taking into accountpossible future developments in environmental regulations inItaly and in other countries where Eni operates, particularlycurrent and proposed fuel and product specifications, emissioncontrols and implementation of increasingly strict measuresdecided at both international and country level to reducegreenhouse gas emissions. For more discussion about this lattertopic see "Item 4 – Environmental Regulations".

 

> 
*Eni has incurred in the past and may incur in the    future material environmental liabilities in connection to    the environmental impact of its past and present industrial    activities. Also plaintiffs may seek to obtain compensation    for damage resulting from events of contamination and    pollution*

Risks of environmental, health and safety incidences andliabilities are inherent in many of Eni’s operations andproducts. Notwithstanding management’s beliefs that Eniadopts high operational standards to ensure safety of itsoperations and to protect the environment and health of peopleand employees, it is possible that incidents like blow-outs, oilspills, contaminations and similar events could occur that wouldresult in damage to the environment, employees and communities.Environmental laws also require the Company to remediate andclean-up the environmental impacts of prior disposals or releasesof chemicals or petroleum substances and pollutants by theCompany. Such contingent liabilities may exist for various sitesthat the Company disposed of, closed or shut down in prior yearswhere the Group products have been produced, processed, stored,distributed or sold, such as chemicals plants,mineral-metallurgic plants, refineries and other facilities. TheCompany is particularly exposed to the risk of environmentalliabilities in Italy where the vast majority of the Groupindustrial installations are localized and also due to thecircumstance that the Group engaged in a number of industrialactivities in past years that were subsequently divested, closed,liquidated or shut down. At those industrial sites Eni hascommenced in recent years a number of remedial plans to restoreand clean-up proprietary or concession areas that werecontaminated and polluted by the Group’s industrialactivities in previous years. Notwithstanding the Group claimedthat it cannot be held liable for such past contaminations aspermitted by applicable regulations in case of declarationrendered by a guiltless owner – particularly regulationsthat enacted into Italian legislation the Directive No.2004/35/EC – a number of civil and administrativeproceedings have arisen relating to both the environmental damageand 

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administrative prescriptions on how to perform individualcleaning-up project. In 2010, Eni proposed a global transactionto the Italian Ministry for the Environment related to nine sitesof national interest where the Group has been performing clean-upactivities in order to define the scope of work of each clean-upproject and settle all pending administrative and civillitigation. To account for this proposal, the Group accrued apre-tax risk provision amounting to euro 1.1 billion in its 2010Consolidated Financial Statements.

Remedial actions with respect to other Company’s sitesare expected to continue in the foreseeable future, impacting ourliquidity as the Group has accrued risk provisions to cope withall existing environmental liabilities whereby both a legal orconstructive obligation to perform a clean-up or other remedialactions is in place and the associated costs can be reasonablyestimated. The accrued amount represents the management’sbest estimates of future environmental expenses to be incurred.

Notwithstanding this, management believes that it is possiblethat in the future Eni may incur significant environmentalexpenses and liabilities in addition to the amounts alreadyaccrued due to: (i) the likelihood of as yet unknowncontamination; (ii) the results of ongoing surveys or surveys tobe carried out on the environmental status of certain Eni’sindustrial sites as required by the applicable regulations oncontaminated sites; (iii) unfavorable developments in ongoinglitigation on the environmental status of certain Company’ssite where a number of public administrations and the ItalianMinistry for the Environment act as plaintiffs; (iv) thepossibility that new litigation might arise; (v) the probabilitythat new and stricter environmental laws might be implemented;and (vi) the circumstance that the extent and cost of futureenvironmental restoration and remediation programs are ofteninherently difficult to estimate.

 

> 
***Legal Proceedings***

Eni is party to a number of civil actions and administrativeproceedings arising in the ordinary course of business. Inaddition to existing provisions accrued as of the balance sheetdate to account for ongoing proceedings, it is possible that infuture years Eni may incur significant losses in addition toamounts already accrued in connection with pending legalproceedings due to: (i) uncertainty regarding the final outcomeof each proceeding; (ii) the occurrence of new developments thatmanagement could not take into consideration when evaluating thelikely outcome of each proceeding in order to accrue the riskprovisions as of the date of the latest financial statements;(iii) the emergence of new evidence and information; and (iv)underestimation of probable future losses due to the circumstancethat they are often inherently difficult to estimate. Seedisclosure of pending litigation in Note 34 to the ConsolidatedFinancial Statements.

 

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

Operating results in Eni’s Exploration & Production,Refining & Marketing, and Petrochemical segments are affectedby changes in the price of crude oil and by the impacts ofmovements in crude oil prices on margins of refined andpetrochemical products.

 

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

Overall, lower oil prices have a net adverse impact onEni’s results of operations. The effect of lower oil priceson Eni’s average realizations for produced oil is generallyimmediate. Furthermore, Eni’s average realizations forproduced oil differ from the price of Brent crude markerprimarily due to the circumstance that Eni’s productionslate, which also includes heavy crude qualities, has a lower APIgravity compared with Brent crude (when processed the latterallows for higher yields of valuable products compared to heavycrude qualities, hence higher market price).

 

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

The impact of changes in crude oil prices on Eni’sdownstream businesses, including the Gas & Power, theRefining & Marketing and the Petrochemical businesses,depends upon the speed at which the prices of gas and productsadjust to reflect movements in oil prices.

In the Gas & Power segment, increases in the oil pricerepresent a risk to the Company as gas supplies are mainlyindexed to the cost of oil and certain refined products, whileselling prices, particularly outside Italy, are increasinglylinked to certain market benchmarks quoted at continental hubs.In the current trading environment, 

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spot prices at those hubs are particularly depressed due tooversupply conditions. In addition, the Italian Authority forElectricity and Gas may limit the ability of the Company to passcost increases linked to higher oil prices onto selling prices insupplies to residential customers and small businesses as theItalian Authority for Electricity and Gas regulates theindexation mechanism of the raw material cost in selling formulaeto those customers. See the paragraph "Risks in theCompany’s gas business" above for more information.

In addition, in light of changes in the European gas marketenvironment, Eni has recently adopted new risk managementpolicies. These policies contemplate the use of derivativecontracts to mitigate the exposure of Eni’s future cashflows to future changes in gas prices; such exposure had beenexacerbated in recent years by the fact that spot prices atEuropean gas hubs have ceased to track the oil prices to whichEni’s long-term supply contracts are linked. These policiesalso contemplate the use of derivative contracts for speculativepurposes whereby Eni will seek to profit from opportunitiesavailable in the gas market based, among other things, on itsexpectations regarding future prices. These contracts may lead togains as well as losses, which, in each case, may be significant.All derivative contracts that are not entered into for hedgingpurposes in accordance with IFRS will be accounted through profitand loss, resulting in higher volatility of the gasbusiness’ operating profit. Please see "Item 5 –Financial Review – Outlook" and "Item 11 –Quantitative and Qualitative Disclosures About Market Risk".

In the Refining & Marketing and Petrochemical businesses atime lag exists between movements in oil prices and in prices offinished products.

 

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

Results of operations of the Eni’s Refining &Marketing segment are substantially affected by changes inEuropean refining margins which reflect changes in relativeprices of crude oil and refined products. The prices of refinedproducts depend on global and regional supply/demand balances,inventory levels, refinery operations, import/export balances andweather. Furthermore, Eni’s realized margins are alsoaffected by relative price movements of heavy crude qualitiesversus light crude qualities, taking into account the ability ofEni’s refineries to process complex crudes that represent acost advantage when market prices of heavy crudes are relativelycheaper than the marker Brent price. In 2010, Eni’s refiningmargins were unprofitable as the high cost of oil was onlypartially transferred to final prices of fuels at the pumppressured by weak demand, high worldwide and regional inventorylevels and excess refining capacity. Management does not expectany significant recovery in industry fundamentals over the nextfour-year industrial plan. The sector as a whole will continue tosuffer from weak demand and excess capacity, while the cost ofoil feedstock may continue rising and price differentials mayremain compressed. In this context, management expects that theCompany’s refining margins will remain at below break-evenlevels in 2011 and possibly beyond.

 

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

Eni’s margins on petrochemical products are affected bytrends in demand for petrochemical products and movements incrude oil prices to which purchase costs of petroleum-basedfeedstock are indexed. Given the commoditized nature of Enipetrochemical products, it is difficult for the Company totransfer higher purchase costs for oil-based feedstock to sellingprices to customers. Rising oil-based feedstock costs willcontinue to negatively affect Eni’s results of operationsand liquidity in this business segment in 2011.

 

> 
***Risks from Acquisitions***

Eni constantly monitors the oil and gas market in search ofopportunities to acquire individual assets or companies in orderto achieve its growth targets or complement its asset portfolio.Acquisitions entail an execution risk – an important risk,among other matters, that the acquirer will not be able toeffectively integrate the purchased assets so as to achieveexpected synergies. In addition, acquisitions entail a financialrisk – the risk of not being able to recover the purchasecosts of acquired assets, in case a prolonged decline in themarket prices of oil and natural gas occurs. We also may incurunanticipated costs or assume unexpected liabilities and lossesin connection with companies or assets we acquire. If theintegration and financial risks connected to acquisitionsmaterialize, our financial performance may be adversely affected.

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> 
***Credit risk***

Credit risk is the potential exposure of the Group to lossesin case counterparties fail to perform or pay due amounts. Creditrisks arise from both commercial partners and financial ones. Inrecent years, the Group has experienced a higher than normallevel of counterparty failure due to the severity of the economicand financial downturn. In our 2010 Consolidated FinancialStatements, we accrued an allowance against doubtful accountsamounting to euro 201 million, mainly relating the Gas &Power business. Management believes that the Gas & Powerbusiness is particularly exposed to credit risks due to its largeand diversified customer base which include a large number ofmiddle and small businesses and retail customers where impacts ofthe economic and financial downturn were particularly severe.

 

> 
***Exchange Rates***

Movements in the exchange rate of the euro against the U.S.dollar can have a material impact on Eni’s results ofoperations. Prices of oil, natural gas and refined productsgenerally are denominated in, or linked to, U.S. dollars, while asignificant portion of Eni’s expenses are denominated ineuros. Similarly, prices of Eni’s petrochemical products aregenerally denominated in, or linked to, the euro, whereasexpenses in the Petrochemical segment are denominated both ineuros and U.S. dollars. Accordingly, a depreciation of the U.S.dollar against the euro generally has an adverse impact on Eniresults of operations and liquidity because it reduces bookedrevenues by an amount greater than the decrease in U.S.dollar-denominated expenses. The Exploration & Productionsegment is particularly affected by movements in the U.S. dollarversus the euro exchange rates as the U.S. dollar is thefunctional currency of a large part of its foreign subsidiariesand therefore movements in the U.S. dollar versus the euroexchange rate affect year-on-year comparability of results ofoperations.

 

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

Significant changes in weather conditions in Italy and in therest of Europe from year to year may affect demand for naturalgas and some refined products; in colder years, demand is higher.Accordingly, the results of operations of the Gas & Powersegment and, to a lesser extent, the Refining & Marketingsegment, as well as the comparability of results over differentperiods may be affected by such changes in weather conditions.

Furthermore, our operations, particularly offshore productionof oil and natural gas, are exposed to extreme weather phenomenathat can result in material disruption to our operations andconsequent loss or damage of properties and facilities.

 

> 
***Interest Rates***

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

 

> 
***Critical Accounting Estimates***

The preparation of financial statements requires management tomake certain accounting estimates that are characterized by ahigh degree of uncertainty, complexity and judgment. Theseestimates affect the reported amount of the Company’s assetsand liabilities, as well as the reported amount of theCompany’s income and expenses for a given period. Althoughmanagement believes these estimates to represent the best outcomeof the estimation process, actual results could differ from suchestimates, due to, among other things, the following factors:uncertainty, lack or limited availability of information,availability of new informative elements, variations in economicconditions such as prices, costs, other significant factorsincluding evolution in technologies, industrial practices andstandards (e.g. removal technologies) and the final outcome oflegal, environmental or regulatory proceedings. See "Item 5– Critical Accounting Estimates".

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**Item 4. INFORMATION ON THE COMPANY**

**History and Development of the Company**

Eni SpA with its consolidated subsidiaries is engaged in theoil and gas exploration and production, gas marketing operations,management of gas infrastructures, power generation,petrochemicals, oil field services and engineering industries.Eni has operations in 79 countries and 79,941 employees as ofDecember 31, 2010.

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

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

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

Internet address: www.eni.com.

The name of the agent of Eni in the USA is Salzano Pasquale,485 Madison Avenue, New York, NY 10002.

Eni’s principal segments of operations are describedbelow.

Eni’s Exploration & Production segment engages in oiland natural gas exploration and field development and production,as well as LNG operations in 43 countries, including Italy, theUK, Norway, Libya, Egypt, Angola, Nigeria, Congo, the USA,Kazakhstan, Iraq, Russia, Venezuela and Australia. In 2010, Eniproduced 1,757 KBOE/d on an available for-sale basis. As ofDecember 31, 2010, Eni’s total proved reserves ofsubsidiaries stood at 6,332 mmBOE; Eni’s share of reservesof equity-accounted entities amounted to 511 mmBOE. In 2010,Eni’s Exploration & Production segment reported netsales from operations (including inter-segment sales) of euro29,497 million and operating profit of euro 13,866 million.

Eni’s Gas & Power segment engages in supply, tradingand marketing of gas and electricity, managing gasinfrastructures for transport, distribution, storage,re-gasification, and LNG supply and marketing. This segment alsoincludes the activity of power generation that is ancillary tothe marketing of electricity. In 2010, Eni’s worldwide salesof natural gas amounted to 97.06 BCM, including 5.65 BCM of gassales made directly by the Eni’s Exploration &Production segment in Europe and the USA. Sales in Italy amountedto 34.29 BCM, while sales in European markets were 54.52 BCM thatincluded 8.44 BCM of gas sold to certain importers to Italy.

Through Snam Rete Gas, Eni operates an Italian network of highand medium pressure pipelines for natural gas transport that isapproximately 31,600-kilometer long, while outside Italy, Eniholds capacity entitlements on a network of European pipelinesextending for approximately 4,400 kilometers made up of highpressure pipelines to import gas from Russia, Algeria, Libya andNorthern European production basins to European markets. SnamRete Gas, through its 100-percent owned subsidiary Italgas andother subsidiaries, is engaged in natural gas distributionactivity in Italy serving 1,330 municipalities through a lowpressure network consisting of approximately 50,307 kilometers ofpipelines as of December 31, 2010. Snam Rete Gas, through itswholly-owned subsidiary Stoccaggi Gas Italia operates in naturalgas storage activities in Italy through eight storage fields. Eniproduces power and steam at its operated sites of Livorno,Taranto, Mantova, Ravenna, Brindisi, Ferrera Erbognone, Ferraraand Bolgiano with a total installed capacity of 5.3 GW as ofDecember 31, 2010. In 2010, sales of power totaled 39.54 TWh. Enioperates a re-gasification terminal in Italy and holds indirectinterest or capacity entitlements in a number of LNG facilitiesin Europe, Egypt and the USA. In 2010, Eni’s Gas & Powersegment reported net sales from operations (includinginter-segment sales) of euro 29,576 million and operating profitof euro 2,896 million.

Eni’s Refining & Marketing segment engages in crudeoil supply, refining and marketing of petroleum products mainlyin Italy and in the rest of Europe, as well as crude oil andtrading and shipping products. In 2010, processed volumes ofcrude oil and other feedstock amounted to 34.80 mmtonnes andsales of refined products were 46.80 mmtonnes, of which 27.01mmtonnes were in Italy. Retail sales of refined product atoperated service stations amounted to 11.73 mmtonnes includingItaly and the rest of Europe. In 2010, Eni’s retail marketshare in Italy through its "eni" and "Agip"branded network of service stations was 30.4%. In 2010,Eni’s Refining & Marketing segment reported net salesfrom operations (including inter-segment sales) of euro 43,190million and operating profit of euro 149 million.

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Eni’s petrochemical activities include production ofolefins and aromatics, basic intermediate products, polyethylene,polystyrenes, and elastomers. Eni’s petrochemical operationsare concentrated in Italy and Western Europe. In 2010, Eni sold6.1 mmtonnes of petrochemical products. In 2010, Eni’sPetrochemical segment reported net sales from operations(including inter-segment sales) of euro 6,141 million and anoperating net loss of euro 86 million.

Eni engages in oil field services, construction andengineering activities through its partially-owned subsidiarySaipem and subsidiaries of Saipem (Eni’s interest being42.92%). Saipem provides a full range of engineering, drillingand construction services to the oil and gas industry anddownstream refining and petrochemicals sectors, mainly in thefield of performing large EPC (Engineering, Procurement andConstruction) contracts offshore and onshore for the constructionand installation of fixed platforms, subsea pipelaying andfloating production systems and onshore industrial complexes. In2010, Eni’s Engineering & Construction segment reportednet sales from operations (including intra-group sales) of euro10,581 million and operating profit of euro 1,302 million.

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

 

> 
***Strategy***

Eni’s strategy is to expand the Company’s principalbusinesses over both the medium and the long-term, with improvingprofitability. Specifically, the Company is planning for:

| • |   | growing profitably oil and        gas production in the Exploration & Production        business leveraging on the development of the        Company’s portfolio of assets and pipeline of        capital projects. The Company plansto drive higher        returns by reducing the time to market of our projects,        focusing on continued cost control and deploying our        competencies and technologies to manage technical risks;                                                                                                                                                                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | improving profitability in        the Gas & Power business by leveraging on the        Company’s assets (long-term supply contracts,        transport rights, storage capacity), renegotiation of the        principal long-term supply contracts to boost the        competitiveness of the Company’s cost position and        implementation of effective marketing initiatives against        the backdrop of a challenging competitive landscape in        the European gas market reflecting increasing competition        and ongoing oversupply conditions;                                                                                                                                     |
| • |   | improving profitability and        cash generation in the Refining & Marketing business        in the face of weak industry fundamentals and a poor        outlook for refining margins expected to remain below        their historical averages across the plan period.        Management plans to implement cost reduction initiatives,        integration of refinery cycles to capture cost savings or        margin expansions, and selective capital projects to        upgrade refinery complexity. In the marketing business,        we plan to enhance profitability through a number of        initiatives for improving service quality and client        retention and non-oil profit contribution; |
| • |   | enhancing revenues and        profitability in our Engineering & Construction        business by leveraging on our strong order backlog,        technologically-advanced assets and competencies in        engineering and project management and execution; and                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • |   | managing efficiently and        effectively our petrochemicals business, and re-launching        development initiatives in the field of        environmentally-friendly projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

In executing this strategy, management intends to pursueintegration opportunities among and within businesses andstrongly focus on efficiency improvement through technologyupgrading, cost efficiencies, commercial and supply optimizationand continuing process streamlining across all businesses. Overthe next four years, Eni plans to execute a capital expenditureprogram amounting to euro 53.3 billion to support continuingorganic growth in its businesses, mainly Exploration &Production. In 2011, Eni intends to invest approximately euro 14billion, an amount roughly in line with 2010. Eni plans to fundthose capital expenditure projects mainly by means of cash flowsprovided by operating activities. Capital projects will beassessed and implemented in accordance with strict financialcriteria. Management intends to progressively reduce the ratio ofnet borrowings to shareholders’ equity leveraging onprojected cash flows from operations at our Brent scenario of $70a barrel flat in the next four years and planned divestmentsamounting to euro 2 billion in 2011. This target includesexpected cash outflows to remunerate Eni’s shareholdersthrough a progressive dividend policy. In 2010 management plansto distribute a dividend of euro 1 a share subject to approvalfrom the General Shareholders Meeting scheduled on May 5, 2011.In subsequent years, management plans to increase dividends inline with OECD inflation. This dividend policy is based on theCompany’s planning assumptions for Brent prices and otherassumptions (see "Item 5 – Outlook" and "Item3 – Risk Factors").

Further details on each business segment strategy arediscussed throughout this Item 4. For a description of risks anduncertainties associated with the Company’s outlook,including any possible impact associated with ongoing politicalinstability and war in Libya, and the capital expenditure programsee "Item 5 – Outlook" and "Item 3 –Risk Factors".

In the next four-year period, Eni plans to spend euro 1.1billion for technological research and innovation activities.Management believes that technological leadership is a key driverof the Company’s competitive 

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advantages in the long-term. Eni concentrates most of itsefforts in upstream projects focused on maximizing the recoveryrate of hydrocarbons from reservoirs, optimizing drilling andwell performance, exploiting unconventional oil and gas resourcesand improving exploration performance. Projects in the refiningsector target the development of advanced fuels, that allowhigher engine performance with minimum environmental impact, andthe increase in valuable products yields from refining heavy andsour crude qualities (in particular the Eni Slurry Technology(EST) project). In the petrochemical sector, efforts are focusedon developing high value added elastomers and polymers. We alsointend to enhance our long-term options to contribute tosustainable development by progressing our capabilities inrenewable sources of energy, particularly in the field of solarand photovoltaic energy, carbon capture and sequestration, cleanfuels, operations safety and integrity in upstream, andenvironmental clean-up and remediation.

 

> 
***Significant Business and Portfolio Developments***

The significant business and portfolio developments thatoccurred in 2010 and to date in 2011 were the following:

| • |   | From February 22, 2011,        liquids and natural gas production at a number of fields        in Libya and supplies through the GreenStream pipeline        have been halted as a result of ongoing political        instability and unrest in the Country. Facilities have        not suffered any damage and such standstills do not        affect Eni’s ability to ensure natural gas supplies        to its customers. Eni is technically able to resume gas        production at or near previous level once the situation        stabilizes. The overall impact of the political        instability and conflict in Libya on Eni’s results        of operations and cash flows will depend on how long such        tensions will last as well as on their outcome, which        management is currently unable to predict. Eni’s oil        and natural gas production as of end of March 2011, was        flowing at a rate ranging from 70 to 75 KBBL/d, down from        the expected level of approximately 280 KBBL/d.        Production is continuing to decline. Current production        mainly consists of gas that is entirely delivered to        local power generation plant. For further discussion on        risks and management outlook on the Libyan situation see        "Item 3 – Risk Factors – Political        Considerations" and "Item 5 –        Outlook". |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In November 2010, Eni and        the Venezuelan State Company PDVSA established a joint        venture in charge of developing the Junín 5 oil field,        located in the Orinoco Oil Belt. Management believes that        the field contains important volumes of resources, mainly        heavy oil. The two partners plan to achieve first oil by        2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • |   | In 2010, appraisal        activities were performed in the gas discovery of Perla        located in the Cardón IV Block, in the shallow water of        the Gulf of Venezuela. Based on the assessment made,        management believes that Perla contains significant        amount of gas reserves. The initiative is conducted        through a 50/50 joint venture with another international        oil. The two partners are planning for starting        production in 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • |   | At the beginning of the        fourth quarter 2010, Eni achieved project milestones at        the Zubair oil field in Iraq by increasing production by        more than 10% above the initial production rate of        approximately 180 KBBL/d. Increasing production above        that level means that Eni has begun the cost recovery for        its work on the field by booking its share of production,        including receiving a remuneration fee for every extra        barrel of oil produced above the 10% target. Eni, with a        32.8% share, is leading the consortium in charge of        redeveloping the Zubair field over a 20-year period,        targeting a production plateau of 1.2 mmBBL/d in the next        six years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| • |   | In October 2010, with a view        to rationalizing its upstream portfolio, Eni divested its        subsidiary Società Padana Energia to Gas Plus. The        divested subsidiary includes exploration leases and        concessions for developing and producing oil and natural        gas in Northern Italy. For further details, see        "Exploration & Production –        Italy", below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | In May 2010, Eni signed a        preliminary agreement with an affiliate of Petrobras for        the divestment of its 100% interest in Gas Brasiliano        Distribuidora, a company that markets and distributes gas        in an area of the S. Paulo State, Brazil. The completion        of the transaction is subject to approval of the relevant        Brazilian Authorities. The expected cash consideration        amounts to $250 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| • |   | In April 2010, Eni sold to        NOC (Libyan National Oil Corp) a 25% stake in the share        capital and the control of GreenStream BV, the company        owning and managing the gas pipeline for importing to        Italy natural gas produced in Libya.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | Procedures for divesting        Eni’s interests in the German TENP, the Swiss        Transitgas and the Austrian TAG gas transport pipelines        and carrier companies are progressing and the Company        targets to finalize the divestiture in 2011. The        divestment program has been agreed upon with the European        Commission as remedial actions to settle an antitrust        proceeding without the ascertainment of any illicit        behavior and consequently without imposition of any fines        or sanctions on the Company. The proceeding was started        by the Commission in the year 2006 to investigate        allegedly anti-competitive behavior ascribed to Eni in        the natural gas market. The commitments have been        ratified as of September 29, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

In addition, in 2010 and up to date in 2011 Eniclosed the following transactions:

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| • |   | In March 2011, Eni signed a        Memorandum of Understanding with the Minister of Ecology        and Natural Resources in Ukraine. The agreement provides        for a joint study to cooperate in conventional and        unconventional oil and gas resources and evaluate        upstream initiatives.                                                                                                            |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In January 2011, Eni was        awarded rights to explore retaining operatorship of        offshore Block 35 in Angola, with a 30% interest. The        agreement foresees drilling 2 wells and 3D seismic        surveys to be carried out in the first 5 years of        exploration. This deal is subject to the approval of the        relevant authorities.                                                       |
| • |   | In January 2011, Eni signed        a Memorandum of Understanding with PetroChina to promote        common opportunities to jointly expand operations in        research and development of conventional and        unconventional hydrocarbons in China and outside China,        particularly in Africa. In addition, PetroChina is        evaluating to purchase an interest in certain of        Eni’s assets. |
| • |   | In December 2010, Eni        acquired Minsk Energy Resources which operates 3        exploration licenses in the Polish Baltic Basin.        Management believes that the acquired acreage may contain        unconventional gas resources. Drilling operations are        expected to start in the second half of 2011.                                                                                               |
| • |   | In December 2010, Eni        acquired a controlling interest in Altergaz, a company        marketing natural gas in France to retail and middle        market clients, as the other partners of the company        exercised a put option on a 15% stake.                                                                                                                                                              |
| • |   | In November 2010, Eni signed        with the Government of Ecuador new terms for the service        contract for the Villano oil field, due to expire in        2023. Under the new agreement, the operated area is        enlarged to include the Oglan oil discovery, which is        planned to be developed in synergy with existing        facilities.                                                            |

| • |   | In October 2010, Eni was        awarded operatorship of offshore Block 1 and Block 2 (Eni        100%) in the Dahomey Basin in the Gulf of Guinea as part        of its agreements with the Government of Togo to develop        the country’s offshore mineral resources.       |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In August 2010, Eni signed        an agreement with UK-based Surestream Petroleum to        acquire a 55% stake and operatorship in the Ndunda Block        located in the Democratic Republic of Congo. The        agreement has been sanctioned by the relevant        authorities. |
| • |   | In January 2010, Eni        finalized an acquisition of downstream activities in        Austria, including a retail network, wholesale        activities, as well as commercial assets in the aviation        business and related logistic and storage activities.                   |

In 2010, capital expenditures amounted to euro 13,870 million,of which 87% related to Exploration & Production, Gas& Power and Refining & Marketing businesses, andprimarily related to: (i) the development of oil and gas reserves(euro 8,578 million) deployed mainly in Egypt, Kazakhstan, Congo,the USA and Algeria, and exploration projects (euro 1,012million) carried out mainly in Angola, Nigeria, the USA,Indonesia and Norway; (ii) the development and upgrading ofEni’s natural gas transport and distribution network inItaly (euro 842 million and euro 328 million, respectively) aswell as development and increase of storage capacity (euro 250million); (iv) projects aimed at improving the conversioncapacity and flexibility of refineries, and at building andupgrading service stations in Italy and outside Italy (totalingeuro 692 million); and (v) the upgrading of the fleet used in theEngineering & Construction segment (euro 1,552 million).There were no significant acquisitions in the year.

In 2009, capital expenditures amounted to euro 13,695 million,of which 86% related to the Exploration & Production,Gas & Power and Refining & Marketing businesses, andprimarily related to: (i) the development of oil and gas reserves(euro 7,478 million) deployed mainly in Kazakhstan, the USA,Egypt, Congo, Italy and Angola, and exploration projects (euro1,228 million) carried out mainly in the USA, Libya, Egypt,Norway and Angola; (ii) the acquisition of proved and unprovedproperties amounting to euro 697 million mainly related to theacquisition of a 27.5% interest in assets with gas shale reservesfrom Quicksilver Resources Inc and extension of the duration ofoil and gas properties in Egypt following the agreement signed inMay 2009; (iii) the development and upgrading of Eni’snatural gas transport and distribution networks in Italy (euro919 million and euro 278 million, respectively) as well as thedevelopment and increase of the storage capacity (euro 282million); (iv) projects aimed at improving the conversioncapacity and flexibility of refineries, and at building andupgrading service stations in Italy and outside Italy (totalingeuro 608 million); and (v) the upgrading of the fleet used in theEngineering & Construction segment (euro 1,630 million).

In 2009, Eni’s acquisitions amounted to euro 2.32 billionand mainly related to the completion of the acquisition ofDistrigas NV. Following the acquisition of the 57.243% majoritystake in the Belgian company Distrigas NV from French companySuez-Gaz de France, Eni made an unconditional mandatory publictakeover bid on the minorities of Distrigas (42.76% stake). OnMarch 19, 2009, the mandatory tender offer on the minorities ofDistrigas was finalized. Shareholders representing 41.61% of theshare capital of Distrigas, including the second largestshareholder, Publigaz SCRL with a 31.25% interest, tendered theirshares. The squeeze-out of the residual 1.14% of the sharecapital was finalized on May 4, 2009. After this, Distrigasshares have been delisted from Euronext Brussels. The total cashconsideration amounted to approximately euro 2.05 billion.

In 2008, capital expenditures amounted to euro 14,562 million,of which 84% related to the Exploration & Production,Gas & Power and Refining & Marketing Divisions andconcerned mainly: (i) the development of oil and gas reserves(euro 6,429 million) deployed mainly in Kazakhstan, Egypt,Angola, Congo and Italy and exploration projects (euro 1,918million), primarily in the USA, Egypt, Nigeria, Angola and Libya;(ii) the purchase of proved and unproved property for euro 836million related mainly to the extension of mineral rights inLibya 

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following an agreement signed in October 2007 with the statecompany NOC and the purchase of a 34.81% interest in the ABOproject in Nigeria; (iii) the development and upgrading ofEni’s natural gas transport and distribution networks inItaly (euro 1,130 million and euro 233 million, respectively) andupgrading of natural gas import pipelines to Italy (euro 233million); (iv) the ongoing construction of combined cycle powerplants (euro 107 million); (v) projects designed to upgrade theconversion capacity and flexibility of Eni’s refineries,including construction of a new hydrocracking unit at theSannazzaro refinery in Italy, and to build of new servicestations and upgrade of existing ones in Italy and outside Italy(totaling euro 965 million); and (vi) the upgrading of the fleetused in the Engineering & Construction Division (euro 2,027million).

In 2008, Eni’s acquisitions amounted to euro 5.85 billion(euro 4.3 billion net of acquired cash of euro 1.54 billion) andmainly related to: (i) the acquisition of the 57.243% majoritystake in Distrigas NV in Belgium; (ii) the completion of theacquisition of Burren Energy Plc in the UK; (iii) the purchasesof certain upstream properties and gas storage assets, related tothe entire share capital of the Canadian company First Calgaryoperating in Algeria, a 52% stake in the Hewett Unit in the NorthSea, a 20% stake in the Indian company Hindustan Oil ExplorationCo; and (iv) other investments in non-consolidated entitiesmainly related to funding requirements for a LNG project inAngola.

 

**BUSINESS OVERVIEW**

**Exploration & Production**

Eni’s Exploration & Production segment engages in oiland natural gas exploration and field development and production,as well as LNG operations, in 43 countries, including Italy,Libya, Egypt, Norway, the UK, Angola, Congo, the USA, Kazakhstan,Russia, Algeria, Australia, Venezuela and Iraq. In 2010, Eniaverage daily production amounted to 1,757 KBOE/d on an availablefor-sale basis. As of December 31, 2010, Eni’s total provedreserves amounted to 6,843 mmBOE; proved reserves of subsidiariesstood at 6,332 mmBOE; Eni’s share of reserves ofequity-accounted entities amounted to 511 mmBOE.

Eni’s strategy in its Exploration & Productionoperations is to pursue profitable production growth leveragingon the Company’s portfolio of assets and pipeline ofdevelopment projects. We plan to achieve a compound averagegrowth rate in our production in excess of 3% in the next2011-2014 four-year period, targeting a production plateau above2.05 mmBOE/d by 2014. Those targets are based on our long-termBrent price assumptions of 70 $/BBL. The production outlook for2011 is uncertain due to ongoing political instability and unrestin Libya. Following suspension of activities at several ofEni’s producing sites in Libya and the closure of a pipelinetransporting gas from Libya to Italy, Eni’s production inLibya as of end of March 2011, was flowing at a rate ranging from70 to 75 KBOE/d compared to an expected level for 2011 ofapproximately 280 KBOE/d. Production is continuing to decline.Future developments in Libya, which we are currently unable topredict, may have a material adverse effect on Eni’sproduction targets. However, in our planning assumptions to 2014we assumed that the Libyan production would resume flowing at itsnormal rate at some point in the future. For further informationon this issue as well as certain other trading environmentassumptions including an indication of Eni’s productionvolume sensitivity to oil prices see "Item 5 –Outlook" and "Item 3 – Risk Factors".

Management plans to achieve the target of production growth to2014 via organic developments, leveraging on the plannedstart-ups of a number of fields and material expenditures tosupport current production levels at our producing fields. Weproject that new fields start-ups will add approximately 630KBOE/d to the Company’s production level by 2014. Mainproduction start-ups are planned in Angola, Norway, Russia,Kazakhstan, Algeria and Venezuela. We have a good level ofvisibility on those new projects as most of them have beenalready sanctioned.

The second leg of our growth strategy is to maximize theproduction recovery rate at our current fields by counteractingnatural field depletion. To achieve this, we plan to executeinfilling and work-over activities, apply our advanced recoverytechnologies and reservoir management capabilities.

In exploration activities, Eni plans to perform the major partof exploration projects in well-established areas of presencetargeting to extend the plateau of producing fields. Those areasinclude Egypt, Pakistan, Nigeria, Congo and the Gulf of Mexicowhere availability of production facilities will enable theCompany to readily put in production discovered reserves. Otherprojects will be executed offshore of West Africa, Venezuela andin deepwater plays in the Gulf of Mexico where the Companybelieves to have the necessary know-how and skills to discovernew reserves. A third layer of exploration projects is planned tobe executed in high risk/high reward areas including Mozambique,Togo, Ghana and offshore Australia and East Timor where theCompany believes important resources can be discovered. Eniexpects to purchase new exploration permits and to divest or exitmarginal or non-strategic areas.

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Eni intends to focus on reserve replacement in order to ensurethe medium to long-term sustainability of the business.Management intends to implement a number of initiatives tosupport profitability in its upstream operations by exercisingtight cost control and reducing the time span which is necessaryto put reserves in production. We expect that costs to developand operate fields will increase in the next years due tosector-specific inflation, and growing complexity of newprojects. We plan to counteract those cost increases byleveraging on cost efficiencies associated with: (i) increasingthe scale of our operations as we concentrate our resources onfields of greater dimensions than in the past where we plan toachieve economies of scale; (ii) expanding the scope of operatedproduction. We believe that is a key driver of profitability asoperatorship will enable the Company to exercise better costcontrol, effectively manage reservoir and production operations,and deploy our safety standards and procedures to minimize risks;and (iii) applying our technologies which we believe can reducedrilling and completion costs.

Eni intends to optimize its portfolio of developmentproperties by focusing on areas where its presence isestablished, and divesting non-strategic or marginal assets. Enialso intends to develop certain LNG project in order to monetizeits large base of gas reserves mainly in West Africa.

Management plans to invest approximately euro 39.1 billion toexplore for and develop new reserves over the next four years.Exploration projects will account for approximately euro 3.6billion. Approximately euro 1.8 billion will be spent to buildtransportation infrastructures and LNG projects throughequity-accounted entities. For the year 2011, management plans tospend euro 9.8 billion in reserves development and explorationprojects.

 

> 
***Disclosure of Reserves***

***Overview***

The Company has adopted comprehensive classification criteriafor the estimate of proved, proved developed and provedundeveloped oil and gas reserves in accordance with applicableU.S. Securities and Exchange Commission (SEC) regulations, asprovided for in Regulation S-X, Rule 4-10. Proved oil and gasreserves are those quantities of liquids (including condensatesand natural gas liquids) and natural gas which, by analysis ofgeoscience and engineering data, can be estimated with reasonablecertainty to be economically producible from a given dateforward, from known reservoirs, under existing economicconditions, operating methods, and government regulations priorto the time at which contracts providing the right to operateexpire, unless evidence indicates that renewal is reasonablycertain.

Oil and natural gas prices used in the estimate of provedreserves are obtained from the official survey published byPlatt’s Marketwire, except when their calculation derivesfrom existing contractual conditions. Prices are calculated asthe unweighted arithmetic average of the first-day-of-the-monthprice for each month within the 12-month period prior to the endof the reporting period. Prices include consideration of changesin existing prices provided only by contractual arrangements.

Engineering estimates of the Company’s oil and gasreserves are inherently uncertain. Although authoritativeguidelines exist regarding engineering criteria that have to bemet before estimated oil and gas reserves can be designated as"proved", the accuracy of any reserve estimate is afunction of the quality of available data and engineering andgeological interpretation and evaluation. Consequently, theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revisions may be madeto the initial booking of reserves due to analysis of newinformation. Proved reserves to which Eni is entitled underconcession contracts are determined by applying Eni’s shareof production to total proved reserves of the contractual area,in respect of the duration of the relevant mineral right. Provedreserves to which Eni is entitled under Production SharingAgreements are calculated so that the sale of productionentitlements should cover expenses incurred by the Group todevelop a field (cost oil) and on the profit oil setcontractually (profit oil). A similar scheme applies to buy-backand service contracts.

 

> 
***Reserves Governance***

Eni exercises rigorous control over the process of bookingproved reserves, through a centralized model of reservegovernance. The Reserves Department of the Exploration &Production Division is entrusted with the task of: (i) ensuringthe periodic certification process of proved reserves; (ii)continuously updating the Company’s guidelines on reservesevaluation and classification and the internal procedures; and(iii) providing training of staff involved in the process ofreserves estimation.

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Company guidelines have been reviewed by DeGolyer andMacNaughton (D&M), an independent petroleum engineeringcompany, which has stated that those guidelines comply with theSEC rules1. D&M has also stated that the Companyguidelines provide reasonable interpretation of facts andcircumstances in line with generally accepted practices in theindustry whenever SEC rules may be less precise. Whenparticipating in exploration and production activities operatedby others entities, Eni estimates its share of proved reserves onthe basis of the above guidelines.

The process for estimating reserves, as described in theinternal procedure, involves the following roles andresponsibilities: (i) the business unit managers (geographicunits) and Local Reserves Evaluators (LRE) are in charge withestimating and classifying gross reserves including assessingproduction profiles, capital expenditures, operating expenses andcosts related to asset retirement obligations; (ii) the PetroleumEngineering Department at the head office verifies the productionprofiles of such properties where significant changes haveoccurred; (iii) geographic area managers at the head officeverify estimates carried out by business unit managers; (iv) thePlanning and Control Department provides the economic evaluationof reserves; (v) the Reserve Department, through the DivisionReserves Evaluators (DRE), provides independent reviews offairness and correctness of classifications carried out by theabovementioned units and aggregates worldwide reserve data.

The head of the Reserve Department attended the"Politecnico di Torino" and received a Master ofScience degree in Mining Engineering in 1985. She has more than20 years of experience in the oil and gas industry and more than10 years of experience specifically in evaluating reserves.

Staff involved in the reserves evaluation process fulfills theprofessional qualifications requested and maintains the highestlevel of independence, objectivity and confidentiality inaccordance with professional ethics. Reserves Evaluatorsqualifications comply with international standards established bythe Society of Petroleum Engineers.

 

> 
***Reserves independent evaluation***

Since 1991, Eni has requested independent oil engineeringcompanies to carry out an independent evaluation2 ofpart of its proved reserves on a rotational basis. Managementbelieves that those engineering firms are qualified andexperienced on the marketplace. The description of qualificationsof the persons primarily responsible for the reserve audit isincluded in the third party audit report3. In thepreparation of their reports, independent evaluators rely,without independent verification, upon information furnished byEni with respect to property interests, production, current costsof operations and development, sale agreements, prices and otherfactual information and data that were accepted as represented bythe independent evaluators. This data, equally used by Eni in itsinternal process, include logs, directional surveys, core and PVT(Pressure Volume Temperature) analysis, maps, oil/gas/waterproduction/injection data of wells, reservoir studies; technicalanalysis relevant to field performance, reservoir performance,long-term development plans, future capital and operating costs.

In order to calculate the economic value of Eni’s equityreserves, actual prices applicable to hydrocarbon sales, priceadjustments required by applicable contractual arrangements andother pertinent information are provided. In 2010, Ryder ScottCompany and DeGolyer and MacNaughton provided an independentevaluation of 28% of Eni’s total proved reserves at December31, 20104, confirming, as in previous years, thereasonableness of Eni internal evaluation5.

In the 2008-2010 three-year period, 78% of Eni total provedreserves were subject to an independent evaluation. As atDecember 31, 2010 the principal Eni properties not subjected toindependent evaluation in the last three years were Karachaganak(Kazakhstan), Samburgskoye and Yaro-Yakhinskoye (Russia).

 

> 
***Summary of proved oil and gas reserves***

The tables below provide a summary of proved oil and gasreserves of the Group companies and its equity-accounted entitiesby geographic area for the three years ended December 31, 2010,2009 and 2008. Reserves data for 2010 and 2009 are based on theun-weighted arithmetic average of the first-day-of-the-monthprice for each month within the 12-month period prior to the endof the reporting period. Data for 2008 is based on the last dayprice of the Company’s fiscal year in accordance with thenapplicable rules.

----

| (1) |  i | See        "Item 19 – Exhibits" in the Annual Report        on Form 20-F 2009. |
|-----|---------|-----------------------------------------------------------------------------------------------|
| (2) | i       | From 1991 to        2002, DeGolyer and MacNaughton; from 2003, also Ryder        Scott.       |
| (3) |  i | See        "Item 19 – Exhibits".                                               |
| (4) |  i | SIncludes        Eni’s share of proved reserves of equity-accounted        entities.     |
| (5) |  i | See        "Item 19 – Exhibits".                                               |

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**HYDROCARBONS**

| (mmBOE) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total consolidated        subsidiaries** |   | **Equity-accounted        entities** |   | **Total reserves** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|--------------------------------------------|--------|--------------------------------------|--------|--------------------|
|    |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |                                            |   |                                      |   |                    |

| **Year ended Dec. 31, 2008**        |   | **681** |   | **525** |   | **1,922** |   | **1,146** |   | **1,336** |   | **265** |   | **235** |   | **132** |   | **6,242** |   | **666** |   | **6,908** |
|-------------------------------------|--------|---------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|-----------|--------|---------|--------|-----------|
| Developed                           |   | 465     |   | 417     |   | 1,229     |   | 827       |   | 647       |   | 168     |   | 133     |   | 62      |   | 3,948     |   | 107     |   | 4,055     |
| Undeveloped                         |   | 216     |   | 108     |   | 693       |   | 319       |   | 689       |   | 97      |   | 102     |   | 70      |   | 2,294     |   | 559     |   | 2,853     |
|                                |   |         |   |         |   |           |   |           |   |           |   |         |   |         |   |         |   |           |   |         |   |           |
| **Year        ended Dec. 31, 2009** |   | **703** |   | **590** |   | **1,922** |   | **1,141** |   | **1,221** |   | **236** |   | **263** |   | **133** |   | **6,209** |   | **362** |   | **6,571** |
| Developed                           |   | 490     |   | 432     |   | 1,266     |   | 799       |   | 614       |   | 139     |   | 168     |   | 122     |   | 4,030     |   | 74      |   | 4,104     |
| Undeveloped                         |   | 213     |   | 158     |   | 656       |   | 342       |   | 607       |   | 97      |   | 95      |   | 11      |   | 2,179     |   | 288     |   | 2,467     |
|                                |   |         |   |         |   |           |   |           |   |           |   |         |   |         |   |         |   |           |   |         |   |           |
| **Year ended Dec. 31, 2010** (a)    |   | **724** |   | **601** |   | **2,096** |   | **1,133** |   | **1,126** |   | **295** |   | **230** |   | **127** |   | **6,332** |   | **511** |   | **6,843** |
| Developed                           |   | 554     |   | 405     |   | 1,215     |   | 812       |   | 543       |   | 139     |   | 141     |   | 117     |   | 3,926     |   | 96      |   | 4,022     |
| Undeveloped                         |   | 170     |   | 196     |   | 881       |   | 321       |   | 583       |   | 156     |   | 89      |   | 10      |   | 2,406     |   | 415     |   | 2,821     |
|                                |   |         |   |         |   |           |   |           |   |           |   |         |   |         |   |         |   |           |   |         |   |           |

----

| (a) |   | In 2010, Eni        has updated the natural gas conversion factor. See page        vi for further information. |
|-----|--------|----------------------------------------------------------------------------------------------------------------|

**LIQUIDS**

| (mmBBL) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total consolidated        subsidiaries** |   | **Equity-accounted        entities** |   | **Total reserves** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|--------------------------------------------|--------|--------------------------------------|--------|--------------------|
|    |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |                                            |   |                                      |   |                    |

| **Year ended Dec. 31, 2008**        |   | **186** |   | **277** |   | **823** |   | **783** |   | **911** |   | **106** |   | **131** |   | **26** |   | **3,243** |   | **142** |   | **3,385** |
|-------------------------------------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|--------|--------|-----------|--------|---------|--------|-----------|
| Developed                           |   | 111     |   | 222     |   | 613     |   | 576     |   | 298     |   | 92      |   | 74      |   | 23     |   | 2,009     |   | 33      |   | 2,042     |
| Undeveloped                         |   | 75      |   | 55      |   | 210     |   | 207     |   | 613     |   | 14      |   | 57      |   | 3      |   | 1,234     |   | 109     |   | 1,343     |
|                                |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |        |   |           |   |         |   |           |
| **Year        ended Dec. 31, 2009** |   | **233** |   | **351** |   | **895** |   | **770** |   | **849** |   | **94**  |   | **153** |   | **32** |   | **3,377** |   | **86**  |   | **3,463** |
| Developed                           |   | 141     |   | 218     |   | 659     |   | 544     |   | 291     |   | 45      |   | 80      |   | 23     |   | 2,001     |   | 34      |   | 2,035     |
| Undeveloped                         |   | 92      |   | 133     |   | 236     |   | 226     |   | 558     |   | 49      |   | 73      |   | 9      |   | 1,376     |   | 52      |   | 1,428     |
|                                |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |        |   |           |   |         |   |           |
| **Year ended Dec. 31, 2010**        |   | **248** |   | **349** |   | **978** |   | **750** |   | **788** |   | **139** |   | **134** |   | **29** |   | **3,415** |   | **208** |   | **3,623** |
| Developed                           |   | 183     |   | 207     |   | 656     |   | 533     |   | 251     |   | 39      |   | 62      |   | 20     |   | 1,951     |   | 52      |   | 2,003     |
| Undeveloped                         |   | 65      |   | 142     |   | 322     |   | 217     |   | 537     |   | 100     |   | 72      |   | 9      |   | 1,464     |   | 156     |   | 1,620     |
|                                |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |        |   |           |   |         |   |           |

**NATURAL GAS**

| (BCF)  |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total consolidated        subsidiaries** |   | **Equity-accounted        entities** |   | **Total reserves** |
|--------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|--------------------------------------------|--------|--------------------------------------|--------|--------------------|
|   |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |                                            |   |                                      |   |                    |

| **Year ended Dec. 31, 2008**        |   | **2,844** |   | **1,421** |   | **6,311** |   | **2,084** |   | **2,437** |   | **911** |   | **600** |   | **606** |   | **17,214** |   | **3,015** |   | **20,229** |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|------------|--------|-----------|--------|------------|
| Developed                           |   | 2,031     |   | 1,122     |   | 3,537     |   | 1,443     |   | 2,005     |   | 439     |   | 340     |   | 221     |   | 11,138     |   | 420       |   | 11,558     |
| Undeveloped                         |   | 813       |   | 299       |   | 2,774     |   | 641       |   | 432       |   | 472     |   | 260     |   | 385     |   | 6,076      |   | 2,595     |   | 8,671      |
|                                |   |           |   |           |   |           |   |           |   |           |   |         |   |         |   |         |   |            |   |           |   |            |
| **Year        ended Dec. 31, 2009** |   | **2,704** |   | **1,380** |   | **5,894** |   | **2,127** |   | **2,139** |   | **814** |   | **629** |   | **575** |   | **16,262** |   | **1,588** |   | **17,850** |
| Developed                           |   | 2,001     |   | 1,231     |   | 3,486     |   | 1,463     |   | 1,859     |   | 539     |   | 506     |   | 565     |   | 11,650     |   | 234       |   | 11,884     |
| Undeveloped                         |   | 703       |   | 149       |   | 2,408     |   | 664       |   | 280       |   | 275     |   | 123     |   | 10      |   | 4,612      |   | 1,354     |   | 5,966      |
|                                |   |           |   |           |   |           |   |           |   |           |   |         |   |         |   |         |   |            |   |           |   |            |
| **Year ended Dec. 31, 2010**        |   | **2,644** |   | **1,401** |   | **6,207** |   | **2,127** |   | **1,874** |   | **871** |   | **530** |   | **544** |   | **16,198** |   | **1,684** |   | **17,882** |
| Developed                           |   | 2,061     |   | 1,103     |   | 3,100     |   | 1,550     |   | 1,621     |   | 560     |   | 431     |   | 539     |   | 10,965     |   | 246       |   | 11,211     |
| Undeveloped                         |   | 583       |   | 298       |   | 3,107     |   | 577       |   | 253       |   | 311     |   | 99      |   | 5       |   | 5,233      |   | 1,438     |   | 6,671      |
|                                |   |           |   |           |   |           |   |           |   |           |   |         |   |         |   |         |   |            |   |           |   |            |

Volumes of oil and natural gas applicable to long-term supplyagreements with foreign governments in mineral assets where Eniis operator totaled 683 mmBOE as of December 31, 2010 (674 and679 mmBOE as of December 31, 2009 and 2008, respectively). Saidvolumes are not included in reserves volumes shown in the tableherein.

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> 
***Activity of the year***

|   | **Subsidiaries** |   | **Equity-accounted        entities** |
|--------|------------------|--------|--------------------------------------|
|   |                  |   |                                      |

|   | **2008** |   | **2009** |   | **2010** |   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |   |          |

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

| Additions to proved reserves                               |   | 882    |   |   | 605    |   |   | 776    |   |   | 6      |   |   | (296   | )      |   | 158    |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| *of        which purchases and sales of reserves-in-place* |   | *32*   |   |   | *25*   |   |   | *(12*  | *)*    |   |   |   |   | *(314* | *)*    |   |   |   |
| Production for the year                                    |   | (650   | )      |   | (638   | )      |   | (653   | )      |   | (8     | )      |   | (8     | )      |   | (9     | )      |
|                                                       |   |        |        |   |        |        |   |        |        |   |        |        |   |        |        |   |        |        |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | **Subsidiaries and        equity-accounted entities** |
|--------|-------------------------------------------------------|
|   |                                                       |

|   | **2008** |   | **2009** |   | **2010** |
|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |

|   | **(%)** |
|--------|---------|

| Proved reserves replacement ratio of        subsidiaries and equity-accounted entities |   | 135 |   | 96 |   | 125 |
|----------------------------------------------------------------------------------------|--------|-----|--------|----|--------|-----|
|                                                                                   |   |     |   |    |   |     |

Eni’s proved reserves of subsidiaries as of December 31,2010 totaled 6,332 mmBOE (oil and condensates 3,415 mmBBL;natural gas 16,198 BCF) representing an increase of 123 mmBOE, or2%, from December 31, 2009. Additions to proved reserves bookedin 2010 were 776 mmBOE (including the impact of gas conversionfactor update equal to 97 mmBOE) and derived from: (i) revisionsof previous estimates were 661 mmBOE mainly reported in Libya,Nigeria, Egypt, Iraq and Italy; (ii) extensions, discoveries andother factors were 125 mmBOE, with major increase booked in theUK and Algeria; and (iii) improved recovery were 2 mmBOE. Theunfavorable effect of higher oil price on reserve entitlements incertain PSAs and service contracts (down 80 mmBOE) resulted fromhigher oil prices compared to year ago (the Brent price used inthe reserve estimation process was $79 per barrel in 2010compared to $59.9 per barrel in 2009). Higher oil prices alsoresulted in upward revisions associated with improved economicsof marginal productions.

In 2010, sales of mineral-in-place resulted mainly from thedivestment of wholly-owned subsidiary Società Padana Energia toGas Plus, which held exploration, development and productionproperties in Northern Italy.

As of December 31, 2010 Eni’s share of proved reserves ofequity-accounted entities amounted to 511 mmBOE, an increase of149 mmBOE, or 41.2%, compared to December 31, 2009, with anincrease mainly reported in Venezuela.

The current SEC rules allow the use of reliable technology tojustify the reserves estimate if it produces consistent andrepeatable results. We did not have any material additions ofproved reserves due to application of "reliabletechnologies".

Proved developed reserves of subsidiaries as of December 31,2010 amounted to 3,926 mmBOE (1,951 mmBBL of liquids and 10,965BCF of natural gas) representing 62% of total estimated provedreserves (65% and 63% as of December 31, 2009 and 2008,respectively).

The reserve replacement ratio for Eni’s subsidiaries andequity-accounted entities was 125% in 2010 (96% in 2009 and 135%in 2008). The ratio did not include the impact associated withadoption of a new conversion factor of natural gas tobarrel-of-oil equivalent on the initial balances of provedreserves as of January 1, 2010 as management believes that thatchange did not pertain to the Company’s reserve performancefor the year. The reserve replacement ratio was calculated bydividing additions to proved reserves by total production, eachas derived from the tables of changes in proved reserves preparedin accordance with FASB Extractive Activities - Oil & Gas(Topic 932) (see the supplemental oil and gas information in theConsolidated Financial Statements). The reserve replacement ratiois a measure used by management to assess the extent to whichproduced reserves in the year are replaced by reserve additionsbooked. Management considers the reserve replacement ratio to bean important indicator of the Company ability to sustain itsgrowth perspective. However, this ratio measures pastperformances and is not an indicator of future production becausethe ultimate recovery of reserves is subject to a number of risksand uncertainties. These include the risks associated with thesuccessful completion of large-scale projects, includingaddressing ongoing regulatory issues and completion ofinfrastructures, as well as changes in oil and gas prices,political risks and geological and other environmental risks.Specifically, in recent years Eni’s reserves replacementratio has been affected by the impact of higher oil prices onreserves entitlements in the Company’s Production SharingAgreements (PSAs) and similar contractual schemes. In accordancewith such contracts, Eni is entitled to a portion of fieldreserves, the sale of which should cover expenditures incurred bythe Company to develop and operate the field. The higher thereference prices for Brent crude oil used to determine year 

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end amounts of Eni’s proved reserves, the lower thenumber of barrels necessary to cover the same amount ofexpenditures. In 2010, this trend resulted in a lower amount ofbooked reserves associated with the Company’s PSAs as theaverage oil price used in reserve computation was higher than theprevious year. See "Item 3 – Risks associated withexploration and production of oil and natural gas – and– Uncertainties in Estimates of Oil and Natural GasReserves".

The average reserve life index of Eni’s proved reserveswas 10.3 years as of December 31, 2010 which included reserves ofboth subsidiaries and equity-accounted entities.

 

> 
***Proved undeveloped reserves***

Proved undeveloped reserves as of December 31, 2010 totaled2,821 mmBOE. At year end, liquids proved undeveloped reservesamounted to 1,620 mmBBL, mainly concentrated in Africa andKazakhstan. Natural gas proved undeveloped reserves accounted for6,671 BCF, mainly located in Africa and Russia.

In 2010, total proved undeveloped reserves increased by 354mmBOE. The principal reasons for the increase are revisions andnew projects sanction, mainly in Libya, Venezuela and Iraq.

During 2010, Eni converted approximately 295 mmBOE of provedundeveloped reserves to proved developed reserves. The mainreclassification to proved developed were related to developmentactivities, revisions and production start-up of the followingfields/projects: Cerro Falcone (Italy), M’Boundi (Congo),Wafa (Libya), Bhit and Sawan (Pakistan), Morvin (Norway), Tunaand Hapy (Egypt) and Karachaganak (Kazakhstan).

In 2010, capital expenditures amounted to approximately euro1.7 billion and were made to progress the development of provedundeveloped reserves.

Reserves that remain proved undeveloped for five or more yearsare a result of several physical factors that affect the timingof the projects development and execution, such as the complexnature of the development project in adverse and remotelocations, physical limitations of infrastructure or plantcapacities and contractual limitations that establish productionlevels.

The Company estimates that approximately 0.9 BBOE of provedundeveloped reserves have remained undeveloped for five years ormore with respect to the balance sheet date, mainly related to:(i) the Kashagan project in Kazakhstan (0.6 BBOE) wheredevelopment activities are progressing and start-up production istargeted by the end of 2012. For more details regarding thisproject please refer to part 1, Item 4, page 46, where theproject is disclosed. See also our discussion under the"Risk Factors" section about risks associated with oiland gas development projects on page 6; (ii) certain Libyan gasfields where development activities and production start-up isdependent upon fulfilling contractual delivery obligations undera long-term gas supply agreement; and (iii) other minor projectswhere development activities are progressing.

 

> 
***Delivery commitments***

Eni sells crude oil and natural gas from its producingoperations under a variety of contractual obligations. Some ofthese contracts, mostly relating to natural gas, specify thedelivery of fixed and determinable quantities.

Eni is contractually committed under existing contracts oragreements to deliver over the next three years natural gas tothird parties for a total of approximately 1,852 BCF fromproducing properties located in Australia, Egypt, India,Indonesia, Libya, Nigeria, Norway, Pakistan, Tunisia and the UK.

The temporary shut down of the GreenStream pipeline due toongoing political instability and unrest in Libya will notmaterially impair the Company’s ability to fulfill itscontractual delivery commitments with third parties as theCompany can make use of its gas availability from various sourcesto meet those commitments.

The sales contracts contain a mix of fixed and variablepricing formulas that are generally referenced to the marketprice for crude oil, natural gas or other petroleum products.

Management believes it can satisfy these contracts fromquantities available from production of the Company’s proveddeveloped reserves and supplies from third parties based onexisting contracts. Production will account for approximately 68%of outstanding delivery commitments in the next three years.

Eni has met all contractual delivery commitments as ofDecember 31, 2010.

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> 
***Oil and gas production, production prices and    production costs***

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

In 2010, oil and natural gas production available for saleaveraged 1,757 KBOE/d. Production for the year expressed inbarrel-of-oil equivalent was calculated assuming a natural gasconversion factor which was updated to 5,550 CF of gas equaling 1barrel of oil. On a comparable basis, i.e. when excluding theeffect of the update gas conversion factor, production showed anincrease of 0.9% for the full year. Production growth was drivenby additions from new field start-ups, particularly the Zubairfield (Eni’s interest 32.8%) in Iraq, and productionramp-ups at fields which were started-up in 2009 (for a totalincrease of 40 KBOE/d). These increases were offset in part bymature field declines. Lower entitlements in the Company’sPSA due to higher oil prices, as well as lower gas uplifts inLibya as a result of oversupply conditions in the European marketwere partly offset by lower OPEC restrictions resulting in a netnegative impact of approximately 7 KBOE/d. The share of oil andnatural gas produced outside Italy was 90% (90% in 2009).

Liquids production (997 KBBL/d) decreased by 10 KBBL/d from2009 (down 1%). The impact of mature field declines was partlyoffset by organic growth and production start-ups achieved inparticular in Nigeria, due to the ramp-up of the Oyo project(Eni’s interest 40%), in Italy as a result of the ramp-up ofthe Val d’Agri enhanced development project (Eni’sinterest 60.77%), in Tunisia due to the productionstart-up/ramp-up of the Baraka and Maamoura projects (Enioperator with a 49% interest) as well as Zubair in Iraq.

Natural gas production (4,222 mmCF/d) increased by 148 mmCF/dfrom 2009 (up 3.6%). The main increases were registered inNigeria, due to projects start-up in the Block OML 28 (Eni’sinterest 5%), in Australia, due to ramp-up of the Blacktipproject (Eni’s interest 100%), in Congo, due to ramp-up ofthe M’Boundi gas project (Eni operator with an 83% interest)in Egypt, due to start-up of the Tuna field (Eni operator with a50% interest), in Italy, due to the start-up of the Annamariafield (Eni operator with an 90% interest) and in India, due toorganic growth of PY-1 project (Eni’s interest 47.18%).These increases were offset in part by mature field declines.

Oil and gas production sold amounted to 638 mmBOE. The 24.5mmBOE difference over production (662.5 mmBOE for the year endedDecember 31, 2010) reflected volumes of natural gas consumed inoperations (20.9 mmBOE).

Approximately 58% of liquids production sold (361.3 mmBBL) wasdestined to Eni’s Refining & Marketing Division (ofwhich 18% was processed in Eni’s refinery); about 28% ofnatural gas production sold (1,536 BCF) was destined toEni’s Gas & Power Division.

The tables below provide Eni’s production, by finalproduct sold of liquids and natural gas by geographical area foreach of the last three fiscal years.

**LIQUIDS PRODUCTION**(1)

| (KBBL/d) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total** |
|----------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-----------|
|     |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |           |

| **2008** |   | 68 |   | 140 |   | 338 |   | 289 |   | 69 |   | 49 |   | 63 |   | 10 |   | **1,026** |
|----------|--------|----|--------|-----|--------|-----|--------|-----|--------|----|--------|----|--------|----|--------|----|--------|-----------|
| **2009** |   | 56 |   | 133 |   | 292 |   | 312 |   | 70 |   | 57 |   | 79 |   | 8  |   | **1,007** |
| **2010** |   | 61 |   | 121 |   | 301 |   | 321 |   | 65 |   | 48 |   | 71 |   | 9  |   | **997**   |
|     |   |    |   |     |   |     |   |     |   |    |   |    |   |    |   |    |   |           |

----

| (1) |    | Data includes        Eni’s share of production of affiliates and joint        venture accounted for under the equity method of        accounting amounting to 19, 17 and 14 KBBL/d in 2010,        2009 and 2008, respectively. |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NATURAL GAS PRODUCTION AVAILABLE FOR SALE**(1) (2)

| (mmCF/d) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total** |
|----------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-----------|
|     |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |           |

| **2008** |   | 725 |   | 588 |   | 1,661 |   | 204 |   | 227 |   | 396 |   | 304 |   | 38 |   | **4,143** |
|----------|--------|-----|--------|-----|--------|-------|--------|-----|--------|-----|--------|-----|--------|-----|--------|----|--------|-----------|
| **2009** |   | 630 |   | 608 |   | 1,503 |   | 213 |   | 241 |   | 417 |   | 416 |   | 46 |   | **4,074** |
| **2010** |   | 648 |   | 517 |   | 1,559 |   | 365 |   | 221 |   | 436 |   | 385 |   | 91 |   | **4,222** |
|     |   |     |   |     |   |       |   |     |   |     |   |     |   |     |   |    |   |           |

----

| (1) |    | Data includes Eni’s share of production of        affiliates and joint venture accounted for under the        equity method of accounting amounting to 27, 29 and 26        mmCF/d in 2010, 2009 and 2008, respectively. |
|-----|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | It excludes production volumes of natural gas        consumed in operations. Said volumes were 318, 300 and        281 mmCF/d in 2010, 2009 and 2008, respectively.                                                           |

Volumes of oil and natural gas purchased under long-termsupply contracts with foreign governments or similar entities inproperties where Eni acts as producer totaled 105 KBOE/d, 97KBOE/d and 93 KBOE/d in 2010, 2009 and 2008, respectively.

The tables below provide Eni’s average sales prices perunit of liquids and natural gas by geographical area for each ofthe last three fiscal years. Also Eni’s average productioncost per unit of production is provided. Unit prices andproduction costs are disclosed separately for subsidiaries andequity-accounted entities. The average production cost does notinclude any ad valorem or severance taxes.

**AVERAGE SALES PRICES AND PRODUCTION COST PER UNIT OFPRODUCTION**

| ($)    |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total consolidated        subsidiaries** |   | **Equity- accounted        entities** |
|--------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|--------------------------------------------|--------|---------------------------------------|
|   |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |                                            |   |                                       |

| **2008**Oil and condensate, per BBL        |   | 84.87 |   | 71.90 |   | 85.38 |   | 91.58 |   | 79.06 |   | 75.29 |   | 88.88 |   | 82.80 |   | **84.31** |   | **56.04** |
|--------------------------------------------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-----------|--------|-----------|
| Natural        gas, per KCF                |   | 13.06 |   | 10.55 |   | 7.15  |   | 1.50  |   | 0.53  |   | 5.05  |   | 8.81  |   | 9.59  |   | **7.99**  |   | **11.91** |
| Average production cost, per BOE           |   | 9.40  |   | 8.67  |   | 3.62  |   | 15.33 |   | 5.86  |   | 3.63  |   | 8.48  |   | 8.50  |   | **7.65**  |   | **18.97** |
| **2009**Oil        and condensate, per BBL |   | 56.02 |   | 56.46 |   | 56.42 |   | 59.75 |   | 52.34 |   | 55.34 |   | 55.66 |   | 50.40 |   | **57.02** |   | **44.43** |
| Natural gas, per KCF                       |   | 9.01  |   | 7.06  |   | 5.79  |   | 1.66  |   | 0.45  |   | 4.09  |   | 4.05  |   | 8.14  |   | **5.62**  |   | **6.81**  |
| Average        production cost, per BOE    |   | 9.69  |   | 8.28  |   | 3.99  |   | 13.19 |   | 5.20  |   | 3.44  |   | 7.39  |   | 9.56  |   | **7.41**  |   | **13.72** |
| **2010**Oil and condensate, per BBL        |   | 72.19 |   | 67.26 |   | 70.96 |   | 78.23 |   | 66.74 |   | 75.20 |   | 72.84 |   | 73.00 |   | **72.95** |   | **58.86** |
| Natural        gas, per KCF                |   | 8.71  |   | 7.40  |   | 6.87  |   | 1.87  |   | 0.49  |   | 4.35  |   | 4.70  |   | 7.40  |   | **6.01**  |   | **8.73**  |
| Average production cost, per BOE           |   | 9.42  |   | 9.42  |   | 5.63  |   | 15.19 |   | 6.40  |   | 5.62  |   | 8.15  |   | 9.75  |   | **8.89**  |   | **17.45** |
|                                       |   |       |   |       |   |       |   |       |   |       |   |       |   |       |   |       |   |           |   |           |

> 
***Drilling and other exploratory and development    activities***

In 2010, a total of 47 new exploratory wells were drilled(23.8 of which represented Eni’s share), which includesdrilled exploratory wells that have been suspended pendingfurther evaluation, as compared to 69 exploratory wells drilledin 2009 (37.6 of which represented Eni’s share) and 111exploratory wells drilled in 2008 (58.4 of which representedEni’s share).

Overall commercial success rate was 41% (39% net to Eni) ascompared to 41.9% (43.6% net to Eni) and 36.5% (43.4% net to Eni)in 2009 and 2008, respectively.

In 2010, a total of 399 development wells were drilled (178 ofwhich represented Eni’s share) as compared to 418development wells drilled in 2009 (175.1 of which representedEni’s share) and 366 development wells drilled in 2008(155.1 of which represented Eni’s share). The drilling of122 development wells (43 of which represented Eni’s share)is currently underway.

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The table below provides the number of net productive and dryexploratory and development oil and natural gas wells completedin the years indicated by the Group companies and itsequity-accounted entities.

**NET EXPLORATION AND DEVELOPMENT DRILLING ACTIVITY**

| (units) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-----------|
|    |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |           |

| **2008 Exploratory** |   | **0.7**  |   | **3.7**  |   | **22.9** |   | **7.4**  |   |    |   | **16.2** |   | **3.4**  |   | **1.4** |   | **55.7**  |
|----------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|---------|--------|----------|--------|----------|--------|---------|--------|-----------|
| Productive           |   |     |   | 0.7      |   | 8.7      |   | 4.0      |   |    |   | 9.4      |   | 1.4      |   |    |   | 24.2      |
| Dry (a)              |   | 0.7      |   | 3.0      |   | 14.2     |   | 3.4      |   |    |   | 6.8      |   | 2.0      |   | 1.4     |   | 31.5      |
| **Development**      |   | **12.9** |   | **5.5**  |   | **47.6** |   | **37.2** |   | **2.6** |   | **43.0** |   | **6.3**  |   |    |   | **155.1** |
| Productive           |   | 11.3     |   | 5.5      |   | 46.4     |   | 36.4     |   | 2.6     |   | 36.5     |   | 6.3      |   |    |   | 145.0     |
| Dry (a)              |   | 1.6      |   |     |   | 1.2      |   | 0.8      |   |    |   | 6.5      |   |     |   |    |   | 10.1      |
| **2009 Exploratory** |   | **1.0**  |   | **4.3**  |   | **8.6**  |   | **2.7**  |   |    |   | **6.2**  |   | **4.8**  |   | **2.2** |   | **29.8**  |
| Productive           |   |     |   | 4.1      |   | 4.8      |   |     |   |    |   | 2.3      |   | 1.0      |   | 0.8     |   | 13.0      |
| Dry (a)              |   | 1.0      |   | 0.2      |   | 3.8      |   | 2.7      |   |    |   | 3.9      |   | 3.8      |   | 1.4     |   | 16.8      |
| **Development**      |   | **18.3** |   | **12.5** |   | **41.1** |   | **37.7** |   | **3.8** |   | **42.9** |   | **16.6** |   | **2.2** |   | **175.1** |
| Productive           |   | 18.3     |   | 12.5     |   | 40.7     |   | 35.8     |   | 3.8     |   | 38.6     |   | 15.6     |   | 2.2     |   | 167.5     |
| Dry (a)              |   |     |   |     |   | 0.4      |   | 1.9      |   |    |   | 4.3      |   | 1.0      |   |    |   | 7.6       |
| **2010 Exploratory** |   | **0.5**  |   | **2.8**  |   | **17.4** |   | **7.0**  |   |    |   | **3.8**  |   | **6.3**  |   | **1.4** |   | **39.2**  |
| Productive           |   |     |   | 1.7      |   | 9.3      |   | 2.3      |   |    |   | 1.0      |   |     |   | 1.0     |   | 15.3      |
| Dry (a)              |   | 0.5      |   | 1.1      |   | 8.1      |   | 4.7      |   |    |   | 2.8      |   | 6.3      |   | 0.4     |   | 23.9      |
| **Development**      |   | **24.9** |   | **3.1**  |   | **44.6** |   | **30.5** |   | **1.8** |   | **43.5** |   | **28.1** |   | **1.5** |   | **178.0** |
| Productive           |   | 23.9     |   | 2.9      |   | 44.3     |   | 28.0     |   | 1.8     |   | 41.7     |   | 27.6     |   | 1.5     |   | 171.7     |
| Dry (a)              |   | 1.0      |   | 0.2      |   | 0.3      |   | 2.5      |   |    |   | 1.8      |   | 0.5      |   |    |   | 6.3       |
|                 |   |          |   |          |   |          |   |          |   |         |   |          |   |          |   |         |   |           |

----

| (a) |   | A dry well is        an exploratory, development, or extension well that        proves to be incapable of producing either oil or gas in        sufficient quantities to justify completion as an oil or        gas well. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

***Present activities***

The table below provides the number of exploratory anddevelopment oil and natural gas wells in the process of beingdrilled by the Group companies and its equity-accounted entitiesas of December 31, 2010. A gross well is a well in which Eni ownsa working interest.

**DRILLING ACTIVITY IN PROGRESS**

| (units) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-----------|
|    |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |           |

| **As of December 31, 2010 Exploratory**(a) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|
| Gross                                      |   | 6.0    |   | 19.0   |   | 11.0   |   | 52.0   |   | 13.0   |   | 22.0   |   | 13.0   |   | 1.0    |   | **137.0** |
| Net                                        |   | 4.4    |   | 5.0    |   | 8.7    |   | 12.6   |   | 2.3    |   | 11.7   |   | 4.0    |   | 0.4    |   | **49.1**  |
| **Development**                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |
| Gross                                      |   | 4.0    |   | 18.0   |   | 18.0   |   | 23.0   |   | 8.0    |   | 11.0   |   | 40.0   |   |   |   | **122.0** |
| Net                                        |   | 3.5    |   | 2.9    |   | 8.1    |   | 8.4    |   | 1.5    |   | 5.8    |   | 12.8   |   |   |   | **43.0**  |
|                                       |   |        |   |        |   |        |   |        |   |        |   |        |   |        |   |        |   |           |

----

| (a) |   | Includes        temporary suspended wells pending further evaluation. |
|-----|--------|-----------------------------------------------------------------------|

 

> 
***Oil and gas properties, operations and acreage***

As of December 31, 2010, Eni’s mineral right portfolioconsisted of 1,176 exclusive or shared rights for exploration anddevelopment in 43 countries on five continents for a totalacreage of 320,961 square kilometers net to Eni of whichdeveloped acreage was 41,386 square kilometers and undevelopedacreage was 279,575 square kilometers.

In 2010, changes in total net acreage mainly derived from: (i)new leases in Poland, Democratic Republic of Congo, Togo, Angola,Pakistan and Venezuela for a total acreage of approximately13,000 square kilometers; (ii) the divestment ofwholly-owned subsidiary Società Padana Energia and leases inNigeria for a total acreage of 

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approximately 1,500 square kilometers; (iii) the totalrelinquishment of mainly exploration leases in Pakistan,Australia, Congo, Italy, Egypt, Russia and East Timor, coveringan undeveloped acreage in excess of 23,000 square kilometers; and(iv) the decrease in net acreage due to partial relinquishment orinterest reduction in Mali and Indonesia for a total net acreageof approximately 15,000 square kilometers.

The table below provides certain information about theCompany’s oil and gas properties. It provides the totalgross and net developed and undeveloped oil and natural gasacreage in which the Group and its equity-accounted entities hadinterest as of December 31, 2010. A gross acreage is one in whichEni owns a working interest.

|   | **December 31, 2009** |   | **December        31, 2010** |
|--------|-----------------------|--------|------------------------------|
|   |                       |   |                              |

|   |   | **Total net acreage**(a) |   | **Number         of interests** |   | **Gross developed**        (b)**acreage**(a) |   | **Gross undeveloped        acreage**(a) |   | **Total gross acreage**(a) |   | **Net         developed** (b)**acreage**(a) |   | **Net undeveloped********acreage**(a) |   | **Total net acreage**(a) |
|--------|--------|--------------------------|--------|---------------------------------|--------|----------------------------------------------|--------|-----------------------------------------|--------|----------------------------|--------|---------------------------------------------|--------|---------------------------------------|--------|--------------------------|
|   |   |                          |   |                                 |   |                                              |   |                                         |   |                            |   |                                             |   |                                       |   |                          |

| **EUROPE**                          |   | **31,607**  |   | **287**   |   | **17,430**  |   | **28,293**  |   | **45,723**  |   | **11,142** |   | **17,937**  |   | **29,079**  |
|-------------------------------------|--------|-------------|--------|-----------|--------|-------------|--------|-------------|--------|-------------|--------|------------|--------|-------------|--------|-------------|
| **Italy**                           |   | **22,038**  |   | **154**   |   | **10,951**  |   | **12,945**  |   | **23,896**  |   | **8,995**  |   | **10,102**  |   | **19,097**  |
| **Rest of Europe**                  |   | **9,569**   |   | **133**   |   | **6,479**   |   | **15,348**  |   | **21,827**  |   | **2,147**  |   | **7,835**   |   | **9,982**   |
| Croatia                             |   | 987         |   | 2         |   | 1,975       |   |        |   | 1,975       |   | 987        |   |        |   | 987         |
| Norway                              |   | 3,412       |   | 49        |   | 2,276       |   | 5,956       |   | 8,232       |   | 338        |   | 2,080       |   | 2,418       |
| Poland                              |   |        |   | 3         |   |        |   | 1,968       |   | 1,968       |   |       |   | 1,968       |   | 1,968       |
| United Kingdom                      |   | 1,469       |   | 73        |   | 2,228       |   | 1,364       |   | 3,592       |   | 822        |   | 329         |   | 1,151       |
| Other        countries              |   | 3,701       |   | 6         |   |        |   | 6,060       |   | 6,060       |   |       |   | 3,458       |   | 3,458       |
| **AFRICA**                          |   | **158,749** |   | **274**   |   | **68,350**  |   | **211,830** |   | **280,180** |   | **20,153** |   | **132,518** |   | **152,671** |
| **North        Africa**             |   | **46,011**  |   | **116**   |   | **31,723**  |   | **48,530**  |   | **80,253**  |   | **13,802** |   | **30,475**  |   | **44,277**  |
| Algeria                             |   | 17,244      |   | 38        |   | 2,177       |   | 17,433      |   | 19,610      |   | 730        |   | 16,514      |   | 17,244      |
| Egypt                               |   | 8,328       |   | 54        |   | 5,135       |   | 12,669      |   | 17,804      |   | 1,847      |   | 4,747       |   | 6,594       |
| Libya                               |   | 18,165      |   | 13        |   | 17,947      |   | 18,428      |   | 36,375      |   | 8,951      |   | 9,214       |   | 18,165      |
| Tunisia                             |   | 2,274       |   | 11        |   | 6,464       |   |        |   | 6,464       |   | 2,274      |   |        |   | 2,274       |
| **West Africa**                     |   | **60,524**  |   | **152**   |   | **36,627**  |   | **86,076**  |   | **122,703** |   | **6,351**  |   | **49,830**  |   | **56,181**  |
| Angola                              |   | 3,393       |   | 68        |   | 4,532       |   | 15,569      |   | 20,101      |   | 589        |   | 3,931       |   | 4,520       |
| Congo                               |   | 8,188       |   | 25        |   | 1,900       |   | 9,680       |   | 11,580      |   | 1,044      |   | 5,030       |   | 6,074       |
| Democratic        Republic of Congo |   |        |   | 1         |   |        |   | 1,118       |   | 1,118       |   |       |   | 615         |   | 615         |
| Gabon                               |   | 7,615       |   | 6         |   |        |   | 7,615       |   | 7,615       |   |       |   | 7,615       |   | 7,615       |
| Ghana                               |   | 1,086       |   | 2         |   |        |   | 2,300       |   | 2,300       |   |       |   | 1,086       |   | 1,086       |
| Mali                                |   | 31,668      |   | 1         |   |        |   | 32,458      |   | 32,458      |   |       |   | 21,640      |   | 21,640      |
| Nigeria                             |   | 8,574       |   | 47        |   | 30,195      |   | 11,144      |   | 41,339      |   | 4,718      |   | 3,721       |   | 8,439       |
| Togo                                |   |        |   | 2         |   |        |   | 6,192       |   | 6,192       |   |       |   | 6,192       |   | 6,192       |
| Other        countries              |   | 52,214      |   | 6         |   |        |   | 77,224      |   | 77,224      |   |       |   | 52,213      |   | 52,213      |
| **ASIA**                            |   | **125,641** |   | **78**    |   | **18,825**  |   | **191,203** |   | **210,028** |   | **6,352**  |   | **106,393** |   | **112,745** |
| Kazakhstan****                      |   | 880         |   | 6         |   | 324         |   | 4,609       |   | 4,933       |   | 105        |   | 775         |   | 880         |
| **Rest of Asia**                    |   | **124,761** |   | **72**    |   | **18,501**  |   | **186,594** |   | **205,095** |   | **6,247**  |   | **105,618** |   | **111,865** |
| China                               |   | 18,322      |   | 10        |   | 138         |   | 18,256      |   | 18,394      |   | 22         |   | 18,210      |   | 18,232      |
| East Timor                          |   | 7,999       |   | 4         |   |        |   | 8,087       |   | 8,087       |   |       |   | 6,470       |   | 6,470       |
| India                               |   | 10,089      |   | 14        |   | 303         |   | 27,861      |   | 28,164      |   | 143        |   | 9,946       |   | 10,089      |
| Indonesia                           |   | 16,519      |   | 12        |   | 1,735       |   | 24,054      |   | 25,789      |   | 656        |   | 12,256      |   | 12,912      |
| Iran                                |   | 820         |   | 4         |   | 1,456       |   |        |   | 1,456       |   | 820        |   |        |   | 820         |
| Iraq                                |   | 640         |   | 1         |   | 1,950       |   |        |   | 1,950       |   | 640        |   |        |   | 640         |
| Pakistan                            |   | 18,201      |   | 18        |   | 9,122       |   | 17,224      |   | 26,346      |   | 2,708      |   | 8,639       |   | 11,347      |
| Russia                              |   | 2,323       |   | 4         |   | 3,597       |   | 1,529       |   | 5,126       |   | 1,058      |   | 449         |   | 1,507       |
| Saudi        Arabia                 |   | 25,844      |   | 1         |   |        |   | 51,687      |   | 51,687      |   |       |   | 25,844      |   | 25,844      |
| Turkmenistan                        |   | 200         |   | 1         |   | 200         |   |        |   | 200         |   | 200        |   |        |   | 200         |
| Yemen                               |   | 20,560      |   | 2         |   |        |   | 23,296      |   | 23,296      |   |       |   | 20,560      |   | 20,560      |
| Other countries                     |   | 3,244       |   | 1         |   |        |   | 14,600      |   | 14,600      |   |       |   | 3,244       |   | 3,244       |
| **AMERICAS**                        |   | **11,523**  |   | **522**   |   | **4,659**   |   | **17,356**  |   | **22,015**  |   | **3,063**  |   | **8,124**   |   | **11,187**  |
| Brazil                              |   | 1,067       |   | 1         |   |        |   | 745         |   | 745         |   |       |   | 745         |   | 745         |
| Ecuador                             |   | 2,000       |   | 1         |   | 2,000       |   |        |   | 2,000       |   | 2,000      |   |        |   | 2,000       |
| Trinidad and Tobago                 |   | 66          |   | 1         |   | 382         |   |        |   | 382         |   | 66         |   |        |   | 66          |
| USA                                 |   | 6,450       |   | 506       |   | 1,899       |   | 8,536       |   | 10,435      |   | 899        |   | 4,997       |   | 5,896       |
| Venezuela                           |   | 614         |   | 5         |   | 378         |   | 2,528       |   | 2,906       |   | 98         |   | 1,056       |   | 1,154       |
| Other        countries              |   | 1,326       |   | 8         |   |        |   | 5,547       |   | 5,547       |   |       |   | 1,326       |   | 1,326       |
| **AUSTRALIA AND OCEANIA**           |   | **20,342**  |   | **15**    |   | **1,057**   |   | **43,153**  |   | **44,210**  |   | **676**    |   | **14,603**  |   | **15,279**  |
| Australia                           |   | 20,304      |   | 14        |   | 1,057       |   | 42,389      |   | 43,446      |   | 676        |   | 14,565      |   | 15,241      |
| Other countries                     |   | 38          |   | 1         |   |        |   | 764         |   | 764         |   |       |   | 38          |   | 38          |
| **Total**                           |   | **347,862** |   | **1,176** |   | **110,321** |   | **491,835** |   | **602,156** |   | **41,386** |   | **279,575** |   | **320,961** |
|                                |   |             |   |           |   |             |   |             |   |             |   |            |   |             |   |             |

----

| (a) |    | Square        kilometers.                                                                                                                                        |
|-----|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |    | Developed        acreage refers to those leases in which at least a        portion of the area is in production or encompasses        proved developed reserves. |

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The table below provides the number of gross and netproductive oil and natural gas wells in which the Group companiesand its equity-accounted entities had interests as of December31, 2010. A gross well is a well in which Eni owns a workinginterest. The number of gross wells is the total number of wellsin which Eni owns a whole or fractional working interest. Thenumber of net wells is the sum of the whole or fractional workinginterests in a gross well. One or more completions in the samebore hole are counted as one well. Productive wells are producingwells and wells capable of production. The total number of oiland natural gas productive wells is 8,153 (2,895.6 of whichrepresent Eni’s share).

**PRODUCTIVE OIL AND GAS WELLS**

| (units) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **Americas** |   | **Australia and Oceania** |   | **Total** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-----------|
|    |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |              |   |                           |   |           |

| **Number of productive wells at Dec. 31, 2010**(a) |   |   |   |   |   |    |   |    |   |   |   |   |   |   |   |   |   |    |
|----------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|
| **Oil        wells**                               |   |   |   |   |   |    |   |    |   |   |   |   |   |   |   |   |   |    |
| Gross                                              |   | 224.0  |   | 408.0  |   | 1,240.0 |   | 3,002.0 |   | 91.0   |   | 618.0  |   | 134.0  |   | 4.0    |   | 5,721.0 |
| Net                                                |   | 184.4  |   | 63.1   |   | 601.1   |   | 515.3   |   | 29.6   |   | 383.8  |   | 63.6   |   | 2.6    |   | 1,843.5 |
| **Gas wells**                                      |   |   |   |   |   |    |   |    |   |   |   |   |   |   |   |   |   |    |
| Gross                                              |   | 525.0  |   | 206.0  |   | 131.0   |   | 505.0   |   |   |   | 762.0  |   | 289.0  |   | 14.0   |   | 2,432.0 |
| Net                                                |   | 479.3  |   | 93.2   |   | 52.6    |   | 37.1    |   |   |   | 290.5  |   | 96.1   |   | 3.3    |   | 1,052.1 |
|                                               |   |        |   |        |   |         |   |         |   |        |   |        |   |        |   |        |   |         |

----

| (a) |   | Includes        approximately 2,320 gross (700 net) multiple completion        wells (more than one producing into the same well bore). |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

Eni’s principal oil and gas properties are describedbelow. In the discussion that follows, references to hydrocarbonproduction are intended to represent hydrocarbon productionavailable for sale.

| *Italy*

Eni has been operating in Italy since 1926. In 2010,        Eni’s oil and gas production amounted to 178 KBOE/d.        Eni’s activities in Italy are deployed in the        Adriatic Sea, the Central Southern Apennines, mainland        and offshore Sicily and the Po Valley. Eni’s        exploration and development activities in Italy are        regulated by concession contracts.

In October 2010, with a view to rationalizing its        upstream portfolio, Eni closed the divestment of the        entire share capital of its subsidiary Società Padana        Energia to Gas Plus. The divested subsidiary includes        exploration leases and concessions for developing and        producing oil and natural gas in Northern Italy. Cash        consideration for the deal amounted to euro 179 million,        subject to a possible adjustment of up to euro 25 million        related to achieving certain production targets at assets        under development. Further price adjustments are foreseen        in connection with appraising the underlying exploration        resources.

The Law Decree No. 128 issued by the Italian        Government on June 29, 2010 that introduced certain        restrictions for exploration and production hydrocarbons        activities mainly in certain offshore and coastline areas        due to environmental constrains without impacting the        leases already granted to conduct oil and gas operations        became effective on August 26, 2010. Eni and other        operators in the industry have commenced discussions with        the Ministry for Economic Development and the Ministry        for the Environment to clarify uncertainties in correctly        interpreting and applying the new regulations. During the        year the Group did not incur any significant impact on        its operations related to this new decree, while certain        projects initially planned for 2011 have been        rescheduled. For further information on this matter, see        "Environmental matters" below. |   |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

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The Adriatic Sea represents Eni’s main production area inItaly, accounting for 55% of Eni’s domestic production in2010. Main operated fields are Barbara, Angela-Angelina, PortoGaribaldi, Cervia and Bonaccia (for an overall production ofapproximately 212 mmCF/d).

Eni is the operator of the Val d’Agri concession(Eni’s interest 60.77%) in the Basilicata Region in SouthernItaly. Production from the Monte Alpi, Monte Enoc and CerroFalcone fields is fed by 24 production wells and is treated bythe Viggiano oil center with an oil capacity of 104 KBBL/d. Oilproduced is carried to Eni’s refinery in Taranto via a136-kilometer long pipeline. Gas produced is treated at theViggiano oil center and then delivered to the national gridsystem. In 2010, the Val d’Agri concession produced 88KBOE/d (47 net to Eni) representing 26% of Eni’s productionin Italy.

Eni is the operator of 15 production concessions onshore andoffshore in Sicily. Its main fields are Gela, Ragusa, Giaurone,Fiumetto and Prezioso, which in 2010 accounted for 10% ofEni’s production in Italy.

|  |   | In 2010, production was        started-up at: (i) the Annamaria B production        platform (Eni operator with a 90% interest), located at        the border with Croatian territorial waters. During the        course of the year the field reached its production        plateau at approximately 40 mmCF/d; and (ii) the Bonaccia        Est field flowing at the initial rate of approximately 36        mmCF/d.
In 2010, development activities progressed at        the Val d’Agri concession (Eni’s interest        60.77%) as wells at Cerro Falcone were connected to the        oil treatment centre. Other activities were performed        including: (i) optimization of producing fields by        means of sidetrack and work over activities (Barbara,        Annalisa and Azalea); (ii) sidetrack programs and        facility upgrading in Val d’Agri;        (iii) upgrading activities of compression plants and        treatment facilities at the Crotone plants; and        (iv) development activities at the Capparuccia,        Tresauro and Guendalina fields.

In the medium-term, management expects production in        Italy to slightly increase due to the production ramp-up        of the Val d’Agri fields and ongoing new field        projects and continuing production optimization        activities partly offset by mature fields decline and        divested fields. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  

*Rest of Europe*

Eni’s operations in the Rest of Europe are        conducted mainly in Croatia, Norway and the UK. In 2010,        the Rest of Europe accounted for 12% of Eni’s total        worldwide production of oil and natural gas.

*Croatia.*Eni has been present in Croatia since        1996. In 2010, Eni’s production of natural gas        averaged 42 mmCF/d. Activities are deployed in the        Adriatic Sea near the city of Pula.

Exploration and production activities in Croatia are        regulated by PSAs.

The main producing gas fields are Annamaria B        (start-up in 2010, as disclosed above), Ivana, Ika &        Ida, Marica and Katarina are operated by Eni through a        50/50 joint operating company with the Croatian oil        company INA.

*Norway.*Eni has been operating in Norway since        1964. Eni’s activities are performed in the        Norwegian |   |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

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Sea, in the Norwegian section of the North Sea and in theBarents Sea. Eni’s production in Norway amounted to 120KBOE/d in 2010.

Exploration and production activities in Norway are regulatedby Production Licenses (PL). According to a PL, the holder isentitled to perform seismic surveys and drilling and productionactivities for any given number of years with possibleextensions.

|  |   | Eni currently holds        interests in 6 production areas in the Norwegian Sea. The        principal producing fields are Aasgard (Eni’s        interest 14.82%), Kristin (Eni’s interest 8.25%),        Heidrun (Eni’s interest 5.12%), Mikkel (Eni’s        interest 14.9%), Yttergryta (Eni’s interest 9.8%),        Norne (Eni’s interest 6.9%) and Urd (Eni’s        interest 11.5%) which in 2010 accounted for 72% of        Eni’s production in Norway.
In 2010, production        was started-up at the Morvin field (Eni’s interest        30%) as three wells of the development program were put        into production. Production is expected to peak at 15        KBOE/d net to Eni in 2011 when the project is completed.

Development activities progressed to put in production        discovered reserves near the Aasgard field with the        Marulk development plan (Eni operator with a 20%        interest). Start-up is expected in 2012.

Eni holds interests in four production licenses in the        Norwegian section of the North Sea. The main producing        field is Ekofisk (Eni’s interest 12.39%) in PL 018,        which in 2010 produced approximately 34 KBOE/d net to Eni        and accounted for 28% of Eni’s production in Norway.        The license expires in 2028, and negotiations are ongoing        to grant an extension. Activities were performed during        the year to maintain and optimize the production rate by        means of infilling wells, the development of the South        Area extension, upgrading of existing facilities and        optimization of water injection. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni is currently performing exploration and developmentactivities in the Barents Sea. Operations have been focused ondeveloping the Goliat discovery made in 2000 at a water depth of370 meters in PL 229 (Eni operator with a 65% interest). Thelicense expires in 2042. The project is progressing according toschedule. In 2010, EPC contracts have been awarded for buildingan FPSO unit that will be linked to an underwater productionsystem, onshore facilities and an offshore supply system designedto reduce CO2 emissions. Start-up is expected in 2013while the production peak of 100 KBBL/d will be reached thefollowing year.

Exploration activities yielded positive results in: (i) theProspecting License 128 (Eni’s interest 11.5%) with theFossekal oil discovery that will exploit synergies with the Norne(Eni’s interest 6.9%) production facilities; (ii) inthe PL 473 license (Eni’s interest 29.4%) with theFlyndretind oil discovery; and (iii) the PL 532 (Eni’sinterest 30%) with the Skrugard oil and gas discovery.

*Poland.* In December 2010, Eni acquired Minsk EnergyResources, which operates 3 licenses in the Polish Baltic Basin.Management believes that is a highly prospective shale gas play.Drilling operations are expected to start in the second half of2011 with a total exploration commitment of 6 wells.

*United Kingdom.* Eni has been present in the UK since1964. Eni’s activities are carried out in the Britishsection of the North Sea, the Irish Sea and certain areas Eastand West of the Shetland Islands. In 2010, Eni’s netproduction of oil and gas averaged 87 KBOE/d.

Exploration and production activities in the UK are regulatedby concession contracts.

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In 2010, Eni signed a Sale and Purchase Agreement to divestits 18% stake of the Blane producing field and completed thedivestment of its entire working interest in the Laggan(Eni’s interest 20%) and Tormore (Eni’s interest 22.5%)pre-development fields. Production started-up in Burghley field(Eni’s interest 21.92%).

Eni holds interests in 13 production areas; in 1 of these Eniis operator. The main fields are Elgin/Franklin (Eni’sinterest 21.87%), West Franklin (Eni’s interest 21.87%),Liverpool Bay (Eni’s interest 53.9%), J Block Area(Eni’s interest 33%), Andrew (Eni’s interest 16.21%),Farragon (Eni’s interest 30%), Flotta Catchment Area(Eni’s interest 20%) and MacCulloch (Eni’s interest40%), which in 2010 accounted for 85% of Eni’s production inthe UK.

Ongoing activities are aimed at optimizing production at theElgin/Franklin field and infilling activity at the J-Block. Inthe fourth quarter of 2010, the following projects weresanctioned by partners and relevant authorities: (i) thedevelopment plan of the Jasmine discovery (Eni’s interest33%). Engineering activities are currently ongoing and start-upis expected in 2012; and (ii) Phase 2 of the development programof the West Franklin field. This project comprises theconstruction of a production platform and the drilling ofadditional wells with production processed by Elgin/Franklintreatment plant.

Pre-development activities started in Kinnoull oil and gasdiscovery (Eni’s interest 16.67%) to be developed throughAndrew field’s production facilities.

Exploration activity concerned the drilling of an appraisalwell in Culzean gas discovery (Eni’s interest 16.95%), nearthe Elgin/Franklin producing field for assessing its possibledevelopment options.

> 
*North Africa*

Eni’s operations in North Africa are conducted inAlgeria, Egypt, Libya and Tunisia. In 2010, North Africaaccounted for 33% of Eni’s total worldwide production of oiland natural gas.

*Algeria.* Eni has been present in Algeria since 1981. In2010, Eni’s oil and gas production averaged 74 KBOE/d.Operating activities are located in the Bir Rebaa area in theSouth-Eastern Desert and include the following exploration andproduction blocks: (i) Blocks 403a/d (Eni’s interest up to100%); (ii) Blocks 401a/402a 

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(Eni’s interest 55%); (iii) Blocks 403 (Eni’sinterest 50%) and 404a (Eni’s interest 12.25%); (iv) Blocks208 (Eni’s interest 12.25%) and 405b (Eni’s interest75%) with ongoing development activities; (v) Block 212(Eni’s interest 22.38%) with discoveries already made; and(vi)  Blocks 316b, 319a and 321a (Eni operator with a 100%interest) in the Kerzaz area with ongoing exploration activities.

| Exploration and production        activities in Algeria are regulated by Production Sharing        Agreements (PSAs) and concession contracts.
Production        in Block 403a/d comes mainly from the HBN and Rom and        satellite fields and represented approximately 23% of        Eni’s production in Algeria in 2010. The main        project underway is the integrated development of Rom and        satellites reserves (Zea, Zek and Rec) following the        mineral potential revaluation. The development plan has        been approved by the relevant authorities. Current        production is collected at the Rom Central Production        Facility (CPF) and delivered to the treatment plant in        Bir Rebaa North. An export pipeline has been completed        and a new multiphase pumping system is under finalization        in compliance with applicable country law to reduce gas        flaring.

Production in Blocks 401a/402a comes mainly from the        Rod and satellite fields and accounted for approximately        23% of Eni’s production in Algeria in 2010.        Infilling activities are being performed in order to        maintain the current production plateau.

The main fields in Block 403 are BRN, BRW and BRSW        which accounted for approximately 17% of Eni’s        production in Algeria in 2010.

In Block 405b, the development activity relates to the        MLE and CAFC integrated project. The final investment        decision was sanctioned for both projects (MLE in 2009;        CAFC in April 2010). The MLE development plan provides        for the construction of a natural gas treatment plant        with a capacity of 350 mmCF/d and of four export        pipelines with linkage to the national grid system. These        facilities will also receive gas from the CAFC field. |   |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

As of December 31, 2010, 61% of MLE project was completed. TheCAFC project provides the construction of an oil treatment plantand will also benefit from synergies with existing MLE productionfacilities. As of December 31, 2010, 27% of CAFC project wascompleted. MLE and CAFC start-up are expected in 2011 and 2012,respectively, with a production plateau of approximately 33KBOE/d net to Eni by 2014.

Block 208 is located South of Bir Rebaa. The El Merk projectis progressing with the drilling activities and the constructionof treatment facilities. 60% of the project scope was completedat year end. Production start-up is expected in 2012.

The new Algerian hydrocarbon Law No. 5 of 2007 introduced ahigher tax burden for the national oil company Sonatrach whichhas requested to renegotiate the economic terms of certain PSAsin order to restore the initial economic equilibrium. Eni signedan agreement for Block 403 in this respect while agreements havenot yet been reached for Blocks 401a/402a (Eni’s interest55%) and Block 208 (Eni’s interest 12.25%).

In the medium-term, management expects to increase Eni’sproduction in Algeria to approximately 120 KBOE/d, reflecting thedevelopment and integration of the First Calgary acquired assets.

*Egypt.* Eni has been present in Egypt since 1954. In2010, Eni’s share of production in this country amounting to222 KBOE/d and accounted for 13% of Eni’s total annualhydrocarbon production. Eni’s main producing liquid fieldsare located in the Gulf of Suez, primarily in Belayim field(Eni’s interest 100%) and in the Western Desert mainlyMelehia concession (56% interest) and Ras Qattara (75% interest).Gas production mainly comes from the operated or participatedconcession of North Port Said (Eni’s interest 100%), ElTemsah (50% interest), Baltim (50% interest) and Ras el Barr (50%interest, non-operated) and all located in the offshore the NileDelta. In 2010, production from these main concessions accountedfor approximately 90% of Eni’s production in Egypt.

Exploration and production activities in Egypt are regulatedby Production Sharing Agreements.

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|  |   | In July 2010, Eni signed a        Strategic Framework Agreement with the Egyptian Ministry        of Petroleum for new upstream and downstream initiatives.        The agreement provides for: (i) a joint study to evaluate        a number of upstream activities in the Mediterranean        Basin and outside Egypt, including Gabon and Iraq; and        (ii) an initiative to secure rights for Eni to acquire        gas transport capacity in the Arab Gas Pipeline system in        compliance with existing intergovernmental agreements.
In        May 2010, Eni divested a 50% interest in the Ashrafi        offshore field located in the Gulf of Suez. Eni will        retain operatorship and a 50% interest.

Production start-up was achieved from Tuna field (Eni        operator with a 50% interest) through linkage to the El        Gamil facility with a production plateau at approximately        70 mmCF/d net to Eni.

Other development activities mainly regarded:        (i) the basic engineering of the Belayim field for        the upgrading of water injection facilities to recover        remaining reserves; (ii) the second phase of the Denise        field (Eni operator with a 50% interest); and (iii) the        upgrading of the El Gamil plant by adding new compression        capacity to support production.

Through its affiliate Unión Fenosa Gas, Eni has an        indirect interest in the Damietta natural gas        liquefaction plant with a producing capacity of 5.1        mmtonnes/y of LNG corresponding to approximately 268        BCF/y of |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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feed gas. Eni is currently supplying 35 BCF/y for a 20-yearperiod. Natural gas supplies derived from the Taurt and Denisefields with 17 KBOE/d net to Eni of feed gas.

Exploration activities yielded positive results in the: (i)Belayim concession (Eni’s interest 100%) with two discoverywells containing oil that were linked to existing facilities;(ii) El Qara North (Eni’s interest 75%) and Zaafaran East(Eni’s interest 75%) gas discoveries which were linked tothe existing nearby facilities; (iii) Melehia development lease(Eni’s interest 56%) with the Jana and Arcadia oildiscoveries. The latter was started-up in the second half of theyear.

In the medium-term, management expects that Egypt will remainamong Eni’s largest oil and gas producing countries.

| *Libya.* Eni started        operations in Libya in 1959. In 2010, Eni’s oil and        gas production averaged 267 KBOE/d, the portion of        liquids being 43%. Production activity is carried out in        the Mediterranean Sea near Tripoli and in the Libyan        Desert area and includes six contract areas. Onshore        contract areas are: (i) Area A consisting in the former        concession 82 (Eni’s interest 50%); (ii) Area B,        former concessions 100 (Bu Attifel field) and the NC 125        Block (Eni’s interest 50%); (iii) Area E with        El Feel (Elephant) field (Eni’s interest 33.3%); and        (iv) Area F with Block 118 (Eni’s interest 50%).        Offshore contract areas are: (i) Area C with the Bouri        oil field (Eni’s interest 50%); and (ii) Area D with        Blocks NC 41 and NC 169 (onshore) that feed the Western        Libyan Gas Project (Eni’s interest 50%).
In the        exploration phase, Eni is operator of four onshore blocks        in the Muzurk Basin (161/1, 161/2&4, 176/3), in the        Kufra area (186/1, 2, 3 & 4) and in the contract        Areas A, B and D.

Exploration and production activities in Libya are        regulated by six Exploration and Production Sharing        contracts (EPSA). The licenses of Eni’s assets in        Libya expire in 2042 and 2047 for oil and gas properties,        respectively.

From February 22, 2011, some liquids and natural gas        production activities and the gas export through the        GreenStream pipeline have been halted. Facilities have        not suffered any damage and such standstill does not        affect Eni’s ability to ensure natural gas supplies        to its customers. Eni is technically able to resume gas        production at or near previous level once the situation        stabilizes. The overall impact of instability and        conflict in Libya on Eni’s results in terms of        operations and cash flows will depend on how long such        political instability and unrest will last, which        management is currently unable to predict. Eni’s        production as of end of March 2011, was flowing at around        70-75 KBOE/d, down from the expected level of        approximately 280 KBOE/d, and is made of gas which is        totally delivered to local power generation plants.        Production is continuing to decline.. |   |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

Eni has limited investments planned in Libya over the courseof the next two years, and no major project start-up are plannedfor the next four years.

Main development activities underway concerned the WesternLibyan Gas Project (Eni’s interest 50%) for the monetizationof gas reserves ratified in the strategic agreements between Eniand NOC. Activities were performed for maintaining in the futuregas production profiles at the Wafa and Bahr Essalam fieldsthrough increasing compression capacity at the Wafa field anddrilling additional wells at both fields. In 2010, volumesdelivered through the GreenStream pipeline were 309 BCF. Inaddition, 53 BCF were sold on the Libyan market for powergeneration and approximately 7 BCF to feed the GreenStreamcompressor station.

*Tunisia.* Eni has been present in Tunisia since 1961. In2010, Eni’s production amounted to 19 KBOE/d. Eni’sactivities are located mainly in the Southern Desert areas and inthe Mediterranean offshore facing Hammamet.

Exploration and production in this country are regulated byconcessions.

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Production mainly comes from operated Maamoura and Barakaoffshore blocks (Eni’s interest 49%) and the Adam (Enioperator with a 25% interest), Oued Zar (Eni operator with a 50%interest), MLD (Eni’s interest 50%) and El Borma (Eni’sinterest 50%) onshore blocks.

In 2010, Eni signed new terms for the El Borma concession(Eni’s interest 50%), due to expire in 2043.

Development activities concerned the completion of theoperated Baraka project and ramp-up of production at Maamourafield.

Optimization of production was carried out at the Adam, DjebelGrouz (Eni’s interest 50%), Oued Zar and El Borma fields.

In the medium-term, Eni expects production in Tunisia as aresult of the development of recent offshore discoveries.

> 
*West Africa*

Eni’s operations in West Africa are conducted mainly inAngola, Congo and Nigeria. In 2010, West Africa accounted for 22%of Eni’s total worldwide production of oil and natural gas.

*Angola.* Eni has been present in Angola since 1980. In2010, Eni’s production averaged 113 KBOE/d. Eni’sactivities are concentrated in the conventional and deepoffshore.

| The main blocks with        Eni’s participation are: (i) Block 0 in Cabinda        (Eni’s interest 9.8%) West of the Angolan coast;        (ii) Development Areas in the former Block 3 (Eni’s        interest ranging from 12% to 55%) in the offshore of the        Congo Basin; (iii) Development Areas in the former Block        14 (Eni’s interest 20%) in the deep offshore West of        Block 0; and (iv) Development Areas in the former        Block 15 (Eni’s interest 20%) in the deep offshore        of the Congo Basin.
Eni also holds interests in other        minor concessions, in particular in the Lianzi        Development Area (former 14K/A IMI Unit Area - Eni’s        interest 10%). In the exploration and development phase,        Eni is operator of Block 15/06 (35% interest), holds 12%        interest in Block 3/05-A, 15% interest in Cabinda North        (onshore) and 20% interest in the Open Areas of the Gas        Project.

Exploration and production activities in Angola are        regulated by concessions and PSAs.

In January 2011, Eni was awarded rights to explore and        the operatorship of deep offshore Block 35, with a 30%        interest. The agreement foresees drilling 2 wells to be        carried out in the first 5 years of exploration. This        deal is subject to the approval of the relevant        authorities.

West Hub is the main project underway in the        Development Area of operated Block 15/06 (Eni’s        interest 35%), with start-up expected in 2013 and peaking        production at 22 KBBL/d net to Eni. |   |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

Within the activities for reducing gas flaring inBlock 0, activity progressed at the Nemba field in Area B. Thecompletion is expected in 2013 reducing flared gas byapproximately 85%. Other ongoing projects include:(i) completion of linkage and treatment facilities at theMalongo plant; and (ii) installation of a second compression unitat the platform in the Nemba field in Area B. Flaring down of theMalongo area is still underway with completion 2011.

In the Development Areas of former Block 14, infillingactivity was carried out at the Benguela-Belize/Lobito-Tombocofields. Drilling of wells in Tombua-Landana field is ongoing asper field development plan.

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Main projects underway in the Development Areas of formerBlock 15 (Eni’s interest 20%) regarded: (i) the satellitesof Kizomba Phase 1, with start-up expected before mid 2012 andpeaking production at 100 KBBL/d (21 KBBL/d net to Eni) in2013; and (ii) drilling activity at the Mondo and Saxi/Batuquefields to finalize their development plan. The subsea facility ofthe Gas Gathering project has been already completed. The projectprovides the construction of a pipeline collecting all the gas ofthe Kizomba, Mondo and Saxi/Batuque fields.

Eni holds a 13.6% interest in the Angola LNG Ltd (A-LNG)consortium responsible for the construction of an LNG plant inSoyo, 300 kilometers North of Luanda. It has been designed with aprocessing capacity of approximately 1.1 BCF/d of natural gas andproduction of 5.2 mmtonnes/y of LNG, condensates and LPG. Theproject has been sanctioned by relevant Angolan Authorities. Itenvisages the development of 10,594 BCF of gas in 30 years.Start-up is expected in the first quarter of 2012. LNG wasoriginally expected to be delivered to the USA market at there-gasification plant in Pascagoula, currently underconstruction, (Eni’s capacity amounting to approximately 205BCF/y) in Mississippi. During the year, Eni signed a Memorandumof Understanding with the other project partners to assesspossible further marketing opportunities. In 2010, the principalfollowing activities were carried out: (i) engineering andprocurement; (ii) linkage from offshore to onshore facilities;(iii) implementation of the construction of storage tanks for theprocessed products and onshore plant facilities; and (iv) fuelgas supplies from Block 15.

In addition, Eni is part of a second gas consortium with thenational Angolan company and other partners that will explorefurther potential gas discoveries to support the feasibility of asecond LNG train or marketing projects to deliver gas andassociated liquids. Eni is technical advisor with a 20% interest.

Exploration activities yielded positive results in: (i)operated Block 15/06 (Eni’s interest 35%) with the appraisalwells of the Cinguvu (Cinguvu-1), Cabaça (Cabaça South East-2)and Mpungi (Mpungi 1 e 2) oil discoveries. The appraisalactivities were completed ahead of schedule with commitmentsincreasing the initial resource estimation to develop the EastHub and West Hub projects. In February 2010, the West Hub conceptdefinition (FEED) was approved while the final investmentdecision was sanctioned at year end; (ii) Development Areas informer Block 14 (Eni’s interest 20%) with the Lucapa 6appraisal oil well. Activities are underway for assessing itspossible development opportunities following the area’smineral potential revaluation; and (iii) Block 0 (Eni’sinterest 9.8%) with the liquids and gas discovery located in theVanza area.

| In the medium-term,        management expects to increase Eni’s production to        approximately 190 KBBL/d reflecting contributions from        ongoing development projects.
*Congo.* Eni has        been present in Congo since 1968. In 2010, production        averaged 107 KBOE/d net to Eni. Eni’s activities are        concentrated in the conventional and deep offshore facing        Pointe Noire and onshore.

Eni’s main operated oil producing interests in        Congo are the Zatchi (Eni’s interest 65%) and Loango        (Eni’s interest 50%), Ikalou (Eni’s interest        100%), Djambala, Foukanda and Mwafi (Eni’s interest        65%), Kitina (Eni’s interest 35.75%), Awa Paloukou        (Eni’s interest 90%), M’Boundi (Eni’s        interest 83%) and Kouakouala (Eni’s interest 75%)        fields.

Other relevant producing areas are a 35% interest in        the Pointe Noire Grand Fonde, PEX and Likouala permits.        In the exploration phase, Eni also holds interests in the        Mer Très Profonde Sud deep offshore block (Eni’s        interest 30%), the Noumbi onshore permit (Eni’s        interest 37%) and the Marine XII offshore permit (Eni        operator with a 65% interest).

Exploration and production activities in Congo are        regulated by Production Sharing Agreements.

Production started-up at Zingali and Loufika (Eni        operator with an 85% interest) onshore satellites of the        M’Boundi field. Ongoing development activities        concerned offshore fields with start-up expected in        2011-2012. |   |  |
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Activities on the M’Boundi field (Eni operator with an83% interest) moved forward with the application of advancedrecovery techniques and a design to monetize associated gaswithin the activities aimed at reducing flared gas. Eni signed along-term agreement to supply associated gas from theM’Boundi field to feed three facilities in the Pointe Noirearea: (i) the under construction potassium plant, owned byCanadian Company MAG Industries; (ii) the existing Djeno powerplant (CED - Centrale Electrique du Djeno); and (iii) therecently built CEC Centrale Electrique du Congo power plant(Eni’s interest 20%). These facilities will also receive gasin the future from the offshore discoveries of the Marine XIIpermit. Development activities to build the CEC power plant movedforward as scheduled in the cooperation agreement signed by Eniand the Republic of Congo in 2007, with the start-up of the firstand second turbo-generator.

Within the activities aimed to monetize gas reserves, the RITproject moved forward with the rehabilitation plan of the PointeNoire-Brazzaville power grid. In 2010 the project DEPN - Phase 1(Distribution Electrique à Pointe Noire) started-up in the townof Pointe Noire.

In the medium-term, management expects to increase Eni’sproduction in Congo due to the integration and development ofrecently acquired assets as well as projects underway, targetinga level in excess of 120 KBOE/d by 2014.

*Democratic Republic of Congo.* In August 2010, Eniacquired a 55% stake and operatorship in the Ndunda Block locatedin the Democratic Republic of Congo which may lead to futuredevelopments after exploration activities. At present noactivities are conducted in this country.

*Nigeria.* Eni has been present in Nigeria since 1962. In2010, Eni’s oil and gas production averaged 167 KBOE/dlocated mainly in the onshore and offshore of the Niger Delta.

In the development/production phase Eni is operator of onshoreOil Mining Leases (OML) 60, 61, 62 and 63 (Eni’s interest20%) and offshore OML 125 (Eni’s interest 85%), OMLs 120-121(Eni’s interest 40%), holding interests in OML 118(Eni’s interest 12.5%) as well as in OML 119 and 116 ServiceContracts. As partners of SPDC JV, the largest joint venture inthe country, Eni also holds a 5% interest in 26 onshore blocksand a 12.86% interest in 5 conventional offshore blocks.

In the exploration phase Eni is operator of offshore OilProspecting Leases (OPL) 244 (Eni’s interest 60%), OML 134(former OPL 211 - Eni’s interest 85%) and onshore OPL 282(Eni’s interest 90%) and OPL 135 (Eni’s interest 48%).Eni also holds a 12.5% interest in OML 135 (former OPL 219).

Exploration and production activities in Nigeria are regulatedmainly by Production Sharing Agreements and concession contractsas well as service contracts, in two blocks, where Eni acts ascontractor for state owned companies.

In Blocks OML 60, 61, 62 and 63 (Eni operator with a 20%interest), within the activities aimed at supplying production offeed gas to the Bonny liquefaction plant (Eni’s interest10.4%), the following development activities have beenimplemented: (i) the completion of basic engineering to increasecapacity at the Obiafu/Obrikom plant; and (ii) the installationof a new treatment plant and transport facility aiming to 155mmCF/d of feed gas for a 20-year period.

Exploration activity yielded positive results with the Tuomo 4oil discovery (Eni’s interest 20%) and the development planof the Tuomo gas field has been progressing with an earlyproduction through a linkage from Tuomo 4 well to the Ogbainbirytreatment plant. In 2010, a new compressor plant was started-upaiming to feed gas for the liquefaction trains 4 and 5, amountingto 311 mmCF/d (60 mmCF/d net to Eni).

In Block OML 61 flaring down of the Ebocha oil plant wascompleted.

In Block OML 28 (Eni’s interest 5%) within the integratedoil and natural gas project in the Gbaran-Ubie area, the firsttreatment unit started-up with first gas production. The Phase-2is currently ongoing and start-up is expected in 2012. Thedevelopment plan, currently ongoing, foresees for theconstruction of a Central Processing Facility (CPF) withtreatment capacity of about 1 BCF/d of gas and 120 KBBL/day ofliquids, the drilling of producing wells and the construction ofa pipeline to carry the gas to the Bonny liquefaction plant.

The Forcados/Yokri oil and gas field (Eni’s interest 5%)is under development as part of the integrated associated gasgathering project aimed at supplying gas to the domestic market.First gas is expected in 2013 and project completion in 2015.

Eni holds a 10.4% interest in Nigeria LNG Ltd responsible forthe management of the Bonny liquefaction plant, located in theEastern Niger Delta. The plant has a design treatment capacity ofapproximately 1,236 BCF/y of feed gas corresponding to aproduction of 22 mmtonnes/y of LNG on 6 trains. The seventh unitis being engineered as it is in the planning phase. Whenfully-operational, total capacity will amount to approximately 30mmtonnes/y of 

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LNG, corresponding to a feedstock of approximately 1,624BCF/y. Natural gas supplies to the plant are provided under gassupply agreements with a 20-year term from the SPDC joint venture(Eni’s interest 5%) and the NAOC JV, the latter operatingthe Blocks OMLs 60, 61, 62 and 63. In 2010, total supplies were1,870 mmCF/d (191 mmCF/d net to Eni corresponding to 34 KBOE/d).LNG production is sold under long-term contracts and exported toEuropean and American markets by the Bonny Gas Transport fleet,wholly owned by Nigeria LNG Co.

Eni holds a 17% interest of the Brass LNG Ltd Company for theconstruction of a natural gas liquefaction plant to be built nearthe existing Brass terminal, 100 kilometers West of Bonny. Thisplant is expected to start operating in 2016 with a productioncapacity of 10 mmtonnes/y of LNG corresponding to 590 BCF/y(approximately 60 net to Eni) of feed gas on 2 trains for twentyyears. Supplies to this plant will derive from the gathering ofassociated gas from nearby producing fields and from thedevelopment of gas reserves in the onshore OMLs 60 and 61.The venture signed preliminary long-term contracts to sellthe whole LNG production capacity. Eni acquired 1.67 mmtonnes/yof LNG capacity (corresponding to approximately 81 BCF/y). LNGwill be delivered to the USA market mainly at the re-gasificationplant in Cameron, in Louisiana. Eni’s capacity amounts toapproximately 201 BCF/y. Front end engineering activitiesprogressed. EPC tender exercise is ongoing. The final investmentdecision is envisaged in 2011.

In the medium-term, management expects to increase Eni’sproduction in Nigeria to approximately 190 KBOE/d, reflecting thedevelopment of gas reserves.

*Togo.* In October 2010, Eni awarded operatorship ofoffshore Block 1 and Block 2 (Eni 100%) in the Dahomey Basin aspart of its agreements with the Government of Togo to develop thecountry’s offshore mineral resources.

> 
*Kazakhstan*

Eni has been present in Kazakhstan since 1992. Eni isco-operator of the Karachaganak field and partner in the NorthCaspian Sea Production Sharing Agreement (NCSPSA). In 2010,Eni’s operations in Kazakhstan accounted for 6% of its totalworldwide production of oil and natural gas.

*Kashagan.* Eni holds a 16.81% working interest in theNCSPSA. The NCSPSA defines terms and conditions for theexploration and development activities to be performed in an areaencompassing approximately 4,600 square kilometers. The Kashaganfield was discovered in the Northern section of the contractualarea in the year 2000. 

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Management believes this field contains a large amount ofhydrocarbon resources which will eventually be developed inphases. The PSA on Kashagan will expire at the end of 2041.

The participating interest in the NCSPSA has been redefined,effective as of January 1, 2008, in line with an agreement signedin October 2008 with Kazakh Authorities which proportionallydiluted the participating interest of the international companiesin favor of the Kazakh national oil company, KazMunaiGas. TheKazakh partner will pay the other co-venturers an aggregateamount of $1.78 billion for the transaction. Eni partners of theinternational consortium are the Kazakh national oil company,KazMunaiGas, and the international oil companies Total, Shell andExxonMobil, each with a participating interest currently of16.81%, ConocoPhillips with 8.40%, and Inpex with 7.56%.

The exploration and development activities of the Kashaganfield and the other discoveries made in the contractual area areexecuted through an operating model which entails an increasedrole of the Kazakh partner and defines the internationalparties’ responsibilities in the execution of the subsequentdevelopment phases of the project. The new North CaspianOperating Co (NCOC) BV participated by the seven partners of theconsortium has taken over the operatorship of the project.Subsequently development, drilling and production activities havebeen delegated by NCOC BV to the main partners of the Consortium:Eni has retained the responsibility for the development of Phase1 of the project (the so-called "Experimental Program")and the onshore part of Phase 2.

The consortium is currently focused on completing Phase 1 andstarting commercial oil production. Phase 1 completion as atDecember 2010 was around 80%, of which the completion of tranches1 and 2 allowing the first production was around 90%.

The partners of the venture are currently discussing an updateof the expenditures and time schedule to complete the Phase 1which were included in the development plan approved in 2008 bythe relevant Kazakh Authorities. The consortium continues totarget the achievement of first commercial oil production by endof 2012. However, the timely delivery of Phase 1 depends on anumber of factors which are presently under review.

The Phase 1 of the project targets an initial productioncapacity of 150 KBBL/d. In the 12-15 months following thestart-up, the treatment plant and the compression facilities forgas re-injection will be started-up enabling an increase of theproduction capacity to 370 KBBL/d by 2014. A further increase ofproduction capacity to 450 KBBL/d is expected as additionalcompression capacity for gas re-injection becomes available withthe start-up of Phase 2 offshore facilities. Early engineeringstudies of Phase 2 are underway aiming at optimizing thedevelopment scheme.

Management believes that significant capital expenditures willbe required in case the partners of the venture would sanctionPhase 2 and possibly other additional phases. Eni will fund thoseinvestments in proportion to its participating interest of16.81%. However, taking into account that future developmentexpenditures will be incurred over a long time horizon andsubsequently to the production start-up, management does notexpect a material impact on the Company’s liquidity or itsability to fund these capital expenditures. In addition to theexpenditures for developing the field, further capitalexpenditures will be required to build the infrastructures neededfor exporting the production from Phase 2 and subsequent phasesto the international markets.

As of December 31, 2010, Eni’s proved reserves booked forthe Kashagan field amounted to 569 mmBOE, recording a decrease of19 mmBOE with respect 2009 mainly due to price effect.

As of December 31, 2009, Eni’s proved reserves booked forthe Kashagan field amounted to 588 mmBOE, recording a decrease of6 mmBOE with respect to 2008.

As of December 31, 2008, Eni’s proved reserves booked forthe Kashagan field amounted to 594 mmBOE determined according toEni’s participating interest of 16.81%, recording anincrease of 74 mmBOE with respect to 2007 despite the divestmentof a 1.71% stake in the Kashagan project following thefinalization of the agreements implementing the new contractualand governance framework of the project.

As of December 31, 2010, the aggregate costs incurred by Enifor the Kashagan project capitalized in the ConsolidatedFinancial Statements amounted to $5.8 billion (euro 4.4 billionat the EUR/USD exchange rate of December 31, 2010). Thiscapitalized amount included: (i) $4.5 billion relating toexpenditures incurred by Eni for the development of the oilfield; and (ii) $1.3 billion relating primarily to accrue financecharges and expenditures 

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for the acquisition of interests in the North Caspian Sea PSAconsortium from exiting partners upon exercise of pre-emptionrights in previous years.

| *Karachaganak*. Located        in West onshore Kazakhstan, Karachaganak is a liquid and        gas field. Operations are conducted by the Karachaganak        Petroleum Operating consortium (KPO) and are regulated by        a PSA lasting 40 years, until 2037. Eni and British Gas        are co-operators of the venture both with a 32.5%        interest.
In 2010, production of the Karachaganak field        averaged 228 KBBL/d of liquids (65 net to Eni) and 812        mmCF/d of natural gas (221 net to Eni). This field is        developed by producing liquids from the deeper layers of        the reservoir and re-injecting the associated gas in the        higher layers. Approximately 70% of liquid production are        stabilized at the Karachaganak Processing Complex (KPC)        with a capacity of approximately 200 KBBL/d and exported        to Western markets through the Caspian Pipeline        Consortium (Eni’s interest 2%) and the Atyrau-Samara        pipeline. The remaining volumes of non-stabilized liquid        production and associated gas not re-injected in the        reservoir are marketed at the Russian terminal in        Orenburg.

The execution of the fourth treatment unit has been        progressing towards completion and will enable to        increase export of oil volumes to Western markets of        currently non-stabilized liquids delivered to the        Orenburg terminal.

Phase 3 of the Karachaganak project targets to        increase the development of gas and condensates reserves.        The engineering activities identified a phased approach        as the preferred development strategy with stage 1 of the        project providing for the installation of gas producing        and re-injection facilities to increase liquid production        and gas sales in accordance with the foreseeable future        market conditions. Technical and marketing discussion on        Phase 3 with the relevant Kazakh Authorities are        underway. |   |  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

As of December 31, 2010, Eni’s proved reserves booked forthe Karachaganak field amounted to 557 mmBOE, recording adecrease of 76 mmBOE with respect to 2009 due to price effect andproduction of the year.

As of December 31, 2009, Eni’s proved reserves booked forthe Karachaganak field amounted to 633 mmBOE, recording adecrease of 107 mmBOE with respect to 2008 in connection todownward revisions due to the impact of higher oil prices and theproduction of the year.

As of December 31, 2008, Eni’s proved reserves booked forthe Karachaganak field amounted to 740 mmBOE, recording anincrease of 200 mmBOE with respect to 2007 as a result of theupward revisions of previous estimates that were mainly relatedto higher entitlements reported in PSA resulting from lower yearend oil prices from a year ago.

> 
*Rest of Asia*

In 2010, Eni’s operations in the rest of Asia accountedfor 7% of its total worldwide production of oil and natural gas.

*China.* Eni has been present in China since 1984 and itsactivities are located in the South China Sea. In 2010 Eni’sproduction amounted to 7 KBOE/d.

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| Exploration and production        activities in China are regulated by Production Sharing        Agreements.
Hydrocarbons are produced from the offshore        Blocks 16/08 and 16/19 through eight platforms connected        to a FPSO. Natural gas production from the HZ21-1 field        is delivered through a sealine to the Zhuhai Terminal and        sold to the Chinese National Company CNOOC. Oil, which is        sold into the domestic market, is mainly produced from        HZ25-4 field (Eni’s interest 49%). Activity is        operated by the CACT-Operating Group (Eni’s interest        16.33%).

In January 2011, Eni signed a Memorandum of        Understanding with the national oil company PetroChina to        promote common opportunities to jointly expand operations        in conventional and unconventional hydrocarbons in China        and outside China.

*India.* Eni has been present in India since 2005        and its activities are located in the offshore Cauvery        Basin near the South-Eastern coast. In 2010, Eni’s        production amounted to 7 KBOE/d.

Production mainly comes from the PY-1 gas field which        is part of the assets belonging to Hindustan Oil        Exploration Co Ltd (Eni’s interest 47.18%) acquired        within Burren acquisition. Gas production is sold to the        local national oil company.

*Indonesia.* Eni has been present in Indonesia        since 2001. In 2010, Eni’s production mainly        composed of gas, amounted to 16 KBOE/d. Activities are        concentrated in the Eastern offshore and onshore of East        Kalimantan, the offshore Sumatra, and the offshore and        onshore area of the West Timor; in total, Eni holds        interest in 12 blocks.

Exploration and production activities in Indonesia are        regulated by PSAs.

Eni is also involved in the ongoing study phase of        joint development of the oil and gas discoveries in the        Bukat permit (Eni operator with a 66.25% interest), the        Muara Bakau permit (Eni operator with a 55% interest) and        the five discoveries in the Kutei Deep Water Basin area        (Eni’s interest 20%).

In 2010, the exploration activities related to the        coal bed methane project were started in the Sanga Sanga        PSC (Eni’s interest 37.8%). In case of commercial        discovery, the project will exploit the synergy        opportunities provided by the existing production and        treatment facilities also including the Bontang LNG        plant.

Exploration activity yielded positive results in the        Muara Bakau permit (Eni operator with a 55% interest),        located offshore East Kalimantan, where the Jangkrik 2        and 3 appraisal wells significantly increased the initial        reserve evaluations.

*Iran.* Eni has been operating in Iran for        several years under four Service Contracts (South Pars,        Darquain, Dorood and Balal, these latter two projects |   |  |
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being operated by another international oil company) enteredinto with the National Iranian Oil Co (NIOC) between 1999 and2001, and no other exploration and development contracts havebeen entered into since then. All projects mentioned above havebeen completed or substantially completed; the last one, theDarquain project, is in the process of final commissioning and isbeing handed over to NIOC. Operatorship has already beentransferred to a NIOC affiliate. When hand over of operations iscompleted, Eni’s involvements will essentially consist ofbeing reimbursed for its past investments. In 2010, Eni’sproduction in Iran was 21 KBOE/d, approximately 1% of theGroup’s worldwide production. Eni does not believe that itsactivities in Iran have a material impact on the Group’sresults. See "Item 3 – Risk Factors – PoliticalConsideration – Iran" for a full discussion of risksinvolved by our presence in Iran.

| *Iraq.* In January        2010, Eni leading a consortium of partners including        international companies and the national oil company        Missan Oil signed a technical service contract to develop        the Zubair oil field (Eni 32.8%) with the Iraqi South Oil        Company, under a 20-year term with an option for further        5 years extension. The field was awarded to the Eni-led        consortium following a successful first bid round and was        offered under a competitive bid starting on June 30,        2009. The development of the project foresees to        gradually increase production to a target plateau level        of 1.2 mmBBL/d over the next six years. The contract        provides the recovery of expenditures incurred from the        incremental production of the field and the recognition        of a remuneration fee once the production has been raised        by 10% from its initial level of approximately 180        KBBL/d. Development provides for two phases: (i)        Rehabilitation plan, approved in June 2010, aimed at        improving the current production level and the knowledge        of the reservoir; and (ii) Redevelopment plan        allowing to reach the scheduled targets. 
In 2010 all        the milestones planned for the initial phase of the        project were achieved. In particular in September 2010,        production was raised by more than 10% above the initial        production rate allowing the consortium, based on the        contact provision, to begin recovery of costs and        recognition of remuneration fee. Therefore Eni starting        from the last quarter of 2010 booked its equity        production in relation to its share of cost recovery and        remuneration. |   |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

*Pakistan.* Eni has been present in Pakistan since 2000.In 2010, Eni’s production averaged 58 KBOE/d and is mainlygas.

Exploration and production activities in Pakistan areregulated by concessions (onshore) and PSAs (offshore).

Eni’s main permits in the Country are Bhit (Eni’sinterest 40%), Sawan (Eni’s interest 23.68%) and Zamzama(Eni’s interest 17.75%), which in 2010 accounted for 86% ofEni’s production in Pakistan.

Development activities concerned: (i) the Bhit field (Enioperator with a 40% interest) with the completion of a compressorplant and the drilling of new wells aimed at maintaining currentproduction plateau; (ii) the Sawan field (Eni’s interest23.68%) with a review of production facilities and reservoir tomitigate the current decline; and (iii) the Zamzama permit(Eni’s interest 17.75%) with the start-up of the Front EndCompressor.

Exploration activity yielded positive results with the LatifNorth 1 appraisal well (Eni’s interest 33.33%) whichstarted-up in 2010.

*Russia.* Eni has been present in Russia since 2007following the acquisition of Lot 2 in the liquidation of Yukos.

As part of the transaction to divest a 51% stake inEni-Enel’s joint venture Llc SeverEnergia to Gazprom, basedon the call option exercised by the Russian company in September2009, Eni collected a second installment of the transaction byMarch 31, 2010. This amounted to euro 526 million ($710 million,approximately 75% of the total amount of the transaction).

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Ongoing activities mainly concerned the development of theSamburskoye gas field. Start-up is planned by 2012, targeting aproduction plateau of 150 KBOE/d.

*Turkmenistan.* Eni started its activities inTurkmenistan with the purchase of British company Burren Energyplc in 2008. Activities are mainly focused in the Western part ofthe country. In 2010 Eni’s production averaged 12 KBOE/d.

Exploration and production activities in Turkmenistan areregulated by PSAs.

Eni is operator of the Nebit Dag producing block (with a 100%interest). Production derives mainly from the Burun oil field.Oil production is shipped to the Turkmenbashi refinery plant. Enireceive, by mean of a swapping with the Turkmen Authorities, anequivalent amount of oil at the Okarem field, close to the Southcoast of Caspian Sea. Eni’s entitlement is sold FOB.Associated natural gas is used to own consumption and gas liftsystem. The remaining amount is delivered to Turkmenneft, vianational grid.

> 
*America*

In 2010, Eni’s operations in America area accounted for8% of its total worldwide production of oil and natural gas.

*Ecuador.* Eni has been present in Ecuador since 1988 andactivities are performed in Block 10 (Eni’s interest 100%)located in the Amazon forest. In 2010, Eni’s productionaveraged 11 KBBL/d.

Exploration and production activities in Ecuador are regulatedby a service contract.

Production derives from the Villano field and is carried outby means of a Central Production Facility linked by pipeline tothe storage facility.

In November 2010, Eni signed with the Government of Ecuadornew terms for the service contract for the Villano oil field, dueto expire in 2023. Under the new agreement, the operated area isenlarged to include the Oglan oil discovery, with volumes inplace of 300 mmBBL. In case of a successful appraisal campaign onOglan, development will be carried out in synergy with existingfacilities.

*Trinidad and Tobago.* Eni has been present in Trinidadand Tobago since 1970. In 2010, Eni’s production averaged 64mmCF/d and its activity is concentrated offshore North ofTrinidad.

Exploration and production activities in Trinidad and Tobagoare regulated by PSAs.

Production is provided by the Chaconia, Ixora and Hibiscus gasfields in the North Coast Marine Area 1 Block (Eni’sinterest 17.4%). Production is supported by fixed platformslinked to the Hibiscus treatment facility. Natural gas is used tofeed trains 2, 3 and 4 of the Atlantic LNG liquefaction plantunder long-term contracts. LNG production is sold in the USA,Spain and the Dominican Republic.

In 2010, the development plan of the Poinsettia, Bougainvilleaand Heliconia fields in the North Coast Marine Area 1 Block(Eni’s interest 17.4%) was completed through theinstallation of a production platform on the Poinsettia field andthe linkage to the Hibiscus treatment facility which was alreadyupgraded. The new scheme platform was started-up in 2010.

*USA.* Eni has been present in the USA since 1968.Activities are performed in the conventional and deep offshore inthe Gulf of Mexico and more recently onshore and offshore inAlaska.

In 2010, Eni’s oil and gas production is mainly derivedfrom the Gulf of Mexico with an average of 108 KBOE/d.

Exploration and production activities in the USA are regulatedby concessions.

Eni holds interests in 354 exploration and production blocksin the Gulf of Mexico of which 61% are operated by Eni.

The main fields operated by Eni are Allegheny, East Breaks andMorphet (Eni’s interest 100%), Longhorn-Leo, Devils Towersand Triton (Eni’s interest 75%) as well as King Kong(Eni’s interest 54%) and Pegasus (Eni’s interest 58%).Eni also holds interests in the Medusa (Eni’s interest 25%),Europa (Eni’s interest 32%), and Thunder Hawk (Eni’sinterest 25%) fields.

Drilling activities in the Gulf of Mexico were impacted by theincident at the BP-operated Macondo well. The U.S. Governmentimposed a six-month moratorium on new offshore drillingactivities that was suspended in 

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October 2010. Through the end of 2010, development or drillingactivities were still suspended, due to the delay in getting therelevant authorizations. For further information, see "Item3 – Risk Factors".

In 2010, the development plan of the Alliance area (Eni’sinterest 27.5%), in the Fort Worth Basin in Texas moved forward.This area, including gas shale reserves, was acquired in 2009following a strategic alliance that Eni signed with QuicksilverResources Inc. Production plateau at 10 KBOE/d net to Eni isexpected in 2012.

Exploration activity yielded positive results with the oil andnatural gas Hadrian West appraisal well, located in offshoreBlock KC 919 (Eni’s interest 25%), in the Gulf of Mexico.

Eni holds interests in 151 exploration and development blocksin Alaska, with interests ranging from 10 to 100% and for overhalf of these blocks, Eni is the operator.

Production is provided by the Oooguruk oil field (Eni’sinterest 30%), in the Beaufort Sea and amounted to 10 KBBL/d(3 KBBL/d net to Eni) in 2010.

The main development activities concerned the Nikaitchuqoperated field (Eni’s interest 100%), located in North SlopeBasins offshore Alaska, with resources of 220 mmBBL. Productionstart-up was achieved at the end of January 2011. Peak productionis expected at 28 KBBL/d.

*Venezuela.* Eni has been present in Venezuela since1998. In 2010, Eni’s production averaged 10 KBBL/d.

Activity is concentrated in the Gulf of Venezuela and in theGulfo de Paria.

Exploration and production of oil fields are regulated by theterms of the so-called Empresa Mixta. Under the new legalframework, only a company incorporated under the law of Venezuelais entitled to conduct petroleum operations. A stake of atleast 60% in the capital of such company is held by an affiliateof the Venezuela state oil company, PDVSA, preferablyCorporación Venezuelana de Petróleo (CVP).

The Corocoro (Eni’s interest 26%) field is Eni’sonly producing asset in the country. A second development phaseis expected to be designed based on the results achieved in thefirst development phase relating to the well 

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production rate and field performance under water and gasinjection. A production peak more than 40 KBBL/d (approximately11 net to Eni) is expected in 2012.

In June 2010, Eni was awarded gas exploration and developmentpermits with a 40% interest in Punta Pescador and Gulfo de PariaOvest, the latter coinciding with the Corocoro oil field area(Eni’s interest 26%). Commitment activities are undernegotiation with the relevant authorities.

On January 26, 2010, Eni and PDVSA signed an agreement for thejoint development of the giant field Junin 5 with 35 BBBL ofcertified heavy oil in place, located in the Orinoco oil belt.The two partners plan to achieve first oil by 2013 at an initialrate of 75 KBBL/d, targeting a long-term production plateau of240 KBBL/d to be reached in 2018.

As part of the agreement, on November 22, 2010, Eni and PDVSAsigned the contracts to set up two Empresas Mixtas (Eni’sinterest 40%, PDVSA’s interest 60%) for the development ofthe Junin 5 field and the construction and operation of arefinery with a capacity of 350 KBBL/d that will allow also thetreatment of intermediate streams from other PDVSA facilities.Eni, at the publication of the contract of incorporation of theJunin 5 project "Empresa Mixta" in December 2010 paidthe first tranche of the bonus of $300 million; the balance of$346 million will be paid in additional tranches according to theachievement of milestones of the project.

Exploration activities yielded positive results with thesuccessful appraisal campaign of the Perla gas field, located inthe Cardon IV Block (Eni’s interest 50%) in the Gulf ofVenezuela. This block is under a Concession Agreement for gasexploration and exploitation licensed and operated by aVenezuelan Joint Venture Company. PDVSA owns a 35% back-in-rightto be exercised in the development phase, and at that time Eniwill hold a 32.5% joint controlled interest in the company. Perla2, 3 and 4 appraisal wells results exceeded the initial resourceestimation by 50%. A Front End Engineering Design contractsrelated to offshore facility and transport infrastructure wereassigned in 2010 targeting an early production phase of 300mmCF/d with start-up in 2013. The early production phase includesthe utilization of the already successfully drilled wells and theinstallation of four light offshore platforms linked, through agas pipeline, to a Central Processing Facility (CPF) locatedonshore. The development of Perla is currently planned tocontinue with the full field phase, which includes additionalproducer wells and the CPF upgrade, to reach a plateau productionof 1,200 mmCF/d.

Eni is also participating with a 19.5% interest in the Gulfode Paria Centrale offshore exploration block, where the Punta Suroil discovery is located.

> 
*Australia and Oceania*

Eni’s operations in Australia and Oceania area areconducted mainly in Australia. In 2010, Australia and Oceaniaarea accounted for 2% of Eni’s total worldwide production ofoil and natural gas.

*Australia.* Eni has been present in Australia since2000. In 2010, Eni’s production of oil and natural gasaveraged 26 KBOE/d. Activities are focused on conventional anddeep offshore fields.

The main production blocks in which Eni holds interests areWA-33-L (Eni’s interest 100%), WA-25-L (Eni operator with a65% interest) and JPDA 03-13 (Eni’s interest 10.99%). In theexploration phase Eni holds interests in 9 licenses (in 2 ofwhich with a 100% interest), of particular interest are theAlberts Blocks (WA-362/363/386/387-P) and JPDA 06-15 (Eni’sinterest 40%), where the Kitan discovery is located. The projectis progressing according to schedule. Start-up is expected in2011.

Exploration and production activities in Australia areregulated by concession agreements, whereas in the cooperationzone between East Timor and Australia (Joint PetroleumDevelopment Area - JPDA) they are regulated by PSAs.

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

 

> 
***Capital Expenditures***

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

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**Gas & Power**

Eni’s Gas & Power segment engages in supply, tradingand marketing of gas and electricity, managing gasinfrastructures for transport, distribution, storage,re-gasification, and LNG supply and marketing. This segment alsoincludes the activity of power generation that is ancillary tothe marketing of electricity. In 2010, Eni’s worldwide salesof natural gas amounted to 97.06 BCM, including 5.65 BCM of gassales made directly by the Eni’s Exploration &Production segment in Europe and the USA. Sales in Italy amountedto 34.29 BCM, while sales in European markets were 54.52 BCM thatincluded 8.44 BCM of gas sold to certain importers to Italy.

Gas transport, distribution and storage, as well asre-gasification of LNG in Italy are regulated activities astariffs for the services rendered to gas operators and return oncapital employed are set by an independent administrative body.For further description on those regulated activities see below.

 

> 
***Marketing of natural gas***

The competitive landscape in the marketing of gas in thepan-European sector has changed dramatically from late 2008 todate. Gas demand across Europe was severely impacted by theeconomic downturn and has been struggling to recover topre-crisis levels as the industrial activity is slowlyprogressing, particularly in Italy.

On the supply side, gas availability has considerablyincreased on the marketplace due to capacity upgrading at themajor international pipelines which carry natural gas fromproducing countries to Europe, including the TAG line from Russiaand the TTPC line from Algeria. Also large quantities of LNG havebeen directed towards Europe as a number of important upstreamprojects started operations worldwide, and the U.S. market hasprogressively reduced its LNG imports due to commercialexploitation of large gas reserves from non-conventional sources.Several LNG terminals and facilities which were recentlyfinalized commenced to receive those surpluses of LNG in Europe.The build up of LNG supplies at the European hubs has driven downspot prices which have fallen below the level of gas prices basedon oil-linked formulas. That trend has impaired the profitabilityof gas operators, including Eni, whose portfolio of supplies ismainly indexed to the cost of oil and certain refined products asprovided in purchasing formulas of long-term take-or-paycontracts, while spot prices have increasingly become thebenchmark in selling formulas, particularly outside Italy.

In 2010, our gas marketing operations reported significantlylower operating profit driven by lower sales in Italy due tomounting competitive pressures and compressed unit margins insales outside Italy. Operating profit for the year in the gasmarketing business decreased by 64% from a year ago andrepresented less than 5% of the Group’s consolidatedoperating profit for 2010. The short-term outlook for theEuropean gas sector remains challenging. Weak underlyingfundamentals and strong competitive pressures are expected tostay in place for some time. Risks still exist in the next coupleof years that the Company may be unable to fulfill its minimumtake obligations associated with its long-term gas purchasecontracts providing take-or-pay clauses. For a description ofthose risks see "Item 3 – Risk Factors" and"Item 5 – Outlook". However, management expectsthat the European gas market will rebalance by the end of the2011-2014 period due to a number of trends. In fact, it isexpected that demand will continue to recover to pre-crisis leveland be driven by economic expansion and increased consumption bythe power generation sector. Production from European fields willcontinue to deplete, increasing the need for gas imports. Also,LNG oversupplies will be progressively absorbed due to increasingenergy requirements in other parts of the world and limited newcapacity additions in the Atlantic Basin. In such a scenario,Eni’s long-term supply contracts and access to transport andstorage infrastructures will again become a competitiveadvantage.

Against this backdrop, management plans to improve results inits gas marketing operations which management expects to recoverto 2009 profitability levels by 2014. We intend to renegotiatebetter economic terms and operating conditions in our long-termgas purchase contracts, so as to restore the competitiveness ofthe Company’s cost position in the current weak scenario forthe gas sector. The renegotiation of revised contractual terms,including any price revisions and contractual flexibility, isestablished by such contractual clauses whereby parties are heldto bring the contract back to the economic equilibrium in case ofsignificant changes in the market environment, like the ones thathave been occurring from the second half of 2008. In the courseof 2010, Eni has finalized a number of important contractualrenegotiations by obtaining improved economic conditions forsupplies and wider contractual flexibility with a benefit to itscommercial programs. A number of renegotiations have commenced orare due to commence in the near future involving all theCompany’s main suppliers of gas based on long-termcontracts. The Company targets to grow sales volumes at anaverage annual rate of 5% both in Europe and Italy over the planperiod; particularly we plan:

| (i)  |   | to increase gas sales        volumes in European markets leveraging on the increased        competitiveness of the Company’s cost position and        its multiple presence in a number of markets. We target        to expand sales mainly in France, Germany and Austria        leveraging on new customized commercial offers and to        retain the leadership in the Benelux market; |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | to regain market share in        the Italian market and preserve marketing margins        leveraging on the commercial strength and capabilities of        the Company, as well as the increased competitiveness of        the Company’s cost                                                                                                                                               |

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|   |   | position. Measures will be        implemented to select the customer portfolio and retain        clients by proposing new pricing offers and schemes and        improve the service quality; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iii)  |   | to reduce the cost-to-serve,        marketing and general and business support expenses;                                                                                                     |
| (iv)   |   | to monitor and effectively        manage working capital requirements; and                                                                                                                   |
| (v)    |   | to boost margins by means of        new risk management activities.                                                                                                                          |

For a description of uncertainties and risks associated withthis strategy including a discussion of the possible consequencesof the Libyan political instability and conflict see "Item 3– Risk Factors" and "Item 5 – Outlook".

In the next four-year period, management plans to invest euro1.1 billion in marketing activities mainly directed to:(i) power plant upgrading, including building a new bio-masspower generation plant at Eni’s Porto Torres industrial sitewhere a reconversion plan is underway; and (ii) increasingflexibility of generation facilities.

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

 

> 
***Demand outlook***

In 2010, gas demand in Italy and Europe rebounded from thedepressed levels registered in the previous year, growing by 6%and 4%, respectively. Consumption volumes however remained belowthe pre-crisis levels seen in 2007. Looking forward, managementestimates that long-term gas demand growth will achieve anaverage rate of 1.7% and 1.1% in Italy and Europe, respectively,until 2020. Those projections imply a consumption level ofapproximately 590 BCM for the Europe as a whole by 2020; while inItaly a consumption level of approximately 97 BCM is projected at2020.

Those estimates have been revised down from previousmanagement projections to factor in the expected impactsassociated with a number of ongoing trends:

| • |   | uncertainties and volatility        in the current macroeconomic cycle;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | growing adoption of        consumption patterns and life-style characterized by        wider sensitivity to energy efficiency; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| • |   | EU policies intended to        reduce GHG emissions and promoting renewable energy        sources. Specifically, legislation was voted by the        European Parliament in December 2008 to enact a package        of interventions in the European energy sector, the        so-called "Climate Change and Renewable Energy        Package". The package includes a commitment to        reduce greenhouse gas (GHG) emissions by 20% by 2020        compared to emission levels recorded in 1990 (the target        being 30% if an international agreement is reached), as        well as an improved energy efficiency within the EU        member states of 20% by 2020 and a 20% renewable energy        target by 2020. |

Among positive drivers for demand growth, it is worthmentioning the growing adoption of natural gas to fuelthermoelectric production via combined cycles and the higherenvironmental compatibility of natural gas than other fossilfuels to produce energy.

 

> 
***Supply of natural gas***

In 2010, Eni’s consolidated subsidiaries supplied 82.49BCM of natural gas, representing a decrease of 6.16 BCM, or 6.9%from 2009 reflecting lower sales for the year.

Gas volumes supplied outside Italy (75.20 BCM fromconsolidated companies), imported in Italy or sold outside Italy,represented approximately 92% of total supplies, a decrease of6.59 BCM, or 8.1%, from 2009, mainly reflecting a decline innatural gas sales. In 2010, lower volumes were purchased from:(i) Russia (down 7.73 BCM), where Eni reduced its off-takes inparticular of volumes directed to Italy; (ii) the Netherlands(down 1.57 BCM); and (iii) Norway (down 1.17 BCM) also due to theimpact of an accident that occurred at the import pipelineTransitgas in August 2010.

In 2010, increases were recorded in gas purchases from Algeria(up 2.41 BCM) and from the UK (up 1.8 BCM), as well as in LNGavailability.

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Supplies in Italy (7.29 BCM) increased by 0.43 BCM from 2009,or 6.3%, also due to higher domestic production.

In 2010, main gas volumes from equity production derived from:(i) Italian gas fields (6.7 BCM); (ii) the Wafa and Bahr Essalamfields in Libya linked to Italy through the GreenStream pipeline.In 2010, these two fields supplied 2.5 BCM net to Eni; (iii)certain Eni fields located in the British and Norwegian sectionsof the North Sea (2.6 BCM); and (iv) other European areas(Croatia with 0.4 BCM).

Considering also the direct sales of the Exploration &Production Division in Europe and in the Gulf of Mexico and LNGsupplied from the Bonny liquefaction plant in Nigeria, suppliedgas volumes from equity production were approximately 20 BCMrepresenting 21% of total volumes available for sale.

In 2010, volumes input to storage deposits owned by Eni’ssubsidiary Stoccaggi Gas Italia amounted to 0.20 BCM compared towithdrawals from storage deposit 1.25 BCM in 2009.

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

| **Natural        gas supply** |   | **2008** |   | **2009** |   | **2010** |
|-------------------------------|--------|----------|--------|----------|--------|----------|
|                          |   |          |   |          |   |          |

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

| **Italy**                                                        |   | **8.00**   |   |   | **6.86**   |   |   | **7.29**  |   |
|------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
| **Outside        Italy**                                         |   | **81.65**  |   |   | **81.79**  |   |   | **75.20** |   |
| *Russia*                                                         |   | *22.91*    |   |   | *22.02*    |   |   | *14.29*   |   |
| *Algeria        (including LNG)*                                 |   | *19.22*    |   |   | *13.82*    |   |   | *16.23*   |   |
| *Libya*                                                          |   | *9.87*     |   |   | *9.14*     |   |   | *9.36*    |   |
| *the        Netherlands*                                         |   | *9.83*     |   |   | *11.73*    |   |   | *10.16*   |   |
| *Norway*                                                         |   | *6.97*     |   |   | *12.65*    |   |   | *11.48*   |   |
| *the        United Kingdom*                                      |   | *3.12*     |   |   | *3.06*     |   |   | *4.14*    |   |
| *Hungary*                                                        |   | *2.84*     |   |   | *0.63*     |   |   | *0.66*    |   |
| *Qatar        (LNG)*                                             |   | *0.71*     |   |   | *2.91*     |   |   | *2.90*    |   |
| *Other supplies of natural gas*                                  |   | *4.07*     |   |   | *4.49*     |   |   | *4.42*    |   |
| *Other        supplies of LNG*                                   |   | *2.11*     |   |   | *1.34*     |   |   | *1.56*    |   |
| **Total supplies of subsidiaries**                               |   | **89.65**  |   |   | **88.65**  |   |   | **82.49** |   |
| Withdrawals        from (input to) storage                       |   | (0.08      | )      |   | 1.25       |   |   | (0.20     | )      |
| Network losses, measurement differences and        other changes |   | (0.25      | )      |   | (0.30      | )      |   | (0.11     | )      |
| **Volumes        available for sale of Eni’s subsidiaries** |   | **89.32**  |   |   | **89.60**  |   |   | **82.18** |   |
| **Volumes available for sale of Eni’s        affiliates**   |   | **8.91**   |   |   | **7.95**   |   |   | **9.23**  |   |
| **E&P        volumes**                                       |   | **6.00**   |   |   | **6.17**   |   |   | **5.65**  |   |
|                                                             |   |            |        |   |            |        |   |           |        |
| **Total volumes available for sale**                             |   | **104.23** |   |   | **103.72** |   |   | **97.06** |   |
|                                                             |   |            |        |   |            |        |   |           |        |

In order to secure long-term access to gas availability,particularly with a view of supplying the Italian gas market, Enihas signed a number of long-term gas supply contracts with keyproducing countries that supply the European gas markets. Thesecontracts have been ensuring approximately 80 BCM of gasavailability from 2010 (including the Distrigas portfolio ofsupplies) with a residual life of approximately 19 years and apricing mechanism indexed to the price of crude oil and itsderivatives (gasoil, fuel oil, etc). The contracts providetake-or-pay clauses whereby the Company is required to collectminimum pre-determined volumes of gas in each year of thecontractual term or, in case of failure, to pay the whole price,or a fraction of that price, applied to uncollected volumes up tothe minimum contractual quantity. The take-or-pay clause entitlesthe Company to collect pre-paid volumes of gas in later yearsduring the period of contract execution. Amounts of cashpre-payments and time schedules for collecting pre-paid gas varyfrom contract to contract. Generally speaking, cash pre-paymentsare calculated on the basis of the energy prices current in theyear of non-fulfillment with the balance due in the year when thegas is actually collected. Amounts of pre-payments range from 10to 100 percent of the full price. The right to collectpre-paid gas expires within a ten-year term in some contracts orremains in place until contract expiration in other arrangements.In addition, rights to collect pre-paid gas in future years canbe exercised provided that the Company has fulfilled its minimumtake obligation in a given year and within the limit of themaximum annual quantity that can be collected in each contractualyear. In this case, Eni will pay the residual price calculatingit as the percentage that complements 100%, based on thearithmetical average of monthly base prices current in the yearof the off-take. Similar considerations apply to ship-or-paycontractual obligations.

Management believes that the current outlook for increasingcompetition pressures coupled with large gas availability on themarketplace, the possible evolution of sector-specificregulation, as well as the de-coupling between trends in gasprices indexed to oil versus gas benchmark prices at spotmarkets, represent risks factors to the Company’s ability tofulfill its minimum take obligations associated with itslong-term supply contracts.

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Particularly, management expects that the Company willexperience increasing exposure to the risk associated withgrowing adoption on the marketplace of selling formulas linked tospot prices which movements are independent of those of oilprices and refined products that drive supply costs in Eni’stake-or-pay contracts.

In the years 2009 and 2010, Eni incurred the take-or-payclause as the Company collected lower volumes than its minimumtake obligations in each of those years accumulating deferredcosts for an amount of euro 1.44 billion as of December 31, 2010.The Company’s ability to recover those pre-paid volumeswithin contractual terms will depend in future years on a numberof factors, including the possible evolution of the marketenvironment and the competitiveness of Eni’s cost position.Ongoing political instability in Libya and the shut down of theGreenStream pipeline may possibly counteract those negativetrends as the Company may be able to replace supplies from Libyawith gas from its ample portfolio. The latter trend will evolvedepending on how long such political instability and conflictwill last and on their outcome which for the time being cannot beforeseen.

In case Eni fails to off-take the contractual minimum amounts,it will be exposed to a price risk, because the purchase priceEni will ultimately be required to pay is based on pricesprevailing after the date on which the off-take obligation arose.In addition, Eni is subject to the risk of not being able todispose of pre-paid volumes. The Company also expects toincur financing costs to pay cash advances corresponding tocontractual minimum amounts. As a result, the Company’sselling margins, results of operations and cash flow may benegatively affected.

Based on management’s projections for sales volumes andunit margins for the four-year plan and subsequent years whichincorporated expected trends in the European market fundamentals,and management’s assumptions to renegotiate better economicterms within the Company’s long-term gas purchase contracts,so as to restore the competitiveness of the Company’s costposition, the Company believes that in the long-term it will bein the position to recover volumes of gas which have beenpre-paid in 2009 and 2010 due to the take-or-pay clause and alsopossible new volumes associated with the contractual clause dueto the uncertainties and weak conditions in the gas market overthe next two years. Even if financing associated with cashadvances is factored in, the net present value associated withthose long-term purchase contracts discounted at the weightedaverage cost of capital for the Gas & Power segment stillremains a positive and consequently those contracts do not fallwithin the category of the onerous contract provided by IAS 37.

For further information about this topic and risks associatedwith those obligations, see "Item 3 – RiskFactors" and "Item 5 – Outlook".

 

> 
**Marketing**

***Natural Gas Sales for the Year 2010***

In 2010, worldwide natural gas sales were 97.06 BCM, down 6.66BCM, or 6.4%, mainly due to unfavorable trends on the Italianmarket. Sales included Eni’s own consumption, Eni’sshare of sales made by equity-accounted entities and upstreamsales in Europe and in the Gulf of Mexico.

Natural gas sales in Italy were 34.29 BCM (including ownconsumption and sales by affiliates) a decline of 5.75 BCM from2009, or 14.4%, driven by increased competitive pressures andoversupply conditions on the marketplace, resulting in anestimated loss of ten percentage points in the Group market sharein Italy. Particularly, lower sales were recorded in the powergeneration business (down 5.64 BCM), as clients opted to directlypurchase gas on the marketplace. Lower sales to industrialcustomers (down 1.17 BCM) and wholesalers (down 1.08 BCM) werecaused by increased competitive pressure fuelled by oversupplyand weak demand. Sales on the Italian exchange for gas and spotmarket increased by 2.28 BCM, while sales volumes to theresidential sector (6.39 BCM, up 0.09 BCM) were nearly unchanged.In addition, sales to importers in Italy were down by 2.04 BCM,or 19.5%, due to oversupply on the Italian market.

The Italian market includes large businesses, power generationusers, wholesalers, middle-sized enterprises and service andresidential customers; they are further grouped as follows: (i)large industrial clients and power generation utilities, directlylinked to the national and the regional natural gas transportnetworks; (ii) wholesalers, mainly local selling companies whichresell natural gas to residential customers through low pressuredistribution networks and distributors of natural gas forautomotive use; and (iii) residential customers, that includehouseholds (also referred to as the retail market), the tertiarysector (mainly commercial outlets, hospitals, schools and localadministrations) and middle-sized enterprises (also referred toas the middle market) located in large metropolitan areas andurban areas.

As of December 31, 2010, Eni’s customers in Italy totaled6.88 million.

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Despite strong competitive pressures, sales on target marketsin Europe showed a positive trend, increasing by approximately 1BCM, or 2.5%, to 46.08 BCM. The main drivers behind the increasewere organic growth achieved in France (up 1.18 BCM), NorthernEurope (including the UK, up 0.91 BCM), Germany/Austria (up 0.31BCM) and the Iberian Peninsula (up 0.30 BCM). Declines wererecorded in Turkey (down 0.84 BCM), Belgium (down 0.80 BCM) andHungary (down 0.22 BCM).

Sales to markets outside Europe (2.60 BCM) increased by 0.54BCM, or 26.2%, from 2009.

E&P sales in Europe and in the USA (5.65 BCM) declined by0.52 BCM.

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

| **Natural        gas sales by entities** |   | **2008** |   | **2009** |   | **2010** |
|------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                     |   |          |   |          |   |          |

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

| **Total sales of subsidiaries**                                    |   | **89.32**  |   | **89.60**  |   | **82.00** |
|--------------------------------------------------------------------|--------|------------|--------|------------|--------|-----------|
| *Italy        (including own consumption)*                         |   | *52.82*    |   | *40.04*    |   | *34.23*   |
| *Rest of Europe*                                                   |   | *35.61*    |   | *48.65*    |   | *46.74*   |
| *Outside        Europe*                                            |   | *0.89*     |   | *0.91*     |   | *1.03*    |
| **Total sales of Eni’s affiliates**        (Eni’s share) |   | **8.91**   |   | **7.95**   |   | **9.41**  |
| *Italy*                                                            |   | *0.05*     |   | *-*        |   | *0.06*    |
| *Rest of Europe*                                                   |   | *7.42*     |   | *6.80*     |   | *7.78*    |
| *Outside        Europe*                                            |   | *1.44*     |   | *1.15*     |   | *1.57*    |
| **Total sales of G&P**                                         |   | **98.23**  |   | **97.55**  |   | **91.41** |
| E&P in        Europe and in the Gulf of Mexico (a)             |   | 6.00       |   | 6.17       |   | 5.65      |
| **Worldwide gas sales**                                            |   | **104.23** |   | **103.72** |   | **97.06** |
|                                                               |   |            |   |            |   |           |

----

| (a) |   | E&P sales        include volumes marketed by the Exploration &        Production Division in Europe (3.36, 2.57 and 2.33 BCM in        2008, 2009 and 2010, respectively) and in the Gulf of        Mexico (2.64, 3.60 and 3.32 BCM in 2008, 2009 and 2010,        respectively). |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **Natural        gas sales by market** |   | **2008** |   | **2009** |   | **2010** |
|----------------------------------------|--------|----------|--------|----------|--------|----------|
|                                   |   |          |   |          |   |          |

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

| **ITALY**                                       |   | **52.87**  |   | **40.04**  |   | **34.29** |
|-------------------------------------------------|--------|------------|--------|------------|--------|-----------|
| Wholesalers                                     |   | 7.52       |   | 5.92       |   | 4.84      |
| Gas release                                     |   | 3.28       |   | 1.30       |   | 0.68      |
| Italian        gas exchange and spot markets    |   | 1.89       |   | 2.37       |   | 4.65      |
| Industries                                      |   | 9.59       |   | 7.58       |   | 6.41      |
| Medium-sized        enterprises and services    |   | 1.05       |   | 1.08       |   | 1.09      |
| Power generation                                |   | 17.69      |   | 9.68       |   | 4.04      |
| Residential                                     |   | 6.22       |   | 6.30       |   | 6.39      |
| Own consumption                                 |   | 5.63       |   | 5.81       |   | 6.19      |
| **INTERNATIONAL        SALES**                  |   | **51.36**  |   | **63.68**  |   | **62.77** |
| **Rest of Europe**                              |   | **43.03**  |   | **55.45**  |   | **54.52** |
| Importers        in Italy                       |   | 11.25      |   | 10.48      |   | 8.44      |
| European markets                                |   | 31.78      |   | 44.97      |   | 46.08     |
| *Iberian        Peninsula*                      |   | *7.44*     |   | *6.81*     |   | *7.11*    |
| *Germany - Austria*                             |   | *5.29*     |   | *5.36*     |   | *5.67*    |
| *Belgium*                                       |   | *4.57*     |   | *14.86*    |   | *14.06*   |
| *Hungary*                                       |   | *2.82*     |   | *2.58*     |   | *2.36*    |
| *Northern        Europe*                        |   | *3.21*     |   | *4.31*     |   | *5.22*    |
| *Turkey*                                        |   | *4.93*     |   | *4.79*     |   | *3.95*    |
| *France*                                        |   | *2.66*     |   | *4.91*     |   | *6.09*    |
| *Other*                                         |   | *0.86*     |   | *1.35*     |   | *1.62*    |
| **Extra        European markets**               |   | **2.33**   |   | **2.06**   |   | **2.60**  |
| **E&P in Europe and in the Gulf of Mexico** |   | **6.00**   |   | **6.17**   |   | **5.65**  |
| **WORLDWIDE        GAS SALES**                  |   | **104.23** |   | **103.72** |   | **97.06** |
|                                            |   |            |   |            |   |           |

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> 
***Marketing of Electricity***

As part of its marketing activities in Italy, Eni engages inselling electricity on the Italian market principally on the openmarket, at industrial sites and on the Italian Exchange forelectricity. Supplies of electricity include both own productionvolumes through gas-fired, combined-cycles facilities andpurchases on the open market. This activity has been developed inorder to capture further value along the gas value-chainleveraging on the Company’s large gas availability. Inaddition, with the aim of developing and retaining valuablecustomers in the residential space and middle to large industrialusers, the Company has been developing a commercial offer thatprovides the combined supply of gas and power. In 2010, theprogram for expanding the combined integrated offer of gas andpower progressed in accordance with the Company’s expansionplans.

In 2010, electricity sales increased by 16.4% to 39.54 TWh,driven by a slight recovery in electricity demand and growth inthe client base, in particular the retail market followingintensive marketing campaigns, and mainly related to higher saleson open-markets (up 2.74 TWh) benefiting from higher trading andhigher volumes traded on the Italian power exchange (up 2.43TWh).

In 2010, electricity sales (39.54 TWh) were directed to thefree market (70%), the Italian power exchange (18%), industrialsites (8%) and others (4%).

| **Power        availability** |   | **2008** |   | **2009** |   | **2010** |
|-------------------------------|--------|----------|--------|----------|--------|----------|
|                          |   |          |   |          |   |          |

|   |   | **(TWh)** |
|--------|--------|-----------|

| Power generation sold                   |   | 23.33     |   | 24.09     |   | 25.63     |
|-----------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Trading of        electricity (a)       |   | 6.60      |   | 9.87      |   | 13.91     |
|                                    |   |           |   |           |   |           |
|                                    |   | **29.93** |   | **33.96** |   | **39.54** |
|                                    |   |           |   |           |   |           |
| **Power        sales by market**        |   |      |   |      |   |      |
| Free market                             |   | 22.89     |   | 24.74     |   | 27.48     |
| Italian        Exchange for electricity |   | 3.82      |   | 4.70      |   | 7.13      |
| Industrial plants                       |   | 2.71      |   | 2.92      |   | 3.21      |
| Other (a)                               |   | 0.51      |   | 1.60      |   | 1.72      |
|                                    |   |           |   |           |   |           |
|                                    |   | **29.93** |   | **33.96** |   | **39.54** |
|                                    |   |           |   |           |   |           |

----

| (a) |   | Include        positive and negative imbalances. |
|-----|--------|--------------------------------------------------|

> 
 

***Planned Actions and Sales Target***

***(i) Italy***

Over the next four years, management plans to increase salesand regain market share in Italy by leveraging on thecompetitiveness of the Company’s cost position, and thequality of its offer, including the offer of pricing formulas andservices that are designed to suit the customers’ needs. TheCompany intends to deploy tailored solutions and customizedcontracts to retain clients in the business segment, and expandits customer base in the retail segment by means of new marketinginitiatives, the bundling of a range of valuable services tocommercial offer and wider geographic presence through anintegrated network of agencies and stores. Based on thoseactions, management targets to expand sales volumes in Italy by12 BCM within 2014 and to regain market share. In the lastquarter of 2010, the adoption of a more volume-oriented approachled to an increase in Italian sales and market share by anestimated 7% and 1.5 percentage points, respectively, compared toa 38.3% market share and 9.8 BCM sales for the fourth quarter ofthe previous year.

 

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

In Europe, the Company plans to increase sales volumes by 8BCM by 2014 boosting direct sales in key European markets,particularly in France, Germany and Austria and maintaining itsleadership position in the Benelux countries. To achieve thesetargets, management plans to leverage on the competitiveness ofthe Company’s cost position and new customized commercialoffers, a multi-country approach and an integrated pan-Europeancommercial platform.

A review of Eni’s presence in the key European markets ispresented below.

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*Benelux.* Eni’s holds a leadership position in theBenelux countries (Belgium, the Netherlands and Luxembourg)granted by the integration with Distrigas’ operations andits significant exposure to spot markets in Western Europe. In2010, Distrigas sales were mainly directed to industrialcompanies, wholesalers and power generation and amounted to 14.87BCM from 2009, down 0.85 BCM, or 5.4%, due to rising competition.The Company plans to maintain steady sales in this region overthe plan period.

*France.* Eni sells natural gas to industrial clients,wholesalers and power generation as well as to the segments ofretail and middle market. Eni is present in the French marketthrough its direct commercial activities and through itssubsidiary Altergaz, in which the Company acquired a controllinginterest by increasing its share to 55.2% in December 2010.Altergaz supplies approximately 119,800 clients, of which 104,000are residential customers (69,000 in 2009, of which 58,000residentials). Furthermore, Eni holds a 34% interest in Gaz deBordeaux SAS (with a 17% direct interest and a further 17% heldby Altergaz) which is engaged in selling natural gas in theMunicipality of Bordeaux. Eni plans to develop this partnership.Management plans to expand sales in France over the plan periodgrowing volumes supplied to the business segments and increasingretail customers leveraging on the Altergaz integration. In 2010,sales in France amounted to 6.09 BCM (4.91 BCM in 2009), anincrease of 1.18 BCM, or 24%, from a year ago.

*Germany-Austria.* Eni is present in the German naturalgas market through its associate GVS (GasversorgungSüddeutschland GmbH - Eni 50%) which sold approximately 3.92 BCMin 2010 (1.96 BCM being Eni’s share), and through a directmarketing structure which sold in 2010 approximately 2.85 BCM inGermany and 1.09 BCM in Austria. Management plans to drive growthin direct sales leveraging on the quality of its commercialoffer. In 2010, sales in Germany-Austria market amounted to 5.67BCM, an increase of 0.31 BCM, or 5.8%, from a year ago.

> 
*Iberian Peninsula*

*Portugal.* Eni operates on the Portuguese market throughits affiliate Galp Energia (Eni’s interest 33.34%) whichsold approximately 5.10 BCM in 2010 (1.70 BCM being Eni’sshare).

*Spain.* Eni operates in the Spanish gas market through adirect marketing structure that markets its portfolio of LNG andUnión Fenosa Gas (UFG) (Eni’s interest 50%) which mainlysupplies natural gas to industrial clients, wholesalers and powergeneration utilities. In 2010, UFG gas sales in Europe amountedto 5.28 BCM (2.64 BCM Eni’s share). UFG holds an 80%interest in the Damietta liquefaction plant, on the Egyptiancoast (see below), and a 7.36% interest in a liquefaction plantin Oman. In addition, it holds interests in the Sagunto(Valencia) and El Ferrol (Galicia) re-gasification plants (42.5%and 18.9%, respectively). In 2010, Eni sales in Spain amounted to5.41 BCM representing a slight increase from a year ago. In 2010,total sales in the Iberian Peninsula amounted to 7.11 BCM, anincrease of 0.30 BCM, or 4.4%, from a year ago.

*Turkey.* Eni sells gas supplied from Russia andtransported via the Blue Stream pipeline. In 2010, sales amountedto 3.95 BCM, a decrease of 0.84 BCM, or 17.5% from a year ago.

*UK/Northern Europe.*Eni through its subsidiary NorthSea Gas & Power (Eni UK Ltd) markets in the UK the equity gasproduced at Eni’s fields in the North Sea and operates inthe main continental natural gas hubs (NBP, Zeebrugge, TTF). In2010, sales amounted to 5.22 BCM, an increase of 21.1% from ayear ago.

*Deborah Gas Storage Project in the Hewett area, UK.* Enihas progressed in developing the Gas Storage Project on theDeborah field within the Hewett area located in the Southern GasBasin in the North Sea, near the Bacton terminal, UK. The DeborahGas Storage Project is designed to provide the UK and NorthWestern Europe markets with 4.6 BCM of working gas. Eni, thesingle owner of the project, completed the Front End EngineeringDesign ("FEED") after an appraisal well had beensuccessfully drilled, and obtained most of the permits requestedto sanction the project from the relevant national and localauthorities. At the end of 2010, a Capacity Allocation Processaiming at selling long-term storage capacity was launched. Anumber of market players participated to the process and EniHewett, the Eni affiliate managing the project, ensured long-termcontractual commitments to sell more than 20% of the capacity.Some of the participants to the capacity allocation process showinterest in getting a participation in the investment as well.Based on that, Eni Hewett is currently managing a process to sellequity participation in the Deborah Gas Storage project and isprogressing in bilateral discussions to sell further gas storagecapacity. FID is expected to be taken by end of 2011/beginning2012 based on the outcome of the equity sale process anddiscussions on capacity sales.

 

> 
**The LNG Business**

Eni is present in all phases of the LNG business:liquefaction, shipping, re-gasification and sale through operatedactivities or interests in joint ventures and associates.Eni’s presence in the business is tied to the Company’splans to develop its large gas reserve base in Africa andelsewhere in the world. The LNG business has been deeply impactedby the economic downturn of 2009 and structural modifications inthe U.S. market where 

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large availability of gas from unconventional sources havereduced the country’s dependence on gas imports via LNG.

Eni’s main assets and projects in the LNG business aredescribed below.

*Qatar.* Though its subsidiary Distrigas, Eni increasedits development opportunities in the LNG business with access tonew supply sources mainly from Qatar, under a 20-year agreementwith RasGas (owned by Qatar Petroleum with a 70% interest andExxonMobil with a 30% interest) and the Zeebrugge LNG terminal onthe Western coast of Belgium.

*Egypt.* Eni, through its interest in Unión Fenosa Gas,owns a 40% interest in the Damietta liquefaction plant with acapacity of approximately 5 mmtonnes/y of LNG which equates to afeedstock of 7.56 BCM/y in natural gas out of which the Gas &Power segment interest is up to 2.2 BCM/y to be marketed inEurope.

*Spain.* Eni through Unión Fenosa Gas holds a 21.25%interest in the Sagunto re-gasification plant, near Valencia,with a capacity of 8.8 BCM/y and a LNG storage capacity of450,000 CM which will be increased to 600,000 CM after theongoing construction of a fourth tank. At present, Eni’sre-gasification capacity entitlement amounts to 1.9 BCM/y of gas.

Eni through Unión Fenosa Gas also holds a 9.45% interest inthe El Ferrol re-gasification plant, located in Galicia, with atreatment capacity of approximately 3.6 BCM/y, of which 0.34BCM/y being Eni’s capacity entitlements. The LNG storagecapacity of the plant is 300,000 CM in two tanks.

> 
*USA*

*Cameron.* The Cameron LNG terminal is situated 18 milesfrom the Gulf of Mexico along the Calcasieu Channel in Hackberry,Louisiana. The facility where Eni owns a capacity entitlement totreat LNG commenced operations in the third quarter of 2009. Inconsideration of a changed demand outlook for gas in the USA, onMarch 1, 2010, Eni renegotiated certain terms of the contractwith the U.S. company Cameron LNG, owner of the facility, to farmout a share of the re-gasification capacity of the terminal. Thenew agreement provides that Eni is entitled to a daily send-outof 572,000 mmbtu (approximately 5.7 BCM/y) and a dedicatedstorage capacity of 160 KCM, giving Eni more flexibility inmanaging seasonal swings in gas demand. Furthermore, on March 3,2011 Eni USA Gas Marketing Llc obtained from the AmericanDepartment of Energy the authorization to export the LNGpreviously imported in the USA. This authorization will enhanceoperation flexibility, and will enable the company to exploitprice differentials between American and European gas markets.Start-up of the Brass project (West Africa) to develop andliquefy gas reserves to fuel the Cameron plant is expected in2016.

*Pascagoula.* This project is part of an upstreamdevelopment project related to the construction of an LNG plantin Angola designed to produce 5.2 mmtonnes of LNG (approximately7.3 BCM/y) destined to the North American market in order tomonetize part of the Company’s gas reserves. As part of thedownstream leg of the project, Eni signed a 20-year contract withGulf LNG to buy 5.8 BCM/y of the re-gasification capacity of theplant under construction near Pascagoula in Mississippi. Thestart-up of the re-gasification facility is scheduled by the endof 2012 which is in line with the expected start-up of theupstream project in Angola.

At the same time Eni USA Gas Marketing Llc entered a 20-yearcontract for the purchase of approximately 0.9 BCM/y ofre-gasified gas downstream the terminal owned by Angola SupplyServices, a company whose partners also own Angola LNG.

| **LNG        sales** |   | **2008** |   | **2009** |   | **2010** |
|----------------------|--------|----------|--------|----------|--------|----------|
|                 |   |          |   |          |   |          |

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

| **G&P sales**                           |   | **8.4**  |   | **9.8**  |   | **11.2** |
|---------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                        |   |          |   |          |   |          |
| Italy                                       |   | 0.3      |   | 0.1      |   | 0.2      |
| Rest of Europe                              |   | 7.0      |   | 8.9      |   | 9.8      |
| Extra        European markets               |   | 1.1      |   | 0.8      |   | 1.2      |
|                                        |   |          |   |          |   |          |
| **E&P sales**                           |   | **3.6**  |   | **3.1**  |   | **3.8**  |
|                                        |   |          |   |          |   |          |
| Liquefaction        plants:                 |   |     |   |     |   |     |
| - Bontang (Indonesia)                       |   | 0.7      |   | 0.8      |   | 0.7      |
| - Point        Fortin (Trinidad and Tobago) |   | 0.5      |   | 0.5      |   | 0.6      |
| - Bonny (Nigeria)                           |   | 2.0      |   | 1.4      |   | 2.2      |
| - Darwin        (Australia)                 |   | 0.4      |   | 0.4      |   | 0.3      |
|                                        |   |          |   |          |   |          |
|                                        |   | **12.0** |   | **12.9** |   | **15.0** |
|                                        |   |          |   |          |   |          |

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> 
**Power Generation**

Eni’s power generation sites are located in FerreraErbognone, Ravenna, Livorno, Taranto, Mantova, Brindisi, Ferraraand in Bolgiano.

In 2010, power generation was 25.63 TWh, up 1.54 TWh, or 6.4%from 2009, mainly due to higher production in particular at theBrindisi and Livorno plant.

As of December 31, 2010, installed operational capacity was5.3 GW (5.3 GW in 2009).

Power availability in 2010 was supported by the growth inelectricity trading activity (up 4.04 TWh, or 40.9%) due tohigher volumes traded on the Italian power exchange benefitingfrom lower purchase prices.

By 2014, Eni intends to complete its plan for expanding itspower generation capacity, targeting an installed operationalcapacity of 5.7 GW6.

At full capacity in 2014, production is expected to amount toapproximately 29.2 TWh, corresponding to approximately 7.9% ofpower expected to be generated in Italy at that date.

This expansion will allow Eni to consolidate its market shareand its position as the third largest power producer in Italy.

Supplies of natural gas are expected to amount toapproximately 6 BCM/y from Eni’s diversified supplyportfolio.

The power generation development plan is underway and mainlyrefers to: (i) the revamping at the recently acquired Bolgianoplant (Eni 100%); (ii) the upgrading at Taranto plant (Eni 100%);and (iii) the construction of a new bio-mass power generationplant at Eni’s Porto Torres industrial site which iscurrently under remediation.

New installed generation capacity uses the combined cycle gasfired technology (CCGT), ensuring a high level of efficiency andlow environmental impact. In particular, management estimatesthat for a given amount of energy (electricity and heat)produced, using the CCGT technology instead of conventional powergeneration technology, the emission of carbon dioxide reduces byapproximately 5 mmtonnes, on an energy production of 26.5 TWh.The CCGT technology has been acknowledged by the Authorityfor Electricity and Gas as a production technology that entailspriority on the national dispatching network and the exemptionfrom the purchase of "green certificates". Article 11of Legislative Decree No. 79/1999 concerning the opening up ofthe Italian electricity market requires importers and producersof power from non renewable sources to input into the nationalpower system a share of power produced from renewable sources setat 2% of power imported or produced from non renewable sourcesexceeding 100 GWh. Calculations are made on total amounts net ofcogeneration and own consumption. This obligation can be metalso by purchasing volumes or rights from other producersemploying renewable sources (the so-called green certificates) tocover all or part of such 2% share. Legislative Decree No.387/2003 provides that from 2004 to 2006 the minimum amount ofpower from renewable sources to be input in the grid in thefollowing year be increased by 0.35% per year. The Minister ofProductive Activities, with decrees issued in consent with theMinister for the Environment, has defined a 0.75% increase ofthis ratio for the periods from 2007 to 2010.

Eni’s main operated power plants are described below.

**Ferrera Erbognone.** This power plant has an installedcapacity of approximately 1,030 MW divided between three combinedcycle units, two of which have a capacity of approximately 390 MWand are fired with natural gas. The third unit has capacity ofapproximately 250 MW and is fired with a mixed fuel containingnatural gas and refinery gas obtained from the gasification of aheavy residue from crude processing at the nearby Eni-operatedSannazzaro refinery.

**Ravenna.** Two new combined cycle units with the capacityof 390 MW each started operations in 2004. Adding to the existingcapacity, the power plant’s installed capacity has reached atotal of approximately 1,100 MW.

**Brindisi.** This power plant has been upgraded byinstalling three new combined cycle units, each with a capacityof 390 MW, which has increased the overall capacity toapproximately 1,500 MW.

**Mantova.** This power plant has been upgraded byinstalling two new combined cycle units, each with a capacity of390 MW, which has increased the overall capacity to approximately900 MW. This power plant also provides steam for heating purposesdelivered to the Mantova urban network through a heat exchanger.

----

| (6) |    | Capacity        available after completion of dismantling of obsolete        plants. |
|-----|--------------|--------------------------------------------------------------------------------------|

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**Livorno.** This power plant has an installed capacity ofapproximately 200 MW, divided between gas and steam turbines withsteam generators.

**Taranto.** The existing power units have a capacity ofapproximately 75 MW, divided between gas and steam turbines withsteam generators.

**Ferrara.** Two new combined cycle units with the capacityof 390 MW each started operations in 2008. Adding to alreadyexisting gas and steam turbines, the power plant’s installedcapacity has reached a total of approximately 840 MW.

**Bolgiano.** The existing power plant has an installedcapacity of approximately 39 MW divided between four gas turbinesassociated with four super-heated water generators.

| **Power        Generation** |   | **2008** |   | **2009** |   | **2010** |
|-----------------------------|--------|----------|--------|----------|--------|----------|
|                        |   |          |   |          |   |          |

| **Purchases**                            |   |      |   |    |   |    |   |    |
|------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|---------|
| Natural        gas                       |   | (mmCM)    |   | 4,530   |   | 4,790   |   | 5,154   |
| Other fuels                              |   | (ktoe)    |   | 560     |   | 569     |   | 547     |
| *- of        which steam cracking*       |   |      |   | *131*   |   | *82*    |   | *103*   |
| **Production**                           |   |      |   |    |   |    |   |    |
| Electricity                              |   | (TWh)     |   | 23.33   |   | 24.09   |   | 25.63   |
| Steam                                    |   | (ktonnes) |   | 10,584  |   | 10,048  |   | 10,983  |
| **Installed        generation capacity** |   | (GW)      |   | **4.9** |   | **5.3** |   | **5.3** |
|                                     |   |      |   |         |   |         |   |         |

> 
 

**Infrastructures**

Eni operates a large European network of integratedinfrastructure for transporting natural gas, which links keyconsumption basins with the main producing areas (Russia,Algeria, Libya and the North Sea).

In Italy, Eni operates almost all lines which form thenational transport network, gas underground storage deposits andrelated facilities, a re-gasification plant in Panigaglia and canrely on an extended system of local distribution networks. Eni iscurrently implementing plans for expanding and upgrading itsnational transport and distribution networks and storagecapacity.

**Transport infrastructure**

| **Route** |   | **Lines**   |   | **Length of main line** |   | **Diameter** |   | **Transport         capacity**(1) |   | **Pressure min-max** |   | **Compression stations** |
|-----------|--------|-------------|--------|-------------------------|--------|--------------|--------|-----------------------------------|--------|----------------------|--------|--------------------------|
|      |   |             |   |                         |   |              |   |                                   |   |                      |   |                          |
| **ITALY** |   | **(units)** |   | **(km)**                |   | **(inch)**   |   | **(mmCM/d)**                      |   | **(bar)**            |   | **(No.)**                |

| Mazara del Vallo-Minerbio        (under upgrading) |   | 2/3 |   | 1,480 |   | 48/42 -        48 |   | 105.0 |   | 75    |   | 7 |
|----------------------------------------------------|--------|-----|--------|-------|--------|-------------------|--------|-------|--------|-------|--------|---|
| Tarvisio-Sergnano-Minerbio                         |   | 3   |   | 433   |   | 42/36, 34 e 48/56 |   | 119.2 |   | 58/75 |   | 3 |
| Passo Gries-Mortara                                |   | 1/2 |   | 177   |   | 48/34             |   | 64.8  |   | 55/75 |   | 1 |

| i                        | i      | i           | i      | i                | i      | i            | i      | i                         | i      | i                       | i      | i                        |
|--------------------------|--------|-------------|--------|------------------|--------|--------------|--------|---------------------------|--------|-------------------------|--------|--------------------------|
|                     |   | **Lines**   |   | **Total length** |   | **Diameter** |   | **Transport capacity**(2) |   | **Transit capacity**(3) |   | **Compression stations** |
|                     |   |             |   |                  |   |              |   |                           |   |                         |   |                          |
| **OUTSIDE        ITALY** |   | **(units)** |   | **(km)**         |   | **(inch)**   |   | **(BCM/y)**               |   | **(BCM/y)**             |   | **(No.)**                |

| TENP (Bocholtz-Wallbach)               |   | 2 lines        of km 500     |   | 1,000 |   | 36/38/40    |   | 22.9 |   | 15.5 |   | 4      |
|----------------------------------------|--------|------------------------------|--------|-------|--------|-------------|--------|------|--------|------|--------|--------|
| Transitgas        (Rodersdorf-Lostorf) |   | 3 lines of km 165, 71 and 55 |   | 291   |   | 36/48       |   | 24.9 |   | 19.9 |   | 1      |
| TAG (Baumgarten-Tarvisio)              |   | 3 lines        of km 380     |   | 1,140 |   | 36/38/40/42 |   | 45.2 |   | 37.4 |   | 5      |
| TTPC (Oued        Saf Saf-Cap Bon)     |   | 2 lines of km 370            |   | 740   |   | 48          |   | 34.0 |   | 33.2 |   | 5      |
| TMPC (Cap Bon-Mazara del Vallo)        |   | 5 lines        of km 155     |   | 775   |   | 20/26       |   | 33.2 |   | 33.2 |   |   |
| GreenStream        (Mellitah-Gela)     |   | 1 line of km 520             |   | 520   |   | 32          |   | 8.0  |   | 8.0  |   | 1      |
| Blue Stream (Beregovaya-Samsun)        |   | 2 lines        of km 387     |   | 774   |   | 24          |   | 16.0 |   | 16.0 |   | 1      |

----

| (1) | i | Transport        capacity refers to the capacity at the entry point        connected to the import pipelines.                                                |
|-----|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | i | Includes both        transit capacity and volumes of natural gas destined to        local markets and withdrawn at various points along the        pipeline. |
| (3) | i | The maximum        volume of natural gas which is input at various entry        points along the pipeline and transported to the next        pipeline.       |

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> 
***International Transport Activities***

Eni owns capacity entitlements in an extensive network ofinternational high pressure pipelines for a total length ofapproximately 4,400 kilometers enabling the Company to importnatural gas produced in Russia, Algeria, the North Sea, includingthe Netherlands and Norway, and Libya to Italy. The Companyinvests in certain entities which own and operate thoseinternational pipelines, the pipeline owners, as well as in theentities which manage transportation rights, the carriercompanies. For financial reporting purposes, such entities areeither fully-consolidated or equity-accounted depending on theCompany’s interest or agreements with other shareholders.

The structure of the Company’s interests in thoseentities may significantly change in the near future due toongoing procedures for divesting Eni’s interests in theGerman TENP, the Swiss Transitgas and the Austrian TAG gastransport pipelines. The divestment is part of the commitmentsagreed upon by Eni and the European Commission to settle anantitrust proceeding related to alleged anti-competitive behaviorin the natural gas market. In light of the strategic importanceof the Austrian TAG pipeline to the supply of the Italian system,which transports gas from Russia to Italy, Eni negotiated asolution with the Commission which called for the transfer of itsstake to an entity controlled by the Italian State. The Companyexpects to complete the divestment procedures within 2011. Theprospected divestments will not affect Eni’s contractual gastransport rights.

A description of the main international pipelines participatedor operated by Eni is provided below.

| • |   | The TAG pipeline,        1,140-kilometer long, made up of three lines, each about        380-kilometer long, with a transport capacity of 37 BCM/y        and five compression stations. This pipeline transports        Russian natural gas from Baumgarten, the delivery point        at the border of Austria and Slovakia, to Tarvisio, point        of entry in the Italian natural gas transport system. In        2009, the upgrading of this facility was finalized by        completing construction of two new compression stations        that increased transport capacity by 6.5 BCM/y. The        entire new capacity has been entirely awarded to third        parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | The TTPC pipeline,        740-kilometer long, made up of two lines that are each        370-kilometer long with a transport capacity of 33.2        BCM/y and five compression stations. This pipeline        transports natural gas from Algeria across Tunisia from        Oued Saf Saf at the Algerian border to Cap Bon on the        Mediterranean coast where it links with the TMPC        pipeline. The pipeline was recently upgraded by        increasing compression capacity in order to enable        transportation of an additional 6.5 BCM/y. The upgrade        was finalized in 2008 and became fully-operational during        2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | The TMPC pipeline for the        import of Algerian gas is 775-kilometer long and consists        of five lines that are each 155-kilometer long with a        transport capacity of 33.5 BCM/y. It crosses the        underwater Sicily Channel from Cap Bon to Mazara del        Vallo in Sicily, the point of entry into the Italian        natural gas transport system. In 2009, the operation of        TMPC gas pipeline was fully-restored.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| • |   | The TENP pipeline is        1,000-kilometer long (two 500-kilometer long lines) and        has transport capacity of 15.5 BCM/y and four compression        stations. It transports natural gas through Germany, from        the German-Dutch border of Bocholtz to Wallbach at the        German-Swiss border.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • |   | The Transitgas pipeline is        291-kilometer long and has one compression station, that        transports natural gas across Switzerland with its        165-kilometer long main line and a 71-kilometer long        doubling line, from Wallbach where it joins the TENP        pipeline to Passo Gries at the Italian border. It has a        transport capacity of 20 BCM/y. A new 55-kilometer long        line from Oltingue/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. In July 2010, a large landslide interrupted the        transportation through the Transitgas gas pipeline which        was restored at the end of December 2010. Currently, a        new variant of the trunkline is under construction with        expected start-up by May 2011.                                                                                                                                                                                                                                                                                                             |
| • |   | The GreenStream pipeline        started operations in October 2004 for the import of        Libyan gas produced at Eni operated fields Bahr Essalam        and Wafa. It is 520-kilometer long with a transport        capacity of 8 BCM/y and crosses underwater in the        Mediterranean Sea from Mellitah on the Libyan coast to        Gela in Sicily, the point of entry into the Italian        natural gas transport system. In 2009, the pipeline was        upgraded by 3 BCM/y, which is expected to come fully on        stream in 2010, bringing total capacity to 11 BCM/y. In        2010 Eni divested a 25% stake in the company which        operates the pipeline. See "Item 4 –        Significant Business and Portfolio Developments"        above. From February 22, 2011, in consideration of the        current crisis in Libya, supplies of natural gas through        the GreenStream pipeline have been suspended. Assets were        not damaged and the abovementioned suspension does not        affect Eni’s ability to fulfill its supply        obligations with customers. For further details about        this issue, see "Item 5 – Outlook". |

Eni holds a 50% interest in the Blue Stream underwaterpipeline (water depth greater than 2,150 meters) linking theRussian coast to the Turkish coast of the Black Sea. Thispipeline is 774-kilometer long on two lines and has transportcapacity of 16 BCM/y. It is part of a joint venture to sell gasproduced in Russia on the Turkish market.

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> 
***The South Stream project***

Eni and Gazprom are jointly assessing the technical andeconomic aspects of a project to build a new import route toEurope to market gas produced in Russia.

The South Stream pipeline will provide transport capacity of63 BCM/y and is expected to be composed by two sections: (i) anoffshore section crossing the Black Sea from the Russian coast atBeregovaya (the same starting point of the Blue Stream pipeline)to the Bulgarian coast at Varna; and (ii) an onshore sectioncrossing Bulgaria for which two options are currently beingevaluated: one pointing North West and another one pointing SouthWest. The second option envisages crossing Greece and theAdriatic Sea before linking to the Italian network.

On June 18, 2010, Eni and Gazprom signed a Memorandum ofUnderstanding to define terms and conditions for the Frenchcompany EDF entering the South Stream project. As part of theagreement, EDF is expected to acquire an interest in the venturethat is planning to build a new infrastructure to transportRussian gas across the Black Sea and Bulgaria to Europeanmarkets.

Discussions among Eni, Gazprom and EdF in order to implementthe latter’s accessions to the offshore section of theProject are ongoing.

 

> 
***Regulated businesses in Italy***

Over the medium-term, management intends to sustain theCompany’s strategies by a selective capital expenditure planfocused in particular on the regulated businesses in Italy withguaranteed returns. Specifically, in the next four-year periodEni plans to invest approximately euro 7.5 billion in the Gas& Power segment of which euro 6.4 billion will mainly bedevoted to: (i) expanding and upgrading transport networks inorder to match the requirements of additional flexibility andsecurity of the system. More than 80% of the total transportcapital expenditures will continue to receive a 2% or 3% premiumon the base allowed return; (ii) developing storage capacity by 4BCM, according to government guidelines provided by LegislativeDecree No. 130/2010 (for further information see below"Regulation of Eni’s Businesses – Gas &Power"), both through the development of new fields and theexpansion of existing capacity; and (iii) upgrading anddeveloping local distribution networks.

Eni, through Snam Rete Gas, a company listed on the ItalianStock Exchange, in which Eni holds a 52.54% interest, operatesmost of the Italian natural gas transport network, are-gasification terminal located in Panigaglia, an extensivelocal distribution network and gas underground storage depositsand related facilities.

Management plans to invest approximately euro 6.4 billion inthe next four years in the regulated businesses mainly directedto upgrading and developing the transport and distributionnetworks and storage capacity, aiming at strengthening security,flexibility and service quality of the gas infrastructures.

Specifically, in the next four-year period Eni plans to expandand upgrade transport networks, the storage regulated capacity,also in accordance with the requirements of Legislative DecreeNo. 130/2010, both through the development of new fields and theexpansion of existing capacity, and upgrade and develop localdistribution networks as well as to provide the substitution ofold gas metering.

Eni, through Snam Rete Gas, operates the re-gasificationterminal operating in Italy at Panigaglia (Liguria). At fullcapacity, this terminal can re-gasify 17,500 CM of LNG per dayand input 3.5 BCM/y into the Italian transport network.

 

> 
*Italian Transport Activity*

Under Legislative Decree No. 164/2000 concerning the openingup of the natural gas market in Italy, transport andre-gasification activities are regulated by the Authority forElectricity and Gas which determines the methods for calculatingtariffs and fixing the return on capital employed. This makestransport a low risk business capable of delivering stablereturns.

Eni’s network extends more than 31,600 kilometers andcomprises: (i) a national transport network extending over 8,894kilometers, made up of high pressure trunk-lines mainly with alarge diameter, which carry natural gas from the entry points tothe system – import lines, storage sites and main Italiannatural gas fields – to the linking points with regionaltransport networks. The national network includes also someinterregional lines reaching important markets; and (ii) aregional transport network extending over 22,786 kilometers, madeup of smaller lines and allowing the transport of natural gas tolarge industrial complexes, power stations and local distribution

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companies in the various local areas served. The majorpipelines interconnected with import trunk-lines that are part ofEni’s national network are:

| • |   | for natural gas        imported from Algeria (Mazara del Vallo delivery point):                      |
|--------|--------|------------------------------------------------------------------------------------------------------|
|   |   | -                                                                                                    |   | two lines with a 48/42-inch        diameters, each approximately 1,500-kilometer long,        including the smaller pipes that cross underwater the        Messina Strait, connect Mazara del Vallo on the Southern        coast of Sicily where they link with the TMPC pipeline        carrying Algerian gas, to Minerbio (near Bologna). This        pipeline is undergoing upgrades with the laying of a        third line with a 48-inch diameter 583-kilometer long (of        these 525 are already operating). At the Mazara del Vallo        entry point the available transport capacity, which is        measured at the beginning of each thermal year starting        on October 1, is approximately 105 mmCM/d; |
| • |   | for natural gas        imported from Libya (Gela delivery point):                                    |
|   |   | -                                                                                                    |   | a 36-inch diameter line,        67-kilometer long linking Gela, the entry point of the        GreenStream underwater pipeline, to the national network        near Enna along the trunkline transporting gas coming        from Algeria. Transport capacity at the Gela entry point        is approximately 35 mmCM/d; |
| • |   | for natural gas        imported from Russia (Tarvisio and Gorizia delivery        points):           |
|   |   | -                                                                                                    |   | two lines with 42/36/34-inch        diameters extending for a total length of approximately        900 kilometers connecting the Austrian network at        Tarvisio. This facility crosses the Po Valley reaching        Sergnano (near Cremona) and Minerbio. This pipeline has        been upgraded by the laying of a third 264-kilometer long        line with a diameter from 48 to 56 inches. The pipeline        transport capacity at the Tarvisio entry point amounts to        approximately 119 mmCM/d plus the transport capacity        available at the Gorizia entry point of approximately 5        mmCM/d; |
| • |   | for natural gas        imported from the Netherlands and Norway (Passo Gries        delivery point): |
|   |   | -                                                                                                    |   | one line, with a 48-inch        diameter and 177-kilometer long that extends from the        Italian border at Passo Gries (Verbania), to the node of        Mortara, in the Po Valley. The pipeline transport        capacity at the Passo Gries entry point amounts to 65        mmCM/d; |
| • |   | for natural gas        coming from the Panigaglia LNG terminal:                                      |

|   |   | -                                                                    |   | one line, with a 30-inch        diameter and 170-kilometer long that links the Panigaglia        terminal to the national transport network near Parma.        The pipeline transport capacity at the Panigaglia entry        point amounts to 13 mmCM/d;                                                                             |
|--------|--------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | for natural gas        coming from the Rovigo Adriatic LNG terminal: |
|   |   | -                                                                    |   | a 36-inch diameter        connection at the Minerbio junction with the        Cavarzere-Minerbio pipeline belonging to Edison        Stoccaggio SpA, which receives gas from the LNG terminal        located offshore of Porto Viro. The pipeline transport        capacity at the Cavarzere entry point amounts to 26        mmCM/d. |

Eni’s system is completed by: (i) eleven compressorstations with a total power of 860 MW used to increase gaspressure in pipelines to the level required for its flow; and(ii) four marine terminals linking underwater pipelines with theon-land network at Mazara del Vallo and Messina in Sicily andFavazzina and Palmi in Calabria. The interconnections managed bySnam Rete Gas in the Italian transport network are guaranteed by22 linkage and dispatching nodes and by 568 plant units includingpressure reduction and regulation plants. These plants allow theregulation of the flow of natural gas in the network andguarantee the connection of pipes working at different pressures.

In 2010, volumes of natural gas input in the national grid(83.32 BCM) increasing by 6.42 BCM from 2009 due to higher gasdeliveries due to a demand recovery. Eni transported 47.87 BCM ofnatural gas on behalf of third parties, up 10.55 BCM from 2009,or 28.3%.

| **Gas        volumes transported**(a) |   | **2008** |   | **2009** |   | **2010** |
|---------------------------------------|--------|----------|--------|----------|--------|----------|
|                                  |   |          |   |          |   |          |

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

| Eni                               |   | 51.80     |   | 39.58     |   | 35.45     |
|-----------------------------------|--------|-----------|--------|-----------|--------|-----------|
| On behalf        of third parties |   | 33.84     |   | 37.32     |   | 47.87     |
|                              |   | **85.64** |   | **76.90** |   | **83.32** |
|                              |   |           |   |           |   |           |

----

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

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**Transport capacity in Italy**

|   |   | **2009-2010 Thermal year** |   | **2010-2011 Thermal year** |
|--------|--------|----------------------------|--------|----------------------------|
|   |   |                            |   |                            |

| **Entry        points** |   | **Available capacity** |   | **Awarded capacity** |   | **Saturation** |   | **Available capacity** |   | **Awarded capacity** |   | **Saturation** |
|-------------------------|--------|------------------------|--------|----------------------|--------|----------------|--------|------------------------|--------|----------------------|--------|----------------|
|                    |   |                        |   |                      |   |                |   |                        |   |                      |   |                |
|                    |   | **(mmCM/d)**           |   | **(mmCM/d)**         |   | **(%)**        |   | **(mmCM/d)**           |   | **(mmCM/d)**         |   | **(%)**        |

| Tarvisio                |   | 119.7     |   | 102.8     |   | 85.9     |   | 119.2     |   | 110.3     |   | 92.5     |
|-------------------------|--------|-----------|--------|-----------|--------|----------|--------|-----------|--------|-----------|--------|----------|
| Mazara del        Vallo |   | 103.6     |   | 98.7      |   | 95.3     |   | 105.0     |   | 98.9      |   | 94.2     |
| Passo Gries             |   | 64.9      |   | 59.0      |   | 90.9     |   | 64.8      |   | 55.0      |   | 84.9     |
| Gela                    |   | 33.0      |   | 32.9      |   | 99.7     |   | 35.2      |   | 34.3      |   | 97.4     |
| Cavarzere (LNG)         |   | 26.4      |   | 21.0      |   | 79.5     |   | 26.4      |   | 24.6      |   | 93.2     |
| Panigaglia        (LNG) |   | 13.0      |   | 7.2       |   | 55.4     |   | 13.0      |   | 7.2       |   | 55.4     |
| Gorizia                 |   | 4.8       |   |      |   |     |   | 4.8       |   | 0.5       |   | 10.4     |
|                    |   | **365.4** |   | **321.6** |   | **88.0** |   | **368.4** |   | **330.8** |   | **89.8** |
|                    |   |           |   |           |   |          |   |           |   |           |   |          |

In 2010, the LNG terminal in Panigaglia (La Spezia)re-gasified 1.98 BCM of natural gas (1.32 BCM in 2009).

 

> 
***Distribution Activity***

Distribution involves the delivery of natural gas toresidential and commercial customers in urban centers through lowpressure networks. The Company’s subsidiary Italgas andother subsidiaries operate in the distribution activity in Italyserving 1,330 municipalities through a low pressure networkconsisting of approximately 50,300 kilometers of pipelinessupplying 5.8 million customers and distributing 8.15 BCM in2010.

Under Legislative Decree No. 164/2000, distribution activitiesare considered a public service and therefore are regulated bythe Authority for Electricity and Gas which determines themethods for calculating tariffs and fixing the return on capitalemployed. This business, therefore, presents low risk and asteady cash generation profile.

Distribution activities are conducted under concessionagreements whereby local public administrations award the serviceof gas distribution to companies. According to Legislative DecreeNo. 164/2000, the award of the service has to take place by acompetitive bid process from the end of a transition period nolater than December 31, 2012. Future concessions will have a termas long as twelve years.

| **Distribution        activity in Italy** |   | **2008** |   | **2009** |   | **2010** |
|-------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                      |   |          |   |          |   |          |

| Volumes distributed:         |   | (BCM)          |   | 7.63      |   | 7.73      |   | 8.15      |
|------------------------------|--------|----------------|--------|-----------|--------|-----------|--------|-----------|
| - on        behalf to Eni    |   |           |   | 6.33      |   | 6.26      |   | 6.30      |
| - on behalf to third parties |   |           |   | 1.30      |   | 1.47      |   | 1.85      |
| Installed        network     |   | (km)           |   | 49,410    |   | 49,973    |   | 50,307    |
| Active meters                |   | (No. of users) |   | 5,676,105 |   | 5,770,672 |   | 5,848,478 |
| Municipalities        served |   | (No.)          |   | 1,320     |   | 1,322     |   | 1,330     |
|                         |   |           |   |           |   |           |   |           |

In particular, in the medium-term Eni intends to consolidateits presence in Italy, by increasing the profitability of itsasset base, security across the network, and improve the servicequality as well as efficiency of services rendered.

 

> 
***Storage***

The storage gas business in Italy is a fully-regulatedactivity which returns are preset by the Italian Authority forElectricity and Gas. Italian regulated storage services areprovided through eight storage fields, based on ten storageconcessions vested by the Ministry of Productive Activities, witha total modulation capacity of 9.2 BCM.

From the beginning of its operations, Stogit progressivelyincreased the number of customers served and the share ofrevenues from third parties.

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| **Storage** |   | **2008** |   | **2009** |   | **2010** |
|-------------|--------|----------|--------|----------|--------|----------|
|        |   |          |   |          |   |          |

| Total storage capacity:                  |   | (BCM)  |   | 13.7   |   | 13.9   |   | 14.2   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| - of which        strategic storage      |   |   |   | 5.1    |   | 5.0    |   | 5.0    |
| - of which available storage             |   |   |   | 8.6    |   | 8.9    |   | 9.2    |
| Available        capacity:               |   | (%)    |   |   |   |   |   |   |
| - share utilized by Eni                  |   |   |   | 39     |   | 30     |   | 29     |
| - share        utilized by third parties |   |   |   | 61     |   | 70     |   | 71     |
| Total offtake from (input to) storage:   |   | (BCM)  |   | 11.57  |   | 16.52  |   | 15.59  |
| - input to        storage                |   |   |   | 6.30   |   | 7.81   |   | 8.00   |
| - offtake from storage                   |   |   |   | 5.27   |   | 8.71   |   | 7.59   |
| Total        customers                   |   | (No.)  |   | 48     |   | 56     |   | 60     |
|                                     |   |   |   |        |   |        |   |        |

In 2010, 8 BCM of gas were inputted to Company’s storagedeposits (an increase of 0.19 BCM from 2009) while 7.59 BCM weresupplied (down 1.12 BCM compared to 2009).

In 2010, storage capacity amounted to 14.2 BCM, of which 5were destined to strategic storage.

The share of storage capacity used by third parties was 71%(70% in 2009).

 

> 
***Capital Expenditures***

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

 

**Refining & Marketing**

Eni’s Refining & Marketing segment engages in thesupply of crude oil, refining and marketing of refined products,trading and shipping of crude oil and product primarily in Italyand in Central-Eastern Europe. In Italy, Eni is the largestrefining and marketing operator in terms of capacity and marketshare. The Company’s operations are fully-integrated throughrefining, supply, trading, logistics and marketing so as tomaximize cost efficiencies and effectiveness of operations.

In 2010, the refining business was hit by a weak tradingenvironment due to higher costs of oil-based feedstock that wasnot followed by a corresponding increase in product prices,pressured by weak demand, high inventories and excess refiningcapacity. In addition, the increased oil price triggered highercosts of energy utilities, which are typically indexed to it.However, those negative trends were more than offset by costefficiencies, supply optimization, lower impairment andamortization charges and stable marketing results enabling theCompany to achieve a significant improvement from theyear-earlier results.

In the medium-term, management expects the trading environmentin Europe to show limited improvements as demand for refinedproducts will stagnate and excess capacity and high worldwide andregional inventory levels and product imbalances will persist onthe marketplace. Although an overall reduction in refiningcapacity is expected. Management also warns against risks offurther oil price increases.

To face expected negative trends in the refining scenario, Eniintends to focus on:

| • |   | efficiency improvements        mainly by achieving energy savings, reducing operating        costs and streamlining logistic operations; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | integration of refining        cycles which will enable the Company to capture cost        reductions or margin expansions; and          |
| • |   | making selective capital        projects to increase refining complexity.                                                                |

In marketing, management plans to improve results byleveraging on better services to customers at Eni’s networkof service stations, growing its market share in selectiveEuropean markets and expanding the contribution to results fromnon-oil activities.

In the 2011-2014 period, we plan to make capital expendituresamounting to euro 2.9 billion, in line with the previous plan,carefully selecting capital projects. Management plans to investapproximately euro 2 billion to upgrade the Company’s bestrefineries mainly by completing and starting-up the EST (EniSlurry Technology) 

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project at the Sannazzaro unit which will upgrade theconversion capacity of the refinery. In marketing, the Companyintends to invest in retail network upgrading and rebranding andfor developing non-oil activities.

As a result of all these actions, management believes that theRefining & Marketing segment will break-even in 2011 and thencontinue to improve profitability and cash generation, under theassumption that there will no improvement in the tradingenvironment compared to 2010.

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

 

> 
**Supply and Trading**

In 2010, a total of 68.25 mmtonnes of crude were purchased bythe Refining & Marketing Division (67.40 mmtonnes in 2009),of which 30.14 mmtonnes from Eni’s Exploration &Production Division. Volumes amounting to 20.95 mmtonnes werepurchased on the spot market, while 17.16 mmtonnes were purchasedunder long-term supply contracts with producing countries.Approximately 25% of crude purchased in 2010 came from Russia,22% from West Africa, 12% from the North Sea, 12% from the MiddleEast, 11% from North Africa, 5% from Italy, and 13% from otherareas.

In 2010, some 36.17 mmtonnes of crude purchased were marketed(up of approximately 60 ktonnes, or 0.2%, from 2009). Inaddition, 3.05 mmtonnes of intermediate products were purchased(2.92 mmtonnes in 2009) to be used as feedstock in conversionplants and 15.28 mmtonnes of refined products (13.98 mmtonnes in2009) were purchased to be sold on markets outside Italy (10.72mmtonnes) and on the domestic market (4.56 mmtonnes) as acomplement to available production.

 

> 
**Refining**

Against the backdrop of a weak outlook for refining margins,in the medium-term, management plans to improve profitability ofthe Company’s refining operations by focusing on operationalefficiency through energy saving, streamlining logistics andfixed cost reductions. Integration actions of Eni’s refiningsystem are expected to mainly target Gela and Taranto refineriesenabling the Company to cut production of low value fuel oil andreduce supply costs. Management also intends to tightly controlcapital expenditure and selectively upgrade conversion capacityand flexibility of the best refineries.

As of December 31, 2010, Eni’s refining system had totalrefinery capacity (balanced with conversion capacity) ofapproximately 37.8 mmtonnes (equal to 757 KBBL/d) and aconversion index of 61%. The conversion index is a measure of arefinery complexity. The higher the index, the wider the spectrumof crude qualities and feedstock that a refinery is able toprocess thus enabling it to benefit from the cost economies whichthe Company generally expects to achieve as certain qualities ofcrude (particularly the heavy ones) may trade at discount withreference to the light crude Brent benchmark. Eni’s five100-percent owned refineries have balanced capacity of 28.2mmtonnes (equal to 564 KBBL/d), with a 65% conversion rate.

In 2010, refinery throughputs in Italy and outside Italy were34.80 mmtonnes.

The Company plans to selectively upgrade its refining systemby increasing complexity and flexibility at its best refineries.The main capital project will be the completion of a newconversion unit at the Sannazzaro refinery designed on the ESTproprietary technology for converting the heavy barrel by almosteliminating residue from conversion processes. The start-up ofthis facility is confirmed to be 2012. Higher conversion capacityis expected to enable the Company to extract value from equitycrude as well as capture opportunities of monetizing heavy crudesand non-conventional resources. Other projects will involve theenhancement of logistic infrastructures at the Taranto unit.

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The table below sets forth certain statistics regardingEni’s refineries as of December 31, 2010.

**Refining system in 2010**

|   |   | Ownership share        (%) |   | Distillation capacity        (total)        (KBBL/d) |   | Distillation capacity        (Eni’s share)        (KBBL/d) |   | Primary balanced refining        capacity (Eni’s share)        (KBBL/d) |   | Conversion index (1)        (%) |   | Fluid catalytic cracking -        FCC (2)        (KBBL/d) |   | Residue conversion        (KBBL/d) |   | Go-Finer        (KBBL/d) |   | Mild Hydro- cracking/        Hydro- cracking        (KBBL/d) |   | Visbreaking/ thermal        cracking        (KBBL/d) |   | Coking        (KBBL/d) |   | Distillation capacity        utilization rate        (Eni’s share)        (%) |   | Balanced refining capacity        utilization rate        (Eni’s share)        (%) |
|--------|--------|----------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|---------------------------------|--------|-----------------------------------------------------------|--------|------------------------------------|--------|--------------------------|--------|--------------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------|--------|------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|

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

| **Wholly owned refineries**                                       |   |   |   | **685**   |   | **685** |   | **564** |   | **65** |   | **69**  |   | **41** |   | **37** |   | **29**  |   | **89**  |   | **46** |   | **70** |   | **91**  |
|-------------------------------------------------------------------|--------|--------|--------|-----------|--------|---------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|---------|
| Italy                                                             |   |   |   |      |   |    |   |    |   |   |   |    |   |   |   |   |   |    |   |    |   |   |   |   |   |    |
|      Sannazzaro                          |   | 100    |   | 223       |   | 223     |   | 180     |   | 61     |   | 34      |   | 11     |   |   |   | 29      |   | 29      |   |   |   | 77     |   | 95      |
|      Gela                                |   | 100    |   | 129       |   | 129     |   | 100     |   | 142    |   | 35      |   |   |   | 37     |   |    |   |    |   | 46     |   | 69     |   | 89      |
|      Taranto                             |   | 100    |   | 120       |   | 120     |   | 120     |   | 72     |   |    |   | 30     |   |   |   |    |   | 38      |   |   |   | 78     |   | 78      |
|      Livorno                             |   | 100    |   | 106       |   | 106     |   | 84      |   | 11     |   |    |   |   |   |   |   |    |   |    |   |   |   | 87     |   | 110     |
|      Porto Marghera                      |   | 100    |   | 107       |   | 107     |   | 80      |   | 20     |   |    |   |   |   |   |   |    |   | 22      |   |   |   | 64     |   | 85      |
| **Partially        owned refineries** (3)                         |   |   |   | **874**   |   | **245** |   | **193** |   | **50** |   | **163** |   | **25** |   |   |   | **99**  |   | **27**  |   |   |   | **83** |   | **109** |
| Italy                                                             |   |   |   |      |   |    |   |    |   |   |   |    |   |   |   |   |   |    |   |    |   |   |   |   |   |    |
|      Milazzo                             |   | 50     |   | 248       |   | 124     |   | 80      |   | 73     |   | 41      |   | 25     |   |   |   | 32      |   |    |   |   |   | 74     |   | 109     |
| Germany                                                           |   |   |   |      |   |    |   |    |   |   |   |    |   |   |   |   |   |    |   |    |   |   |   |   |   |    |
|      Vohburg/Neustadt        (Bayernoil) |   | 20     |   | 215       |   | 43      |   | 41      |   | 36     |   | 49      |   |   |   |   |   | 43      |   |    |   |   |   | 94     |   | 98      |
|      Schwedt                             |   | 8.33   |   | 231       |   | 19      |   | 19      |   | 42     |   | 49      |   |   |   |   |   |    |   | 27      |   |   |   | 96     |   | 99      |
| Czech        Republic                                             |   |   |   |      |   |    |   |    |   |   |   |    |   |   |   |   |   |    |   |    |   |   |   |   |   |    |
|      Kralupy e Litvinov                  |   | 32.4   |   | 180       |   | 59      |   | 53      |   | 30     |   | 24      |   |   |   |   |   | 24      |   |    |   |   |   | 79     |   | 87      |
| **Total        refineries**                                       |   |   |   | **1,559** |   | **930** |   | **757** |   | **61** |   | **232** |   | **66** |   | **37** |   | **128** |   | **116** |   | **46** |   | **73** |   | **93**  |

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

----

| (1) |    | Stated in        fluid catalytic cracking equivalent/topping (% by        weight), based on 100% of balanced primary distillation        capacity.                                                                                                      |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Conversion        plant where vacuum feedstock undergoes cracking at high        pressure and moderate temperature thus producing mostly        high quality gasoline. This kind of plant guarantees high        operating flexibility to the refinery. |
| (3) |    | Capacity of        conversion plant is 100%.                                                                                                                                                                                                            |

 

> 
***Italy***

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

The **Sannazzaro** refinery has balanced refining capacityof 180 KBBL/d and a conversion index of 61.2%. Managementbelieves that this unit is among the most efficient refineries inEurope. Located in the Po Valley, it mainly supplies markets inNorth-Western Italy and Switzerland. The high degree offlexibility and conversion capacity of this refinery allows it toprocess a wide range of feedstock. From a logistical standpointthis refinery is located along the route of the Central EuropePipeline, which links the Genoa terminal with French speakingSwitzerland. This refinery contains two primary distillationplants and relevant facilities, including three desulfurizationunits. Conversion is obtained through a fluid catalytic cracker(FCC), two hydrocrackers (HdCK), with the last unit entered intooperations in June 2009, which enable middle distillateconversion and a visbreaking thermal conversion unit with agasification facility using the heavy residue from visbreaking(tar) to produce syn-gas to feed the nearby EniPower power plantat Ferrera Erbognone. Eni is developing a conversion plantemploying the Eni Slurry Technology with a 23 KBBL/d capacity forthe processing of extra heavy crude with high sulfur contentproducing high quality middle distillates, in particular gasoil,and reducing the yield of fuel oil to zero. Start-up of thisfacility is scheduled in late 2012.

The **Taranto** refinery has balanced refining capacity of120 KBBL/d and a conversion index of 72%. This refinery canprocess a wide range of crude and other feedstock. It principallyproduces fuels for automotive use and residential heatingpurposes for the Southern Italian markets. Besides its primarydistillation plants and relevant facilities, including two unitsfor the desulfurization of middle distillates, this refinerycontains a two-stage thermal conversion plant(visbreaking/thermal cracking) and an RHU conversion plant forthe conversion of high sulfur content residues into valuableproducts and catalytic cracking feedstocks. It processes most ofthe oil produced in Eni’s Val d’Agri fields carried toTaranto through the Monte Alpi pipeline (in 2010 a total of 1.8mmtonnes of this oil were processed). A new hydro-cracking unitwith a capacity of 17 KBBL/d started production in 2010 expandingthe conversion capacity of the refinery.

The**Gela** refinery has balanced refining capacity of 100KBBL/d and a conversion index of 142.4%. This refinery is locatedon the Southern coast of Sicily and is highly integrated withupstream operations as it processes heavy crude produced fromEni’s nearby offshore and onshore fields in Sicily. Inaddition, it is integrated downstream as it supplies largevolumes of petrochemical feedstock to Eni’s in sitepetrochemical plants. The refinery also manufactures fuels forautomotive use and petrochemical feedstock. Its high conversionlevel is ensured by an FCC unit with go-finer for the upgradingof feedstocks and two coking plants for the vacuum conversion ofheavy residues. The power plant of this refinery also containsmodern residue and exhaust fume treatment plants which allow fullcompliance with the tightest environmental standards. An upgradeof the Gela 

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refinery is underway by means of an upgrade of its powerplant, mainly through the revamping of its boilers, aimed atincreasing profitability by exploiting the synergies derivingfrom the integration of refining and power generation.

The **Livorno**refinery, with balanced refining capacityof 84 KBBL/d and a conversion index of 11.4%, manufactures mainlygasoline, fuel oil for bunkering and lubricant bases. Besides itsprimary distillation plants, this refinery contains two lubricantmanufacturing lines. Its pipeline links with the local harbor andwith the Florence storage sites by means of two pipelinesoptimizes intake, handling and distribution of products.

The **Porto Marghera** refinery, with balanced refiningcapacity of 80 KBBL/d and a conversion index of 20.2%, thisrefinery supplies mainly markets in North-Eastern Italy andAustria. Besides its primary distillation plants, this refinerycontains a two-stage thermal conversion plant(visbreaking/thermal cracking) designed to increase yields ofvaluable products.

 

> 
***Rest of Europe***

In Germany, Eni holds an 8.3% interest in the Schwedt refineryand a 20% interest in Bayernoil, an integrated pole that includedVohburg and Neustadt refineries. Eni’s refining capacity inGermany amounts to approximately 60 KBBL/d mainly used to supplyEni’s distribution network in Bavaria and Eastern Germany.

Eni holds a 32.4% stake in Ceska Rafinerska, which includestwo refineries, Kralupy and Litvinov, in the Czech Republic.Eni’s share of refining capacity amounts to about 53 KBBL/d.

In addition, through its 33.34% interest in Galp, Eniparticipates two refineries in Portugal: a small one in Portospecialized in the manufacture of lubricant bases and a largerand more complex refinery in Sines integrated with petrochemicalsproduction.

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

| **Availability        of refined products** |   | **2008** |   | **2009** |   | **2010** |
|---------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                        |   |          |   |          |   |          |

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

| **ITALY**                                                              |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| **Refinery        throughputs**                                        |   |      |   |   |      |   |   |      |   |
| At wholly-owned refineries                                             |   | 25.59     |   |   | 24.02     |   |   | 25.70     |   |
| Less input        on account of third parties                          |   | (1.37     | )      |   | (0.49     | )      |   | (0.50     | )      |
| At affiliates refineries                                               |   | 6.17      |   |   | 5,87      |   |   | 4.36      |   |
| **Refinery        throughputs on own account**                         |   | **30.39** |   |   | **29,40** |   |   | **29.56** |   |
| Consumption and losses                                                 |   | (1.61     | )      |   | (1.60     | )      |   | (1.69     | )      |
| **Products        available for sale**                                 |   | **28.78** |   |   | **27.80** |   |   | **27.87** |   |
| Purchases of refined products and change in        inventories         |   | 2.56      |   |   | 3,73      |   |   | 4.24      |   |
| Products        transferred to operations outside Italy                |   | (1.00     | )      |   | (0.96     | )      |   | (0.92     | )      |
| Consumption for power generation                                       |   | (1.13     | )      |   | (1.00     | )      |   | (0.96     | )      |
| **Sales        of products**                                           |   | **28.92** |   |   | **26.68** |   |   | **27.01** |   |
| **OUTSIDE ITALY**                                                      |   |      |   |   |      |   |   |      |   |
| **Refinery        throughputs on own account**                         |   | **5.45**  |   |   | **5.15**  |   |   | **5.24**  |   |
| Consumption and losses                                                 |   | (0.25     | )      |   | (0.25     | )      |   | (0.24     | )      |
| **Products        available for sale**                                 |   | **5.20**  |   |   | **4.90**  |   |   | **5.00**  |   |
| Purchases of finished products and change in        inventories        |   | 15.14     |   |   | 10.12     |   |   | 10.61     |   |
| Products        transferred from Italian operations                    |   | 1.42      |   |   | 3.89      |   |   | 4.18      |   |
| **Sales of products**                                                  |   | **21.76** |   |   | **18.91** |   |   | **19.79** |   |
|                                                                   |   |           |        |   |           |        |   |           |        |
| **Refinery        throughputs on own account**                         |   | **35.84** |   |   | **34,55** |   |   | **34.80** |   |
| *of which: refinery throughputs of equity        crude on own account* |   | *6.98*    |   |   | *5,11*    |   |   | *5.02*    |   |
|                                                                   |   |           |        |   |           |        |   |           |        |
| **Total        sales of refined products**                             |   | **50.68** |   |   | **45.59** |   |   | **46.80** |   |
| **Crude oil sales**                                                    |   | **26.00** |   |   | **36,11** |   |   | **36.17** |   |
|                                                                   |   |           |        |   |           |        |   |           |        |
| **TOTAL        SALES**                                                 |   | **76.68** |   |   | **81.70** |   |   | **82.97** |   |
|                                                                   |   |           |        |   |           |        |   |           |        |

In 2010, refining throughputs were 34.80 mmtonnes, up 0.7%from 2009.

Volumes processed in Italy increased by approximately 160ktonnes, or 0.5%, from 2009 mainly due to a better performance atthe Livorno, Gela and Taranto plants as the trading environmentimproved from a year ago and 

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optimization of refining cycles was implemented. In addition,higher volumes were processed due to the coming on stream of anew hydro-cracking unit in Taranto and lower planned standstillsaffected the partially-owned Milazzo refinery. These effects werepartly offset by the termination of a process contract on theSaras third-party refinery (down 1,966 ktonnes). Eni’srefining throughputs outside Italy increased by 1.7% supported byhigher refinery throughput in the Czech Republic as a consequenceof increased margins and demand recovery.

Total throughputs in wholly-owned refineries were 25.70mmtonnes, up by approximately 1.68 mmtonnes (or 7%) from 2009,reflecting an improved refinery utilization rate which reached91%. This increase reflects feedstock integration in refinerycycles and improved throughput margins, in particular forlubricants.

Approximately 15.8% of volumes of processed crude was suppliedby Eni’s Exploration & Production segment (16.3% in2009) representing a 0.5 percentage point decrease from 2009,corresponding to a lower volume of approximately 90 ktonnes.

 

> 
**Logistics**

Eni is a primary operator in storage and transport ofpetroleum products in Italy with its logistical integratedinfrastructure consisting of 21 directly managed storage sitesand a network of petroleum product pipelines for the sale andstorage of refined products, LPG and crude.

Eni’s logistic model is organized on hub structureincluding five main areas. These hubs monitor and centralize thehandling of products flows aiming to drive forward moreefficiency particularly in cost control of collection anddelivery of orders.

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

Eni operates in the transport of oil and refined products: (i)by sea through spot and long-term lease contracts of tankerships; and (ii) on land through the ownership of a pipelinenetwork extending approximately 1,447 kilometer-long. Secondarydistribution to retail and wholesale markets is effected throughthird parties who also own their means of transportation, in someinstances with minority participation of Eni.

 

> 
**Marketing**

Eni markets a wide range of refined petroleum products,primarily in Italy, through an extensive operated network ofservice stations, franchises and other distribution systems.

 

 

 

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The table below sets forth Eni’s sales of refinedproducts by distribution channel for the periods indicated.

| **Oil        products sales in Italy and outside Italy** |   | **2008** |   | **2009** |   | **2010** |
|----------------------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                                     |   |          |   |          |   |          |

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

| *Italy*                         |   |      |   |      |   |      |
|---------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Retail                          |   | 8.81      |   | 9.03      |   | 8.63      |
| Wholesale                       |   | 11.15     |   | 9.56      |   | 9.45      |
|                            |   | **19.96** |   | **18.59** |   | **18.08** |
| Petrochemicals                  |   | 1.70      |   | 1.33      |   | 1.72      |
| Other        sales              |   | 7.26      |   | 6.76      |   | 7.21      |
| **Total**                       |   | **28.92** |   | **26.68** |   | **27.01** |
| *Outside        Italy*          |   |      |   |      |   |      |
| Retail                          |   | 3.22      |   | 2.99      |   | 3.10      |
| Wholesale                       |   | 4.50      |   | 4.07      |   | 4.30      |
|                            |   | **7.72**  |   | **7.06**  |   | **7.40**  |
| Other        sales              |   | 12.52     |   | 11.85     |   | 12.39     |
| **Total**                       |   | **20.24** |   | **18.91** |   | **19.79** |
| **Iberian        Peninsula**(a) |   | **1.52**  |   |      |   |      |
| *of which:*                     |   |      |   |      |   |      |
| *Retail*                        |   | *0.64*    |   |      |   |      |
| *Wholesale*                     |   | *0.88*    |   |      |   |      |
|                            |   |           |   |           |   |           |
| **TOTAL        SALES**          |   | **50.68** |   | **45.59** |   | **46.80** |
|                            |   |           |   |           |   |           |

----

| (a) |   | Downstream        activities in the Iberian Peninsula were divested to Galp        in October 2008. |
|-----|--------|-----------------------------------------------------------------------------------------------------|

In 2010, sales volumes of refined products (46.80 mmtonnes)were up of 1.21 mmtonnes from 2009, or 2.7%, mainly due to highervolumes sold to oil companies and traders in Italy and outsideItaly.

 

> 
***Retail Sales in Italy***

The re-branding of Eni’s service stations and theupgrading of Eni’s retail network progressed in 2010. In2010, 463 service stations in Italy were re-branded to the"eni" brand, corresponding to approximately 10% of theretail network, with priority awarded to high throughput servicestations with non-oil activities.

In marketing operations, Eni plans to strengthen itscompetitive positioning in Italy and to expand sales of fuels andnon-oil products as well as expanding its share in the domesticretail market for fuels by 2014, up from 30.4% in 2010. Toachieve those results, management intends to upgrade the networkof service stations by starting-up new outlets with high servicestandards, improve the quality and range of services offered tothe Company’s customers in order to boost customerretention, enhancing the offer of premium products, and developnon-oil activities under the "eni" brand.

A strong focus will be devoted to pursue high levels ofoperating efficiency.

In 2010, retail sales in Italy of 8.63 mmtonnes decreased byapproximately 400 ktonnes, down 4.4% driven by lower demand whichmainly impacted gasoline and, to a lesser extent gasoil,reflecting a decline in domestic fuel demand, as well as risingcompetitive pressure and price elasticity. Average throughputrelated to gasoline and gasoil (2,322 kliters) decreased byapproximately 160 kliters from 2009. Eni’s retail marketshare for 2010 was 30.4%, down 1.1 percentage point from 2009(31.5%).

At December 31, 2010, Eni’s retail network in Italyconsisted of 4,542 service stations, 68 more than at December 31,2009 (4,474 service stations), resulting from the positivebalance of acquisitions/releases of lease concessions (74 units),the opening of new service stations (11 units), partly offset bythe closing of service stations with low throughput (13 units)and the release of 4 service stations under highway concession.

In 2010, also fuel sales of the Blu line – fuels withhigh performance and low environmental impact – recordedlower sales from 2009, reflecting weak domestic consumption. Inparticular, sales of BluDieselTech declined slightly down from2009, approximately amounting to 573 ktonnes (689 mmliters), andrepresented 10.3% of gasoil sales on Eni’s retail network.At December 31, 2010, service stations marketing BluDieselTechtotaled 4,071 units (4,104 at 2009 year end) coveringapproximately 90% of Eni’s network.

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Retail sales of BluSuper amounted to 70 ktonnes (approximately94 mmliters), decreasing by approximately 12 ktonnes from 2009,and covered 2.6% of gasoline sales on Eni’s retail network(down 0.1% from a year ago). At December 31, 2010, servicestations marketing BluSuper totaled 2,672 units (2,679 atDecember 31, 2009), covering approximately 59% of Eni’snetwork.

In February 2010, in replacement of the previous promotionalcampaign "You&Agip", Eni launched the new"you&eni" loyalty points program, which will last 3years. This three-year long initiative offered prizes tocustomers in proportion to their purchases of fuels andconvenience items through the accumulation of points on a loyaltycard at service stations’ stores as well as at the ones ofcertain partners to the program. As of December 31, 2010, thenumber of customers that actively used the card in the yearamounted to approximately 5 million. The average number of cardsactive each month was approximately 2.8 million. Volumes of fuelmarketed under this initiative represented approximately 40% ofoverall volumes marketed on Eni’s network.

In 2010, the success of Eni’s "Iperself"promotional campaign continued. This promotion provides adiscount to customers purchasing fuel in self-service stationsduring closing hours. Jointly with other marketing activitiesthis initiative supported sales against the backdrop of a weakdemand and increased price elasticity.

 

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

Eni’s strategy in the rest of Europe is focused onselectively growing its market share, particularly Eastern andCentral Europe leveraging on recent acquisitions in Austria andsynergies ensured by the proximity of these markets to Eni’sproduction and logistic facilities, brand awareness and economiesof scale.

In 2010, retail sales of refined products marketed in the restof Europe (3.10 mmtonnes) were up 3.7% from 2009. The increasewas driven by volume additions in Austria, reflecting thepurchase of service stations, and by enhanced performance inEastern Europe (particularly in Slovakia and Romania), as well asin Germany and France.

At December 31, 2010, Eni’s retail network in the rest ofEurope consisted of 1,625 units, an increase of 113 units fromDecember 31, 2009 (1,512 service stations). The network evolutionwas as follows: (i) positive balance of acquisitions/releases oflease concessions (19 units) with positive changes in Austria andHungary; (ii) purchased 114 service stations; (iii) opened 5 newoutlets; and (iv) 25 low throughput service stations were closed.Average throughput (2,441 kliters) slightly decreased from 2009(2,461 kliters).

The key markets of Eni’s presence are: Austria with a 7%market share, Hungary with 11.9%, Czech Republic with 11.8%,Slovakia with 9.7%, Switzerland with 6.5% and Germany with a 3.4%on national base. These market shares were calculated by Enibased on public data on national consumption and Eni’s salesvolumes.

Non-oil activities in the rest of Europe are carried out underthe CiaoAgip® brand name in 1,146 service stations,of which 395 are in Germany and 173 in France, with a 71%coverage of the network and a virtually complete coverage ofowned stations.

 

> 
***Other businesses***

*Wholesale*

Eni markets gasoline and other fuels on the wholesale marketin Italy, including diesel fuel for automotive use and forheating purposes, for agricultural vehicles and for vessels andfuel oil. Major customers are resellers, agricultural users,manufacturing industries, public utilities and transports, aswell as final users (transporters, condominiums, farmers,fishers, etc.).

Eni provides its customers with its expertise in the area offuels with a wide range of products that cover all marketrequirements. Along with traditional products provided with thehigh quality Eni standard, there is also an innovative lowenvironmental impact line, which includes AdvanceDieselespecially targeted for heavy duty public and private transports.Customer care and product distribution is supported by awidespread commercial and logistical organization presence allover Italy and articulated in local marketing offices and anetwork of agents and concessionaires.

In 2010, sales volumes on wholesale markets in Italy (9.45mmtonnes) were down by approximately 110 ktonnes from 2009, or1.2%, mainly reflecting a decline in domestic consumption inparticular of fuel oil by industrial customers. Eni’swholesale market share for 2010 averaged 29.2%, up 1.6 percentagepoints from 2009 (27.6%).

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Sales on wholesale markets in the rest of Europe (3.88mmtonnes) increased by approximately 220 ktonnes, or 6%, mainlyin Austria, due to purchase of service stations, in France due tohigher bitumen sales and in Germany, due to a large productavailability and a recovery in consumption.

Supplies of feedstock to the petrochemical industry (1.72mmtonnes) increased by approximately 390 ktonnes due to demandrecovery.

Other sales (19.60 mmtonnes) increased by approximately 990ktonnes, or 5.3%, mainly due to higher sales volumes to the cargomarket and to oil companies.

Eni also markets jet fuel directly at 46 airports, of which 27are in Italy. In 2010, these sales amounted to 1.8 mmtonnes (ofwhich 1.4 mmtonnes are in Italy).

Eni is also active in the international market of bunkering,marketing marine fuel mainly in 40 ports, of which 23 are inItaly. In 2010, marine fuel sales were 2.03 mmtonnes (1.97mmtonnes in Italy).

 

> 
*LPG*

In Italy, Eni is leader in LPG production, marketing and salewith 592 ktonnes sold for heating and automotive use equal to a17.6% market share. An additional 217 ktonnes of LPG weremarketed through other channels mainly to oil companies andtraders.

LPG activities in Italy are supported by direct production,availability from 5 bottling plants and 4 owned storage sites, inaddition to products imported at coastal storage sites located inLivorno, Naples and Ravenna.

In order to expand its presence on the marketplace, in themedium-term Eni plans to increase the number of service stationsproviding dispensers for LPG for automotive use, targeting anincrease market share to 26% by 2014.

 

> 
*Lubricants*

Eni operates seven (owned and co-owned) blending plants, inItaly, Europe, North and South America and the Far East. With awide range of products composed of over 650 different blends Enimasters international state-of-the-art know-how for theformulation of products for vehicles (engine oil, special fluidsand transmission oils) and industries (lubricants for hydraulicsystems, industrial machinery and metal processing).

In Italy, Eni is leader in the manufacture and sale oflubricant bases. Base oils are manufactured primarily atEni’s refinery in Livorno. Eni also owns one facility forthe production of additives and solvents in Robassomero.

In 2010, retail and wholesale sales in Italy amounted to 106ktonnes with a 24.1% market share. Eni also sold approximately 4ktonnes of special products (white oils, transformer oil andanti-freeze fluids). Outside Italy sales amounted toapproximately 120 ktonnes, of these about 60% were registered inEurope (mainly Spain, Germany, and France).

 

> 
*Oxygenates*

Eni, through its subsidiary Ecofuel (Eni’s interest100%), sells approximately 1.7 mmtonnes/y of oxygenates mainlyethers (approximately 6.5% of world demand) and methanol(approximately 1.1% of world demand). About 81% of products aremanufactured in Italy in Eni’s plants in Ravenna, inVenezuela (in joint venture with Pequiven) and Saudi Arabia (injoint venture with Sabic) and the remaining 19% is bought andresold.

Eni also distributes bio-ETBE on the Italian market incompliance with the new legislation indicating the minimumcontent of bio-fuels. Bio-ETBE is a kind of MTBE that gained arelevant position in the formulation of gasoline in the EuropeanUnion, due to the fact that it is produced from ethanol fromagricultural crops and qualified as bio-component in the Europeandirective on bio-fuels.

Starting from March 1, 2010, Italian regulation on bio-fuelscontent has been changed from 3% to 3.5%. With the use ofBio-ETBE and FAME Eni covered the compliance within 98%. FromJanuary 1, 2011, the content increases to 4%. Eni expects tocover compliance in the same manner as in 2010.

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> 
***Capital Expenditures***

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

 

**Engineering & Construction**

Eni engages in engineering, construction and drilling bothoffshore and onshore for the oil and gas industry through Saipem,a subsidiary listed on the Italian Stock Exchange (Eni’sinterest is 43%), and Saipem’s controlled subsidiaries.Saipem boasts a strong competitive position in the market forservices to the oil industry, particularly in executing large,complex EPC contracts for the construction of offshore andonshore facilities and systems to develop hydrocarbons reservesas well as LNG, refining and petrochemicals plants, pipelinelayering and offshore and onshore drilling services. The Companyowes its market position to technological and operational skillswhich we believe are acknowledged in the marketplace due to itscapabilities to operate in frontier areas and complex ecosystems,efficiently and effectively managing large projects, engineeringcompetencies and availability of technologically-advanced vesselsand rigs which have been upgraded in recent years through a largecapital expenditure plan. Management expects to furtherstrengthen Saipem’s competitive position in the medium-term,leveraging on its business model articulated across variousmarket sectors combined with a strong competitive position infrontier areas, which are traditionally less exposed to thecyclical nature of this market. In particular, Saipem plans toimplement the following strategic guidelines: (i) to maximizeefficiency in all business areas at the same time maintaining topexecution and security standards, preserve competitive supplycosts, optimize the utilization rate of the fleet, increasestructure flexibility in order to mitigate the effects ofnegative business cycles as well as develop and promote a companyculture that will permit identification and management of risksand business opportunities; (ii) to continue focusing on the morecomplex and difficult projects in the strategic segments ofdeepwater, FPSO, heavy crude and LNG (offshore and onshore, forthe gas monetization) upgrading; (iii) to promote local contentin terms of employment of local contractors and assets instrategic countries where large projects are carried outsupporting the development of delocalized logistic hubs andconstruction yards when requested by clients in order to achievea long-term consolidation of its market position in thosecountries; (iv) to leverage on the capacity to execute internallymore phases of large projects on an EPC and EPIC basis, pursuingbetter control of costs and terms of execution adapting withflexibility to clients’ needs, thus expanding theCompany’s value proposition; and (v) to complete theexpansion and revamping program of its construction and drillingfleet in consideration of the future needs of the oil and gasindustry, in order to confirm the Company’s leading positionin the segment of complex projects with high profitability.

Saipem expects to invest approximately euro 2.4 billion overthe next four years to complete the upgrading program of itsfleet of vessels and rigs, further expanding the operationalfeatures, the dimension and the geographical reach and of itsfleet as well as to support the activities related to theexecution of projects in portfolio and the acquisition of neworders.

Orders acquired in 2010 amounted to euro 12,935 million, ofthese projects 94% are to be carried out outside Italy, whileorders from Eni companies represented 7% of the total. Orderbacklog was euro 20,505 million as of December 31, 2010 (euro18,730 million as of December 31, 2009). Projects to be carriedout outside Italy represented 94% of the total order backlog,while orders from Eni companies amounted to 16% of the total.

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Orders acquired**                                |   | (euro million) |   | **13,860** |   | **9,917**  |   | **12,935** |
|----------------------------------------------------|--------|----------------|--------|------------|--------|------------|--------|------------|
| Offshore        construction                       |   |           |   | 4,381      |   | 5,089      |   | 4,600      |
| Onshore construction                               |   |           |   | 7,522      |   | 3,665      |   | 7,744      |
| Offshore        drilling                           |   |           |   | 760        |   | 585        |   | 326        |
| Onshore drilling                                   |   |           |   | 1,197      |   | 578        |   | 265        |
| Originated        by Eni companies                 |   | (%)            |   | 4          |   | 32         |   | 7          |
| To be carried out outside Italy                    |   | (%)            |   | 94         |   | 79         |   | 94         |
| **Order        backlog and breakdown by business** |   | (euro million) |   | **19,105** |   | **18,730** |   | **20,505** |
| Offshore construction                              |   |           |   | 4,682      |   | 5,430      |   | 5,544      |
| Onshore        construction                        |   |           |   | 9,201      |   | 8,035      |   | 10,543     |
| Offshore drilling                                  |   |           |   | 3,759      |   | 3,778      |   | 3,354      |
| Onshore        drilling                            |   |           |   | 1,463      |   | 1,487      |   | 1,064      |
| Originated by Eni companies                        |   | (%)            |   | 13         |   | 22         |   | 16         |
| To be        carried out outside Italy             |   | (%)            |   | 98         |   | 93         |   | 94         |
|                                               |   |           |   |            |   |            |   |            |

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> 
*Offshore construction*

Saipem is well positioned in the market of large, complexprojects for the development of offshore hydrocarbon fieldsleveraging on its technical and operational skills, supported bya technologically-advanced fleet, the ability to operate incomplex environments, and engineering and project managementcapabilities acquired on the marketplace over recent years.Saipem intends to consolidate its market share strengthening itsEPIC oriented business model and leveraging on its satisfactorylong-term relationships with the major oil companies and NationalOil Companies ("NOCs"). Higher levels of efficiency andflexibility are expected to be achieved by reaching thetechnological excellence and the highest economies of scale inits engineering hubs employing local resources in contexts wherethis represents a competitive advantage, integrating in its ownbusiness model the direct management of construction processthrough the creation of a large construction yard in South-EastAsia and revamping/upgrading its construction fleet. Over thenext years, Saipem will invest in the upgrading of its fleet, bybuilding a pipelayer, a field development ship for deepwater, anFPSO and other supporting assets for offshore activity.

Saipem’s offshore construction fleet is made up 33vessels and a large number of robotized vehicles able to performadvanced subsea operations. Its major vessels are: (i) the Saipem7000 semisubmersible dynamic positioned vessel, with 14 ktonnesof lift capacity, capable to lay pipelines using the J-laytechnique to the maximum depth of 3,000 meters; (ii) the FieldDevelopment Ship for the development of underwater fields indynamic positioning, provided with cranes lifting up to 600tonnes and a system for J-lay pipelaying to a depth of 2,000meters; (iii) the Castoro 6 semisubmersible vessel, capable oflaying pipes in waters up to 1,000 meters deep; (iv) theSaipem 3000 multifunction vessel for the development ofhydrocarbon fields, able to lay rigid and flexible pipes andprovided with cranes capable of lifting over 2 ktonnes; and (v)the Semac semisubmersible vessel used for large diameterunderwater pipelaying. The fleet also includes remotely operatedvehicles (ROV), highly sophisticated and advanced underwaterrobots capable of performing complex interventions in deepwaters.

The most significant order awarded in 2010 in offshoreconstruction were: (i) the extension of Kashagan Trunklinescontract on behalf of Agip KCO for the installation of theoffshore facilities system relating to the experimental phase ofthe Kashagan field development program in Kazakhstan; (ii) theextension of Kashagan Piles and Flares contract on behalf of AgipKCO for the installation of the offshore facilities systemrelating to the experimental phase of the Kashagan fielddevelopment program in Kazakhstan; (iii) an EPIC contract onbehalf of Petrobras for the P55-SCR project, for risers andflowlines serving the semisubmersible platform P-55 to beinstalled in the Roncador field, offshore Brazil.

 

> 
*Onshore construction*

In the onshore construction business, Saipem is one of thelargest engineering and construction operators on turnkeycontract base at a worldwide level in the oil and gas segment,especially through the acquisition of Snamprogetti. Saipemoperates in the construction of plants for hydrocarbon production(extraction, separation, stabilization, collection ofhydrocarbons, water injection) and treatment (removal andrecovery of sulfur dioxide and carbon dioxide, fractioning ofgaseous liquids, recovery of condensates) and in the installationof large onshore transport systems (pipelines, compressionstations, terminals). Saipem preserves its own competitivenessthrough its technology excellence granted by its engineeringhubs, its distinctive know-how in the construction of projects inthe high-tech market of LNG and the management of large parts ofengineering activities in cost efficient areas. In themedium-term, underpinning upward trends in the oil servicemarket, Saipem will be focused on taking advantage of theopportunities arising from the market in the plant and pipelinesegments leveraging on its solid competitive position in therealization of complex projects in the strategic areas ofMiddle-East, Caspian Sea, Northern and Western Africa and Russia.

The most significant orders awarded in 2010 in Onshoreconstruction were: (i) the EPC contracts on behalf of Abu DhabiGas Development for the construction of a gas processing plant(with a treatment capacity of 1 BCF/d of gas), a sulfur recoveryunit and the related transporting facilities as part of the ShahGas development program in the United Arab Emirates; (ii) an EPCcontract on behalf of Husky Oil for the realization of theCentral Processing Facilities designed for a total of 60 KBBL/dof bitumen production for the first phase of the Sunrise OilSands project near Fort Murray, Alberta, Canada; and (iii) an EPCcontract on behalf of Kharafi National for the construction ofEarly Production Facilities, which will have an oil and gastreatment capacity of 150 KBBL/d and a sulfur granulation plant,for the development of the Jurassic field located in NorthernKuwait.

 

> 
*Offshore drilling*

Saipem is the only engineering and construction contractorthat provides both offshore and onshore drilling services to oilcompanies. In the offshore drilling segment, Saipem mainlyoperates in West Africa, the North Sea, 

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the Mediterranean Sea and the Middle East and boastssignificant market positions in the most complex segments of deepand ultra-deep offshore, leveraging on the outstanding technicalfeatures of its drilling platforms and vessels, capable ofdrilling exploration and development wells at a maximum depth of9,200 meters. In order to better meet industry demands, Saipem isfinalizing an upgrading program of its drilling fleet providingit with state-of-the-art rigs to enhance its role as high qualityplayer capable of operating also in complex and harshenvironments.

In particular, in the following years, Saipem intends tocomplete the building of: the Scarabeo 8 and 9, new generationsemisubmersible platforms, that have been already rented to Enithrough multi-year contracts. In parallel, investments areongoing to renew and to keep up the production capacity of otherfleet equipment (upgrade equipment to the characteristics ofprojects or to clients needs and purchase of support equipment).

Saipem’s offshore drilling fleet consists of 15 vesselsfully-equipped for its primary operations and some drillingplants installed on board of fixed offshore platforms. Its majorvessels are: the Saipem 12000 and Saipem 10000, designed toexplore and develop hydrocarbon reservoir operating in excess of3,600 and 3,000 meters water depth, respectively in full dynamicpositioning. In 2010 those vessels operated in West Africa andFar East. Other relevant vessels are Scarabeo 5 and 7, third andfourth generation semisubmersible rigs able to operate at depthsof 1,900 and 1,500 meters of water, respectively. Averageutilization of drilling vessels in 2010 stood at 100% (90% in2009).

The most significant orders awarded in 2010 in Offshoredrilling were: (i) a 15-month contract (plus additional options)for the use of the semisubmersible platform Scarabeo 3 in Congoand Nigeria on behalf of Addax Petroleum; (ii) a 36-monthcontract for the lease of the jack-up Perro Negro 5 in SaudiArabia on behalf Saudi Aramco; and (iii) an extension until June2013 for the lease of the semisubmersible platform Scarabeo 4 inEgypt on behalf of IEOC.

 

> 
*Onshore drilling*

Saipem operates in this area as a main contractor for themajor international oil companies and NOCs executing its activitymainly in South America, Saudi Arabia, North Africa and, at alower extent, in Europe. In this area, Saipem can leverage itsknowledge of the market, long-term relations with customers andsynergies and integration with other business areas. Saipemboasts a solid track record in remote areas (in particular in theCaspian Sea), leveraging on its own operational skills and itsability to operate in complex environments.

Average utilization of rigs in 2010 stood at 94% (91% in2009). The 86 rigs owned by Saipem at year end were located asfollows: 28 in Venezuela, 19 in Peru, 8 in Saudi Arabia, 7 inAlgeria, 6 in Colombia, 4 in Italy, 3 in Kazakhstan, 3 in Brazil,3 in Ecuador, 2 in Ukraine, 2 in Congo and 1 Bolivia. Saipem alsoused rigs owned by third parties (6 in Peru and 2 in Kazakhstan)as well as rigs owned by the joint company Saipar.

The most significant orders awarded in 2010 in Onshoredrilling were: (i) a contract on behalf on ExxonMobil KazakhstanInc. for the decommissioning and transportation of two rigs ownedby the client already operated by Saipem. Saipem will also carryout conversion activities on one of the two rigs; (ii) a contracton behalf of Repexa in Peru for the lease of a rig with acontract duration of two years; and (iii) a contract on behalf ofConocoPhillips in Algeria for the lease of a rig with a contractduration of six months (plus an additional 18 months option).

 

> 
***Capital Expenditures***

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

 

**Petrochemicals**

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

Eni’s strategy in its petrochemical business is toeffectively and efficiently manage operations in order to lowerthe break-even considering the volatility of costs of oil-basedfeedstock, cyclicality in demand, strong competitive pressuresfrom operators with lower cost structure, taking into account thecommoditized nature of many of Eni’s products. In fact,Eni’s profitability in the petrochemical businesses isparticularly sensitive to movements in product margins that aremainly affected by changes in oil-based feedstock costs and thespeed at which product 

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prices adjust to higher oil prices. See "Item 3 –Risk Factors". In 2010, the Petrochemicals Division trimmedoperating losses from 2009 by improving demand, better productsmargins and cost efficiencies. Management expects the outlook for2011 will be shaping favorably to the Company as the worldeconomy strengthens thus boosting worldwide demand for chemicalcommodities. However, risks will persist due to rising oil priceswhich could put pressure on unit margins of commodities. In lightof this, management is planning for actions intended tostrengthen the product mix of the Company by developing newproducts characterized by higher value added than the currentportfolio, particularly in the businesses of elastomers,polyethylene and styrenics. Further measures will be dedicated toreduce operating costs and improve yields and plant efficiency inthe production of basic ethylene which is the primary input forall downstream productions. To target those objectives,management plans to make capital expenditures amounting to euro 1billion over the next four-year period which will be mainlydirected to develop the product line in the elastomer andpolyethylene businesses, plant upgrading and revamping at theCompany’s cracking units as well as complying with allapplicable regulations on environment, health and safety issues.In addition, the Company plans to develop an initiative toproduce plastics from certain bio-components at the Porto Torresunit in Sardinia, Italy. Other initiatives will involve marketingactivities with the aim of boosting margins by sales channelsoptimization, product portfolio rationalization, includingelimination of unprofitable products, and revision of pricingpolicies. Also licensing activities will be pursued in order toexpand contribution to results from licensing the Company’stechnologies. Based on those planned actions, management expectsto improve profitability and cash flow of the Company’spetrochemicals operations targeting to break-even in 2012 underthe Company’s assumption relating trends in the prices ofcrude oil. See "Item 5 – Outlook".

In 2010, sales of petrochemical products (4,731 ktonnes)increased by 466 ktonnes (or 10.9%) from 2009 as a result of arecovery in demand from the depressed levels experienced ayear-earlier.

Petrochemical production (7,220 ktonnes) increased by 699ktonnes from 2009, or 10.7% in all business areas driven by theneeds to ensure supplies to meet recovery in sales volumes in allEni’s main plants. In addition, the year earlier the Companywas forced to shut down production during the course of the yearin order to avoid accumulating excess of finished products.

In 2010, nominal production capacity decreased by onepercentage point from 2009 due to the closing of the styreneplant in Hythe. The average plant utilization rate, calculated onnominal capacity increased from 65.4% to 72.9% as a result ofhigher volumes produced, in particular in the Priolo, Brindisiand Porto Torres plants.

Average unit sale prices increased by 35.6% from the depressedlevels registered in 2009. The most relevant increase wasregistered in the average price of olefins (up 48% on average)driven by higher costs for oil-based feedstock (the virginnaphtha prices increased by 41% from a year ago) as demands forbasic chemicals increased at a fast pace and supplies wereconstrained. Average unit prices of styrene and polyethyleneincreased on average by 30%, while elastomers achieved lowerincreases.

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

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Basic petrochemicals                |   | 5,110     |   |   | 4,350     |   |   | 4,860     |   |
|-------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Polymers                            |   | 2,262     |   |   | 2,171     |   |   | 2,360     |   |
|                                |   |           |        |   |           |        |   |           |        |
| **Total production**                |   | **7,372** |   |   | **6,521** |   |   | **7,220** |   |
|                                |   |           |        |   |           |        |   |           |        |
| Consumption        of monomers      |   | (3,539    | )      |   | (2,701    | )      |   | (2,912    | )      |
| Purchases and change in inventories |   | 851       |   |   | 445       |   |   | 423       |   |
|                                |   | **4,684** |   |   | **4,265** |   |   | **4,731** |   |
|                                |   |           |        |   |           |        |   |           |        |

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

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Basic petrochemicals      |   | 3,060     |   | 1,832     |   | 2,833     |
|---------------------------|--------|-----------|--------|-----------|--------|-----------|
| Polymers                  |   | 2,961     |   | 2,185     |   | 3,126     |
| Other revenues            |   | 282       |   | 186       |   | 182       |
|                      |   |           |   |           |   |           |
| **Total        revenues** |   | **6,303** |   | **4,203** |   | **6,141** |
|                      |   |           |   |           |   |           |

> 
 

*Basic petrochemicals*

Basic petrochemical revenues (euro 2,833 million) increased byeuro 1,001 million (up 54.6%) from 2009 in all of the mainbusiness segments due to the steep increase in average unitprices (olefins up 48%; intermediates and aromatics up more than30%) as a result of the pricing environment and higher volumessold.

In particular, sales volumes of olefins increased by 17%,intermediates by 10%, while aromatics registered lower increases(up 8%) due to the decreases registered in xylene sales (down5%).

Basic petrochemical production (4,860 ktonnes) increased by510 ktonnes from 2009 (up 11.7%) due to the recovery in thedemand for monomers.

 

> 
*Polymers*

Polymer revenues (euro 3,126 million) increased by euro 941million from 2009 (up 43.1%) as unit prices increased by 30% onaverage. Sales volumes increased on average by 8% (elastomers up11%, styrene up 10%, polyethylene up 6%) due to positive trendsin demand.

Polymers production (2,360 ktonnes) increased by 189 ktonnesfrom 2009 (up 8.7%) driven by a recovery in the main end-markets(automotive, construction and packaging).

Production volumes of elastomers and styrene increased onaverage by 10% from 2009 due to higher production of EPR,nytrilic rubbers, compact polystyrene and ABS. Polyethyleneproduction registered a lower increase (up 7.7%) due to unplannedfacility downtime at the Dunkerque plant.

 

> 
***Capital Expenditures***

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

 

**Corporate and Other activities**

These activities include the following businesses:

| • |   | the "Other        activities" segment comprises results of operations        of Eni’s subsidiary Syndial which runs minor        petrochemical activities and reclamation and        decommissioning activities pertaining to certain        businesses which Eni exited, divested or shut down in        past years; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the "Corporate and        financial companies" segment comprises results of        operations of Eni’s headquarter and certain        Eni’s subsidiaries engaged in treasury, finance and        other general and business support services. Eni’s        headquarter is a department of the parent company Eni SpA        and performs Group strategic planning, human resources        management, finance, administration, information        technology, legal affairs, international affairs and        corporate research and development functions. Through        Eni’s subsidiaries Eni Adfin SpA, Eni International        BV and Eni Insurance Ltd, Eni carries out lending,        factoring, leasing, financing Eni’s projects around        the world and insurance activities, principally on an        inter-company basis. EniServizi, Eni Corporate        University, AGI and other minor subsidiaries are engaged        in providing Group companies with diversified services        (mainly services including training, business support,        real estate and general purposes services to Group’s        companies). |

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

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> 
***Seasonality***

Eni’s results of operations reflect the seasonality indemand for natural gas and certain refined products used inresidential space heating, the demand for which is typicallyhighest in the first quarter of the year, which includes thecoldest months and lowest in the third quarter, which includesthe warmest months. Moreover, year-to-year comparability ofresults of operations is affected by weather conditions affectingdemand for gas and other refined products in residential spaceheating. In colder years that are characterized by lowertemperatures than historical average temperatures, demand for gasand products is typically higher than normal consumptionpatterns, and vice versa.

 

**Research and Development**

Technological research and development ("R&D")and continuous innovation represent key success factors inimplementing Eni’s business strategies as they support ourlong-term competitive performance.

The Company believes that the oil industry has to face anumber of challenges in the near future and that technology willplay a vital role in helping it to effectively manage thosechallenges:

| • |   | continuing uncertainty about        the future evolution of prices and demand for oil and        gas;                                  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
| • |   | limited access to new        hydrocarbon resources, with the consequent problems for        production growth and reserve replacement; |
| • |   | growing interest for the        development of unconventional resources; and                                                           |
| • |   | greater attention to        operations safety in the aftermath of the recent accident        in the Gulf of Mexico.                    |

The reorganization of R&D structures that Eni started in2006 was completed in 2010 with the help of some measures:

| • |   | reorganization of the        research projects portfolio aimed at focusing activity on        industrial objectives while reducing time to completion.        To this end, the total portfolio was reorganized by        strategic themes with priority given to critical        projects, thus achieving a balance between breakthrough        research and technology upgrading. A new assessment        system has been introduced which makes use of Key        Performance Indicators (KPI) that allow to assess the        tangible and intangible value generated by R&D and to        monitor the management of projects;                                                                                                                                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | new approach to the        enhancement and management of intellectual property,        based on the recognition of the value of patents        generated by R&D activities;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| • |   | launch of a cross-business        project for operations safety in extreme environment,        named "Effective control and mitigation of any well        blow-out in super challenging environment";                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| • |   | enhancement of the program        "Along with petroleum" which targets the        exploitation of solar energy by means of polymeric plates        acting as converters and concentrators of the solar        spectrum, and the conversion of bio-mass from waste into        bio-fuels by means of a liquefaction process that allows        to convert organic waste into a bio-oil and the start-up        of activities to develop a possible commercial        application in the short-medium term; and                                                                                                                                                                                                                                                                                                                 |
| • |   | strengthening of strategic        alliances and scientific cooperation projects with        international academic institutions and research centers        which we believe are qualified in the marketplace. As        part of this, in 2008 we signed a research alliance with        the Massachusetts Institute of Technology (MIT), Boston        (USA), focused on innovative technology in the field of        solar energy and in the Oil & Gas business. Within        the alliance the Solar Frontiers Center (SFC) was        inaugurated on May 4, 2010: a research center shared        between MIT and Eni and wholly dedicated to R&D in        solar energy. Other agreements were signed with the Milan        and Turin Polytechnic universities and with the Italian        National Research Center (CNR). |

In 2010, Eni filed 88 patent applications (106 in 2009), 61 ofthese coming from Eni Divisions and Eni Corporate, 10 fromPetrochemicals and 17 from the Engineering & Constructionactivities of Saipem. In particular, 8% of patents concernedrefining processes, 49% were in the field of drilling andcompletion, geology/geophysics of fields and engineering, 8%concerned the environment and 35% concerned innovation onrenewable energy sources. The efficacy and efficiency ofintellectual property management and of know-how disseminationare monitored within the R&D performance assessment system.In 2010, a review of Eni’s patent portfolio was performedthat ended with the decision to abandon obsolete and nonprofitable patents.

In 2010, Eni’s overall expenditure in R&D amounted toeuro 221 million which were almost entirely expensed as incurred(euro 207 million in 2009 and euro 217 million in 2008). 

At December 31, 2010, a total of 1,019 persons were employedin research and development activities (in line with 2009).Below, we describe the main results achieved in research andinnovation for sustainability in 2010. 

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In the next four-year period, Eni plans to spend euro 1.1billion for technological research and innovation activities.Management believes that technological developments may ensurethe Company a competitive advantages in the long-term. 

A summary of the most relevant R&D results obtained duringthe year by each business segment and at a Corporation level isprovided below.

 

> 
**Exploration & Production**

*Advanced exploration techniques- Reverse Time Migration (RTM).* Emerging technology for theprocessing of in depth seismic data aimed at reconstructing theimage of highly complex underground areas. In 2010, theproprietary version has been successfully applied for the firsttime to an exploration project in Angola, allowing theidentification of new oil bearing structures that were notvisible with conventional tools.*- Basin simulation (e-simba**TM**).*This proprietary package contains about 20 integrated softwareitems for assessing the amount and type of hydrocarbonspotentially trapped. In 2010, some of the functions have beendeveloped and applied in about 30 exploration projects incountries such as Venezuela, Ghana, Mozambique, Poland Australia,Angola and Congo, allowing a better probabilistic assessment ofmineral potential.

*Drilling and completion technologies- Extended reach drilling.* Proprietary technology andequipment (Eni continuous circulation device, e-cdTMand aluminum rods) have been used to drill wells in China andAlaska. In China, costs were reduced by 50% as compared toearlier works. *- Innovative technologies to improve drilling safety.* Aportfolio of projects for increasing drilling safety reached anadvanced stage with the in-field testing of special surfacevalves to be integrated in the proprietary equipment for anoptimal drilling control (e-cdTM). An innovativesystem for blow-out control within the well (downhole blow-outisolation packer) has also been tested. In 2010, Eni continuedthe development of the Dual ROV assisted top kill system thatprovides an efficient technique for blow-outs in deepwater wells.The system will be introduced in the sea in 2011. 

*Technologies for field characterization and increase inrecovery rates - Polymer enhanced water injection.*The design phase has beencompleted for the implementation of the project of polymerenhanced water injection in a well in Egypt. The study resultssuggest an approximately 3% increase in the recovery factor.*- Bright Water Injection.* This technology is based on anadditive that is injected in the ground and selectively blocksthe rock parts where water is present, thus potentiallyincreasing the extraction of crude from mature fields.It has been applied in 2010 in two fields in North Africawith positive results and further applications in Congo arescheduled for 2011. *- Tar recovery from tar sands.* A mixed water-solventprocess for obtaining high recovery rates from tar sands (>90%in weight as compared to tar contained in sands) has beendeveloped and applied to different types of sand. A conceptdesign study has been completed for facilities in a pilot plantfor the testing of in situ recovery techniques. *- EOR with acoustic stimulation.*This process is based onsending sound waves into a field through a mechanical liftingsystem designed for this purpose. In 2010, field tests in Egyptwere made in order to assess the potential of this well known butlittle tested technology in controlled conditions. Early resultsindicated a positive effect on oil production in the mature fieldwhere the test was made. 

 

> 
**Refining & Marketing**

*Eni Slurry Technology (EST).* The EST proprietarytechnology is an innovative process for hydro-conversion by meansof a nanodispersed catalyst (slurry) and a peculiar processscheme to refine various kinds of heavy feedstock: residues fromthe distillation of heavy and extra-heavy crude (such as the onesfrom the Orinoco Belt in Venezuela) or non-conventional productssuch as tar sands, characterized by high contents of sulfur,nitrogen, metals, asphaltenes and other pollutants that are hardto manage in conventional refineries. EST does not produceby-products and completely converts feedstocks into distillates.In 2010, testing continued mainly directed to validating thetechnology from the point of view of the upgrading performanceand plant management, and a customized basic on the Zuata crudewas prepared. The first industrial plant with a 23 KBBL/dcapacity is under construction at the Sannazzaro refinery, withstart-up scheduled for 2012.

*Hydrogen SCT-CPO (Short Contact Time - Catalytic PartialOxidation).* It is a reforming technology that can convertgaseous and liquid hydrocarbons (also derived from bio-mass) intosynthetic gas (carbon monoxide and hydrogen). This technology cancontribute to process intensification as it allows to producesynthetic gas and hydrogen using reactors up to 100 times smallerthan those currently in use, with relevant savings. Thedevelopment 

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of this technology, that makes use of oxygen enriched air, hasbeen completed and another version making use of pure oxygen isunder development.

*Nanomaterials.*The use of structured nanomaterials isone of the key elements for innovation and intensification ofprocesses. Projects are underway to study and enhancenanomaterials that could introduce radical improvements inconversion processes. The Dual Catalyst Slurry technology isbased on nanocatalysts and its current tests could lead tobreakthrough developments in EST, as it can increase productivityand quality of end products. The development of a bi-functionalcatalyst is underway that hydrogenates and desulphoratesfeesdtocks and increases the cracking rate and nitrogen removal.In the Flexible FCC (fluid catalytic cracking), new proprietaryzeolite and zeolite-like materials have been developed forincreasing the conversion of heavier fractions without increasingresidues. This additive, associated to a new process scheme couldchange the gasoline/gasoil ratio in favor of the latter. In 2010,application testing continued and confirmed the results obtainedso that scale up has started with the aim of finding the finalformulation to be used in industrial reactors. This applicationis covered by a patent application.

 

> 
**Petrochemicals**

*Elastomers.* A new grade of thermoplastic co-polymer hasbeen industrially homologated to be used in adhesives with lowerviscosity (remaining equal its adhesive/cohesive properties)leading to lower energy consumption in the formulation of thefinal adhesive. At a pilot scale, new hydrogenatedstyrene-butadiene co-polymers to be used as viscosity indeximprovers have been produced and are scheduled to be homologatedby the reference customer. In the lab and pilot plant theadvantage of using a new activator in the polymerization ofterpolymers EPDM with vanadium based catalysts has been confirmedand provided higher yields, improved quality and lowerconsumption of chlorine in the production process.

*Polyethylene.* The production of two new grades of LLDPE(linear low density polyethylene) continued with widedistribution of molecular weight and therefore improvedprocessability and retention of basic mechanic properties. In agas phase plant a new grade of LLDPE for rotomolding applicationwith exenes has been produced entailing a significant improvementof certain basic properties (such as resistance to chemicals).New formulas have been developed for HDPE (high densitypolyethylene) to be used in rotomolding applications in the fieldof phytochemicals. 

*Styrenic polymers.* A new formula of ABS(acrylonitryl-butadiene-styrene polymer) grade from continuousmass has been developed for injection molding. This formuladramatically increases the mechanical properties of productsadjusting their performance to products deriving from emulsions.This allows a relevant recovery in penetration into injectionmolding. After the first industrial campaign, customers expressedtheir satisfaction.

 

> 
**Engineering & Construction**

*Assets*Technological innovation on assets is pursued with the aim ofimproving sustainability, competition and reliability, andreducing the environmental impact of operations. In particular,in 2010 some of the projects underway reached the testing phase:

| • |   | *Equipment.* New        systems for the construction of coverage for soldering        joints on board of pipelaying vessels, techniques for the        remote control of anomalous deformations during the        laying of pipes into the sea and some technologies        complementary to excavation activities for critical        operating scenarios have been validated. Studies were        completed on technologies for the sustainability of        construction of infrastructure in environmentally highly        sensitive areas. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | *Vessels.* Detailed        development and implementation of the main technical        systems and subsystems for production and laying of pipes        on the new pipelaying vessel CastorOne continued.                                                                                                                                                                                                                                                                                                                                       |

*Offshore*Activities were focused on programs dedicated to thecontinued improvement of innovative solutions for the developmentof oil and natural gas fields in the sea. Main activitiesconcerned fields in frontier areas such as deep waters and theArctic, monetization of offshore natural gas reserves by means ofliquefaction technologies applied on floating plants (LNGoffshore) and production from offshore renewable sources:

| • |   | *Subsea processing.* A        new proprietary multi-pipe system for the gravitational        separation of gas and liquids successfully completed the        second testing phase in the framework of a Joint Industry        Project supported by important oil companies. Results        achieved confirmed the efficacy of the separator in real        flow conditions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | *SURF.* Activities        started in 2009 on projects for developing solutions for        new risers to be used in ultra-deep (up to 3,000 meters)        or intermediate depth (between 300 and 600 meters) waters        continued. Work continued on technologies for thermal        isolation and anticorrosion solutions for underwater        operations.            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | *Offshore renewable        sources.* Activities focus mainly on a large scale        prototype of an underwater turbine with 10-meter diameter        called Sabella to be installed in the future off the        coast of Brittany. The participation of the French        Government to the financing of the project was officially        announced at the end of 2010. |

*Onshore*Activity is dedicated to process technologies and theirknow-how and to the application of the most modern andstate-of-the-art technologies from third parties supporting ourclients worldwide in the upstream, midstream and downstream areasin the various phases of completion from engineering toconstruction.

| • |   | *Urea plants.*Work was        aimed at increasing the performance of our        SnamprogettiTM Urea proprietary technology for the        production of fertilizers, licensed worldwide and applied        to date in 120 plants. After having planned and in some        cases also built the largest urea plants in the world        (Engro in Pakistan, Qafco V and VI in Qatar and Matix in        India) based on the operation of single lines for 3,859        tonnes/d, we developed a conceptual study for a future        5,000 tonnes/d train using the same well-established        sequence of technologies. In addition, we are designing a        pilot unit for the recovery of ammonia within the Zero        emission project that will be then built in a commercial        plant. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | *CCS.* Within the        Eni/Enel pilot program on Carbon Capture and Storage,        Saipem is following the design of a pipe for carrying        dense CO2. We completed the project phase of a        line for pilot transport to be located in the Brindisi        power station.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • |   | *ENSOLVEX.* The first        commercial unit based on this proprietary technology for        the remediation of contaminated soil is under        construction at the Gela refinery.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • |   | *Microalgae.* The first        semicommercial unit for removing carbon dioxide from        refinery effluents through bio-fixation by means of        microalgae was completed and delivered. The ensuing        bio-mass can be used for the production of bio-fuels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • |   | *Sulfur treatment.*        Saipem obtained a new patent for the technology for the        treatment and transport of sulfur with zero emissions, a        new method for solidifying liquid sulfur in blocks, thus        consolidating its first class position in sulfur        treatment technologies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

An overview of the main research projects developed during theyear at the Corporate level is provided below.

 

> 
**Exploration & Production Division**

*Cube.*To cope with events similar to that occurred atthe Macondo well in the Gulf of Mexico and the failed attempt tocollect the crude plume with a containing device, Eni prepared adevice (in 1:4 proportion) for the collection and separation ofgas from water and oil near the wellhead on the seabed and testedit in-house up to a flow of 10,000 BBL/d.

*Development of reaction capacity to oil spills on the coastof the Barents Sea and sub-Arctic areas.* The Norwegianproject led by Eni achieved relevant results in 2010 in preparingan emergency plan for the Goliat field in the Barents Sea.Standards for testing disperdents and beach cleaners have beendeveloped in order to use them in case of oil spills near thecoast. These standards will be upheld by Norwegian law and latersuggested at international level.

*GHG program (Green House Gases).* Activities areprogressing part of the pilot project for injecting CO2in the Cortemaggiore gas storage site. Authorizations are pendingto build and operate the plant.

*Water management.* This project promotes the applicationof innovative technologies for the treatment of reinjectedwaters. In 2010, the contract for the supply of a system for theremoval of oil and solids from production waters in the EgyptianDesert has been awarded.

*Organic Rankine Cycle (ORC) Technology for Energy Recovery.*A feasibility study has been completed and the installation ofOrganic Fluid Cycle is underway in the gas powered Fano powerstation (3 MW) by recovering the thermal power dissipated byturbocompressors. This would represent the first application ofthe ORC technique to Eni’s Group.

*Feeding pumps in desert areas with photovoltaic devices.*A contract has been prepared and the engineering is underway fora the supply of photovoltaic systems to be applied onto dieselgenerators for feeding sucker rod pumps in desert areas in Egypt.

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> 
**Gas & Power Division**

*Transport of carbon dioxide by pipeline (TACC).* Thisproject is part of the program of long distance transport ofgases under different pressures with the aim of developingstandards, guidelines and recommendations for future applicationsin carbon capture and storage. In 2010, the technical part of theprogram was laid out as well as the participants in the jointindustrial project. Eni will promote the creation of JIP actionwith other integrated gas companies, e.g. Gasunie and Statoil.

*Monitoring of advanced gas transport systems (MAST andDionisio project).* Eni has developed proprietary technologiesfor the advanced monitoring of gas transport systems (pipelinesand compression stations). In 2010, technologies have beensuccessfully tested for the identification of structural defaults(MAST) that can generate criticalities in transport. Thedevelopment of the Dionisio technology that is based onvibro-acoustic sensors for noticing intrusions and leaks alongtransport pipelines continued. A prototype monitoring system hasbeen installed on the Chivasso-Aosta pipeline.

 

> 
**Refining & Marketing Division**

*Blu fuels and products.*Eni has been working for yearsin R&D for advanced fuels and lubricants that aim atoptimizing engine efficiency and reducing noxious emissions. InFebruary 2010, the Lombardia Region and Eni signed an agreementfor the distribution of "formula Milano" in 50 outlets.This is a type of BluDieselTech with: (i) a total aromaticscontent lower than 18% in weight, as compared to an average 25%currently on sale; (ii) a total polyaromatics content lower 3% inweight as compared to an average 8%; and (iii) cetane number>55 as compared to current standards providing for a minimum51.

*Biofuels.* Eni developed the EcofiningTM technologyin cooperation with UOP that allows for the conversion ofvegetables into Green Diesel. In November 2010, the AmericanInstitute of Chemical Engineers (AICHE) awarded Eni and UOP the2010 Sustainable Energy Award for the activities developed inthis area. Aim of the EcofiningTM technology is theproduction of bio-fuel by means of an integrated refining processthat allows for the hydrotreatment of the renewable portion(vegetable oil, exhausted oil, animal fat) and obtain a superiorproduct in terms of heating value and cetane number thanconventional bio-diesel (FAME).

*Zero waste.* Eni intends to develop a system for thedisposal of industrial sludge alternative to landfills, possiblyassociated to thermal treatment in order to minimize waste. Forthe treatment of industrial, oily and biological waste generatedby the oil industry a thermal process has been studied thatallows for the gasification of sludge that is turned into aninert residue. A patent application has been filed on thisproject. Basic design has been completed of a pilot plant with a50 kg/h capacity along with a feasibility study for an annualvolume of 5,000 tonnes of sludge.

 

> 
**Polimeri Europa**

*Basic petrochemicals.* Positive testing of catalyticoxidation of phenilcyclohexane on a pilot plant was performed aspart of a study aiming at completing a proprietary process forthe direct production of phenol and cyclohexanone, which usesbenzene as sole feedstock, eliminating the production of acetoneas by-product (a toxic and flammable fluid).

*Elastomers.* The first industrial production of newgrades of SBR (styrene-butadiene rubber) has been completed withapplication to high performance (lower energy consumption andreduction in resistance to rolling) in tire materials. In the labEni developed a proprietary technology for new grades ofelastomers for Tyre Green application (with lower emissions) witheven better performance. ESBR and NBR rubber grades have beenobtained at industrial level with low VOCs content.

*Styrenic polymers.* At the Mantova site, in the newpatented technology plant for the expandable polystyreneproduction, the industrialization of expandable polystyrene wassuccessfully completed through a continuous mass system with a 38ktonnes/y capacity. The new products allow a 15% reduction inVOCs which are released in the atmosphere during transformation.

 

> 
**Eni Corporate**

*Photoactive materials.* A Luminescent Solar Concentratorconsists of a slab of transparent material (polymeric or glassy)doped with fluorescent molecules, patented by Eni, which work asmicroscopic light emitters. The emitted 

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radiation is partially concentrated within the slab by totalinternal reflections and is waveguided toward its edges where PVcells are placed. LSCs allow for a substantial decrease instandard PV module costs by reducing the effective cell surfacewith respect to the absorbing surface. The positive resultsobtained at lab level allow the commencement of a pre-commercialphase.

*Use of waste for energy production.* At lab scale Enideveloped a "liquefaction" process for the conversionof the organic waste into bio-oil with a nearly 42% yield (on dryweight) corresponding to an 80% energy recovery. This newtechnology has been patented and successfully applied to theorganic fraction of solid urban waste (FORSU) and to sludge fromwaste purification plants. 

*Micro-organisms for bio-diesel.* Purpose of the projectis the use of micro-organisms (yeasts and bacteria) thataccumulate lipids similar to those deriving from oil-bearingvegetables, that can easily be turned into bio-diesel.The raw material employed by these micro-organisms derivesfrom the treatment of wood-cellulose bio-mass in order to notcompete with food products. The identified yeasts have higherproductivity than the traditional oil crops, including palm.

*EKRT (ElectroKinetic Remediation Technology).* It is atechnology for environmental remediation applicable to mercurypolluted soils. An electrolytic solution is circulated in orderto dissolve the metallic part of mercury, separating it by meansof electro kinesis. This process does not affect the inertportions of mercury and acts selectively only on the mobileportion of mercury, that is also its toxic portion.

 

> 
**Results derived from the Eni-MIT alliance**

*Oil spills in marine environment.* The project derivesfrom the discovery of an innovative material with great selectivecapacity for the absorption of oil dispersed in water. This couldbe a first step towards new systems for treating oil spills inmarine environments.

*Ultraflexible solar cell.* One of the most relevantresults obtained by the Solar Frontier Center: these cells madeof a thin photoactive material covered by a layer of transparentplastic can be bent without breaking or reducing performance andthis allows to cover irregular surfaces without using metalstilts.

*Solar cells on paper.* In this case the photoactivedevice is made on paper as a printed document.The innovative technique is the same used for producingcells on plastic and flexible substrata. A paper cell can bea low cost solution for application where the key aspect is notduration but fast installation and easy transport.

*Photochemical splitting of water*. Aim of this projectis to devise processes for generating oxygen and hydrogen fromwater by means of biological agents using solar light. The mainactors here are nanomaterials synthesized by exploiting theself-assembling capacity of viruses. With this technique weproceeded with the synthesis of new active materials that can beuseful in promoting a sustainable generation of hydrogen fromrenewable sources.

*Biofixation of CO**2**.* CO2in the sea is captured by living organisms that convert it intocalcium carbonate that is a component of their shell. Thesebiological systems have been successfully reproduced in the labwith the use of yeasts. This paves the way for exploiting CO2while producing calcium carbonate and other materials that areconsidered eco-friendly.

 

**Insurance**

In order to control the insurance costs incurred by each ofEni’s business units, the Company constantly assesses itsrisk exposure in both Italian and foreign activities. The Companyhas established a subsidiary, Eni Insurance Ltd, in order toefficiently manage transactions with mutual entities and thirdparties providing insurance policies. Internal insurance riskmanagers work in close contact with business units in order toassess potential underlying business and other type of risks andpossible financial impact on the Group results of operations andliquidity. This process allows Eni to accept risks inconsideration of results of technical and risk mitigationstandards and practices, to define the appropriate level of riskretention and, finally, the amount of risk to be transferred tothe market.

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Eni enters into insurance arrangements through itsshareholding in the OIL Insurance Ltd ("OIL") and withother insurance partners in order to limit possible economicimpacts associated with damages to both third parties and theenvironment occurring in case of both onshore and offshoreaccidents. The main part of this insurance portfolio is relatedto operating risks associated with oil and gas operations whichare insured making use of insurance policies provided by the OIL,a mutual insurance and re-insurance company that provides itsmembers a broad coverage of insurance services tailored to thespecific requirements of oil and energy companies. In addition,Eni makes recourse to insurance companies who we believe areestablished on the marketplace. Insured liabilities varydepending on the nature and type of circumstances; howeverunderlying amounts represent significant shares of the plafondgranted by insuring companies. In particular, in the case of oilspills and other environmental damage, current insurance policiescover costs of cleaning-up and remediating polluted sites, damageto third parties and containment of physical damage up to $1.1billion for offshore events and $1.5 billion for onshore plants(refineries). These are complemented by insurance policies thatcover owners, operators and renters of vessels with the followingmaximum amounts: $1 billion for the fleet owned by the subsidiaryLNG Shipping in the Gas & Power segment and FPSOs usedby the Exploration & Production segment for developingoffshore fields; $500 million for time charters.

Management believes that the level of insurance maintained byEni is generally appropriate for the risks of its businesses.

 

**Environmental Matters**

> 
***Environmental Regulation***

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

A brief description of major environmental laws impactingEni’s activities located in Italy and Europe is outlinedbelow.

 

> 
**Italy**

On April 29, 2006, Legislative Decree No. 152/2006"Environment Regulation" came into force. This wasdesigned to rationalize and coordinate the whole regulation ofenvironmental matters by setting:

| • |   | procedures for Strategic        Environment Assessment (SEA), Environmental Impact        Assessment (EIA) and Integrated Pollution Prevention and        Pollution Control (IPPC); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | procedures to preserve soil,        prevent desertification, effectively manage water        resources and protect water from pollution;                                            |
| • |   | procedures to effectively        manage waste and remediate contaminated sites;                                                                                                     |
| • |   | air protection and reduction        of atmospheric pollution; and                                                                                                                   |
| • |   | environmental liability.                                                                                                                                                            |

The most important changes introduced by the Decree regardedreclamation and remediation activities as this Decree provided asite-specific risk-based approach to determine objectives ofreclamation and remediation projects, cost-effective analysisrequired to evaluate remediation solutions, and criteria forwaste classification.

Decree No. 152/2006 was amended by four subsequent decrees:Legislative Decrees No. 284/2006, No. 4/2008, No. 128/2010 andNo. 205/2010.

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Decree No. 4/2008 introduced important changes regarding SEAand EIA procedures, landfill, waste and remediation. The mostimportant aspects of these regulations to Eni are thoseregulating permits for industrial activities, waste management,and remediation of polluted sites, water protection andenvironmental liability.

Decree No. 128/2010 introduced IPPC regulations and additionalrestricting emission limits for certain critical pollutants, incompliance with the IED directive. In relation to the accidentoccurred in the Gulf of Mexico, the Decree also introduced permitrestrictions regarding offshore activities, in line with theEuropean Parliament Resolution of October 7, 2010 on EU action onoil exploration and extraction in Europe. Eni is planning toreschedule certain offshore activities in the Mediterranean Seaand the North European Sea to take account of such developments. 

Decree No. 205/2010 implemented the Directive No. 2008/98/ECabout waste and adopted the new Special Waste Tracking System(SISTRI) aimed to track waste transfers at national level and toallow a real-time control by authorities. The full operability ofthe system, initially forecasted by July 2010, has beenrescheduled to June 2011.

Decree No. 155/2010 adopted in the Italian law, the Europeanprescriptions on ambient air quality, established by theDirective No. 2008/50/EC. Its main innovation is the definitionof monitoring criteria and emission limits for fine particulatesubstances (PM 2.5), to be achieved by January 1, 2015.

Legislative Decree No. 81/2008 concerned the protection ofhealth and safety in the work place and was designed to regulatethe work environments, equipments and individual protectiondevices, physical agents (noise, mechanical vibrations,electromagnetic fields, optical radiations, etc.), dangeroussubstances (chemical agents, carcinogenic substances, etc.),biological agents and explosive atmosphere, the system of signs,video terminals. Eni worked on the implementation of the generalframework regulations on health and safety concerning preventionand protection of workers at national and European level to beapplied to all kinds of workers and employees.

At the European level, Eni continued its work for applying theREACH Regulation (Registration, Evaluation, Authorization andRestriction of Chemicals, EC Regulation No. 197/2006).

The complexity and range of situations where Eni is operatingimposed the definition and application of principles forconsolidating its performance in health and prevention. To thisend Eni upholds:

| • |   | clear policies;                                                 |
|--------|--------|-----------------------------------------------------------------|
| • |   | an ethical code;                                                |
| • |   | endorsement of international        conventions and principles; |
| • |   | guidelines and procedures;        and                           |
| • |   | sharing of knowledge.                                           |

 

> 
**European Union**

The European Commission has put forward its new Energy Policyfor Europe - EPE, so-called "20-20 by 2020", afar-reaching package of proposals that will deliver on theEuropean Union’s ambitious commitments to fight climatechange, promote renewable energy and increase energy security.The following regulations were published in order to define thecriteria for cutting emissions cost-effectively by 2020 comparedwith levels in 2005:

| • |   | Directive No. 2009/28/EC:        fixing target of 20% share of energy from renewable        sources in 2020. It creates cooperation mechanisms so        that the EU can achieve the targets in a cost effective        way. It also includes a flat 10% target for renewables in        transport (bio-fuels, "green" electricity,        etc.); this legislation also sets out sustainability        criteria that bio-fuels should meet to ensure they        deliver real environmental benefits.                                                                                                                                                                                                                                                                                       |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Directive No. 2009/29/EC:        improves and extends to the third phase (2013-2020) the        greenhouse gas emission allowance trading scheme of the        European Community to provide for a more efficient,        homogeneous and fair system. It defines criteria and        targets for cutting GHG emissions from the sectors        covered by the system (energy and manufacturing        industries) by 21% by 2020 compared with levels in 2005.        The Auctioning Regulation contains a set of rules for the        auctioning processes that should be undertaken for the        auction of allowances from 2013. On December 14, 2010,        Climate Change Committee voted the benchmark decision,        which describes the rules for the free allocation from        2013. |
| • |   | Directive No. 2009/30/EC:        defines the fuel quality and places an obligation on        suppliers to reduce greenhouse gases from the entire fuel        life cycle of 6% by 2020, mostly by an increased use of        bio-fuels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | Directive No. 2009/31/EC:        defines a scenario in order to promote the development        and safe use of Carbon Capture & Storage (CCS), a        suite of technologies that allows the carbon dioxide        emitted by industrial processes to be captured and stored        underground.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • |   | Regulation 443/2009/CE: sets        emissions standards for new passenger cars and targets a        reduction to an average of 120 g CO2/km by        2015, decreasing to a stringent long-term target of 95 g        CO2/km by 2020.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • |   | Decision 406/2009/CE:        defines, for sectors not included in the EU ETS, such as        transport, housing, agriculture and waste, emissions        reduction target of 10% from 2005 levels by 2020 (the        Italian reduction target is fixed at 13%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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Directive No. 2008/1/EC contains the new IPPC and rationalizesall existing regulations on this issue. member states of the EUhave to communicate their national values of emissions into theatmosphere, wastes produced and managed and discharges ofcompounds into waste that are to be included in the EuropeanPollutant Release and Transfer Register (E-PRTR). According tothe E-PRTR, Eni installations shall report data on the ItalianRegister website, by the end of March of each year.

In 2010, Eni has completed the implementation of an IntegratedEnvironmental Information System, able to gather, manage andreport the data on all the pollutants released and off-sitetransferred as requested by PRTR Regulations.

On December 21, 2007, the European Commission published itsproposal of directive on Industrial Emissions. In view of thegeneral call for "better regulation", the draftincorporates the review of six sector-specific directives (IPPC,Large Combustion Plants, VOC – Volatile Organic Compounds– emissions, incineration of waste and titanium industry).The proposed directive intends to enforce BAT definition,together with a tightening of current minimum emission values insome sectors. The new proposal also introduces more robustmonitoring and inspections on installations, the review of permitconditions and the reporting of compliance. The proposal reachedthe final reading phase on July 7, 2010 and the directive wasformally adopted on October 25, 2010 and expected to be publishedby 2011. The directive defines more restricting emission limitsto be observed by the end of 2012, although includes somederogation, as the TNP Transitional National Plan and the optionOpt-Out for those installations that are going to shut down theiroperations by 2023. The member states must transpose theDirective into national legislation by 24 months frompublication.

Moreover in September 2010, the European Commission started apublic internet consultation on the Review of the EnvironmentalImpact Assessment (EIA) Directive (Directive No. 85/337/EC on theassessment of the effects of certain public and private projectson the environment, as amended). The objective of this publicconsultation is to collect opinions on the overall view on thefunctioning and effectiveness of the EIA Directive and possibleareas to be improved/amended. Eni participates to theconsultation, answering the web-questionnaire.

On November 22, 2008, the new directive on waste (DirectiveNo. 2008/98/EC) was published in the Official Journal of theEuropean Union. The new directive simplifies the existinglegislative framework by clarifying definitions, streamliningprovisions and integrating the directives on hazardous waste (No.1991/689/EC) and on waste oils (No. 1975/439/EC). The directiveintroduces a life-cycle approach, focuses on waste policy byimproving the way of resources consumption. The scope is toimprove the recycling market by setting environmental standards,specifying under which conditions certain recycled waste are nolonger considered such. The directive requires that member statestake appropriate measures to encourage the prevention orreduction of waste production and its harmfulness. This can bedone by a combination of several strategies particularly throughthe development of clean technologies, the technical developmentand marketing of products designed so to contribute as little aspossible to increasing the amount of waste. The directive alsosets new recycling targets.

The core of the directive is the introduction of a wastemanagement hierarchy. This hierarchy is as follows: 1. Wasteprevention, 2. Re-use, 3. Recycling, 4. Recovery (includingenergy recovery), 5. Disposal.

Moreover the directive bolsters the importance of the extendedproducer responsibility in the future waste management measures.

The promising results of the UN Conference of Cancun (December2010) related to the definition of a Climate Agreement after2012, have led the European Commission, on March 15, 2011, topresent a Roadmap for transforming the European Union into theworldwide forerunner of low carbon economy by 2050. The Roadmapobjective is cutting greenhouse gas emissions by 80-95% of 1990levels within 2050, by implementing cost-effective measuresaiming mostly at improving energy efficiency. The analysis takesinto consideration costs and savings related to potentialmeasures such as sectoral policies, national and regionallow-carbon strategies and long-term investments. TheCommission’s analysis shows that the global transition to alow carbon and resource-efficient economy will generate multiplebenefits for the EU: energy importation costs savings,improvements in energy security and economy competitiveness.

Following the incident at the Macondo well in the Gulf ofMexico the U.S. Government and other governments have adopted orare likely to adopt more stringent regulations targeting safetyand reliable oil and gas operations in the USA and elsewhere,particularly relating to environmental and health and safetyprotection controls and oversight of drilling operations, as wellas access to new drilling areas. The U.S. Government imposed amoratorium on certain offshore drilling activities throughNovember 30, 2010 (it was suspended in October), and similaractions may be taken by governments elsewhere in the world.Confirming this approach, Italian Authorities have passedlegislation with Law Decree No. 128 on June 29, 2010 thatintroduces certain restrictions to activities for exploring andproducing hydrocarbons; however existing projects for conductingoil and gas operation would not be affected. Eni and otheroperators in the industry have commenced discussions with theItalian Ministry for Economic Development and the Ministry forthe Environment to clarify uncertainties in correctlyinterpreting and applying the new regulations.

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Also the European Parliament has increased its activities inthe area of environmental protection in the field of hydrocarbonextraction. On October 7, 2010 the European Parliament approved aresolution on this issue and rejected a proposed moratorium onnew oil platforms until global adoption of uniformly morestringent environmental protection laws. The resolutionhighlighted need for a single European system for prevention andresponse to intra-community oil spills which would entailamending three EU directives: Seveso II, the directive onenvironmental responsibility and VIA. The Italian Governmentconfirmed its intention to harmonize Italian laws with Europeanlaws also according to the approved resolution. Adoption ofstricter regulation both at national and European orinternational level and expected evolution in industrialpractices could trigger cost increases to comply with new HSEstandards which the Company might adopt either on a mandatory orvoluntary basis. Also our exploration and development plans toproduce hydrocarbons reserves and drilling programs could beaffected by changing HSE regulations and industrial practices.Lastly, the Company expects that production royalties and incometaxes in the oil and gas industry will likely increase comparedto previous years. The assessments made by Eni’s managementregarding the impacts on our operations following the Macondowell incident in the Gulf of Mexico and the rescheduling ofcertain projects due to the moratorium called by the U.S.Government caused delays in linking few wells to productionfacilities which had a negligible impact on the Company’sproduction for the year. In addition, the Group incurredoperating costs related to inactivity or redeployment of certaindrilling rigs which were booked before the moratorium. During thefirst months of 2011, Eni expects to resume the operations thathad been previously authorized and suspended following themoratorium. Planned activities for which authorizations stillhave to be granted might be rescheduled due to uncertainties inthe timing of obtaining the necessary authorizations from theU.S. Authorities. In order to achieve the highest securitystandards of our operations in the Gulf of Mexico, we enteredinto a consortium led by Helix that worked at the containment ofthe oil spill at the Macondo well. The Helix Fast Response System(HFRS) performs certain activities associated with underwatercontainment of erupting wells, evacuation of hydrocarbon on thesea surface, storage and transport to the coastline.

 

> 
***HSE Activity for the Year 2010***

Eni is committed to continuously improve its model formanaging health, safety and environment across all its businessesin order to minimize risks associated with its industrialactivities, ensure reliability of its industrial operations andcomply with all applicable rules and regulations.

In 2010, Eni’s business units continued to obtaincertifications of their management systems, industrialinstallations and operating units according to the most stringentinternational standards. The total number of certificationsachieved was 271 (247 in 2009), of which 97 certificationsaccording to the ISO 14001 standard, 9 certifications accordingto the EMAS regulation (EMAS is the Environmental Management andAudit Scheme recognized by the European Union) and 62 accordingto the OHSAS 18001 standard (Occupational Health and Safetymanagement Systems - requirements).

*Environment.* In 2010, Eni incurred total expendituresamounting to euro 1,151 million for the protection ofenvironment, down 13% from 2009. Current environmental expensesdecreased by approximately 13% from 2009, and mainly related tocosts incurred with respect to remediation and reclamationactivities, carried out mainly in Italy. Capitalizedenvironmental expenditure decreased by 13% and mainly related tosoil and subsoil protection, air emissions, energy efficiency andclimate change. Eni expects to continue incurring amount ofenvironmental expenditures and expenses in line with or above2010 levels in future years.

*Safety*. Safety of our employees and contractors as wellas of all people living in the area where activities and assetsare located is important to our company. In 2010, there were nosignificant impacts resulting from new regulations on safety inthe workplace. Eni’s business units focused on completingthe important organizational changes required by new regulationsenacted in 2008.

The improvement and dissemination of safety awareness throughall levels of the Company’s organization continued in 2010;this is one of the foundations of Eni’s safety strategy,through a large communication campaign with the target ofimproving the conduct of workers in the specific field of safetyat work. The campaign will be completed this year and willinvolve 35,000 workers and 25,000 contractors. At the end it willbe possible to evaluate the effectiveness of the campaign.

From the end of 2009 and throughout 2010, a number of safetyseminars involving the top and middle management of variousBusiness Units have taken place, with the aim of sharing theexperiences coming from the implementation of process safetyaudits in the downstream sector and asset integrity verificationtools in the upstream sector. The process safety knowledgeimprovement effort is continuing with courses targeted atspecific areas like functional safety and alarms management.

Results of efforts to achieve a better safety in allactivities has brought an improvement of Eni injury frequencyrate to 0.91 and of the injury severity rate to 0.03, bothdecreasing from 2009 and representing the best results ever.

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Costs incurred in 2010 to support the safety levels ofoperations and to comply with applicable rules and regulationswere euro 283.5 million, down 45% from 2009. Eni expects tocontinue incurring amounts of expenses for safety which will bein line with or above 2010 levels in future years.

*Health.*Eni’s activities for protecting health aimat the continuous improvement of work conditions. Results havebeen achieved through:

| • |   | efficiency and reliability        of plants;                                                                                                                                                                                |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | promotion and dissemination        of knowledge, adoption of best practices and operating        management systems based on advanced criteria of        protection of health and internal and external        environment; |
| • |   | certification programs of        management systems for production sites and operating        units;                                                                                                                        |
| • |   | identified indicators in        order to monitor exposure to chemical and physical        agents;                                                                                                                           |
| • |   | strong engagement in health        protection for workers operating outside Italy,        identifying international health centers capable of        guaranteeing a prompt and adequate response to any        emergency;   |
| • |   | identification of an        effective organization of health centers, in Italy and        abroad; and                                                                                                                       |
| • |   | training programs for medics        and paramedics.                                                                                                                                                                         |

To protect the health and safety of its employees, Eni relieson a network of more than 300 health care centers located in itsmain operating areas. A set of international agreements with thebest local and international health centers ensures efficientservices and timely responses to emergencies. The experienceacquired in this field, have brought to the elaboration of HealthImpact Assessment (HIA) and relative standards to be applied toall new projects of evaluation of working exposure in foreignenvironment.

In 2010, Eni incurred a total expense of euro 57.8 million,down 28.6% from 2009, to protect the health of its employees. Eniexpects to continue incurring amounts of expenses for healthwhich will be in line with or above 2010 levels in future years.

In 2010, Eni total HSE expenses (including cross-cuttingissues such as HSE management systems implementation andcertification, etc.) amounted to euro 1,578 million, down 18%from 2009.

 

> 
***Managing GHG emissions and Implementation of the    Kyoto Protocol***

On February 16, 2005, the Kyoto Protocol entered into forcealong with commitments provided by Annex I to the Protocol whichwas ratified by the same parties who joined the Protocol,including the EU and Italy. According to Law No. 120/2002, Italycommitted itself to reduce greenhouse gas (GHG) emissions by 6.5%in the period 2008-2012, as compared to GHG levels emitted in1990. Reductions can be achieved through both internal measuresand complementary initiatives.

The latter include the so-called flexible mechanisms, whichenables a Party to carry out projects in developing countries(CDM - Clean Development Mechanism) and in industrial countrieswith transition economies (JI - Joint Implementation) in order toobtain emission credits to fulfill the Kyoto compliance.

Italy is a party to the EU Emission Trading Scheme("ETS") that was established by Directive No.2003/87/EC. Effective from January 1, 2005, ETS is the largestvirtual market in the world for exchanging emission allowancestargeting industrial installations with high carbon dioxideemissions.

As foreseen by the Directive, Italy has issued two NationalAllocation Plans (NAP) covering the periods 2005-2007 and2008-2012 which set out the allowances awarded to each sector andinstallation. The ETS EU directive provides that each memberstate shall ensure that any operators who produce GHG emissionsin excess of the amounts entitled on the base of nationalallocation plan, will provide allowances to cover excessemissions and also to pay a penalty. The excess emissions penaltyamounts to euro 100 (euro 40 for the first period 2005-2007) foreach tonne of carbon dioxide equivalent emitted in excess ofentitled amounts. All companies are expected to identify andcarry out projects for emission reductions.

Eni is part to the ETS. Eni participates in the ETS schemewith 55 plants in Italy and 4 outside Italy, which collectivelyrepresent about a third of all greenhouse gas emissions generatedby Eni’s plants worldwide. In the period 2005-2007 Eni wasentitled to allowances equal to 77.2 mmtonnes of carbon dioxidefor existing and new installations. In the period 2008-2012 Eniwas entitled to allowances equal to 126.4 mmtonnes of carbondioxide for existing installations and to further 2.0 mmtonnes inrelation to new installations for the 2008-2012 period. Based onthe implementation of projects designed to reduce emissions,particularly the start-up of high efficiency combined cycles forthe cogeneration of electricity and steam, the amount of carbondioxide emitted by Eni’s plants has complied with mandatorylimits in each of the reported periods up to 2010.

Moreover, Eni monitors the opportunities deriving the KyotoFlexible Mechanisms. In fact, due to its presence in about 70Countries, Eni is an elective partner for carrying out CDM and JIprojects thus contributing to the Italian 

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program of greenhouse gas emissions reduction. In December2003, during the Conference of Parties to the Kyoto Protocol– COP9 –, Eni and the Ministry for the Environmentsigned a Voluntary Agreement for using flexible mechanisms,promoting CDM and JI and contributing to the sustainabledevelopment of host countries.

Management believes that the best solutions for complying withthe Kyoto Protocol are use of low emission energy sources andadoption of highly efficient technologies. To address thegreenhouse gas challenge, Eni performed a detailed analysis fordefining its strategy to respond to climate change and toparticipate in the European emissions trading system, identifyinga number of projects for energy saving and emission reductionsfrom its plants.

Management plans to target GHG emissions reduction byimplementing certain gas projects designed to exploit associatedgas in foreign countries where such gas is flared or released inthe atmosphere absent local outlets for that gas. The eliminationof flaring and the use of associated gas for the development oflocal economies enable sustainable development while reducinggreenhouse gas emissions. The validation, where possible, of suchprojects as CDM and JI will provide emission credits and supportthe Company in achieving its GHG reduction targets in Italy, asset by the Kyoto Protocol. The flaring down project of KwaleOkpai in Nigeria was already registered as a CDM.

More projects are being assessed or implemented in Libya,Congo, Nigeria, Angola and Algeria. Management plans to investapproximately euro 1.1 billion in those projects over the nextfour years. Moreover, Eni endorsed the Global Gas FlaringReduction Initiative of the World Bank, in order to move forwardcompletion of gas flaring reduction projects. In the period2010-2013, a reduction in the trend of Eni total GHG emissions isforeseen due to the planned implementation of the abovementionedprojects designed to reduce gas flaring or venting, measurestargeting energy efficiency at various Eni’s installationsand facilities including refineries, petrochemicals plants andelectricity plants, and actions to better manage gas emissions intransport and distribution activities. However, due to newfacilities and installations, management believes that Eni’sGHG emissions under the ETS scheme will exceed the entitledallowances in the next four-year period resulting in theincurrence of higher operating expenses in the range of euro650-750 million. Most of those projected expenses are expected tobe incurred in the years 2013-2014, which correspond to the thirdPhase of Emission Trading. In fact, from 2013, full auctioningwill be in force in power sector, while energy-intensiveindustries exposed to international competition will receivetheir allowances free of charge as benchmarked to the averageperformance of the 10% most efficient installations in a specificsector.

To ensure comprehensive, transparent and accurate reportingfor GHG emissions, Eni introduced in 2005 its own Protocol foraccounting and reporting of greenhouse gas emissions (GHGAccounting and Reporting Protocol), which is an essentialrequirement for emission certification. Indeed, accuratereporting supports the strategic management of risks andopportunities related to greenhouse gases, the definition ofobjectives and the assessment of progress. The Eni GHG Protocolhas been updated during 2009 to be in compliance with theEuropean and Italian regulation (as the new Monitoring andReporting Guide Line) and with the best practices referencedocument (American Petroleum Industry Compendium - August 2009).For safer and more accurate management of GHG emissions and witha view to supporting effective reporting, Eni provided all itsbusiness units with a dedicated database, in order to gather andreport GHG emissions according to the Protocol and to ensurecompleteness, accuracy, transparency and consistency of GHGaccounting as required by certification needs.

In the medium-term, work is underway on the separation ofcarbon dioxide and its permanent storage in geologic reservoirs,a part of the CO2 Capture Project, an internationalR&D program carried out in conjunction with other oilcompanies. Eni is currently implementing Italy’s first CO2injection project in Cortemaggiore: its Environmental ImpactAssessment procedure is in course of approval by the competentMinistries.

In the long-term, Eni is actively engaged in the politicalprocess regarding future emission reduction regulations. Between2008 and 2009 the feasibility and environmental impact evaluationstudies were carried out and completed. Now the project will gounder authorization process (VIA). In particular, Eni is involvedin bio-energy and bio-fuels.

In both the medium and long-term, management believes thatcompliance with changes in laws, regulations and obligationsrelating to climate change could result in substantial capitalexpenditure, taxes, reduced profitability from changes inoperating costs, and revenue generation and strategic growthopportunities being impacted. Eni’s commitment to thetransition to a lower-carbon economy may create expectations forour activities and related liabilities, and the level ofparticipation in alternative energies carries reputational,economic and technology risks.

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**Regulation of Eni’s Businesses**

> 
***Overview***

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

 

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

Eni’s exploration and production activities are conductedin many countries and are therefore subject to a broad range oflegislation and regulations. These cover virtually all aspects ofexploration and production activities, including matters such aslicense acquisition, production rates, royalties, pricing,environmental protection, export, taxes and foreign exchange. Theterms and conditions of the leases, licenses and contracts underwhich these oil and gas interests are held vary from country tocountry. These leases, licenses and contracts are generallygranted by or entered into with a government entity or statecompany and are sometimes entered into with private propertyowners. These arrangements usually take the form of licenses orproduction sharing agreements. See "Regulation of theItalian Hydrocarbons Industry" and "EnvironmentalMatters" in this Item 4 for a description of the specificaspects of the Italian regulation and of environmental regulationconcerning Eni’s exploration and production activities.

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

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

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

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

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

 

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

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

 

> 
***Exploration & Production***

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

*Exploration permits and production concessions.*Pursuantto the Hydrocarbons Laws, all hydrocarbons existing in theirnatural condition in strata in Italy or beneath its territorialwaters (including its continental shelf) are the property of theState. Exploration activities require an exploration permit,while production activities require a 

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production concession, in each case granted by the Ministry ofProductive Activities through competitive auctions. The initialduration of an exploration permit is six years, with thepossibility of obtaining two three-year extensions and anadditional one-year extension to complete activities underway.Upon each of the three-year extensions, 25% of the area underexploration must be relinquished to the State. The initialduration of a production concession is 20 years, with thepossibility of obtaining a ten-year extension and an additionalfive-year extension until the field depletes.

*Royalties.* The Hydrocarbons Laws require the payment ofroyalties for hydrocarbon production. As per Law No. 99 of July23, 2009 royalties are equal to 10% and 4%, respectively, foronshore and offshore production of oil and 10% and 7%,respectively, for onshore and offshore production of natural gas.

 

> 
***Gas & Power***

**Natural gas market in Italy**

*Legislative Decree No. 130 August 13, 2010 containing    measures for increasing competition in the natural gas market    and transferring the ensuing benefits to final customers    according to Article 30, lines 6 and 7, of Law July 23, 2009,    No. 99*

In 2010, the regulated period for gas antitrust thresholdsdefined by Legislative Decree No. 164 of May 23, 2000 expired.Those thresholds defined maximum allowed limits of gas volumes(imported or domestically produced) input into the nationaltransport network and marketed to final customers, applicable toeach operator.

Implementing the provisions of Law 99/2009, that system ofantitrust thresholds was replaced with a mechanism of marketshares enacted by Legislative Decree No. 130 of August 13, 2010"New measures to improve competitiveness in the natural gasmarket and to ensure the transfer of economic benefits to finalcustomers" approved by the Italian Council of Ministers. TheDecree provides that antitrust ceilings be calculated withreference to the market share of each operator, taking intoaccount the amount of natural gas input into the nationalnetwork, purchases on spot markets, and sales to importers inItaly made at national network entry points. Consequently, marketshares will not be lower than the amount input to the network.Operators in the natural gas market will have to comply with amaximum share of 40% of domestic consumption. A mechanism of gasrelease at regulated prices is provided in case an operator failsto comply with the mandatory ceilings on the market share. Thisceiling can be raised to 55% in case an operator commits tobuilding new storage capacity in Italy for a total of 4 BCMwithin five years. In this case, the operator is obliged: (i) toallow third parties (such as industrial customers, groups ofcompanies, consortia of final customers and power generationcustomers) participate in the construction of storageinfrastructure either by means of direct investment or long-termcontracts for storage services; and (ii) bear the costsassociated with giving to third parties 50% of the expectedbenefits of new capacities under conditions defined by theMinistry for Economic Development and the Authority forElectricity and Gas ("AEEG").

Eni is planning to make the necessary investments to increasestorage capacity in Italy so as to benefit from a higher allowedmarket share.

The Decree introduces measures for increasing competition inthe natural gas market aiming at transferring the ensuingbenefits to final customers, increasing storage capacity,supporting the security of supplies and enhancing flexibility inthe gas system. To achieve this target, compensation tomunicipalities interested by the construction of new storagefields has been provided.

Eni’s management is monitoring this area and evaluatingany possible financial or economic impact associated with theproposed measures and their regulatory evolution. Management alsobelieves that this new gas regulation will increase competitionin the wholesale natural gas market in Italy resulting in furthermargin pressures.

 

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

This law provides for:

| • |   | a derogation to third party        access granted to companies that make direct or indirect        investments for the construction of new infrastructure or        the upgrading of existing ones such as: (i)        interconnections between EU member states and national        networks; (ii) interconnections between non-EU States and        national networks for importing natural gas to Italy;        (iii) LNG terminals in Italy; and (iv) underground        storage facilities in Italy. Investing companies can        obtain priority on the assignment of new capacity for a        portion of not less than 80% of the new capacity        installed and for a period of at least 20 years; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | paragraph 69 provides        interpretation of the rule introduced by Legislative        Decree No. 164/2000 concerning the transitional regime of        concessions for natural gas distribution activities in        urban centers existing at June 21, 2000, which allows for        an anticipated repayment of the distribution service,        despite                                                                                                                                                                                                                                                                                                                                                        |

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|   |   | being provided through a bid        procedure rather than direct entitlements. This law        changes the provisions defined by Legislative Decree No.        164/2000 by: (i) extending to December 31, 2007, the        transitional period for the continuation of existing        concessions, with a possible extension of one further        year when public interest is considered important by        local authorities; and (ii) canceling the adding up of        possible extensions, as provided for by Legislative        Decree No. 164/2000, in case of certain conditions        (business restructuring, size parameters, shareholding        composition). The end of concessions awarded on the basis        of a bid procedure remains set as of December 31, 2012.        Currently, the Ministry for Economic Development is        drafting a revision of the distribution gas market with        the aim of reducing the number of distribution companies        by providing for an extension of the territory reach of        each concession. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

*Law No. 290/2003*

Law No. 290/2003 prohibits companies operating in the naturalgas and power industries to hold stakes higher than 20% in theshare capital of companies owning and managing national networksfor the transmission of natural gas and power. The term by whichcompanies must comply with this provision, which was initiallyfixed as of December 31, 2008, has been rescheduled in a 24-monthperiod deadline following enactment of a specific decree from theItalian Prime Minister which is to establish terms and conditionsof the divestments. Currently, Eni is unable to predict anyevolution of this matter.

In addition, on March 23, 2006 a Presidential Decree definedcriteria and methods for the divestment of the interest held byEni in Snam Rete Gas SpA, introducing the special powers of theMinistry of Economy and Finance provided for by the regulationson the divestment of interests held by the Italian Government("golden share") in the By-laws of Eni. Managementbelieves that this decree may impact Eni in case the Companymakes plans to divest the whole or a portion of its interest inSnam Rete Gas. Eni’s interest in Snam Rete Gas will also beaffected by the due steps that Italian institutions have beenimplementing to enact Directive No. 2009/73/EC in Italian laws.See below.

 

> 
*Regulations aimed at increasing competition in the    Italian wholesale segment of natural gas*

In order to implement measures defined by the ItalianGovernment to face the economic downturn, a number ofadministrative provisions relating to the so-called gas releasemeasures have been enacted in an effort by Italian administrativeAuthorities to boost the level of competition and liquidity ofthe Italian gas market. Those measures have strongly affectedEni’s marketing activity in Italy. Legislative Decree No.78/2009 obliged Eni to make a gas release at the virtual exchangepoint for a total of 5 BCM of gas in yearly and half-yearlyamounts. Although the allotment procedure (bid) was based on aminimum price set by the Ministry for Economic Development asproposed by the AEEG (Eni considering this point discriminatory,filed a claim with the competent authority), only a 1.1 BCMportion of the gas release was awarded out of the 5 BCM which hadbeen planned. For the next few years, also based on indicationsof the Authority for Electricity and Gas, Eni believes that it ispossible that the Company will be forced to implement additionalgas release measures.

 

> 
*Negotiation Platform for gas trading*

In compliance with the provisions of Law No. 99 of July 23,2009, on March 18, 2010, the Ministry for Economic Developmentpublished a Decree that implements a trading platform for naturalgas starting from May 10, 2010 aimed at increasing competitionand flexibility on wholesale markets. Management and organizationof this platform are entrusted to an independent operator, theGME (Gestore del Mercato Elettrico). On this platform are tradedvolumes of gas corresponding to the legal obligations on part ofItalian importers and producers as per Law Decree No. 7/2007.Under these provisions, importers from non-European countrieswere expected to supply given amounts of gas (from 5% to 10% oftotal gas import) to the virtual exchange in order to receivepermission to import, as well as volumes corresponding toroyalties due by owners of mineral rights to the Italian state(and to Basilicata and Calabria Regions). Eni was required tooffer at that platform about 200 mmCM related to the residualobligation for volumes imported in thermal year October 1,2008-September 30, 2009, and to the offer obligation for theOctober 1, 2009-September 30, 2010 thermal year, as well asapproximately 215 mmCM related to royalties due for 2009 fullyear. Operators, also non-importers, are allowed to negotiateadditional gas volumes over the compulsory amounts on theplatform according to the supply rules determined by the AEEG.Since December 2010, the GME is also trader’s counterpartyin transactions on the spot market for natural gas (divided intoday-ahead market and intraday market).

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> 
*Natural gas prices*

Following the liberalization of the natural gas sectorintroduced in 2000 by Decree No. 164, prices of natural gas soldto industrial and power generation customers as well as towholesalers are freely negotiated. However the AEEG holds a powerof surveillance on this matter (see below) under Law No. 481/1995(establishing the AEEG) and Legislative Decree No. 164/2000. 

Furthermore, the AEEG is entrusted by the Presidential Decreedated October 31, 2002 with the power of regulating natural gasprices to residential and commercial customers which were noteligible until December 31, 2002, also after the full opening upof the gas market from January 1, 2003, additionally targetingthe public goal of containing inflationary pressure deriving fromincreasing energy costs. Consistently with this decree, atpresent on the basis of different resolutions of the AEEGcompanies selling natural gas through local networks have tooffer to residential customers and customers who live inbuildings consuming, on the whole, less than 200,000 CM/y theregulated tariffs beside their own price proposals.

 

> 
*Change in the criteria for determining and upgrading    tariffs applied to residential customers: Resolution ARG/gas    89/2010*

On June 18, 2010, the AEEG published a resolution ARG/gas89/2010, applied to the October 1, 2010-September 30, 2011thermal year, providing for a 7.5% reduction in the raw materialcost component of those supplies in determining tariffs forresidential users consuming less than 200,000 CM/y. Consideringthat the new calculation does not cover the supply costs of anefficient portfolio of long-term contracts and considering therelevant impact on its consolidated accounts deriving from thisnew resolution, Eni’s management has appealed against theARG/gas 89/2010 resolution. This appeal is part of an ongoingadministrative litigation which follows the partial annulment ofAEEG Resolution No. 79/2007, pronounced by the AdministrativeCourt of Lombardy in November 2010, with reference to themechanism of indexation of the cost of raw material supplies toresidential customers.

 

> 
*Directive No. 2009/73/EC of the European Parliament and    Council on common regulations for the internal natural gas    market*

On July 13, 2009, European Directive No. 2009/73/EC on theregulation of the internal natural gas market was issued. Memberstates are expected to implement it in their legislation by March3, 2011, and to choose one of two options for guaranteeing theindependence of transport companies.

The two options provided are:

| (i)    |   | Separation of        ownership under two alternative modes: |
|--------|--------|-------------------------------------------------------------|
|   |   | -                                                           | Ownership Unbundling (OU):        the company that owns the networks and manages transport        activities is unbundled from its integrated parent        company that will retain supply/production and sale        activities; and |
|   |   | -                                                           | Independent System Operator        (ISO): the vertically integrated company retains        ownership of the networks but confers their management to        a third independent party. |
| (ii)   |   | Strengthened        functional separation:                  |
|   |   | -                                                           | Independent Transmission        Operator (ITO): the vertically integrated company retains        control of the company that manages transport activities        and owns transport networks, provided the vertically        integrated company refrains from interfering in the        decision making process of the controlled carrier        company. |

On March 3, 2010, the Italian Council of Ministers presented adraft legislative decree to implement Directive No. 2009/73/EC.Among the possible options, the decree provides for the adoptionof the ITO model by Snam Rete Gas by March 3, 2012.

 

> 
**Fully-Regulated Businesses in the Italian Gas Market**

*Transport*

*Transport tariffs.* The AEEG set transport criteriacompanies have to apply in determining natural gas transport anddispatching tariffs on national and regional transport networks,for each regulatory period made up of four years, as provided forby Decree No. 164/2000. Tariffs are subject to approval by theAuthority, which ensures their compliance with preset criteria.

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Criteria established by the AEEG set allowed revenues that arecalculated as the sum of: (i) operating costs including storageand modulation costs; (ii) amortization and depreciation oftransport assets; and (iii) return on net capital employed.

With Resolution ARG/gas 184/2009, published on December 2,2009, the Authority set the criteria regulating the tariffs fornatural gas transport on the national and regional gas pipelinenetwork for the third regulatory period (January 1, 2010-December31, 2013). 

The Regulated Asset Base (RAB) is calculated with there-valuated historical cost methodology.

The allowed pre-tax rate of return (WACC) on the RegulatoryAsset Base (RAB) has been set equal to 6.4% in real terms.

The new tariff structure confirms recognition in tariff ofexpenditures incurred for network upgrading, providing for ahigher remuneration than WACC, in a measure ranging from one tothree percentage points of additional remuneration in relation tothe nature of expenditures and for a period of 5 to 15 years. 

Depreciation charges of gas transport infrastructures (gaspipelines) are determined on a 50-year useful technical life andare excluded from the price cap mechanism. Operating costs aredefined with reference to operating costs incurred during 2008and increased by a 50% rate to factor in productivity gainsachieved in the second regulatory period. Fuel gas is excludedfrom the price cap mechanism. 

The revenue component related to volumes transported isdetermined on the basis of operating costs recognized in tariffand amounts to approximately 15% of revenue cap. 

With Resolution ARG/gas 218/2010, the AEEG also recognized toSnam Rete Gas a total amount of euro 54.9 million as settlementof additional costs incurred from October 1, 2008 to December 31,2009 relating to the purchase of fuel gas for compressionstations.

*Network Code.* From 2003, Snam Rete Gas Network Code isin force, regulating entitlements of transport capacity,obligations on part of both the transporter and the customer andthe procedures through which customers can resell capacity toother users. Transport capacity at entry points to the nationalgas pipeline network (point of interconnection with import gaslines) is entitled on an annual basis with duration of up to fivethermal years. Capacity products with duration shorter than oneyear are also available. 

The Network Code, approved by the AEEG with Resolution No. 75of July 1, 2003, is based on the criteria set by the sameRegulator with Resolution No. 137/2002. This resolution setspriority criteria for transport capacity entitlements at pointswhere the Italian transport network connects with internationalimport pipelines (the so-called entry points to the Italiantransport system). Specifically, operators that are party totake-or-pay purchase contracts, as in the case of Eni, areentitled to a priority in allocating available transport capacitywithin the limit of average daily contractual volumes. Gasvolumes exceeding average daily contractual volumes are notentitled to any priority and, in case of congestion at any entrypoints, they are entitled available capacity on a proportionatebasis together with all pending requests for capacityentitlements. The ability of Eni to collect gas volumes exceedingaverage daily volumes as provided by its take-or-pay purchasecontracts represents an important operational flexibility thatthe Company uses to satisfy demand peaks. In planning itscommercial flows, the Company normally assumes to fully utilizeits contractual flexibility and to obtain the necessary capacityentitlements at the entry points to the national transportnetwork. Eni believes that Resolution No. 137/2002 is in contrastwith the rationale of the European regulatory framework on thegas market as provided in Directive No. 2003/55/EC. Based on thatbelief, the Company has opened an administrative procedure torepeal it before an administrative court which has recentlyconfirmed in part Eni’s position. An upper grade court alsoconfirmed the Company’s position. Specifically, theAdministrative Court stated that the purchase of contractualflexibility is an obligation on part of the importer, whichresponds to a collective interest. According to theAdministrative Court, there is no reasonable motivation wherebyvolumes corresponding to such contractual flexibility should notbe granted priority in the access to the network, also in casecongestion occurs. At the moment, however, no case of congestionoccurred at entry points to the Italian transport infrastructureso as to impair Eni’s marketing plans.

 

> 
*Re-gasification*

*Re-gasification tariffs.*The AEEG has set the criteriaregulating the tariffs for the use of LNG terminals in the 3rdregulatory period (October 2008-September 2012) with itsResolution ARG/gas 92/2008. 

The Regulatory Asset Base (RAB) is calculated with there-valuated historical cost methodology. The yearly adjustment ofrevenues and tariffs will follow the same methodologies appliedin the previous regulatory period, 

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except for depreciation that will be adjusted on a yearlybasis and excluded from the price cap mechanism. The allowed rateof return (WACC) on Regulatory Asset Base has been set equal to7.6% in real terms pre tax.

Furthermore, it established an additional remuneration, up to3% above WACC, for new capital expenditures for a maximum of 16years. 

Operating costs will be adjusted every year taking intoaccount inflation and efficiency gains (X-factor) set by theAuthority at 0.5% in real terms.

Resolution ARG/gas 92/2008 also established that theallocation of reference revenues between re-gasification capacityand the commodity component is fixed at 90:10 (compared to 80:20ratio in the second regulated period).

*Re-gasification Code.*From 2007 GNL ItaliaRe-gasification Code is in force, defining rules and regulationsfor the operation and management of the re-gasification plant ofPanigaglia in North-West Italy. The Code, approved with theResolution VIS 8/2009, is based on the criteria for access to LNGre-gasification services set by the same Regulator withResolution No. 167/2005 (August 1, 2005) in accordance withLegislative Decree No. 164/2000. The decision also definescriteria for the allocation of re-gasification capacity. Inparticular it establishes that take-or-pay contracts entered intobefore 1998, as in the case of Eni, are awarded priority accesslimited to the minimum amount of volumes that have beenre-gasified in the period starting from thermal year 2001-2002.Eni filed a claim against this decision with the RegionalAdministrative Court of Lombardy that rejected the claim.Subsequently, Eni filed a claim with a higher degreeadministrative court.

 

> 
*Distribution*

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

*Distribution tariffs.* With Resolution No. 159/2008, theAEEG defined a new methodology for determining revenues fornatural gas distribution activity. Starting from January 1, 2009and for the duration of a four-year regulated period, i.e. until2012, the resolution provides for the recognition of totalrevenues for each regulated year amounting to a value that theAuthority will set at the time of approving the operators’requests for distribution tariffs and defined as Total RevenueConstraint (TRC), representing the maximum remunerationrecognized by the AEEG to each operator for covering costs borne.

In previous years, revenues were determined by applyingtariffs set by the AEEG to volumes actually distributed toselling companies in the relevant year. The resolution alsoprovides for any positive or negative difference between TRC andrevenues resulting from invoices for actually distributed volumesto be regulated through an equalization device making use ofcredit/debit cards lodged with the Electricity EqualizationExchange.

As a result of the new mechanism, revenues are no longerrelated to the seasonality of volumes distributed but areconstantly apportioned during the year. The introduction of thisnew mechanism does not cause a decline in total revenues on ayearly basis.

 

> 
*Storage of natural gas*

Storage activities in Italy are regulated by Decree No.164/2000. The most important aspects of Decree No. 164 concerningstorage activities are the following: (i) in verticallyintegrated enterprises, storage is to be carried out by aseparate company not operating in other gas activities (such asEni’s subsidiary Stoccaggi Gas Italia SpA) or by companiesengaged only in transport and dispatching activities, providedthe accounts of these two activities are clearly separated fromthe accounts of storage; (ii) storage activity is exercisedpursuant to concessions granted by the Ministry of ProductiveActivities. The duration of a concession is 20 years, with thepossibility of obtaining at most two ten-year extensions ifoperators complied with the storage programs and otherobligations deriving from applicable laws. Existing storageconcessions are subject to the decree. Their original term wasconfirmed and includes relevant production concessions; (iii) theneed for strategic storage in Italy is defined explicitly; theburden of strategic storage is imposed upon companies importingfrom non-EU countries, which have to provide a strategic storagecapacity in Italy corresponding to 10% of the amount of naturalgas imported each year; (iv) holders of storage concessions arerequired to provide storage capacity for domestic production, forstrategic use and for modulation to eligible users withoutdiscriminations, where technically and economically viable; (v)modulation storage costs are charged to shippers which have toprovide modulation services adequate to the requirements of theirfinal customers; (vi) storage tariffs criteria are determined bythe AEEG in order to ensure a preset return on capital employed,taking into account the typical risk inherent in this activity,as well as volumes stored for ensuring 

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peak supplies and the need to incentive capital expenditurefor upgrading the storage system; and (vii) the AEEG establishesthe criteria and priority of access storage operators have toinclude in their own storage codes.

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

*Storage tariffs.* On August 3, 2010, the AEEG withResolution No. 119/2010 published the criteria for determiningstorage tariffs for the 2011-2014 regulated period.

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

| (i)   |   | a return on the capital        employed by the storage company equal to 6.7% (7.1% in        the second regulated period); |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | depreciation and        amortization charges;                                                                              |
| (iii) |   | dismantling costs; and                                                                                                     |
| (iv)  |   | operating costs.                                                                                                           |

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

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

*Storage Code.*From November 1, 2006 Stoccaggi GasItalia (Stogit) Storage Code is in force. 

This Code regulates access to and provision of storageservices during normal operational conditions, regulatesprocedures for conferring storage capacities, fees to be chargedto customers in case they uplift from or input to storage sitesvolumes in excess or uses higher input/uplift capacity withrespect to scheduled and operating programs. On the basis ofthese provisions, Eni may incur significant charges for storageservices should the Company fail to use storage services inaccordance with scheduled operating programs.

The storage company offers services according to the accesspriority established by the AEEG as follows: (i) mandatoryservices, including modulation storage, mineral storage, andstrategic storage services; and (ii) services for operatingneeds of transport companies, including hourly modulation.

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

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

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

Storage capacity is awarded by the storage company for periodsno longer than a thermal year by April 1, of each year. The firstrequests to be met are those for strategic storage and for theoperating balancing of the system.

The residual capacity available and the maximum daily upliftcapacity is awarded according to the following order of priorityto: (i) holders of production concessions requesting mineralstorage services; (ii) natural gas selling operators who are heldto provide a modulation service of their supply to theircustomers according to Article 18, paragraphs 2 and 3 ofLegislative Decree No. 164/2000, for maximum volumescorresponding to a seasonal demand peak with averagetemperatures, on the terms and conditions established by aprocedure to be issued by the Regulatory Authority forElectricity and Gas; (iii) to the entities mentioned in (ii)above only for those additional maximum volumes related to aseasonal demand peak in case of certain low temperatures measuredon a 20-year period, under the terms and conditions of theprocedure mentioned in (ii) above; and (iv) the entitiesrequesting access for services different from the ones mentionedabove.

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From November 2009, according to the Resolution No. 165/2009set by the Regulator, monthly based storage services areavailable for gas-network users (Shippers). Storage capacitiesare sold on auction basis.

Eni held natural gas for strategic reserve purposes in itsstorage business, as established by Decree No. 164/2000.

The strategic reserves of gas are defined as "stockdestined to meet situations of deficit/decrease of supply orcrisis of the gas system". The Ministry for EconomicDevelopment determines quantities and usage criteria of suchreserves. As of December 31, 2010, Eni held approximately 177 BCFof strategic reserves of natural gas (177 BCF at year end 2009).

 

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

*Refining.* Under Legislative Decree No. 112 of March 31,1998, companies that seek to establish refining operations inItaly or to expand the capacity of existing refining operationsmust obtain an operating concession from the relevant region,while companies that seek to build or operate new plants that donot increase refining capacity must obtain an authorization fromthe relevant region. Management expects no material delays inobtaining relevant concessions for the upgrading of theSannazzaro and Taranto refineries as planned in the medium-term.

*Service stations.*Legislative Decree No. 32 of February11, 1998, as amended by Legislative Decree No. 346 of September8, 1999 and Law Decree No. 383 of October 29, 1999, as convertedin Law No. 496 of December 28, 1999, significantly changedItalian regulation of service stations. Legislative Decree No. 32replaces the system of concessions granted by the Ministry ofIndustry, regional and local authorities with an authorizationgranted by city authorities while the Decree No. 112 stillconfirms the system of such concessions for the construction andoperation of service stations on highways and confers the powerto grant to Regions. Decree No. 32 also requires that contractsbetween license holders and service station operators have aduration of not less than six years and are drafted in accordancewith arrangements agreed by the relevant trade group of licenseholders and the union representatives for the service stationoperators. Decree No. 32 also provides for: (i) the testing ofcompatibility of existing service stations with local planningand environmental regulations and with those concerning trafficsafety to be performed by city authorities; (ii) upon the closureof at least 7,000 service stations, the option to extend by 50%the opening hours (currently 52 hours per week) and a generallyincreased flexibility in scheduling opening hours; (iii)simplification of regulations concerning the sale of non-oilproducts and the permission to perform simple maintenance andrepair operations at service stations; and (iv) the opening up ofthe logistics segment by permitting third party access to unusedstorage capacity for petroleum products. With the same goal ofrenewing the Italian distribution network, Law No. 57 of March 5,2001 provides that the Ministry of Productive Activities is toprepare guidelines for the modernization of the network, and theRegions shall follow those guidelines in the preparation ofregional plans. The subsequent Ministerial Decree of October 31,2001 establishes the criteria for the closing down ofincompatible stations, the approval of the plan, the renewal ofthe network, the opening up of new stations and the regulationsof the operations of service stations on matters such asautomation, working hours and non-oil activities.

Law No. 133 of August 6, 2008, by intervening in competitionprovisions, removes some national and regional regulations whichmight prejudice the liberty of establishment and introduces newprovisions particularly concerning the elimination ofrestrictions concerning distances between service stations, theobligation to undertake non-oil activities and the liberalizationof opening hours. Management believes that those measures willfavor competition in the Italian retail market and supportefficient operators.

*Petroleum product prices.* Petroleum product prices werecompletely deregulated in May 1994 and are now freely establishedby operators. Oil and gas companies periodically report theirrecommended prices to the Ministry of Productive Activities; suchrecommendations are considered by service station operators inestablishing retail prices for petroleum products.

*Compulsory stocks.* According to Legislative Decree ofJanuary 31, 2001, No. 22 ("Decree 22/2001") enactingDirective No. 1993/98/EC (which regulates the obligation ofmember states to keep a minimum amount of stocks of crude oiland/or petroleum products) compulsory stocks, must be at leastequal to the quantities required by 90 days of consumption of theItalian market (net of oil products obtained by domesticallyproduced oil). In order to satisfy the agreement with theInternational Energy Agency (Law No. 883/1977), Decree 22/2001increased the level of compulsory stocks to reach at least 90days of net import, including a 10% deduction for minimumoperational requirements. Decree 22/2001 states that compulsorystocks are determined each year by a decree of the Minister forEconomic Development based on domestic consumption data of theprevious year, defining also the amounts to be held by each oilcompany on a site-by-site basis.

Law No. 96 of June 4, 2010 requires the government to followsome principles and criteria in drafting the legislative decreethat shall implement, by December 31, 2012, Directive No.2009/119/EC (imposing an obligation 

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on member states to maintain minimum stocks of crude oiland/or petroleum products), in particular: (a) keep a highlevel of oil security of supply through a reliable mechanism toassure the physical access to oil emergency and specific stocks;and (b) provide for the institution of a Central StockholdingEntity under the control of the Ministry for Economic Development– with the mandatory participation of entities who haveimported oil or petroleum products – that should be incharge of: (i) the holding and transport of specific stocks ofproducts, (ii) the stocktaking, (iii) the statistics onemergency, specific and commercial stocks; and, eventually, (iv)the provision of a storage and transportation service ofemergency and commercial stocks in favour of sellers of petroleumproducts to final clients not vertically integrated in the oilchain.

As of December 31, 2010, Eni owned 6.5 mmtonnes of oilproducts inventories, of which 4.2 mmtonnes as "compulsorystocks", 1.7 mmtonnes related to operating inventories inrefineries and depots (including 0.2 mmtonnes of oilproducts contained in facilities and pipelines) and 0.4 mmtonnesrelated to specialty products.

Eni’s compulsory stocks (as of December 31, 2010) wereheld in term of crude oil (33%), light and medium distillates(46%), fuel oil (16%) and other products (5%) and they werelocated throughout the Italian territory both in refineries (78%)and in storage sites (22%).

 

> 
***Competition***

Like all Italian companies, Eni is subject to Italian and EUcompetition rules. EU competition rules are set forth in Articles101 and 102 of the Lisbon Treaty on the Functioning of theEuropean Union entered into force on December 1, 2009("Article 101" and "Article 102",respectively being the result of the new denomination of formerArticles 81 and 82 of the Treaty of Rome as amended by the Treatyof Amsterdam dated October 2, 1997 and entered into force on May1, 1999) and EU Merger Control Regulation No. 139 of 2004("EU Regulation 139"). Article 101 prohibits collusionamong competitors that may affect trade among member states andthat has the object or effect of restricting competition withinthe EU. Article 102 prohibits any abuse of a dominant positionwithin a substantial part of the EU that may affect trade amongmember states. EU Regulation 139 sets certain turnover limits forcross-border transactions, above which enforcement authorityrests with the European Commission and below which enforcement iscarried out by national competition authorities, such as theAntitrust Authority in the case of Italy. On May 1, 2004, a newregulation of the European Council came into force (No. 1/2003)which substitutes Regulation No. 17/1962 on the implementation ofthe rules on competition laid down in Articles 101 and 102 of theTreaty. In order to simplify the procedures required ofundertakings in case of conducts that potentially fall within thescope of Article 101 and 102 of the Treaty, the new regulationsubstitutes the obligation to inform the Commission with a selfassessment by the undertakings that such conducts does notinfringe the Treaty. In addition, the burden of proving aninfringement of Article 101(1) or of Article 102 of the Treatyshall rest on the party or the authority alleging theinfringement. The undertaking or association of undertakingsclaiming the benefit of Article 101(3) of the Treaty shall bearthe burden of proving that the conditions of that paragraph arefulfilled. The regulation defines the functions of Authoritiesguaranteeing competition in member states and the powers of theCommission and of national courts. The competition authorities ofthe member states shall have the power to apply Articles 101 and102 of the Treaty in individual cases. For this purpose, actingon their own initiative or on a complaint, they may take thefollowing decisions:

| • |   | requiring that an        infringement be brought to an end;                                                      |
|--------|--------|------------------------------------------------------------------------------------------------------------------|
| • |   | ordering interim measures;                                                                                       |
| • |   | accepting commitments; and                                                                                       |
| • |   | imposing fines, periodic        penalty payments or any other penalty provided for in        their national law. |

National courts shall have the power to apply Articles 101 and102 of the Treaty. Where the Commission, acting on a complaint oron its own initiative, finds that there is an infringement ofArticle 101 or of Article 102 of the Treaty, it may: (i) requirethe undertakings and associations of undertakings concerned tobring such infringement to an end; (ii) order interim measures;(iii) make commitments offered by undertakings to meet theconcerns expressed to them by the Commission binding on theundertakings; and (iv) find that Articles 101 and 102 of theTreaty are not applicable to an agreement for reasons ofCommunity public interest.

Eni is also subject to the competition rules established bythe Agreement on the European Economic Area (the "EEAAgreement"), which are analogous to the competition rules ofthe Lisbon Treaty (ex Treaty of Rome) and apply to competition inthe European Economic Area (which consists of the EU and Norway,Iceland and Liechtenstein). These competition rules are enforcedby the European Commission and the European Free Trade AreaSurveillance Authority.

In addition, Eni’s activities are subject to Law No. 287of October 10, 1990 (the "Italian Antitrust Law"). Inaccordance with the EU competition rules, the Italian AntitrustLaw prohibits collusion among competitors that restrictscompetition within Italy and prohibits any abuse of a dominantposition within the Italian market or a significant part thereof.However, the Italian Antitrust Authority may exempt for a limitedperiod agreements among companies that otherwise would beprohibited by the Italian Antitrust Law if such agreements havethe effect of improving market conditions and ultimately resultin a benefit for consumers.

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**Property, Plant and Equipment**

Eni has freehold and leasehold interests in real estate innumerous countries throughout the world. Management believes thatcertain individual petroleum properties are of major significanceto Eni as a whole. Management regards an individual petroleumproperty as material to the Group in case it contains 10 per centor more of the Company’ worldwide proved oil and gasreserves and management is committed to invest material amountsof expenditures in developing it in the future. See"Exploration & Production" above for a descriptionof Eni’s both material and other properties and reserves andsources of crude oil and natural gas.

 

**Organizational Structure**

Eni SpA is the parent company of the Eni Group. As of December31, 2010, there were 270 fully-consolidated subsidiaries and 76associates that were accounted for under the equity or costmethod. For a list of subsidiaries of the Company, see"Exhibit 8. List of Eni’s fully-consolidatedsubsidiaries for year 2010".

 

 

**Item 4A. UNRESOLVED STAFF COMMENTS**

***None.***

**Item 5. OPERATING AND FINANCIAL REVIEW ANDPROSPECTS**

*This section is the Company’s analysis of itsfinancial performance and of significant trends that may affectits future performance. It should be read in conjunction with theKey Information presented in Item 3 and the ConsolidatedFinancial Statements and related Notes thereto included in Item18. The Consolidated Financial Statements are prepared inaccordance with International Financial Reporting Standards(IFRS) as issued by the IASB.*

*This section contains forward-looking statements which aresubject to risks and uncertainties. For a list of importantfactors that could cause actual results to differ materially fromthose expressed in the forward-looking statements, see thecautionary statement concerning forward-looking statements onpage ii and "Item 3 – Risk Factors".*

 

**Executive Summary**

Eni reported net profit of euro 6,318 million for the yearended December 31, 2010, representing an increase of 44.7% from2009. That amount represented net profit attributable toEni’s shareholders.

The Group operating profit for the year ended December 31,2010 amounted to euro 16,111 million, up 33.6% from 2009 mainlyrelated to: (i) a positive operating performance reported by theExploration & Production segment, reflecting higher oilrealizations in U.S. dollar terms (up 27.8%), and thedepreciation of the euro against the U.S. dollar (down 4.7%);(ii) higher results of the Engineering & ConstructionDivision which were driven by revenue growth and increasedprofitability of acquired orders; and (iii) improved operatingresults recorded by both the downstream refining andpetrochemical businesses thanks to a more favorable tradingenvironment. In contrast, the Gas & Power Division reportedsharply lower results due to lower unit margins on sales outsideItaly and volumes losses in the Italian market reflectingincreased competitive pressures and oversupply conditions in thegas market. Results of the Gas & Power Division were also hitby an impairment charge amounting to euro 426 million relating togoodwill due to a reduced profitability outlook for the Europeangas marketing business.

Operating profit benefited from the recognition of aninventory holding gain amounting to euro 881 million (euro 345million in 2009), reflecting the impact of rising prices of crudeoil and products on year end valuation of inventories accordingto the average cost method of inventory accounting. Those gainswere partly offset by higher environmental provisions as theCompany recorded a charge amounting to euro 1,109 million toaccount for a proposal of a global environmental settlement withthe Italian Ministry for the Environment. The proposed settlementis intended to define the Company’s commitments to performclean-up and remediation activities at certain Italian sites andsettle all pending civil and administrative litigation on theissue of environmental damage. See "SignificantTransactions" below for a full description of the proposedtransactions.

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Group results for the year also benefited from higher profitsreported by non-consolidated entities that are accounted forunder the equity or the cost method (up euro 587 million).

Net cash provided by operating activities amounted to euro14,694 million for the year ended December 31, 2010 and benefitedfrom a cash inflow from transferring certain account receivableswithout recourse to factoring institutions, amounting to euro1,279 million due in 2011. These inflows were balanced byoutflows for pre-payments to the Company’s suppliers of gasunder long-term contracts upon triggering the take-or-pay clause(euro 1,238 million). Net cash provided by operating activities,together with cash proceeds from divestments amounting to euro1,113 million, were used to fund part of the cash outflowsrelating to capital expenditures totaling euro 13,870 million anddividend payments to Eni’s shareholders amounting to euro3,622 million. Dividends paid to non-controlling interestsamounted to euro 514 million, mainly relating to Saipem and SnamRete Gas.

As of December 31, 2010 net borrowings amounted to euro 26,119million, an increase of euro 3,064 million from December 31,2009.

In 2010, oil and natural gas production available for saleaveraged 1,757 KBOE/d. Production for the year expressed inbarrel-of-oil equivalent was computed assuming a natural gasconversion factor which was updated to 5,550 cubic feet of gasequals 1 barrel of oil. See disclosure in a footnote to the"Conversion Table" on page vi. On a comparable basis,i.e. when excluding the effect of updating the gas conversionfactor, production showed an increase of 0.9% for the full year.Production growth was driven by additions from new fieldstart-ups, particularly the Zubair field (Eni’s interest32.8%) in Iraq (for a total increase of 40 KBOE/d). Theseincreases were offset in part by mature field declines.

Worldwide gas sales in 2010 amounted to 97.06 BCM, down 6.4%from 2009 due to lower volumes supplied to the Italian market(down 5.75 BCM, or 14.4%) against the backdrop of strongercompetitive pressures and oversupply on the marketplace whichalso hit sales to importers of natural gas in Italy (down 2.04BCM or 19.5%). These declines were partly offset by highervolumes achieved in a number of European markets driven by growthin France, Northern Europe (including the UK), Germany/Austriaand the Iberian Peninsula, while sales decreased in Turkey,Belgium and Hungary.

In 2010, capital expenditures amounted to euro 13,870 million(euro 13,695 million in 2009) and related mainly to:

| • |   | oil and gas development        activities (euro 8,578 million) deployed mainly in Egypt,        Kazakhstan, Congo, the USA and Algeria;                                                                                                                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | exploration projects (euro        1,012 million), of which 97% carried out outside Italy,        primarily in Angola, Nigeria, in the USA, Indonesia and        Norway;                                                                                   |
| • |   | upgrading of the fleet used        in the Engineering & Construction Division (euro        1,552 million);                                                                                                                                            |
| • |   | development and upgrading of        Eni’s natural gas transport network in Italy (euro        842 million) and distribution network (euro 328 million),        as well as development and increasing storage capacity        (euro 250 million); and |
| • |   | projects aimed at improving        the conversion capacity and flexibility of refineries        (euro 446 million), as well as building and upgrading        service stations in Italy and outside Italy (euro 246        million).                       |

During the 2010-2014 four-year period, Eni expects to investapproximately euro 53.3 billion in capital expenditures andexploration projects to implement its growth strategy, based onthe assumptions discussed below under "Management’sExpectation of Operations".

 

> 
***Trading Environment***

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Average price of Brent dated crude oil in U.S.        dollars (1) |   | 96.99 |   | 61.51 |   | 79.47 |
|-------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|
| Average        price of Brent dated crude oil in euro (2)         |   | 65.93 |   | 44.16 |   | 59.89 |
| Average EUR/USD exchange rate (3)                                 |   | 1.471 |   | 1.393 |   | 1.327 |
| Average        European refining margin in U.S. dollars (4)       |   | 6.49  |   | 3.13  |   | 2.66  |
| Euribor - three month euro rate % (3)                             |   | 4.6   |   | 1.2   |   | 0.8   |
|                                                              |   |       |   |       |   |       |

----

| (1) | i | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | i | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) | i | Source: ECB.                                                                                                                                                                                                 |
| (4) | i | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

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When the term margin is used in the following discussion, itrefers to the difference between the average selling price anddirect acquisition cost of a finished product or raw materialexcluding other production costs (e.g. refining margin, margin ondistribution of natural gas and petroleum products or margin ofpetrochemicals products). Margin trends reflect the tradingenvironment and are, to a certain extent, a gauge of industryprofitability.

Eni’s results of operations and the year-to-yearcomparability of its financial results are affected by a numberof external factors which exist in the industry environment,including changes in oil, natural gas and refined productsprices, industry-wide movements in refining and petrochemicalmargins and fluctuations in exchange rates and interest rates.Changes in weather conditions from year to year can influencedemand for natural gas and some petroleum products, thusaffecting results of operations of the natural gas business and,to a lesser extent, of the refining and marketing business. See"Item 3 – Risk Factors".

In 2010, Eni’s results were driven by higher oilrealizations driven by rising Brent prices which were up 29.2%from 2009. Results also benefited from the depreciation of theeuro versus the U.S. dollar, down by 4.7%, which improved theoperating results reported by Eni’s subsidiaries whosefunctional currency is the U.S. dollar. Unit margins in themarketing of gas outside Italy were hit by lower pricedifferentials between spot prices for gas recorded in Europeancontinental hubs, as those prices have become the benchmark incontractual selling formulae in Europe, and the Company’spurchase costs of gas which have remained mainly indexed to thecost of oil and certain refined products. Eni’s realizedrefining margins in U.S. dollar terms remained at unprofitablelevels as the Brent benchmark refining margin for the year wasdown 0.47 $/BBL, or 15% from 2009. That trend reflected higheroil-feedstock costs which were only partially transferred toprices of refined products at the pump pressured by weakunderlying fundamentals (slow demand, excess capacity, highinventory levels). Nonetheless, Eni’s realized marginsposted a slight improvement from the depressed levels of theyear-earlier due to wider price differential between sour andsweet crude qualities and higher relative prices of middledistillates compared to heating oil, which benefited Eni’scomplex refineries. Petrochemical product margins also improvedfrom the prior year as high oil-based feedstock costs were atleast partially offset by higher chemicals commodity prices onthe back of a recovery in demand.

 

> 
***Key Consolidated Financial Data***

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Net sales from operations                                                                                                  |   |             |   | 108,082 |   | 83,227 |   | 98,523 |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|---------|--------|--------|--------|--------|
| Operating        profit (1)                                                                                                |   |             |   | 18,517  |   | 12,055 |   | 16,111 |
| Net profit attributable to Eni                                                                                             |   |             |   | 8,825   |   | 4,367  |   | 6,318  |
| Net cash        provided by operating activities                                                                           |   |             |   | 21,801  |   | 11,136 |   | 14,694 |
| Capital expenditures                                                                                                       |   |             |   | 14,562  |   | 13,695 |   | 13,870 |
| Acquisitions        of investments and businesses (2)                                                                      |   |             |   | 4,305   |   | 2,323  |   | 443    |
| Shareholders’ equity including        non-controlling interest at year end                                            |   |             |   | 48,510  |   | 50,051 |   | 55,728 |
| Net        borrowings at year end (2)                                                                                      |   |             |   | 18,376  |   | 23,055 |   | 26,119 |
| Net profit attributable to Eni basic and diluted                                                                           |   | (euro per share) |   | 2.43    |   | 1.21   |   | 1.74   |
| Dividend        per share                                                                                                  |   | (euro per share) |   | 1.30    |   | 1.00   |   | 1.00   |
| Ratio of net borrowings to total        shareholders’ equity including non-controlling        interest (leverage) (3) |   |             |   | 0.38    |   | 0.46   |   | 0.47   |
|                                                                                                                       |   |             |   |         |   |        |   |        |

----

| (1) |    | From year        2009, the Company accounts for gains and losses on        non-hedging commodity derivative instruments, including        both fair value remeasurement and settled transactions,        as items of operating profit. Prior period results have        been restated accordingly. |
|-----|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | This item        includes acquired net borrowings.                                                                                                                                                                                                                                                 |
| (3) |    | For a        discussion of the usefulness of and a reconciliation of        these non-GAAP financial measures with the most directly        comparable GAAP financial measures see - "Liquidity        and Capital Resources - Financial Conditions" below.                              |

 

**Critical Accounting Estimates**

The Company’s Consolidated Financial Statements areprepared in accordance with IFRS as issued by IASB. These requirethe use of estimates and assumptions that affect the assets,liabilities, revenues and expenses reported in the financialstatements, as well as amounts included in the notes thereto,including discussion and disclosure of contingent liabilities.Estimates made are based on complex or subjective judgments andpast experience of other assumptions deemed reasonable inconsideration of the information available at the time. Theaccounting policies and areas that require the most significantjudgments and estimates to be used in the preparation of theConsolidated 

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Financial Statements are in relation to the accounting for oiland natural gas activities, specifically in the determination ofproved and proved developed reserves, impairment of fixed assets,intangible assets and goodwill, asset retirement obligations,business combinations, pensions and other post-retirementbenefits, recognition of environmental liabilities andrecognition of revenues in the oil field services constructionand engineering businesses. Although the Company uses its bestestimates and judgments, actual results could differ from theestimates and assumptions used. A summary of significantestimates follows.

 

> 
***Oil and gas activities***

Engineering estimates of the Company’s oil and gasreserves are inherently uncertain. Proved reserves are theestimated volumes of crude oil, natural gas and gas condensates,liquids and associated substances which geological andengineering data demonstrate that can be economically produciblewith reasonable certainty from known reservoirs under existingeconomic conditions and operating methods. Although there areauthoritative guidelines regarding the engineering criteria thatmust be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data,engineering and geological interpretation and judgment. Fieldreserves will only be categorized as proved when all the criteriafor attribution of proved status have been met. At this stage,all booked reserves will be classified as proved undeveloped.Volumes will subsequently be reclassified from proved undevelopedto proved developed as a consequence of development activity. Thefirst proved developed bookings will occur at the point of firstoil or gas production.

Major development projects typically take one to four yearsfrom the time of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revision may be madeto the initial booking of reserves due to production, reservoirperformance, commercial factors, acquisition and divestmentactivity and additional reservoir development activity.

In particular, changes in oil and natural gas prices couldimpact the amount of Eni’s proved reserves in regards to theinitial estimate and, in the case of Production SharingAgreements and buy-back contracts, the share of production andreserves to which Eni is entitled. Accordingly, the estimatedreserves could be materially different from the quantities of oiland natural gas that ultimately will be recovered. Oil andnatural gas reserves have a direct impact on certain amountsreported in the Consolidated Financial Statements. Estimatedproved reserves are used in determining depreciation anddepletion expenses and impairment expense. Depreciation rates onoil and gas assets using the UOP basis are determined from theratio between the amount of hydrocarbons extracted in the quarterand proved developed reserves existing at the end of the quarterincreased by the amounts extracted during the quarter. Assumingall other variables are held constant, an increase in estimatedproved developed reserves for each field decreases depreciation,depletion and amortization expense. Conversely, a decrease inestimated proved developed reserves increases depreciation,depletion and amortization expense. In addition, estimated provedreserves are used to calculate future cash flows from oil and gasproperties, which serve as an indicator in determining whether ornot property impairment is to be carried out. The larger thevolume of estimated reserves, the lower the likelihood of assetimpairment.

 

> 
***Impairment of assets***

Eni assesses its tangible assets and intangible assets,including goodwill, for possible impairment if there are eventsor changes in circumstances that indicate the carrying values ofthe assets are not recoverable. Such indicators include changesin the Group’s business plans, changes in commodity pricesleading to unprofitable performance, a reduced utilization of theplants and, for oil and gas properties, significant downwardrevisions of estimated proved reserve quantities or significantincrease of the estimated development costs. Determination as towhether and how much an asset is impaired involves managementestimates on highly uncertain matters such as future commodityprices, the effects of inflation and technology improvements onoperating expenses, production profiles and the outlook forglobal or regional market supply and demand conditions for crudeoil, natural gas, commodity chemicals and refined products.Similar remarks are valid for the physical recoverability ofassets recognized in the balance sheet (deferred cost – see"Item 18 – Note 20 to the Consolidated FinancialStatements") related to natural gas volumes not collectedunder long-term purchase contracts with take-or-pay clauses.

The amount of an impairment loss is determined by comparingthe book value of an asset with its recoverable amount. Therecoverable amount is the greater of fair value net of disposalcost or the value in use. The estimated value in use is based onthe present values of expected future cash flows net of disposalcosts. The expected future cash flows used for impairmentanalyses are based on judgmental assessments of future productionvolumes, prices and costs, considering available information atthe date of review and are discounted by using a rate related tothe activity involved.

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For oil and natural gas properties, the expected future cashflows are estimated principally based on developed andnon-developed proved reserves including, among other elements,production taxes and the costs to be incurred for the reservesyet to be developed. Oil, natural gas and petroleum productprices (and to prices from products which derive there from) usedto quantify the expected future cash flows are estimated based onforward prices prevailing in the marketplace for the first fouryears and management’s long-term planning assumptionsthereafter. The estimate of the future amount of production isbased on assumptions related to the commodity future prices,lifting and development costs, market demand and other factors.The discount rate reflects the current market valuation of thetime value of money and of the specific risks of the asset notreflected in the estimate of the future cash flows. Goodwill andother intangible assets with an indefinite useful life are notsubject to amortization. The Company tests such assets at thecash generating unit level for impairment on an annual basis andbetween annual tests if an event occurs or circumstances changethat would more likely than not reduce the fair value below itscarrying amount. In particular, goodwill impairment is based onthe determination of the fair value of each cash generating unitto which goodwill can be attributed on a reasonable andconsistent basis. A cash generating unit is the smallestaggregate on which the Company, directly or indirectly, evaluatesthe return on the capital expenditure. If the recoverable amountof a cash generating unit is lower than the carrying amount,goodwill attributed to that cash generating unit is impaired upto that difference; if the carrying amount of goodwill is lessthan the amount of impairment, assets of the cash generating unitare impaired on a pro-rata basis for the residual difference.

 

> 
***Asset Retirement Obligations***

Obligations to remove tangible equipment and restore land orseabed require significant estimates in calculating the amount ofthe obligation and determining the amount required to be recordedpresently in the Consolidated Financial Statements.

Estimating future asset retirement obligations is complex. Itrequires management to make estimates and judgments with respectto removal obligations that will come to term many years into thefuture and contracts and regulations are often unclear as to whatconstitutes removal. In addition, the ultimate financial impactof environmental laws and regulations is not always clearly knownas asset removal technologies and costs constantly evolve in thecountries where Eni operates, as do political, environmental,safety and public expectations. The subjectivity of theseestimates is also increased by the accounting method used thatrequires entities to record the fair value of a liability for anasset retirement obligation in the period when it is incurred(typically, at the time the asset is installed at the productionlocation). When liabilities are initially recorded, the relatedfixed assets are increased by an equal corresponding amount. Theliabilities are increased with the passage of time (i.e. interestaccretion) and any change in the estimates following themodification of future cash flows and discount rate adopted. Therecognized asset retirement obligations are based on futureretirement cost estimates and incorporate many assumptions suchas: expected recoverable quantities of crude oil and natural gas,abandonment time, future inflation rates and the risk-free rateof interest adjusted for the Company’s credit costs.

 

> 
***Business Combinations***

Accounting for business combinations requires the allocationof the purchase price to the various assets and liabilities ofthe acquired business at their respective fair values. Anypositive residual difference is recognized as"Goodwill". Negative residual differences are creditedto the profit and loss account. Management uses all availableinformation to make these fair value determinations and, formajor business acquisitions, typically engages an independentappraisal firm to assist in the fair value determination of theacquired assets and liabilities.

 

> 
***Environmental liabilities***

Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, production and other activities. They includelegislations that implement international conventions orprotocols. Environmental costs are recognized when it becomesprobable that a liability has been incurred and the amount can bereasonably estimated. Management, considering the actions alreadytaken, insurance policies obtained to cover environmental risksand provisions for risks accrued, does not expect any materialadverse effect on Eni’s consolidated results of operationsand financial position as a result of such laws and regulations.However, there can be no assurance that there will not be amaterial adverse impact on Eni’s consolidated results ofoperations and financial position due to:

| (i)   |   | the possibility of an        unknown contamination;                                                                                                                                                                           |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | the results of the ongoing        surveys and other possible effects of statements required        by Decree No. 471/1999 of the Ministry for the        Environment concerning the remediation of contaminated        sites; |
| (iii) |   | the possible effects of        future environmental legislations and rules;                                                                                                                                                   |

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| (iv) |   | the effects of possible        technological changes relating to future remediation; and                                                                                                                                                        |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (v)  |   | the possibility of        litigation and the difficulty of determining Eni’s        liability, if any, against other potentially responsible        parties with respect to such litigations and the possible        insurance recoveries. |

> 
 

***Employee benefits***

Defined benefit plans are evaluated with reference touncertain events and based upon actuarial assumptions includingamong others discount rates, expected rates of return on planassets, expected rates of salary increases, medical cost trends,estimated retirement dates and mortality rates. The significantassumptions used to account for defined benefit plans aredetermined as follows: (i) discount and inflation rates reflectthe rates at which benefits could be effectively settled, takinginto account the duration of the obligation. Indicators used inselecting the discount rate include rates of annuity contractsand rates of return on high quality fixed-income investments. Theinflation rates reflect market conditions observed country bycountry; (ii) the future salary levels of the individualemployees are determined including an estimate of future changesattributed to general price levels (consistent with inflationrate assumptions), productivity, seniority and promotion; (iii)healthcare cost trend assumptions reflect an estimate of theactual future changes in the cost of the healthcare relatedbenefits provided to the plan participants and are based on pastand current healthcare cost trends including healthcareinflation, changes in healthcare utilization and changes inhealth status of the participants; (iv) demographic assumptionssuch as mortality, disability and turnover reflect the bestestimate of these future events for individual employeesinvolved, based principally on available actuarial data; and (v)determination of the expected rates of return on assets is madethrough compound averaging. For each plan, the distribution ofinvestments among bonds, equities and cash and their specificaverage expected rate of return is taken into account.Differences between expected and actual costs and between theexpected return and the actual return on plan assets routinelyoccur and are called actuarial gains and losses.

Eni applies the corridor method to amortize its actuariallosses and gains. This method amortizes on a pro-rata basis thenet cumulative unrecognized actuarial gains and losses at the endof the previous reporting period that exceed 10% of the greaterof: (i) the present value of the defined benefit obligation; and(ii) the fair value of plan assets, over the average expectedremaining working lives of the employees participating in theplan. Additionally, obligations for other long-term benefits aredetermined by adopting actuarial assumptions. The effect ofchanges in actuarial assumptions or a change in thecharacteristics of the benefit are taken to the profit or loss intheir entirety.

 

> 
***Contingencies***

In addition, to accruing the estimated costs for environmentalliabilities, asset retirement obligations and employee benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining the appropriate amount toaccrue is a complex estimation process that includes subjectivejudgments.

 

> 
***Revenue recognition in the Engineering &    Construction segment***

Revenue recognition in the Engineering & Constructionsegment is based on the stage of completion of a contract asmeasured on the cost-to-cost basis applied to contractualrevenues. Use of the stage of completion method requiresestimates of future gross profit on a contract by contract basis.The future gross profit represents the profit remaining afterdeducting costs attributable to the contract from revenuesprovided for in the contract. The estimate of future gross profitis based on a complex estimation process that includesidentification of risks related to the geographical region,market conditions in that region and any assessment that isnecessary to estimate with sufficient precision the total futurecosts as well as the expected timetable. Requests of additionalincome, deriving from a change in the scope of work, are includedin the total amount of revenues when it is probable that thecustomer will approve the variation and the related amount.Claims deriving from additional costs incurred for reasonsattributable to the client are included in the total amount ofrevenues when it is probable that the counterparty will acceptthem.

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**2008-2010 Group Results of Operations**

> 
***Overview of the Profit and Loss Account for Three    Years Ended December 31, 2008, 2009 and 2010***

The table below sets forth a summary of Eni’s profit andloss account for the periods indicated. All line items includedin the table below are derived from the Consolidated FinancialStatements prepared in accordance with IFRS.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Net sales from operations                                    |   | 108,082    |   |   | 83,227     |   |   | 98,523     |   |
|--------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Other        income and revenues (1)                         |   | 728        |   |   | 1,118      |   |   | 956        |   |
|                                                         |   |            |        |   |            |        |   |            |        |
| Total revenues                                               |   | 108,810    |   |   | 84,345     |   |   | 99,479     |   |
| Operating        expenses                                    |   | (80,354    | )      |   | (62,532    | )      |   | (73,920    | )      |
| Other operating (expense) income (2)                         |   | (124       | )      |   | 55         |   |   | 131        |   |
| Depreciation,        depletion, amortization and impairments |   | (9,815     | )      |   | (9,813     | )      |   | (9,579     | )      |
|                                                         |   |            |        |   |            |        |   |            |        |
| **OPERATING PROFIT**                                         |   | **18,517** |   |   | **12,055** |   |   | **16,111** |   |
| Finance        income (expense)                              |   | (640       | )      |   | (551       | )      |   | (727       | )      |
| Income (expense) from investments                            |   | 1,373      |   |   | 569        |   |   | 1,156      |   |
|                                                         |   |            |        |   |            |        |   |            |        |
| **PROFIT        BEFORE INCOME TAXES**                        |   | **19,250** |   |   | **12,073** |   |   | **16,540** |   |
| Income taxes                                                 |   | (9,692     | )      |   | (6,756     | )      |   | (9,157     | )      |
|                                                         |   |            |        |   |            |        |   |            |        |
| **NET        PROFIT**                                        |   | **9,558**  |   |   | **5,317**  |   |   | **7,383**  |   |
| Attributable to:                                             |   |       |   |   |       |   |   |       |   |
| **- Eni**                                                    |   | **8,825**  |   |   | **4,367**  |   |   | **6,318**  |   |
| - non-controlling interest                                   |   | 733        |   |   | 950        |   |   | 1,065      |   |
|                                                         |   |            |        |   |            |        |   |            |        |

----

| (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) |    | Beginning in        2009, the Company accounts for gains and losses on        non-hedging commodity derivative instruments, including        both fair value remeasurement and settled transactions,        as items of operating profit. Prior period results have        been restated accordingly. |

The table below sets forth certain income statement items as apercentage of net sales from operations for the periodsindicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(%)** |
|--------|--------|---------|

| Operating expenses                                           |   | 74.3     |   | 75.1     |   | 75.0     |
|--------------------------------------------------------------|--------|----------|--------|----------|--------|----------|
| Depreciation,        depletion, amortization and impairments |   | 9.1      |   | 11.8     |   | 9.7      |
| **OPERATING PROFIT**                                         |   | **17.1** |   | **14.5** |   | **16.4** |
|                                                         |   |          |   |          |   |          |

*2010 compared to 2009.* Net profit attributable toEni’s shareholders in 2010 was euro 6,318 million, anincrease of euro 1,951 million from 2009, or 44.7%. This increasewas driven by:

| (i)   |   | an improved operating        performance (up by 33.6% from 2009) which was mainly        reported by the Exploration & Production Division (up        by 52%), reflecting a favorable trading environment.        Improved operating results were also reported by the        Engineering & Construction Division due to strong        business trends, while the Petrochemicals and the        Refining & Marketing Divisions achieved an improved        performance in spite of difficult market conditions.        Those gains were partly offset by sharply lower results        recorded by the Gas & Power Division which was hit by        a weak trading environment, and higher environmental        charges up by approximately euro 1.1 billion mainly due        to the recognition of a provision to account for the        proposed global environmental settlement with the Italian        Ministry for the Environment as discussed in the        paragraph "Significant Transactions"; |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | recognition of higher        inventory holding gains in particular in the Gas &        Power Division. This increase is associated with rising        gas prices which resulted in an increased carrying amount        of gas inventories recorded under the weighted average        cost method; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (iii) |   | higher profits reported from        equity-accounted and cost-accounted entities, including        certain gains on divestments of assets (approximately        euro 300 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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These increases were partly offset by higher income taxes (upeuro 2,401 million compared to 2009) mainly reflecting higherincome taxes currently payable by subsidiaries in the Exploration& Production Division operating outside Italy due to highertaxable profit.

*2009 compared to 2008*. Net profit pertaining to Eni in2009 was euro 4,367 million, a decrease of euro 4,458 millionfrom 2008, or 50.5%. This decrease was affected by the followingfactors:

| (i)   |   | a decreased operating profit        reported by the Exploration & Production and Gas        & Power segments due to lower oil and gas prices and        a weaker gas demand. The Group results were also affected        by higher amortization charges taken in connection with        new investments. Those negatives were partly offset by        recognition of lower inventory write-downs and        impairments of property, plant and equipment particularly        in the Refining & Marketing and Petrochemical        segments. As a result, the Group consolidated operating        profit was down euro 6,462 million, or 34.9%, from a year        ago; |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | lower profit (down euro 804        million) from non-consolidated entities that are        accounted for under the equity or the cost method; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (iii) |   | a higher consolidated tax        rate up from 50.3% to 56% (up 5.7 percentage points),        mainly due to new tax rules both in Italy and outside        Italy which impacted taxes currently payable, charges        accounted in the year which were excluded from tax        calculations, and the circumstance that in 2008 the tax        rate benefited from certain tax gains associated with an        adjustment to deferred taxation amounting to euro 733        million as new tax provisions came into effect pertaining        to both Italian and foreign subsidiaries.                                                                                           |

> 
 

***Discontinued Operations***

Discontinued operations in 2010, 2009 and 2008 wereimmaterial.

 

> 
***Analysis of the Line Items of the Profit and Loss    Account***

***a) Total Revenues***

Eni’s total revenues were euro 99,479 million, euro84,345 million and euro 108,810 million for the year endedDecember 31, 2010, 2009 and 2008, respectively. Total revenuesconsist of net sales from operations and other income andrevenues. Eni’s net sales from operations amounted to euro98,523 million, euro 83,227 million and euro 108,082 million forthe year ended December 31, 2010, 2009 and 2008, respectively,and its other income and revenues totaled euro 956 million, euro1,118 million and euro 728 million, respectively, in theseperiods.

 

 

 

 

 

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> 
*Net sales from operations*

The table below sets forth, for the periods indicated, the netsales from operations generated by each of Eni’s businesssegments including intra-group sales, together with consolidatednet sales from operations.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Exploration & Production (1)                          |   | 33,042      |   |   | 23,801     |   |   | 29,497     |   |
|-----------------------------------------------------------|--------|-------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power (1)                                |   | 37,062      |   |   | 30,447     |   |   | 29,576     |   |
| Refining & Marketing (2)                              |   | 45,017      |   |   | 31,769     |   |   | 43,190     |   |
| Petrochemicals                                            |   | 6,303       |   |   | 4,203      |   |   | 6,141      |   |
| Engineering & Construction                            |   | 9,176       |   |   | 9,664      |   |   | 10,581     |   |
| Other        activities                                   |   | 185         |   |   | 88         |   |   | 105        |   |
| Corporate and financial companies                         |   | 1,331       |   |   | 1,280      |   |   | 1,386      |   |
| Impact of        unrealized intragroup profit elimination |   | 75          |   |   | (66        | )      |   | 100        |   |
| Consolidation adjustment (3)                              |   | (24,109     | )      |   | (17,959    | )      |   | (22,053    | )      |
|                                                      |   |             |        |   |            |        |   |            |        |
| **NET        SALES FROM OPERATIONS**                      |   | **108,082** |   |   | **83,227** |   |   | **98,523** |   |
|                                                      |   |             |        |   |            |        |   |            |        |

----

| (1) |   | From January        1, 2009, results of the gas storage business, which were        previously reported within the Exploration &        Production segment, are reported within the Gas &        Power segment reporting unit, following restructuring of        Eni regulated gas businesses in Italy. As of that date,        the results of the regulated businesses in Italy        therefore include results of the Transport, Distribution,        Re-gasification and Storage activities in Italy. Prior        period results have been restated accordingly. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | From January        1, 2009 Eni adopted IFRIC 13 "Customer Loyalty        Programmes" which requires that the award points        granted to clients within the related loyalty program be        accounted as a separate component of the basic        transaction, evaluated at their fair value and recognized        as revenues when effectively used. Prior period results        have been restated accordingly.                                                                                                                                             |
| (3) |   | Intragroup        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 intragroup sales are        recorded by the Exploration & Production segment. See        Note 35 to the Consolidated Financial Statements for a        breakdown of intragroup sales by segment for the reported        years.                                                                                     |

*2010 compared to 2009*. Eni’s net sales fromoperations (revenues) for 2010 (euro 98,523 million) increased byeuro 15,296 million from 2009, or 18.4% from 2009, primarilyreflecting higher realizations on oil, refined products andnatural gas in U.S. dollar terms and the positive impact of thedepreciation of the euro against the U.S. dollar.

Revenues generated by the Exploration & ProductionDivision (euro 29,497 million) increased by euro 5,696 million,or 23.9%, mainly due to higher realizations in U.S. dollar terms(oil up 27.8%; natural gas up 7.1%) and the depreciation of theeuro versus the U.S. dollar. Eni’s average liquidsrealizations decreased by 1.33 $/BBL to 72.76 $/BBL due to thesettlement of certain commodity derivatives relating to the saleof 28.5 mmBBL. The latter trend is going to continue in 2011 dueto current trends in Brent oil prices.

Revenues generated by the Gas & Power Division (euro29,576 million) decreased by euro 871 million (or 2.9%) due tolower sales volumes in Italy (down 5.75 BCM, or 14.4%), partlyoffset by the positive impact of a slight recovery in spot andoil-linked gas prices due to a less unfavorable pricingenvironment compared to 2009 which are reflected in Eni’srevenues. Increased sales volumes were also recorded in keyEuropean markets.

Revenues generated by the Refining & Marketing Division(euro 43,190 million) increased by euro 11,421 million (or 36%)reflecting higher selling prices of refined products.

Revenues generated by the Petrochemical Division (euro 6,141million) increased by euro 1,938 million (up 46.1%) mainlyreflecting higher average selling prices (up 35.6%) and arecovery in sales volumes (up 10.9%, mainly in the elastomersbusiness area) following stronger demand on end-markets comparedto the particularly weak trading environment of the previousyear.

Revenues generated by the Engineering & Constructionbusiness (euro 10,581 million) increased by euro 917 million, or9.5%, from 2009, as a result of increased activities in theonshore and drilling business units.

*2009 compared to 2008*. Eni’s net sales fromoperations (revenues) for 2009 (euro 83,227 million) were downeuro 24,855 million, or 23% from 2008, primarily reflecting lowerrealizations on oil, refined products and natural gas in U.S.dollar terms and lower sales volumes. These negatives were partlyoffset by the positive impact of the depreciation of the euroversus the U.S. dollar (down 5.3%).

Revenues generated by the Exploration & ProductionDivision (euro 23,801 million) decreased by euro 9,241 million,or 28% from 2008, mainly due to lower realizations in U.S.dollars (oil down 32.2%; natural gas down 29.8%) reflecting atrading environment that was particularly adverse in the firstnine months and the impact of 

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energy parameters on gas prices and a fall in gas spot prices.This decrease reflected also lower sales volumes (down 9.2million BOE, or 1.5%). These negatives were partly offset by thedepreciation of the euro versus the U.S. dollar.

Revenues generated by the Gas & Power Division (euro30,447 million) decreased by euro 6,615 million, or 17.8% from2008, mainly due to lower gas prices reflecting trends in energyparameters, as well as lower volumes sold in Italy (down 12.8BCM, or 24.2%) due to the impact of the economic downturn. Thesenegatives were partly offset by increased sales outside Italy dueto contribution of the Distrigas acquisition (up 12.02 BCM).

Revenues generated by the Refining & Marketing Division(euro 31,769 million) decreased by euro 13,248 million, or 29.4%from 2008, reflecting lower product prices and lower salesvolumes (down 10%), that were partially offset by the impact ofthe depreciation of the euro versus the U.S. dollar.

Revenues generated by the Petrochemical Division (euro 4,203million) decreased by euro 2,100 million, or 33.3% from 2008,mainly reflecting lower sales prices (down 26%) due to lowerinternational prices for crude oil and refined products and adecline in volumes sold due to lower end-markets demand that wasdriven down by the economic downturn.

Revenues generated by the Engineering & Constructionbusiness (euro 9,664 million) increased by euro 488 million, or5.3% from 2008, as a result of the large number of oil and gasprojects that were started during the upward phase of the oilcycle.

 

> 
***b) Operating Expenses***

The table below sets forth the components of Eni’soperating expenses for the periods indicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Purchases, services and other    |   | 76,350     |   | 58,351     |   | 69,135     |
|----------------------------------|--------|------------|--------|------------|--------|------------|
| Payroll        and related costs |   | 4,004      |   | 4,181      |   | 4,785      |
| **Operating expenses**           |   | **80,354** |   | **62,532** |   | **73,920** |
|                             |   |            |   |            |   |            |

*2010 compared to 2009*. Operating expenses for the year(euro 73,920 million) increased by euro 11,388 million from 2009,up 18.2%, reflecting primarily higher supply costs of purchasedoil, gas and petrochemical feedstocks reflecting trends in thetrading environment, the depreciation of the euro against theU.S. dollar, as well as higher operating expenses reported by theupstream activities. 

Purchases, services and other costs include environmental andother risk provisions for an overall amount of euro 1,291 millionmainly associated with an environmental provision recorded toaccount for a proposed global settlement on certain environmentalissues (euro 1,109 million) filed with the Italian Ministry forthe Environment, which is disclosed in the paragraph"Significant Transactions" below.

Payroll and related costs (euro 4,785 million) increased byeuro 604 million, or 14.4%, mainly due to higher unit labor costin Italy and outside Italy, partly due to exchange ratetranslation differences, the increase in the average number ofemployees outside Italy (following higher activity levels in theEngineering & Construction business), as well as increasedprovisions for redundancy incentives (euro 423 million in 2010)including a provision representing the charge to be borne by Enias part of a personnel mobility program in Italy for the period2010-2011. These increases were partly offset by a decrease inthe average number of employees in Italy.

*2009 compared to 2008*. Operating expenses for 2009(euro 62,532 million) were down euro 17,822 million from 2008, or22.2%, reflecting primarily lower supply costs of purchased oil,gas and petrochemical feedstocks, partially offset by thedepreciation of the euro against the U.S. dollar. 

Purchases, services and other included environmental and otherrisk provisions, impairments of certain current and non-currentassets, other than tangible and intangible assets, amounting toeuro 537 million. They also included a charge amounting to euro250 million which was estimated on the basis of the possibleresolution of an investigation related to the TSKJ Consortiumbased on the current status of the ongoing discussions with U.S.Authorities.

Payroll and related costs (euro 4,181 million) increased byeuro 177 million from 2008 (up 4.4%) mainly due to higher unitlabor cost in Italy and outside Italy, partly due to exchangerate translation differences, the increase in 

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the average number of employees outside Italy, following theconsolidation of Distrigas in the Gas & Power Division,increased personnel in the Engineering & Construction andExploration & Production businesses due to higher activitylevels, as well as increased provisions for redundancyincentives. These increases were partially offset by a decreasein the average number of employees in Italy.

 

> 
***c) Depreciation, Depletion, Amortization and    Impairments***

The table below sets forth a breakdown of depreciation,amortization and impairments by business segment for the periodsindicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Exploration & Production (1)                              |   | 6,678     |   |   | 6,789     |   |   | 6,928     |   |
|---------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Gas &        Power                                        |   | 797       |   |   | 981       |   |   | 963       |   |
| Refining & Marketing                                      |   | 430       |   |   | 408       |   |   | 333       |   |
| Petrochemicals                                                |   | 116       |   |   | 83        |   |   | 83        |   |
| Engineering & Construction                                |   | 335       |   |   | 433       |   |   | 513       |   |
| Other        activities                                       |   | 4         |   |   | 2         |   |   | 2         |   |
| Corporate and financial companies                             |   | 76        |   |   | 83        |   |   | 79        |   |
| Impact of        unrealized intragroup profit elimination (2) |   | (14       | )      |   | (17       | )      |   | (20       | )      |
|                                                          |   |           |        |   |           |        |   |           |        |
| **Total depreciation, depletion and        amortization**     |   | **8,422** |   |   | **8,762** |   |   | **8,881** |   |
| Impairments                                                   |   | 1,393     |   |   | 1,051     |   |   | 698       |   |
|                                                          |   |           |        |   |           |        |   |           |        |
|                                                          |   | **9,815** |   |   | **9,813** |   |   | **9,579** |   |
|                                                          |   |           |        |   |           |        |   |           |        |

----

| (1) |    | Exploratory        expenditures of euro 1,199 million, euro 1,551 million        and euro 2,057 million are included in these amounts        relative to the years 2010, 2009 and 2008, respectively. |
|-----|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | This item        concerned mainly intra-group sales of goods, services and        capital assets recorded at period end in the equity of        the purchasing business segment.                      |

*2010 compared to 2009*. In 2010, depreciation, depletionand amortization charges amounted to euro 8,881 million,representing an increase of euro 119 million from 2009, or 1.4%.The Exploration & Production Division recorded higher charges(up euro 139 million) due to increased development activities asnew fields were brought into production and higher expenditureswere made in order to support production levels in producingfields. Those were partly offset by lower explorationexpenditures. Also the Engineering & Construction businessrecorded higher charges (up euro 80 million) as new vessels andrigs were brought into operation. The decrease recorded in theRefining & Marketing Division reflected a review of theresidual useful lives of refineries and related facilities, withan impact of euro 76 million. In doing so, the Company believesthat it aligned with practices prevailing among integrated oilcompanies, particularly the European companies. In the Gas &Power Division, the impact of new investments entered intooperation was offset by the revision of the useful lives of gaspipelines (from 40 to 50 years), as revised by the Authority forElectricity and Gas for tariff purposes, from January 1, 2010,with an impact of euro 31 million.

In 2010, impairment charges of euro 698 million mainlyregarded an impairment charge of goodwill allocated to theEuropean gas marketing cash generating unit in the Gas &Power Division. The impaired goodwill derived from theacquisition of the Belgian company Distrigas that was made in2009. Management forecasts that weak demand growth and continuingoversupply will continue to weigh on the recovery of the Europeangas sector in the next few years. Rising competitive pressureswill pressure unit margins on gas sales and reduce sellingoutlets. To factor in those trends, management revised downwardwith respect to past years, future projections for returns andcash flows of the Company’s gas business for the next fouryears. Particularly, the European market business unit isexpected to be negatively affected by lowering marketing marginsover the next four years. This reflects ongoing development ofhighly liquid spot markets for gas and the fact that spot priceshave increasingly become the prevailing reference price forcontractual formulas in supplies outside Italy whereas Eni’spurchase costs for gas are mainly indexed to the price of oil andrefined products. Trends in spot prices as compared to those inoil-linked purchase costs have been de-coupling until recentlyresulting in negative spreads during the course of 2010;management expects that those negative trends will not re-coupleuntil 2014 at the earliest. In the 2010 Consolidated FinancialStatements, management recognized an impairment loss amounting toeuro 426 million associated with goodwill of the European gasbusiness unit considering weak 2010 results and a reduced outlookfor profitability as discussed above. Impairment charges of oiland gas properties in the Exploration & Production Divisionwere recorded for significantly lower amount than in the previoustwo years. Impairments were triggered by a changed 

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pricing environment and downward reserve revisions whichmainly pertained to gas properties in the USA with proved andunproved reserves. Minor impairment losses were recorded onassets impaired in previous reporting periods in the Refining& Marketing and Petrochemical Divisions as capitalexpenditures made in 2010 were completely written-off as Eni doesnot expect improving profitability in the underlying businessunits (For further information see "Item 18 –Consolidated Financial Statements – Note 14 – Tangibleand Intangible assets").

*2009 compared to 2008*. In 2009, depreciation, depletionand amortization charges (euro 8,762 million) increased by euro340 million, or 4% from 2008, mainly in: (i) the Gas & PowerDivision (up euro 184 million) reflecting consolidation of assetsacquired and entry into service of new investments; and (ii) theExploration & Production segment (up euro 111 million)where higher charges were associated with the depreciation of theeuro against the U.S. dollar, rising development activitiesreflecting consolidation of acquired oil and gas properties andincreased expenditures to develop new complex fields andprojects. These negatives were partly offset by lower explorationexpenses. The Engineering & Construction segment alsoincreased amortization charges in connection with the entry intoservice of new assets.

In 2009, impairments (euro 1,051 million) which were down euro342 million, mainly related to: (i) impairment chargesrecorded on proved and unproved properties in the Exploration& Production Division due to downward reserve revisions andcost increases mainly recorded in the Gulf of Mexico, Australia,Congo and Egypt; (ii) refinery plants due to expectations of poorrefining margins reflecting the industry weak fundamentals andplants’ specific factors such as low complexity. Alsoimpairments of goodwill were recognized on marketing assetsacquired in Central-Eastern Europe and certain other marketingassets in the Refining & Marketing Division, in the light ofa downsizing of growth expectations on certain markets; and (iii)a number of plants in the Petrochemical Division due to a weakoutlook for pricing/margins as a result of lower petrochemicalproducts demand, excess capacity and higher competitivepressures.

 

> 
***d) Operating Profit by Segment***

The table below sets forth Eni’s operating profit bybusiness segment for the periods indicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Exploration & Production (1)                          |   | 16,239     |   |   | 9,120      |   |   | 13,866     |   |
|-----------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power (1)                                |   | 4,030      |   |   | 3,687      |   |   | 2,896      |   |
| Refining & Marketing                                  |   | (988       | )      |   | (102       | )      |   | 149        |   |
| Petrochemicals                                            |   | (845       | )      |   | (675       | )      |   | (86        | )      |
| Engineering & Construction                            |   | 1,045      |   |   | 881        |   |   | 1,302      |   |
| Other        activities (2)                               |   | (466       | )      |   | (436       | )      |   | (1,384     | )      |
| Corporate and financial companies (2)                     |   | (623       | )      |   | (420       | )      |   | (361       | )      |
| Impact of        unrealized intragroup profit elimination |   | 125        |   |   |       |   |   | (271       | )      |
|                                                      |   |            |        |   |            |        |   |            |        |
| **Operating profit**(3)****                               |   | **18,517** |   |   | **12,055** |   |   | **16,111** |   |
|                                                      |   |            |        |   |            |        |   |            |        |

----

| (1) |   | From January        1, 2009, results of the gas storage business, which were        previously reported within the Exploration &        Production segment, are reported within the Gas &        Power segment reporting unit, following restructuring of        Eni regulated gas businesses in Italy. As of that date,        the results of the regulated businesses in Italy        therefore include results of the Transport, Distribution,        Re-gasification and Storage activities in Italy. Prior        period results have been restated accordingly. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | From 2010        certain environmental provisions incurred by the parent        company Eni SpA due to inter-company guarantees on behalf        of Syndial have been reported within the segment        reporting unit "Other activities" rather than        the segment "Corporate and financial        companies". Data for the years 2008 and 2009 have        been restated accordingly for the following amounts: euro        120 million and euro 54 million, respectively.                                                                        |
| (3) |   | From 2009,        the Company accounts gains and losses on non-hedging        commodity derivatives instruments, including both fair        value re-measurement and settled transactions, as items        of operating profit. Prior period results have been        restated accordingly.                                                                                                                                                                                                                                                                                   |

 

 

 

 

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The table below sets forth operating profit orlosses for each of Eni’s principal business segments as apercentage of each segment’s net sales from operations(including intragroup sales) for the periods presented.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(%)** |
|--------|--------|---------|

| Exploration & Production      |   | 49.1     |   |   | 38.3     |   |   | 47.0     |   |
|-----------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Gas &        Power            |   | 10.9     |   |   | 12.1     |   |   | 9.8      |   |
| Refining & Marketing          |   | (2.2     | )      |   | (0.3     | )      |   | 0.3      |   |
| Petrochemicals                    |   | (13.4    | )      |   | (16.1    | )      |   | (1.4     | )      |
| Engineering & Construction    |   | 11.4     |   |   | 9.1      |   |   | 12.3     |   |
| Other        activities           |   |     |   |   |     |   |   |     |   |
| Corporate and financial companies |   | (46.8    | )      |   | (32.8    | )      |   | (26.0    | )      |
|                              |   |          |        |   |          |        |   |          |        |
| **Group**                         |   | **17.1** |   |   | **14.5** |   |   | **16.4** |   |
|                              |   |          |        |   |          |        |   |          |        |

*Exploration & Production.* Operating profit in 2010amounted to euro 13,866 million, up euro 4,746 million from 2009,or 52%, due to higher liquids and gas realizations in U.S. dollarterms (up by 27.8% and 7.1%, respectively). The result alsoreflected: (i) a positive impact associated with the depreciationof the euro against the U.S. dollar, for an estimated amount ofeuro 400 million; (ii) the recognition of lower assetimpairments; and (iii) lower exploration expenditures. Thesepositives were partly offset by increased operating expenses andamortizations charges reflecting new fields entered intooperation and activities to improve production rates in existingfields, and higher provisions for redundancy incentives (up euro66 million).

In 2010, liquids and gas realizations increased on average by18.6% in U.S. dollar terms, driven by higher oil prices formarket benchmarks (Brent crude price increased by 29.2%) and, toa lower extent, higher gas prices which were up by 7.1% onaverage. Eni’s oil realizations increased on average by27.8% driven by a favorable market environment. Eni’saverage liquids realizations were negatively impacted for anamount of 1.33 $/BBL on average due to the settlement of certaincommodity derivatives relating the sale of 28.5 mmBBL in the yearat contractually fixed prices. This was part of a derivativetransaction the Company entered into to hedge exposure tovolability of future cash flows expected from the sale of aportion of the Company’s proved reserves for an originalamount of approximately 125.7 mmBBL in the 2008-2011 period. Asof December 31, 2010, the residual amount of that hedgingtransaction was 9 mmBBL.

Liquid realizations and the impact of commodity derivativeswere as follows:

|   | **Full Year** |
|--------|---------------|
|   |               |

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Sales volumes                                                |   | (mmBBL) |   | 364.3     |   |   | 373.5     |   |   | 357.1     |   |
|--------------------------------------------------------------|--------|---------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Sales        volumes hedged by derivatives (cash flow hedge) |   |    |   | 46.0      |   |   | 42.2      |   |   | 28.5      |   |
| **Total price per barrel, excluding derivatives**            |   | ($/BBL) |   | **88.17** |   |   | **56.98** |   |   | **74.09** |   |
| Realized        gains (losses) on derivatives                |   |    |   | (4.13     | )      |   | (0.03     | )      |   | (1.33     | )      |
| **Total average price per barrel**                           |   |    |   | **84.05** |   |   | **56.95** |   |   | **72.76** |   |
|                                                         |   |    |   |           |        |   |           |        |   |           |        |

Operating profit in 2009 amounted to euro 9,120 million, downeuro 7,119 million from 2008, or 43.8%, reflecting lowerrealizations in U.S. dollars (oil down 32.2%; natural gas down29.8%), and reduced production sales volumes (down 9.2 mmBOE, or1.5%). These negatives were partly offset by: (i) positivecurrency translation differences which were reported bysubsidiaries which adopted the U.S. dollar as functionalcurrency, as the euro depreciated on average by 5.3%. This had anestimated positive impact of euro 500 million; (ii) recognitionof lower asset impairments (down euro 234 million); and (iii)gains recorded on the divestment of certain exploration andproduction assets as part of the agreements signed with Suez.

Liquids and gas realizations for the year decreased on averageby 31.2% in U.S. dollar terms driven by lower oil prices formarket benchmarks (Brent crude price decreased by 36.6%), partlyoffset by an improved product mix of Eni’s crudes (down32.2%). Average oil realizations were barely unchanged, due tothe settlement of certain non-strategic commodity derivativesrelating to the sale of 42.2 mmBBL.

In 2009, the impact of those cash flow hedges was immaterialas the increase in liquids realizations by 0.45 $/BBL as a resultof the sale of 31.6 mmBBL at the hedged price recorded in thefirst nine months was absorbed by 

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a reduction on average by 1.46 $/BBL from the sale of 10.6mmBBL in the fourth quarter, reflecting the inversion in oilprices trends. The derivatives were entered into to hedgeexposure to fluctuations in future cash flows expected from thesale of a portion of the Company’s proved reserves, inconnection with the acquisition of oil and gas assets in Congoand in the Gulf of Mexico. When entered into, those hedgingtransactions originally covered an amount of approximately 125.7mmBBL in the 2008-2011 period, which by the end of 2009 hasdecreased to approximately 37.5 mmBBL.

In 2009, average gas realizations were down 29.8%, driven bytime-lags between movements in oil prices and their effect on gasprices pursuant to pricing formulae and by weak spot prices.

*Gas & Power.* In 2010, the Gas & Power Divisionreported operating profit of euro 2,896 million, a decrease ofeuro 791 million from 2009, down 21.5%, due to a lowerperformance delivered by the Marketing business which was down by63.7%. This was partly offset by a better performance achieved bythe Italian regulated businesses (up by 12.7%). The negativeperformance in marketing operations was mainly due to: (i)increasing competitive pressures in Italy, due to oversupplyconditions in the marketplace and sluggish demand growth,resulting in both sharply lower gas sales (down by 14.4% and19.5% to Italian customers and Italian wholesalers importers,respectively) and price reductions to customers during themarketing campaign for the new thermal year beginning on October1, 2010; (ii) outside Italy, the persistence of unprofitabledifferentials between oil-linked gas purchase costs provided inEni’s long-term gas supply contracts and spot pricesrecorded at European hubs which have become a prevailingreference benchmark for selling prices; (iii) the impairment ofgoodwill attributed to the European marketing cash generatingunit (euro 426 million), based on 2010 results and a reducedprofitability outlook for this business; (iv) a negative changein mark-to-market evaluation of certain commodity derivativeswhich are recorded against profit as they lack formalrequirements to be designated as hedges under applicableaccounting standards; and (v) a reversal in trend of certainenergy parameters to which gas purchase and selling prices areindexed, mainly in sales to residential users.

These negatives were partly offset by: (i) the recording ofhigher inventory holding gains due to the impact of rising gasprices on inventories stated at the weighted average cost ofsupplies or the net realizable value, whichever is lower; and(ii) a non-recurring gain amounting to euro 270 million relatedto the favorable settlement of an antitrust proceeding resultingin a provision accrued in previous reporting periods beingreversed almost entirely to 2010 profit. The provision wasoriginally accrued to take into account a resolution of theItalian Antitrust Authority, who charged Eni withanti-competitive behavior for having allegedly refused thirdparty access to the pipeline for importing natural gas fromAlgeria.

Operating profit in 2009 amounted to euro 3,687 million, adecrease of euro 343 million compared with 2008, down by 8.5%.This decrease was principally due to the following factors: (i)lower results from marketing operations in Italy as sales volumesof gas declined by 12.83 BCM, or 24.3%, due to the impact oflower gas demand and competitive pressures, also impactingselling margins. The negative margin/volume performance inmarketing operations was incurred notwithstanding a positiveimpact associated with the renegotiation of certain long-termsupply contracts; (ii) a negative impact on gas inventoryvaluation associated with falling gas prices which resulted in adecreased carrying amount of gas inventories recorded at theweighted average cost or net realizable value, whichever islower; and (iii) a provision accounted in the LNG businessassociated with poor market perspectives in the USA. Thesenegatives were partly offset by: (i) the circumstance that salesto residential customers in Italy and other customers consumingless than 200,000 CM/y benefited from the regulatory indexationmechanism whereby the selling price was updated with a certaindelay to changed market conditions, resulting in higher marginson those sales. Management believes that this mechanism will havean opposite effect on the Company’s results in comingquarters; and (ii) positive mark-to-market evaluation of certaincommodity derivatives which are recorded against profit as theylack formal requirements to be designated as hedges underapplicable accounting standards. The International Transportbusiness recorded a drop in operating profit; while regulatedbusinesses in Italy increased their result.

The table below sets forth break-down of operating profit bybusinesses in the Gas & Power Division:

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Marketing                                                   |   | 1,806     |   | 1,530     |   | 555       |
|-------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Regulated        businesses in Italy                        |   | 1,701     |   | 1,773     |   | 1,998     |
| International transport                                     |   | 523       |   | 384       |   | 343       |
|                                                        |   |           |   |           |   |           |
| **Operating        profit of the Gas & Power Division** |   | **4,030** |   | **3,687** |   | **2,896** |
|                                                        |   |           |   |           |   |           |

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*Refining & Marketing.* In 2010, the Refining &Marketing segment reported an operating profit of euro 149million, compared to the prior-year loss of euro 102 million. Theimprovement reflected a less adverse refining scenario withEni’s complex refineries helped by widening pricedifferentials between sour and sweet crudes and better spreads ofmiddle distillates to heating fuel. Refining margins stillremained unprofitable as high oil feedstock prices were onlypartially transferred to final prices of refined productspressured by weak industry fundamentals. The Eni Refiningbusiness also benefited from cost efficiencies and variousoptimization measures in supply and refining activities, andintegration of refinery cycles whereby the Gela refinery havebegun processing heavy residues from Taranto throughputs thusenabling to reap cost savings and margins improvements. TheMarketing business was affected by rapidly rising supply coststhat were only partially transferred to prices at the pump, andlower retail sales in Italy. These negatives were partly offsetby higher sales on European networks. Results of Refining &Marketing Division also benefited from the circumstance that in2009 material impairment charges were recorded to align thecarrying amounts of unprofitable refining and marketing assets totheir projected recoverable amounts (down by euro 313 million).

In 2009, the Refining & Marketing segment reported anoperating loss of euro 102 million, which represented asignificant improvement (up euro 886 million) compared to 2008when a loss of euro 988 million was recorded. The improvementreflected the circumstance that an inventory write-down amountingto euro 1,199 million was recorded in 2008 as year endinventories of oil and products were aligned to net realizablevalues prevailing on the marketplace at the time of theassessment which coincided with the low of the oil cycle. In2009, an inventory holding gain amounting to euro 792 million wasrecognized reflecting the impact of a recovery in prices of crudeoil and products on year end valuation of inventories accordingto the average cost method of inventory accounting. Whenexcluding the inventory impacts, the Refining & Marketingsegment reported underlying losses mainly due to sharply lowerrefining margins. Those were affected by an unfavorable tradingenvironment due to weak end-prices of products depressed by poordemand, excess inventory of finished products on the marketplace,in particular diesel oil, whose spread on raw material reachedhistorical lows in the fourth quarter, and excess capacity. As aresult, product price did not absorb the purchase price ofoil-based feedstock. Also narrowing price differentials betweenheavy and light crude qualities negatively affected Eni’scomplex throughputs by reducing cost-advantages associated toconversion: (i) lower operating performance delivered by theMarketing activities affected by weak demand in wholesale marketsin Italy and retail European markets; and (ii) higher assetimpairment charges recorded in the light of the negative outlookfor the refining industry and a downsizing of growth expectationson certain markets.

*Petrochemicals.* In 2010, the Petrochemical Divisionrecordeda sharp reduction in its operatingloss which was down by 87.3% from the year-earlier (from a lossof euro 675 million in 2009 to a loss of euro 86 million in2010). This positive result reflected better market conditionsand a recovery in demand which drove improved product margins andhigher sales (up by 10.9% mainly in the elastomers businessarea). Profitability was also supported by cost efficiencies. Aninventory holding gain amounting to euro 105 million wasrecognized (compared with a loss of euro 121 million in 2009)reflecting the impact of higher oil-based feedstock and commodityprices on year end valuation of inventories according to theaverage cost method of inventory accounting, as well as lowerasset impairments (down by euro 69 million).

In 2009, the Petrochemical segment reported an operating lossin the amount of euro 675 million, which represented animprovement of euro 170 million compared to 2008 mainly due tolower impairment losses (down euro 157 million from 2008). Thesegment’s results continued to be affected by weak industryfundamentals due to poor demand, excess capacity and competitivepressures. As a result, the segment reported unprofitable marginson products and lower sales volumes (down 8.9%).

*Engineering & Construction.* Operating profit in2010 amounted to euro 1,302 million, an increase of euro 421million, or 47.8% compared to 2009. This increase was driven by apositive operating performance reported by the OnshoreConstruction and Offshore Drilling business areas reflectinghigher activity levels and higher margins on the works performed.The utilization rate of the Perro Negro 6 jack-up and thesemisubmersibles Scarabeo 3 and 4 increased. In addition, thecomparison with 2009 benefited from the circumstance that in 2009a charge amounting to euro 250 million was recorded to settle theTSKJ legal proceeding "Item 8 – Financial Information– Legal Proceedings" for further details.

Operating profit in 2009 amounted to euro 881 million, adecrease of euro 164 million, or 15.7% compared to 2008. Thisdecrease related to a non-recurring item represented by a chargeamounting to euro 250 million that was the estimated cost of apossible resolution of the investigation related to the TSKJConsortium based on the current status of ongoing discussionswith U.S. Authorities (See "Item 18 – Note 34 of theFinancial Statements"). Although the charge was recognizedin the segment results of the Engineering & Constructionbusiness as it related to a project to build gas liquefactionplants, it will be fully incurred by Eni and Saipem’sminorities will be left unaffected due to Eni’s contractualobligations to indemnify Saipem undertaken in connection with thedivestiture of Snamprogetti SpA, whose subsidiary SnamprogettiNetherlands BV participates to the TSKJ venture. See "Item 8– Financial Information – Legal Proceedings" forfurther details. When excluding the impact of the charge, thesegment reported an improved operating performance recorded inall business areas reflecting steady revenue 

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growth and stable profitability as a result of the largenumber of oil and gas projects that were started during theupward phase of the oil cycle.

*Other activities.* This reporting segment includes theresults of operations of Eni’s subsidiary Syndial which runsminor petrochemical activities and reclamation anddecommissioning activities pertaining to certain businesses whichEni exited in past years.

Other activities reported an operating loss of euro 1,384million for 2010, representing a sharply higher increase of euro948 million compared to the loss recorded in 2009 (euro 436million) mainly due to higher environmental provisions recordedto account for a proposed global transaction on certainenvironmental issues (euro 1,109 million) filed with the ItalianMinistry for the Environment, which is disclosed in the paragraph"Significant Transactions" below.

Other activities reported an operating loss of euro 436million for 2009, representing an improvement of euro 30 million,or 6.4%, compared to the loss recorded in 2008 (euro 466 million)mainly due to lower environmental charges.

*Corporate and financial companies.* These activities aremainly cost centers which comprise corporate activities andcentral treasury departments and financial and other subsidiariesthat provide a range of financial and business support servicesto Group companies, including financing of Eni’s projectsaround the world, information technology, employee selection,training and retention, real estate and other general purposesservices.

The aggregate Corporate and financial companies reported anoperating loss of euro 361 million for 2010, representing areduction of euro 59 million, compared to the loss recorded in2009 (euro 420 million), mainly reflecting the implementation ofcost efficiency measures.

The aggregate Corporate and financial companies reported anoperating loss of euro 420 million for 2009, representing areduction of euro 203 million, compared to the loss recorded in2008 (euro 623 million), mainly reflecting the circumstance thatin 2008 a contribution of euro 200 million to the solidarity fundpursuant to Italian Law Decree No. 112/2008 to be used tosubsidize the gas bills for residential uses of less affluentcitizens and higher environmental provisions were accounted for.

 

> 
***e) Net Finance Expense***

The table below sets forth a breakdown of Eni’s netfinance expense for the periods indicated:

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Gain (loss) on derivative financial instruments    |   | (427     | )      |   | (4       | )      |   | (131     | )      |
|----------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Exchange        differences, net                   |   | 206      |   |   | (106     | )      |   | 92       |   |
| Interest income                                    |   | 87       |   |   | 33       |   |   | 18       |   |
| Finance        expense on short and long-term debt |   | (993     | )      |   | (753     | )      |   | (766     | )      |
| Finance expense due to the passage of time         |   | (249     | )      |   | (218     | )      |   | (251     | )      |
| Income        from equity instruments              |   | 241      |   |   | 163      |   |   |     |   |
| Other finance income and expense, net              |   | 259      |   |   | 111      |   |   | 124      |   |
|                                               |   | **(876** | **)**  |   | **(774** | **)**  |   | **(914** | **)**  |
| Finance expense capitalized                        |   | 236      |   |   | 223      |   |   | 187      |   |
|                                               |   |          |        |   |          |        |   |          |        |
|                                               |   | **(640** | **)**  |   | **(551** | **)**  |   | **(727** | **)**  |
|                                               |   |          |        |   |          |        |   |          |        |

*2010 compared to 2009*. In 2010, net finance expenseincreased by euro 176 million to euro 727 million from 2009,mainly due to the circumstance that in 2009 a finance gain ofeuro 163 million was recorded under "Income from equityinstruments" due to the contractual remuneration on the 20%interest in OAO Gazprom Neft, earned until such interest wasdivested on April 24, 2009. Higher losses were recognized inconnection with fair value evaluation through profit and loss ofcertain derivative instruments on exchange rates (up euro 127million) that did not meet all formal criteria to be designatedas hedges under IFRS. Those losses were more than offset by netpositive exchange rate differences (euro 198 million). The item"Exchange differences, net" includes a currencyadjustment, amounting to euro 33 million, related to the lossprovision accrued in the 2009 financial statements to takeaccount of the TSKJ proceeding. Finance charges on finance debtwere substantially in line with the previous 

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year, as the impact associated with increased average netborrowings was offset by lower interest rates on botheuro-denominated and U.S. dollar loans (down 0.4 percentagepoints the Euribor and the Libor rate).

*2009 compared to 2008*. In 2009, net finance expenseswere euro 551 million, a decrease of euro 89 million from 2008.This was mainly due to increased losses on exchange differences(up euro 312 million) offset by gains recognized in connectionwith fair value evaluation through profit and loss of certainderivative instruments on exchange rates (up euro 423 million)which were recorded against profit as they did not qualify forhedge accounting. In addition, lower finance charges wereincurred as interest rates on euro-denominated finance debt(Euribor down 3.4 percentage points) and on U.S. dollar loans(Libor down 2.2 percentage points) were down. A gain from aninterest amounting to euro 163 million was recorded (euro 241million in 2008) related to the contractual remuneration of 9.4%on the 20% interest in OAO Gazprom Neft, calculated up to April24, 2009, when Gazprom paid for the call option exercised onApril 7, 2009.

 

> 
***f) Net Income from Investments***

*2010 compared to 2009*. Net income from investments in2010 was a net gain of euro 1,156 million and mainly related to:(i) Eni’s share of profit of entities accounted for with theequity method (euro 537 million), mainly in the Gas & Powerand Exploration & Production Divisions; (ii) dividendsreceived by entities accounted for at cost (euro 264 million),mainly relating to Nigeria LNG Ltd; and (iii) gains on disposalof interests (euro 332 million) related to the full divestment ofSocietà Padana Energia (euro 169 million), a 25% stake inGreenStream (euro 93 million) including a gain from revaluing theresidual interest in the venture, a 100% interest in the Belgiancompany Distri RE SA (euro 47 million) as well as a non-strategicinterest of the Engineering & Construction Division (euro 17million).

*2009 compared to 2008*. Net income from investments in2009 was a net gain of euro 569 million and mainly related to:(i) the share of profit of entities accounted for with the equitymethod (euro 393 million), mainly in the Gas & Power andExploration & Production Divisions. Gains also comprised again on Eni’s 60% interest in Artic Russia (euro 100million) due to the divestment of a 51% stake in OOO Severenergiato Gazprom based on the call option exercised by the Russiancompany; and (ii) dividends received by entities accounted for atcost (euro 164 million), mainly related to Nigeria LNG Ltd.

 

> 
***g) Taxes***

*2010 compared to 2009.* In 2010, income taxes amountedto euro 9,157 million, up euro 2,401 million from a year ago, or35.5%, mainly reflecting higher income taxes currently payable bysubsidiaries in the Exploration & Production Divisionoperating outside Italy due to higher taxable profit.

The Group consolidated tax rate was lower compared to 2009,down from 56% to 55.4% (down 0.6 percentage points). Thisreduction was due to:

| (i)  |   | the recognition of a gain        amounting to euro 270 million reflecting the favorable        outcome of an antitrust proceeding which was a        non-taxable item; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | the circumstance that in        2009 a non-recurring charge amounting to euro 250 million        was recorded to settle the TSKJ legal proceedings which        was a non-deductible tax item. In addition the payment of        a balance for prior-year income taxes amounted to euro        230 million in Libya as new rules come into effect which        reassessed revenues for tax purposes and a lower capacity        for Italian companies to deduct the cost of goods sold        associated with lower gas inventories at year end (euro        64 million) was incurred, partly offset by net tax gains        of euro 150 million. |

Those positive effects on the Group tax rate were partlyoffset by a higher percentage of taxable income reported byforeign subsidiaries in the Exploration & Production Divisionwhich bear a higher tax rate than the Group average tax rate.

*2009 compared to 2008.* In 2009, income taxes amountedto euro 6,756 million, down euro 2,936 million from a year ago,or 30.3%, mainly reflecting reduced income taxes currentlypayable recorded by subsidiaries in the Exploration &Production Division operating outside Italy due to lower taxableprofit.

The Group reported consolidated tax rate was higher comparedto 2008, from 50.3% to 56% (up 5.7 percentage points). A numberof factors explained the increase:

| (i) |   | the impact of recently        enacted tax regulations that provided a one-percentage        point increase in the tax rate applicable to Italian        companies in the energy sector and enactment of a        supplemental tax rate to be added to the Italian        statutory tax rate resulting in higher taxes currently        payable, amounting to euro 239 million for the full year; |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (ii)  |   | the recognition of a        non-recurring item which was a non-deductible tax item,        represented by a charge amounting to euro 250 million        that was the estimated cost of the possible resolution of        the investigation related to the TSKJ Consortium based on        the current status of ongoing discussions with U.S.        Authorities. The matter is fully-disclosed in the section        "Legal Proceedings" in Note 34 to the        Consolidated Financial Statements; |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iii) |   | the payment of a balance for        prior-year income taxes amounting to $310 million (or        euro 230 million) in Libya as new rules came into effect        which reassessed revenues for tax purposes;                                                                                                                                                                                                                                                                                                    |
| (iv)  |   | a write-down of certain        deferred tax assets associated with upstream properties        to factor in expected lower profitability (down euro 72        million);                                                                                                                                                                                                                                                                                                                                          |
| (v)   |   | a lower capacity for Italian        companies to deduct the cost of goods sold associated        with lower gas inventories at year end (down euro 64        million); and                                                                                                                                                                                                                                                                                                                                      |
| (vi)  |   | the circumstance that in        2008 certain tax gains associated with an adjustment to        deferred taxation amounting to euro 733 million were        recorded as new tax provisions came into effect        pertaining to both Italian and foreign subsidiaries.                                                                                                                                                                                                                                          |

These higher tax expenses were partly offset by recognition ofa positive adjustment to deferred taxation following alignment ofthe tax base of certain oil and gas properties to their highercarrying amounts by paying a one-off tax, as part of thereorganization of upstream activities in Italy, and lower incometaxes currently payable as new rules came into effect providingfor the partial deduction of an Italian local tax from taxableincome, also applying to previous fiscal years (for a totalpositive impact of euro 222 million).

 

> 
***h) Non-controlling Interest***

*2010 compared to 2009*. Net profit pertaining tonon-controlling interest was euro 1,065 million, up from euro 950million in 2009, and concerned primarily Snam Rete Gas SpA (euro537 million) and Saipem SpA (euro 503 million).

*2009 compared to 2008*. Non-controlling interest waseuro 950 million, up euro 217 million from 2008, or 29.6%, andconcerned primarily Saipem SpA (euro 567 million) and Snam ReteGas SpA (euro 369 million).

 

**Liquidity and Capital Resources**

Eni’s cash requirements for working capital, dividends toshareholders, capital expenditures and acquisitions over the pastthree years were financed primarily by a combination of fundsgenerated from operations, borrowings and divestments ofnon-strategic assets. The Group continually monitors the balancebetween cash flow from operating activities and net expenditurestargeting a sound and well-balanced financing structure.

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The following table summarizes the Group cash flows and theprincipal components of Eni’s change in cash and cashequivalent for the periods indicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| **Net profit**                                                                                    |   | **9,558**  |   |   | **5,317**  |   |   | **7,383**  |   |
|---------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| *Adjustments        to reconcile net profit to net cash provided by operating        activities:* |   |       |   |   |       |   |   |       |   |
| - amortization and depreciation charges,        impairment losses and other non monetary items    |   | 8,792      |   |   | 9,117      |   |   | 9,024      |   |
| - net        gains on disposal of assets                                                          |   | (219       | )      |   | (226       | )      |   | (552       | )      |
| - dividends, interest, taxes and other changes                                                    |   | 9,399      |   |   | 6,843      |   |   | 9,368      |   |
| Changes in        working capital related to operations                                           |   | 4,489      |   |   | (1,195     | )      |   | (1,720     | )      |
| Dividends received, taxes paid, interest (paid)        received during the period                 |   | (10,218    | )      |   | (8,720     | )      |   | (8,809     | )      |
|                                                                                              |   |            |        |   |            |        |   |            |        |
| **Net        cash provided by operating activities**                                              |   | **21,801** |   |   | **11,136** |   |   | **14,694** |   |
|                                                                                              |   |            |        |   |            |        |   |            |        |
| Capital expenditures                                                                              |   | (14,562    | )      |   | (13,695    | )      |   | (13,870    | )      |
| Investments        and purchases of consolidated subsidiaries and businesses                      |   | (4,019     | )      |   | (2,323     | )      |   | (410       | )      |
| Disposals                                                                                         |   | 979        |   |   | 3,595      |   |   | 1,113      |   |
| Other cash        flow related to investing activities (*)                                        |   | 644        |   |   | 101        |   |   | 202        |   |
| Changes in short and long-term finance debt                                                       |   | 980        |   |   | 3,841      |   |   | 2,272      |   |
| Dividends        paid and changes in non-controlling interests and        reserves                |   | (6,005     | )      |   | (2,956     | )      |   | (4,099     | )      |
| Effect of changes in consolidation and exchange        differences                                |   | 7          |   |   | (30        | )      |   | 39         |   |
|                                                                                              |   |            |        |   |            |        |   |            |        |
| **Change        in cash and cash equivalent for the year**                                        |   | **(175**   | **)**  |   | **(331**   | **)**  |   | **(59**    | **)**  |
|                                                                                              |   |            |        |   |            |        |   |            |        |
| Cash and cash equivalent at the beginning of the        year                                      |   | 2,114      |   |   | 1,939      |   |   | 1,608      |   |
| Cash and        cash equivalent at year end                                                       |   | 1,939      |   |   | 1,608      |   |   | 1,549      |   |
|                                                                                              |   |            |        |   |            |        |   |            |        |

----

| (*)          |    | Net cash used        in investing activities included investments in certain        financial assets to absorb temporary surpluses of cash or        as part of our ordinary management of financing        activities. Due to their nature and the circumstance that        they are very liquid, these financial assets are netted        against finance debt in determining net borrowings. For        the definition of net borrowings, see "Financial        Condition" below.        Cash flows of such investments were as follows: |
|--------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

| (euro million) |   |    ** ** |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|------------------------------|--------|----------|--------|----------|--------|----------|
|           |   |                         |   |          |   |          |   |          |

| Financing investments:                       |   |      |   |   |    |   |   |    |   |
|----------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|
| -        securities                          |   | (74       | )      |   | (2      | )      |   | (50     | )      |
| - financing receivables                      |   | (99       | )      |   | (36     | )      |   | (13     | )      |
|                                         |   | **(173**  | **)**  |   | **(38** | **)**  |   | **(63** | **)**  |
| Disposal of financing investments:           |   |      |   |   |    |   |   |    |   |
| -        securities                          |   | 145       |   |   | 123     |   |   | 5       |   |
| - financing receivables                      |   | 939       |   |   | 311     |   |   | 32      |   |
|                                         |   | **1,084** |   |   | **434** |   |   | **37**  |   |
| **Net cash flows from financing activities** |   | **911**   |   |   | **396** |   |   | **(26** | **)**  |
|                                         |   |           |        |   |         |        |   |         |        |

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The table below sets forth the principal components ofEni’s change in net borrowings(1) for the periodsindicated.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| **Net cash provided from operating activities**                                     |   | **21,801** |   |   | **11,136** |   |   | **14,694** |   |
|-------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Capital        expenditures                                                         |   | (14,562    | )      |   | (13,695    | )      |   | (13,870    | )      |
| Acquisitions of investments and businesses                                          |   | (4,019     | )      |   | (2,323     | )      |   | (410       | )      |
| Disposals                                                                           |   | 979        |   |   | 3,595      |   |   | 1,113      |   |
| Other cash flow related to capital expenditures,        investments and divestments |   | (267       | )      |   | (295       | )      |   | 228        |   |
| Net        borrowings (1) of acquired companies                                     |   | (286       | )      |   |       |   |   | (33        | )      |
| Net borrowings (1) of divested        companies                                     |   | 181        |   |   |       |   |   |       |   |
| Exchange        differences on net borrowings and other changes                     |   | 129        |   |   | (141       | )      |   | (687       | )      |
| Dividends paid and changes in non-controlling        interest and reserves          |   | (6,005     | )      |   | (2,956     | )      |   | (4,099     | )      |
|                                                                                |   |            |        |   |            |        |   |            |        |
| **Change        in net borrowings**(1)                                              |   | **(2,049** | **)**  |   | **(4,679** | **)**  |   | **(3,064** | **)**  |
|                                                                                |   |            |        |   |            |        |   |            |        |
| Net borrowings (1) at the beginning        of the year                              |   | 16,327     |   |   | 18,376     |   |   | 23,055     |   |
| Net        borrowings (1) at year end                                               |   | 18,376     |   |   | 23,055     |   |   | 26,119     |   |
|                                                                                |   |            |        |   |            |        |   |            |        |

----

| (1) |   | Net        borrowings is a non-GAAP financial measure. For a        discussion of the usefulness of net borrowings and its        reconciliation with the most directly comparable GAAP        financial measures see "Financial Condition"        below. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

***Analysis of Certain Components of Eni’s Change    in Net Borrowings***

In 2010, adjustments to reconcile net profit to net cashprovided by operating activities mainly related to non-monetarycharges and gains amounting to euro 9,024 million, whichprimarily regarded depreciation, depletion amortization andimpairment charges of tangible and intangible assets (euro 9,579million), gains on disposals of euro 552 million mainly relatingto divestiture of certain interests as discussed under thecaption "f) Net income from investments and properties inthe Exploration & Production Division" and movements innet working capital. Adjustments to net profit also includedincome taxes (euro 9,157 million) and interest expenses (euro 571million) accrued in the year as opposed to amounts actually paid.

Net profit for 2009 was adjusted to take into accountnon-monetary charges and gains amounting to euro 9,117 million,which primarily regarded depreciation, depletion amortization andimpairment charges of tangible and intangible assets (euro 9,813million), gains on disposals and movements in net workingcapital. Adjustments to net profit also included income taxes(euro 6,756 million) and interest expenses (euro 603 million)occurred in 2009 as opposed to amounts paid in the year.

 

> 
***a) Changes in Working Capital related to Operations***

In 2010, changes in working capital absorbed cash flowsamounting to a negative euro 1,720 million as a result of: (i)increasing oil, gas and petroleum products inventories (up euro1,150 million) due to the impact of rising oil prices oninventories stated at the weighted average cost; and (ii) cashpre-payments amounting to euro 1,238 million made to theCompany’s suppliers of gas under long-term gas supplycontracts whereby the Company has the contractual obligation tolift minimum annual quantities of gas or, in case of failure,pre-pay the whole price or a portion of the price of thosequantities as provided by the so-called take-or-pay clause. TheCompany recognized among its assets a deferred cost to accountfor those pre-paid volumes of gas. For further details on thatasset see "Item 18 – Note 14 – Other non currentassets – in Notes to the Consolidated FinancialStatements".

These negatives were partly offset by an increased balancebetween trade payables and receivables also resulting by reducedtrade receivables relating to the transfer of certain receivableswithout recourse to factoring institutions, amounting to euro1,279 million due in 2011, increasing Group cash inflows.

In 2009, changes in working capital absorbed flows amountingto a negative euro 1,195 million as a result of a decreasedbalance between trade payables and receivables.

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> 
***b) Investing Activities***

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro million)** |
|--------|--------|--------------------|

| Exploration & Production                              |   | 9,281      |   |   | 9,486      |   |   | 9,690      |   |
|-----------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power                                    |   | 2,058      |   |   | 1,686      |   |   | 1,685      |   |
| Refining & Marketing                                  |   | 965        |   |   | 635        |   |   | 711        |   |
| Petrochemicals                                            |   | 212        |   |   | 145        |   |   | 251        |   |
| Engineering & Construction                            |   | 2,027      |   |   | 1,630      |   |   | 1,552      |   |
| Other        activities                                   |   | 52         |   |   | 44         |   |   | 22         |   |
| Corporate and financial companies                         |   | 95         |   |   | 57         |   |   | 109        |   |
| Impact of        unrealized intragroup profit elimination |   | (128       | )      |   | 12         |   |   | (150       | )      |
|                                                      |   |            |        |   |            |        |   |            |        |
| **Capital expenditures**                                  |   | **14,562** |   |   | **13,695** |   |   | **13,870** |   |
| **Acquisitions        of investments and businesses**     |   | **4,019**  |   |   | **2,323**  |   |   | **410**    |   |
|                                                      |   |            |        |   |            |        |   |            |        |
|                                                      |   | **18,581** |   |   | **16,018** |   |   | **14,280** |   |
| **Disposals**                                             |   | **(979**   | **)**  |   | **(3,595** | **)**  |   | **1,113**  |   |
|                                                      |   |            |        |   |            |        |   |            |        |
| **NET INVESTMENT**                                        |   | **17,602** |   |   | **12,423** |   |   | **15,393** |   |
|                                                      |   |            |        |   |            |        |   |            |        |

Capital expenditures totaled euro 13,870 million and euro13,695 million in 2010 and 2009, respectively.

For a discussion of capital expenditures by business segmentand a description of year-on-year changes see below "CapitalExpenditures by Segment".

Acquisitions of investments and businesses totaled euro 410million in 2010 and euro 2,323 million in 2009.

In 2010, disposals amounted to euro 1,113 million and mainlyrelated to: (i) a second tranche of the divestment to Gazprom ofa 51% stake in the joint venture OOO SeverEnergia by theshareholding company Artic Russia which is jointly participatedby Eni and Enel (60% and 40% being their respective interests),following the exercise of a call option by the Russian company.The cash consideration of this second tranche was euro 526million; (ii) divestment of non-strategic oil and gas propertiesin the Exploration & Production Division, for an overallamount of euro 456 million, including divestment of the entirestake in the subsidiary Società Padana Energia (euro 179million); and (iii) the divestment of a 25% stake in GreenStreamBV (euro 75 million).

In 2009, disposals primarily related to: (i) the divestment ofa 20% interest in Gazprom Neft following exercise of a calloption by Gazprom on April 7, 2009, amounting to euro 3,070million. The exercise price of the call option was equal to thebid price ($3.7 billion) as adjusted by subtracting dividendsdistributed and adding the contractual annual remuneration of9.4% on capital employed and certain financial collateralexpenses; (ii) the divestment to Gazprom of a 51% stake in thejoint venture OOO SeverEnergia (Eni 60%). Eni’s share of thetransaction is worth $940 million of which $230 million werecollected as of year end, which corresponded to euro 155 millionat the exchange rate on the transaction date. The remaining partof the divestment was collected by March 31, 2010; and (iii)other disposals relating to non-strategic oil and gas propertiesfollowing agreements signed with Suez.

 

> 
***c) Dividends paid and Changes in Non-controlling    Interests and Reserves***

In 2010, dividends paid and changes in non-controllinginterest and reserves (euro 4,099 million) mainly related to: (i)cash dividends to Eni shareholders (of which euro 1,811 millionrelated to the balance for the dividend relating the fiscal year2009 and euro 1,811 million as an interim dividend for fiscalyear 2010); and (ii) the distribution of dividends tonon-controlling interest by Snam Rete Gas SpA and Saipem SpA(euro 506 million) and other consolidated subsidiaries (euro 8million).

In 2009, dividends paid and changes in non-controllinginterest and reserves (euro 2,956 million) related mainly to thedividend distribution to Eni shareholders for euro 4,166 million(of which euro 2,355 million related to the balance for thefiscal year 2008 and euro 1,811 million as an interim dividendfor fiscal year 2009) and the distribution of dividend tonon-controlling interest by Snam Rete Gas SpA and Saipem SpA(euro 335 million) and other consolidated subsidiaries (euro 15million). These outflows were partly offset by the subscriptionby Snam Rete Gas SpA minorities of their respective share of acapital increase amounting to euro 1,542 million as part of 

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Eni’s reorganization of its regulated businesses inItaly. This transaction is outlined in "Item 4 –Significant business and portfolio developments for theyear".

 

> 
***Financial Condition***

In assessing its capital structure, Eni uses net borrowings,which is a non-GAAP financial measure. Eni calculates netborrowings as total finance debt (short-term and long-term debt)derived from its Consolidated Financial Statements prepared inaccordance with IFRS as endorsed by IASB less: cash, cashequivalents and certain highly liquid investments not related tooperations including, among others, non-operating financingreceivables and securities not related to operations.Non-operating financing receivables consist mainly of depositswith banks and other financing institutions and deposits inescrow. Securities not related to operations consist primarily ofgovernment bonds and securities from financing institutions.These assets are generally intended to absorb temporary surplusesof cash as part of the Company’s ordinary management offinancing activities.

Management believes that net borrowings is a useful measure ofEni’s financial condition as it provides insight about thesoundness of Eni’s capital structure and the ways by whichEni’s operating assets are financed. In addition, managementutilizes the ratio of net borrowings to total shareholders’equity including non-controlling interest (leverage) to assessEni’s capital structure, to analyze whether the ratiobetween finance debt and shareholders’ equity is wellbalanced according to industry standards and to trackmanagement’s short-term and medium-term targets. Managementcontinuously monitors trends in net borrowings and trends inleverage in order to optimize the use of internally-generatedfunds versus funds from third parties. The measure calculated inaccordance with IFRS that is most directly comparable to netborrowings is total debt (short-term and long-term debt). Themost directly comparable measure, derived from IFRS reportedamounts, to calculate leverage is the ratio of total debt toshareholders’ equity (including non-controlling interest).Eni’s presentation and calculation of net borrowings andleverage may not be comparable to that of other companies.

The tables below set forth the calculations of net borrowingsand leverage for the periods indicated and their reconciliationto the most directly comparable GAAP measure.

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |
|--------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|
|   |   |                |   |               |   |           |   |                |   |               |   |           |   |                |   |               |   |           |

|   | **(euro        million)** |
|--------|---------------------------|

| **Total debt (short-term and long-term debt)** |   | **6,908** |   |   | **13,929** |   | **20,837** |   |   | **6,736** |   |   | **18,064** |   | **24,800** |   |   | **7,478** |   |   | **20,305** |   | **27,783** |   |
|------------------------------------------------|--------|-----------|--------|--------|------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|------------|--------|
| Cash and        cash equivalents               |   | (1,939    | )      |   |       |   | (1,939     | )      |   | (1,608    | )      |   |       |   | (1,608     | )      |   | (1,549    | )      |   |       |   | (1,549     | )      |
| Securities not related to operations           |   | (185      | )      |   |       |   | (185       | )      |   | (64       | )      |   |       |   | (64        | )      |   | (109      | )      |   |       |   | (109       | )      |
| Non-operating        financing receivables     |   | (337      | )      |   |       |   | (337       | )      |   | (73       | )      |   |       |   | (73        | )      |   | (6        | )      |   |       |   | (6         | )      |
|                                           |   |           |        |   |            |   |            |        |   |           |        |   |            |   |            |        |   |           |        |   |            |   |            |        |
| **Net borrowings**                             |   | **4,447** |   |   | **13,929** |   | **18,376** |   |   | **4,991** |   |   | **18,064** |   | **23,055** |   |   | **5,814** |   |   | **20,305** |   | **26,119** |   |
|                                           |   |           |        |   |            |   |            |        |   |           |        |   |            |   |            |        |   |           |        |   |            |   |            |        |
|                                           |   |      |   |   |       |   |       |   |   |      |   |   |       |   |       |   |   |      |   |   |       |   |       |   |

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Shareholders’ equity including        non-controlling interest as per Eni’s Consolidated        Financial Statements prepared in accordance with IFRS**                         |   | (euro million) |   | **48,510** |   |   | **50,051** |   |   | **55,728** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| *Ratio        of total debt to total shareholders’ equity        including non-controlling interest*                                                                                   |   |           |   | *0.43*     |   |   | *0.50*     |   |   | *0.50*     |   |
| *Less: ratio of cash, cash equivalents and        certain liquid investments not related to operations to        total shareholders’ equity including non-controlling        interest* |   |           |   | *(0.05*    | *)*    |   | *(0.04*    | *)*    |   | *(0.03*    | *)*    |
| *Ratio        of net borrowing to total shareholders’ equity        including non-controlling interest (leverage)*                                                                     |   |           |   | *0.38*     |   |   | *0.46*     |   |   | *0.47*     |   |
|                                                                                                                                                                                        |   |           |   |            |        |   |            |        |   |            |        |

At the end of 2010, net borrowings amounted to euro 26,119million, representing a euro 3,064 million increase from 2009.This increase was mainly due to the large amount of capitalexpenditures made in the year, dividend payment to shareholdersexecuted in the year and pre-payments to the Company’ssuppliers of gas under long-term contracts upon triggering thetake-or-pay clause. These outflows were only partially fundedwith cash flows from 

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operations, divestments for the year and cash inflow fromtransferring certain account receivables without recourse tofactoring institutions, amounting to euro 1,279 million due in2011. As a result of an increased level of net borrowings, theGroup leverage inched higher to 0.47 at December 31, 2010 from0.46 as of end of 2009. The Group net equity increased due to netprofit for the year and currency translation differences recordedin translating to euro amounts net equity of subsidiaries whosefunctional currency is the U.S. dollar due to the dollarrevaluation in exchange rates recorded at year end (up by 7.3%due to the exchange rate recorded on December 31, 2010 at 1 euro= 1.336 US$ compared to 1 euro = 1.441 US$ at December 31, 2009).

Total debt of euro 27,783 million consisted of euro 7,478million of short-term debt (including the portion of long-termdebt due within 12 months equal to euro 963 million) and euro20,305 million of long-term debt.

Total debt included bonds for euro 13,572 million (includingaccrued interest and discount on issuance). Bonds maturing in thenext 18 months amounted to euro 192 million (including accruedinterest and discount). Bonds issued in 2009 amounted to euro2,614 million (including accrued interest and discount). Totaldebt was denominated in the following currencies: euro (79%),U.S. dollar (17%), pound sterling (2%) and 2% in othercurrencies.

At the end of 2009, net borrowings amounted to euro 23,055million, representing an euro 4,679 million increase from 2008.This increase was mainly due to the large amount of capitalexpenditures made in the year, the completion of the Distrigasacquisition and dividend payment to shareholders executed in theyear. These outflows were only partially funded with cash flowsfrom operations, divestments for the year and capitaltransactions. Total debt of euro 24,800 million consisted of euro6,736 million of short-term debt (including the portion oflong-term debt due within twelve months equal to euro 3,191million) and euro 18,064 million of long-term debt.

 

> 
*Short-term Debt*

As of December 31, 2010, short-term debt of euro 7,478 million(including the portion of long-term debt due within twelvemonths) increased by euro 742 million over 2009. The weightedaverage interest rate of Eni’s short-term debt was 0.7% and0.8% for the years ended December 31, 2010 and 2009,respectively.

At December 31, 2010 Eni had undrawn committed and uncommittedborrowing facilities amounting to euro 2,498 million and euro7,860 million, respectively (euro 2,241 million and euro 9,533million at December 31, 2009). These facilities bore interestrates reflecting prevailing financing conditions on themarketplace. Charges in unutilized facilities were notsignificant.

As of December 31, 2009, short-term debt of euro 6,736 million(including the portion of long-term debt due within twelvemonths) decreased by euro 172 million over 2008. The weightedaverage interest rate of Eni’s short-term debt was 0.8% and4.2% for the years ended December 31, 2009 and 2008,respectively.

 

> 
*Long-term Debt*

As of December 31, 2010, long-term debt of euro 20,305 millionincreased by euro 2,241 million over 2009.

Eni entered into long-term borrowing facilities with theEuropean Investment Bank which were conditioned to themaintenance of certain performance indicators based on Eni’sConsolidated Financial Statements or maintenance of a minimumlevel of credit rating. As of the balance sheet date, Eni was incompliance with those covenants. According to the agreements,should the Company fail to comply with maintenance of a minimumcredit rating, new guarantees would be provided to be agreed uponwith the European Investment Bank. At December 31, 2009 and 2010,the amount of short and long-term debt subject to restrictivecovenants was euro 1,508 million and euro 1,685 million,respectively. During 2010, Saipem reimbursed financial debtsconditioned to the maintenance of certain performance indicators(euro 75 million). Bonds of euro 13,572 million consisted ofbonds issued within the Euro Medium Term Notes Program for atotal of euro 10,678 million and other bonds for a total of euro2,894 million.

As of December 31, 2009, long-term debt of euro 18,064 millionincreased by euro 4,135 million over 2008.

 

> 
*Capital Expenditures by Segment*

*Exploration & Production*. In 2010, capitalexpenditures of the Exploration & Production segment amountedto euro 9,690 million, representing an increase of euro 204million, or 2.2%, from 2009 mainly due to the development of oiland gas reserves (euro 8,578 million). Significant expenditureswere directed mainly outside Italy, in 

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particular Egypt, Kazakhstan, Congo, the USA and Algeria.Development expenditures in Italy concerned well drilling programand facility upgrading in Val d’Agri as well as sidetrackand infilling activities in mature fields. About 97% ofexploration expenditures that amounted to euro 1,012 million weredirected outside Italy in particular to Angola, Nigeria, the USA,Indonesia and Norway. In Italy, exploration activities weredirected mainly to the offshore of Sicily.

In 2009, capital expenditures of the Exploration &Production segment amounted to euro 9,486 million, representingan increase of euro 205 million, or 2.2%, from 2008 mainly due tothe development of oil and gas reserves (euro 7,478 million)directed mainly outside Italy, in particular Kazakhstan, the USA,Egypt, Congo and Angola. Development expenditures in Italyconcerned the well drilling program and facility upgrading in Vald’Agri as well as sidetrack and infilling activities inmature fields. About 97% of exploration expenditures thatamounted to euro 1,228 million were directed outside Italy inparticular to the USA, Libya, Egypt, Norway and Angola. In Italy,exploration activities were directed mainly to the offshore ofSicily. Acquisition of proved and unproved property concernedmainly the acquisition from Quicksilver Resources Inc of a 27.5%interest in the Alliance area, in Northern Texas and theextension of Eni’s mineral rights in Egypt, following theagreement signed in May 2009.

*Gas & Power*. In 2010, capital expenditures in theGas & Power segment totaled euro 1,685 million and mainlyrelated to: (i) developing and upgrading Eni’s transportnetwork in Italy (euro 842 million); (ii) developing andupgrading Eni’s distribution network in Italy (euro 328million); (iii) developing and upgrading Eni’s storagecapacity in Italy (euro 250 million); (iv) completion ofconstruction of the combined cycle power plants at the Ferrarasite, upgrading and other initiatives to improve flexibility(euro 115 million); and (v) the upgrading plan of internationalpipelines (euro 17 million).

In 2009, capital expenditures in the Gas & Power segmenttotaled euro 1,686 million and related principally to: (i)developing and upgrading the transport network in Italy (euro1,479 million); (ii) developing and upgrading storage capacity inItaly (euro 282 million); (iii) developing and upgrading thedistribution network in Italy (euro 278 million); (iv) completionof construction of combined cycle power plants (euro 73 million),in particular at the Ferrara site; and (v) the upgrading plan ofinternational pipelines (euro 32 million).

*Refining & Marketing*. In 2010, capital expendituresin the Refining & Marketing Division amounted to euro 711million and regarded mainly: (i) refining, supply and logisticsin Italy (euro 446 million), with projects designed to improvethe conversion rate and flexibility of refineries, in particularthe Sannazzaro and Taranto refineries, as well as expenditures onhealth, safety and environmental upgrades; and (ii) upgrade ofthe refined product retail network in Italy and in the rest ofEurope (euro 246 million). Expenditures on health, safety and theenvironment amounted to euro 143 million.

In 2009, capital expenditures in the Refining & Marketingsegment amounted to euro 635 million and regarded mainly: (i)refining, supply and logistics in Italy (euro 436 million), withprojects designed to improve the conversion rate and flexibilityof refineries, including the construction of an industrial plantemploying Eni’s proprietary EST technology and completion ofa new hydrocracker at the Sannazzaro refinery (operating fromJuly) and at the Taranto refinery (start-up scheduled in 2010) aswell as expenditures on health, safety and environmentalupgrades; (ii) upgrade of the retail network in Italy, wholesaleand LPG activities (euro 118 million); and (iii) upgrade ofthe retail network and purchase of service stations in the restof Europe (euro 54 million). Expenditures on health, safety andthe environment amounted to euro 78 million.

*Petrochemicals*. In 2010, capital expenditures in thePetrochemical segment amounted to euro 251 million (euro 145million in 2009) and regarded mainly plant upgrades (euro 116million), up-keeping (euro 59 million), energy recovery (euro 45million) and environmental protection, safety and environmentalregulation compliance (euro 29 million).

In 2009, capital expenditures in the Petrochemical segmentamounted to euro 145 million (euro 212 million in 2008) andregarded mainly plant upgrades (euro 58 million), extraordinarymaintenance (euro 28 million), environmental protection, safetyand environmental regulation compliance (euro 28 million),up-keeping and rationalization (euro 20 million).

*Engineering & Construction*. In 2010, capitalexpenditures in the Engineering & Construction Division (euro1,552 million) mainly regarded:

| (i)   |   | Offshore: the construction        of a new pipelayer and the ultra-deep water Field        Development Ship FDS 2, the activities for the conversion        of a tanker into an FPSO, and the development of a new        fabrication yard in Indonesia; |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | Offshore drilling: the        activities of completion of the new ultra-deep water        drill ship Saipem 12000, the two semisubmersible rigs        Scarabeo 8 and 9, and the jack-up Perro Negro 6;                                                  |
| (iii) |   | Onshore drilling:        development of operating structures; and                                                                                                                                                                                        |
| (iv)  |   | Onshore: maintenance of the        existing asset base.                                                                                                                                                                                                  |

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In 2009, capital expenditures in the Engineering &Construction Division (euro 1,630 million) mainly regarded thepurchase of the lay barge Acergy Piper renamed Castoro Sette, theconstruction of a new pipelayer and the ultra-deep water FieldDevelopment Ship FDS 2, development of a new fabrication yard inIndonesia an the activities for the conversion of a tanker intoan FPSO, as well as the construction of the two semisubmersiblerigs Scarabeo 8 and 9, the new ultra-deep water drill ship Saipem12000 and the jack-up Perro Negro 6.

 

**Recent Developments**

> 
***Trading Environment***

The table below sets forth certain indicators of the tradingenvironment for the periods indicated:

|   |   | **Three months        ended March 31,** |
|--------|--------|-----------------------------------------|
|   |   |                                         |

|   |   | **2010** |   | **2011** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

| Average price of Brent dated crude oil in U.S.        dollars (1) |   | 76.24 |   | 104.97 |
|-------------------------------------------------------------------|--------|-------|--------|--------|
| Average        price of Brent dated crude oil in euro (2)         |   | 55.09 |   | 76.73  |
| Average EUR/USD exchange rate (3)                                 |   | 1.384 |   | 1.371  |
| Average        European refining margin in U.S. dollars (4)       |   | 2.40  |   | 1.74   |
| EURIBOR - three month euro rate % (3)                             |   | 0.6   |   | 1.0    |
|                                                              |   |       |   |        |

----

| (1) |    | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) |    | Source: ECB.                                                                                                                                                                                                 |
| (4) |    | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

> 
 

***Status of Our Libyan Operations***

From February 22, 2011, liquids and natural gas production ata number of fields in Libya and supplies through the GreenStreampipeline have been halted as a result of ongoing politicalinstability and conflict in the Country. Facilities have notsuffered any damage and such standstills do not affect Eni’sability to ensure natural gas supplies to its customers. Eni istechnically able to resume gas production at or near previouslevels once the situation stabilizes. The overall impact of theLibyan political instability and conflict on Eni’s resultsof operations and cash flows will depend on how long suchsituation will last as well as on their outcome, which managementis currently unable to predict. Eni’s oil and natural gasproduction as of end March 2011, was flowing at a rate rangingfrom 70 to 75 KBBL/d, down from the expected level ofapproximately 280 KBBL/d. Production is continuing to decline.Current production mainly consists of gas that is entirelydelivered to local power generation plants. For furtherdiscussion on risks and management outlook on the Libyansituation see “Item 3 – Risk Factors – PoliticalConsiderations” and “Item 5 – Outlook”.

 

> 
***Significant Transactions***

In 2010, Eni committed to divest its interests in certaininternational gas pipelines to settle an antitrust proceedingbefore the European Commission concerning allegedanti-competitive behavior in the natural gas market ascribed toEni. Eni was not charged with any illicit behavior andconsequently no fines or sanctions were imposed. The Commissionaccepted Eni’s commitments as of September 29, 2010.Currently, procedures for the divestment of Eni’s interestsin the German TENP, the Swiss Transitgas and the Austrian TAG gastransport pipelines and relevant carrier companies areprogressing. Given the strategic importance of the Austrian TAGpipeline, which transports gas from Russia to Italy, Eni hasnegotiated a solution with the Commission which calls for thetransfer of its stake to an entity controlled by the ItalianState. For further details on the matter see "Item 8 –Legal Proceedings".

In January 2011, the Parent Company Eni SpA also on behalf ofother Group companies (including in particular Syndial) filed aproposal with the Italian Ministry for the Environment to enterinto a global settlement related to nine sites of nationalinterest (Priolo, Napoli Orientale, Brindisi, Pieve Vergonte,Cengio, Crotone, Mantova, Porto Torres and Gela) where the Groupcompanies have started, as guiltless owners of a number of 

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industrial areas, environmental restoration and clean-upactivities. The proposal includes a definition of a number ofpending proceedings relating to clean-up issues and environmentaldamage. The framework of the transaction proposal includes: (i) aglobal environmental transaction as per Article 2 of Law DecreeNo. 208/2008 (related to the Pieve Vergonte, Cengio, Crotone,Mantova, Porto Torres and Gela sites); (ii) certain environmentalframework agreements that have already been signed by relevantadministrative bodies and which interested businesses may adhereto (related to the Priolo, Brindisi and Napoli Orientale sites);and (iii) the settlement of a civil lawsuit regardingenvironmental damage at the Pieve Vergonte site. Briefly, Eni andits subsidiaries through the proposal:

| • |   | commit to execute        environmental investments amounting to euro 600 million        as provided by the 2011-2014 industrial plan in order to        achieve higher levels of efficiency and energy        sustainability of their plants;                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | reaffirm their commitment to        carry out a number of projects to clean up and restore        proprietary or concession areas in the abovementioned        sites with overall expenditures amounting to euro 1,250        million;                          |
| • |   | pledge to pay the Ministry        for the Environment a contribution in cash amounting to        euro 450 million in view of executing clean-up and        remediation works in public areas adjacent to Eni and its        subsidiaries proprietary areas; and |
| • |   | transferring free of charge        certain proprietary areas to interested public        administrations in order to pursue certain local        development projects. Such area are yet to be identified.                                                      |

As a result of the filing of the proposal of global settlementfollowing thorough and extended contacts with the public bodies,Eni took a charge amounting to euro 1,109 million to theenvironmental provision in its 2010 consolidated accounts, with anet effect on profit for 2010 full year of euro 783 millionincluding the tax impact of the operation. The charge had noeffect on the Group’s consolidated net borrowings at periodend. In case of finalization of the global transaction, thepayment of the accrued amount will be made progressivelyaccording to the agreements applicable to each site. A complexadministrative procedure is going to start following thepresentation of Eni’s proposal to the Ministry. That entityis responsible for drafting a framework transaction which willundergo technical review on the part of all interestedadministrative bodies including public and local authorities.Finally, the transaction signed by Eni is due to be ratified bythe Italian Council of Ministers.

The Company’s Annual General Shareholders Meetingscheduled on April 29 and May 5, 2011, is due to approve thefull-year dividend proposal. Eni expects to pay the balance ofthe dividend for fiscal year 2010 amounting to euro 0.50 pershare in May 2011. Total cash out is estimated at euro 1.81billion.

 

**Outlook**

Management expects that the global economic recovery willprogressively strengthen across the year 2011. Nonetheless, the2011 outlook is characterized by a certain degree of uncertaintyand volatility also in light of ongoing political instability andconflict in Libya. Eni forecasts an upward trend for Brent crudeoil prices supported by healthier global oil demand. For capitalbudgeting and planning purposes, Eni assumes an average Brentprice of 70 $/BBL for the full year 2011. Management expects thatthe European gas market will remain weak as sluggish demandgrowth is insufficient to absorb current oversupplies. Refiningmargins are expected to remain unprofitable due to weakunderlying fundamentals and high feedstock costs. Against thisbackdrop, management expectations about the main trends in theCompany’s businesses for 2011 and beyond are disclosedbelow.

 

> 
*Exploration & Production*

| • |   | The outlook for production        of liquids and natural gas in 2011 is affected by the        potential impacts associated with ongoing Libyan        political instability and conflict and how long they will        last, which management is currently unable to predict.        Following suspension of activities at several of        Eni’s producing sites in Libya and the closure of a        pipeline transporting gas from Libya to Italy, Eni’s        production in Libya as of end of March 2011, was flowing        at a rate ranging from 70 to 75 KBOE/d compared to an        expected level for 2011 of approximately 280 KBOE/d.        Production is continuing to decline. Due to Libyan        developments, management expects the Company’s        production to decline in 2011 compared to 2010; see        "Item 3 – Risk Factors – Risks associated        with continuing political instability in North Africa and        Middle East". Outside Libya, management expects to        drive growth by ramping-up fields started in 2010 mainly        in Iraq, and new field start-ups in Australia, Algeria        and the USA, partly offset by mature field declines. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | According to        management’s plans, production growth will        strengthen in the coming years as the Company is        targeting a production level in excess of 2.05 mmBOE/d by        2014, implying an annual growth rate of more than 3% in        the 2011-2014 period under management’s assumptions        for oil prices at 70 $/BBL flat in the 2011-2014 period        and return of the Libyan production to its normal rate at        some point in the future. Oil price assumptions are        particularly significant when it comes to assess the        Company’s future production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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|   |   | performance considering the        entitlement mechanism under Eni’s PSAs and similar        contractual schemes. For the current year, the Company        estimates that production entitlements in its PSAs would        decrease on average by approximately 1,000 BBL/d for a $1        increase in oil prices compared to Eni’s assumptions        for oil prices at 70 $/BBL. This sensitivity analysis        only applies to small deviations from the 70 $/BBL        scenario and the impact on Eni’s production may        increase more than proportionally as the deviation        increases. However, management believes that the        sensitivity of production volumes for each U.S. dollar        price increase described above broadly continues to apply        up to the current oil price environment with Brent prices        hovering at around 120 $/BBL as of the date of this        filing, based on the Company’s current portfolio of        assets. This sensitivity analysis relates to the existing        Eni portfolio and might vary in the future. Management        estimates that should oil prices hold the level of 100        $/BBL in the next four years covered by our plan,        production growth will be reduced to an average rate of        2% in the same period. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Management expects that a        number of factors will drive cost increases in        Exploration & Production operations over the future        years. Those factors include: (i) the growing complexity        of development projects, as a number of planned new        developments will be executed offshore or in        remote/hostile environment; (ii) increasing investing        activities that are necessary to support production        plateau at existing fields and counteract natural        depletion; and (iii) steady trends in costs for        purchasing upstream goods and services. Due to those        trends, operating costs and depreciation and amortization        charges might trend higher in future years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   | Management plans to offset        those negative factors by leveraging on the        Company’s increasing exposure to large fields where        it plans to achieve substantial cost economies due to        scale of operations. Also management plans to increase        the share of operated production in the Company’s        portfolio. Project operatorship enables the Company to        exercise tighter control over project execution,        expenditures and achievement of project milestones and        time schedule. In addition, the Company plans to seek        cost efficiencies due to greater deployment of        proprietary technologies designed to maximize the rate of        hydrocarbon recovery from reservoirs and reduce drilling        costs as well as continuing operational improvement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

> 
 

*Gas & Power*

| • |   | The outlook for natural gas        sales gas in 2011 is affected by the potential impacts        associated with ongoing Libyan political instability and        conflict and how long they will last, which management is        currently unable to predict.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The ongoing Libyan situation        which has recently forced the Company to halt gas        supplies through the GreenStream pipeline may have        certain impacts on the Company’s gas operations. In        2010 the GreenStream pipeline carried 9 BCM (50% being        Eni’s share) to the European gas market. All such        volumes are purchased by the Company’s Gas &        Power segment which resells part of the gas to certain        Italian’s importers and customers at the Gela entry        point to the national transport network, in Sicily.        Globally, management expects the longer the duration of        the GreenStream disruption, the larger the sales losses        of gas. That negative factor will negatively impact the        business segment’s result of operations and cash        flow. However, the impact on cash flow may be partly        offset by the circumstance that the Company is able to        replace Libyan supplies with other gas sources from its        supply portfolio to continue sales, thus mitigating the        risk of incurring the take-or-pay clause on its long-term        supply contracts while the Libyan situation continues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | Management expects that        profitability and cash flows in the Company’s gas        marketing business will be negatively affected by a weak        trading environment in 2011. Rising competitive pressures        fuelled by ongoing oversupply in the European market will        reduce sales opportunities. Unit margins in sales outside        Italy are expected to come under pressure due to        depressed spot prices at continental hubs which have        become the contractual benchmark in selling formulae        outside Italy, whereas the cost of gas supplies to the        Group remains indexed to oil prices. Therefore, the        Company is exposed to the risk of rising oil prices; in        addition, replacing Libyan supplies will hurt the Group        average cost of supplies as the Libyan gas is more        competitive than other sources. Management plans to        counteract those negative factors by means of        renegotiating the key contractual terms of its long-term        gas purchase contracts, including price revision and        contractual flexibility. In this way, management will        seek to preserve competitiveness of the Company’s        cost structure in order to protect unit margins and        recover sales volumes. There is no assurance about the        final outcome of planned contract renegotiations. Should        the outcome fall short of management expectations, we        believe that the Company’s future results of        operations and cash flow in its gas marketing business        will be negatively affected. Difficult market conditions        in the European gas sector are expected to continue over        the next two to three years. Looking beyond, management        plans on the basis that a number of positive trends will        rebalance the European market. European gas demand is        expected to recover driven by continuing expansion in the        use of gas in electricity production; production rates        from European fields are projected to decline thus        increasing the need for gas import requirements, and LNG        oversupplies will be progressively absorbed by continuing        growth in other parts of the world and limited new LNG        capacity additions in the Atlantic Basin between 2012 and        2014. We also note that spot prices at European hub have        recently spiked driven by recent developments in Japan        which we believe may influence a rebalancing between        demand and supply in the natural gas market. Eni believes        that those |

> 
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|   |   | trends will favor a        convergence between spot prices of gas and oil-linked gas        prices provided by long-term gas purchase contracts.        Against this backdrop, management plans to drive volumes        growth in the years subsequent to 2011 targeting an        average annual rate of increase of 5% in sales in Italy        and key European market in the next four years. Volumes        growth is expected to be supported by renegotiations of        long-term supply contracts which are expected to add        price competitiveness to the Company’s portfolio and        effective marketing actions whereby the Company intends        to regain market share in Italy and increase sales        volumes in certain European markets. The Company intends        to leverage its multiple presence in key European        markets, particularly in France, Benelux and Germany (see        "Item 4 – Gas & Power"), and drive        sales growth by developing new customized commercial        offers. Based on those actions, Eni plans to increase        sales in European markets by adding 8 BCM of new volumes        by 2014. In Italy, management plans to boost sales and        regain market share by leveraging on the overall quality        of its offer, including the offer of pricing formulae and        services that are designed to best suit the        customers’ needs. The Company intends to deploy        tailored solutions and customized contracts to retain        client in the business segment, and expand its customer        base in the retail segment by means of new marketing        initiatives, the bundling of a range of valuable services        to the commercial offer and wider geographic presence        through an integrated network of agencies and stores.        Based on those actions, management targets to expand        sales volumes in Italy by 12 BCM by 2014. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Based on the above outlined        trends and industrial actions, management believes that        profitability in the Company’s gas marketing        business will return to same level as in 2009 by the end        of the plan period. Profitability will be supported also        by pursuing cost efficiencies by streamlining business        support activities and reducing marketing and general and        administrative costs. In addition, the Company intends to        capture margins improvements by optimizing the value of        its assets (gas supply contracts, customer base, and        market position) and a new risk management strategy.        Actions that will be implemented as part of that include:        (i) effectively managing flexibilities associated with        the portfolio of long-term gas supply contracts and other        assets available to the Company in the gas value chain,        also entering arbitrage contracts so as to unlock value        from the Company’s access to storage capacities and        transport rights and other assets; (ii) effectively        managing the commodity risk and the volume risk by        entering contractual positions on the marketplace in        order to capture possible favorable trends in market        prices, within limits set by internal policies and        guidelines that define the maximum tolerable level of        market risk. For further information on the market risk        and how the Company manages it see "Item 11 –        Quantitative and Qualitative Disclosures About Market        Risk" and "Item 18 – Note 34 to the        Consolidated Financial Statements".                                                                                                                                                                                                                                            |
|   |   | Considering that current        imbalances between demand and supply on the European        market are expected to continue for some time, management        factored in its planning assumptions the risk that the        Company may fail to fulfill its contractual obligations        associated with the Company’s long-term supply        contracts to off-take minimum annual quantities for        significant amounts in the next two years. Those        projections may be revised in case the Libyan political        instability and conflict should continue for a prolonged        period of time as lower availability of Libyan gas might        eventually diminish the take-or-pay risk. In light of        management assumptions for long-term growth in gas        demand, the Company believes that in the long-term it        will be in the position to recover volumes of gas which        have been pre-paid in the years 2009 and 2010 due to the        take-or-pay clause and also possibly new pre-paid volumes        associated with the contractual clause which might arise        due to uncertainties and weak conditions in the gas        market over the next two years. For more information see        the specific risk paragraph in "Item 3 – Risk        Factors". For a discussion of certain risks relating        to the impact of the evolution of Italian regulation of        the natural gas sector on Eni’s take-or-pay        contracts see "Item 3 – Risk Factors –        Natural Gas Market".                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | Regulated businesses in        Italy are planned to benefit from the pre-set, regulatory        return on new capital expenditures and cost savings from        integrating the whole chain of transport, storage and        distribution activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

> 
 

> 
*Refining & Marketing*

| • |   | Refining margins are        expected to remain at an unprofitable level in 2011 as        weak industry fundamentals are expected to persist in the        near future. Specifically, high feedstock costs, weak        demand, excess inventory levels and compressed        differentials between heavy and light crudes will        continue squeezing margins on products. Refining        throughputs on Eni’s account for the year 2011 are        planned to be in line with 2010 (actual throughputs in        2010 were 34.8 mmtonnes), due to higher volumes processed        on more competitive refineries, the optimization of        refinery cycles, as well as efficiency actions        implemented in response to a volatile trading        environment. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Retail sales of refined        products in Italy and the rest of Europe are expected to        be in line with 2010 (11.73 mmtonnes in 2010) against the        backdrop of weaker demand. Management plans to improve        sales and profitability leveraging on selective pricing        and marketing initiatives, starting new service stations        and developing the "non-oil" business.                                                                                                                                                                                                                                                                                                                                                                   |

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> 
*Engineering & Construction*

| • |   | The Engineering &        Construction business is expected to see solid results        due to a robust order backlog. The segment is expected to        leverage its diversified business model articulated        across various market sectors combined with a strong        competitive position in frontier areas, which are        traditionally less exposed to the cyclical nature of this        market. The start of operations of new advanced assets in        2010 and 2011 coupled with the size and quality of the        backlog and management focus on execution, underpin        expectations for a further strengthening of Saipem’s        competitive position in the medium-term. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

*Petrochemicals*

| • |   | Management expects that        results of the Petrochemical segment will continue to        recover as demand for petrochemical products strengthens        on the back of a global economic upturn. However, rising        oil prices may negatively affect this segment’s        results of operations as the Company may be unable to        transfer cost increases to final prices of commodities        due to competitive pressures. Management plans to        implement a number of initiatives designed to reduce        fixed operating expenses and to realign the industrial        set-up of Eni’s petrochemical operations with a view        to enhancing areas of competitive advantage. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

*Capital Expenditure plans*

Over the next four years, the Company plans to invest euro53.3 billion in its businesses to support continued organicgrowth; approximately 73%, 14%, 5.4% and 4.5% of planned capitalexpenditures is expected be directed to the Exploration &Production, Gas & Power, Refining & Marketing andEngineering & Construction segments, respectively.

The main planned projects are as follows: (i) development ofoil and gas reserves mainly in Iraq, Norway, Kazakhstan, Angola,Italy, Congo, Nigeria, Algeria and the USA; (ii) explorationprojects to be executed mainly in the USA, Egypt, Angola, Italy,Australia, Nigeria and Norway; (iii) upgrading of nationalpipelines for transporting natural gas, as well as upgrading ofItalian distribution networks and gas storage capacity; (iv)completion of the upgrading and new vessel construction programin the Engineering & Construction segment; (v) refineryupgrading, targeting an increase in conversion capacity mainly bycompleting the EST project at the Sannazzaro refinery; and (vi)upgrading of Eni’s networks of service stations formarketing petroleum products.

Eni’s capital expenditure program is expected to increaseby approximately 1% compared to the previous industrial plan dueto planned expenditures for developing new upstream projects,particularly those associated with reserves development in Iraq,and offshore Angola, the circumstance that the Company isforecasting steady trends in costs for materials and sectorspecific services in its upstream projects and the assumption ofthe U.S. dollar appreciation against the euro. Lower capitalexpenditures are associated with the completion of the plan forupgrading the fleet of vessels and offshore rigs of Saipem.

For the year 2011, management plans to make capitalexpenditures of approximately euro 14 billion which is broadly inline with 2010 (euro 13.87 billion were invested in 2010), andwill mainly be directed to developing large fields and startingproduction at new important fields in the Exploration &Production Division, refinery upgrading related in particular tothe realization of the EST project, completing the program ofenhancing Saipem’s fleet of vessels and rigs, and upgradingthe natural gas transport infrastructure.

Management expects to pursue strict capital discipline whenassessing individual capital projects. Management assumed an oilprice of 70 $/BBL flat in the next four-year period; longer-termmanagement assumed an oil price of 70 $/BBL that is adjusted totake account of expected inflation from 2015 onwards. Theinternal rate of return of each project is compared to therelevant hurdle rate, differentiated by business segment andcountry of operation. These hurdle rates are calculated takinginto account: (i) the weighted average cost of capital to theGroup. In 2010 management assessed that the cost of capital tothe Group decreased by 0.5 percentage points on average from theprevious year reflecting a reduced market premium for the equityrisk and a slight decrease in the cost of borrowings to Enifollowing expected trends in the main market benchmarks. Suchtrends were partially offset by increased market yields on assetsrisk-free due to a higher risk premium for Italy; (ii) acountry risk premium which reflects the specific level of riskassociated with each country of operations in terms ofmacroeconomic, business and socio-political current conditionsand outlook; and (iii) a premium for the business risk.

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> 
*Liquidity and leverage*

In the foreseeable future, management is strongly focused onpreserving a solid balance sheet and an adequate level ofliquidity taking into account macroeconomic uncertainties andtight financial markets. For planning purposes, managementcalculated the Company’s expected cash flows assuming ascenario of Brent prices at 70 $/BBL for the years 2011-2014 toassess the financial compatibility of its capital expendituresprograms and dividend policy with internal targets of ratio oftotal equity to net borrowing. We note that Brent price in theperiod January 1 to March 31, 2011 was 104.97 $/BBL on averageand it was 118.62 $/BBL as of April 1, 2011. Management plans forachieving a reduction in the ratio of net borrowings to totalequity ("leverage") in 2011 compared to end of the year2010 also taking into account the planned divestment of assetsfor an amount of euro 2 billion. Looking forward, managementintends to seek to progressively reduce this ratio to below 40%by the end of the plan period leveraging on future cash flow fromoperations.

For planning purposes, management assumed an average exchangerate of approximately 1.30 U.S. dollars per euro in the 2011-2014period. Given the sensitivity of Eni’s results of operationsto movements in the euro versus the U.S. dollar exchange rate,trends in the currency market represent a factor of risk anduncertainty. See "Item 3 – Risk Factors".

 

> 
*Dividend policy*

In the next four-year period management intends to pursue aprogressive dividend policy. Management plans to pay euro 1.00 ashare dividend for 2010 subject to approval from the GeneralShareholders’ Meeting scheduled on May 5, 2011. Of this,euro 0.50 per share was paid in September 2010 as an interimdividend with the balance of euro 0.50 per share expected to bepaid late in May 2011. For the year 2011, management plans tostart growing the dividend in line with OECD inflation. Thisdividend policy is based on management’s planningassumptions for oil prices at 70 $/BBL flat in the 2011-2014period. If management assumptions on oil prices were to change,management may revise the dividend and reset the basis forprogressive dividend increases. In future years, managementexpects to continue paying interim dividends for each fiscalyear, with the balance for the full-year dividend paid in thefollowing year.

The expectations described above are subject to risks,uncertainties and assumptions associated with the oil and gasindustry, and economic, monetary and political developments inItaly and globally that are difficult to predict. There are anumber of factors that could cause actual results anddevelopments to differ materially, including, but not limited to,political instability in Libya and other countries, crude oil andnatural gas prices; demand for oil and gas in Italy and othermarkets; developments in electricity generation; pricefluctuations; drilling and production results; refining marginsand marketing margins; currency exchange rates; general economicconditions; political and economic policies and climates incountries and regions where Eni operates; regulatorydevelopments; the risk of doing business in developing countries;governmental approvals; global political events and actions,including war, terrorism and sanctions; project delays; materialdifferences from reserves estimates; inability to find anddevelop reserves; technological development; technicaldifficulties; market competition; the actions of field partners,including the inability of joint venture partners to fund theirshare of operating or developments activities; industrial actionsby workers; environmental risks, including adverse weather andnatural disasters; and other changes to business conditions.Please refer to "Item 3 – Risk Factors".

 

> 
***Off-Balance Sheet Arrangements***

Eni has entered into certain off-balance sheet arrangements,including guarantees, commitments and risks, as described in Note34 to the Consolidated Financial Statements. Eni’s principalcontractual obligations, including commitments under take-or-payor ship-or-pay contracts in the gas business, are described under"Contractual Obligations" below. See the Glossary for adefinition of take-or-pay or ship-or-pay clauses.

Off-balance sheet arrangements comprise those arrangementsthat may potentially impact Eni’s liquidity, capitalresources and results of operations, even though sucharrangements are not recorded as liabilities under generallyaccepted accounting principles. Although off-balance sheetarrangements serve a variety of Eni’s business purposes, Eniis not dependent on these arrangements to maintain its liquidityand capital resources; nor is management aware of anycircumstances that are reasonably likely to cause the off-balancesheet arrangements to have a material adverse effect on thecompany’s financial condition, results of operations,liquidity or capital resources.

Eni has provided various forms of guarantees on behalf ofunconsolidated subsidiaries and affiliated companies, mainlyrelating to guarantees for loans, lines of credit and performanceunder contracts. In addition, Eni 

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has provided guarantees on the behalf of consolidatedcompanies, primarily relating to performance under contracts.These arrangements are described in Note 34 to the ConsolidatedFinancial Statements.

 

> 
***Contractual Obligations***

Amounts in the table refer to expected payments, undiscounted,by period under existing contractual obligations commitments.

|   | **Maturity        year** |
|--------|--------------------------|
|   |                          |

|   | **Total** |   | **2011** |   | **2012** |   | **2013** |   | **2014** |   | **2015** |   | **2016 and thereafter** |
|--------|-----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-------------------------|
|   |           |   |          |   |          |   |          |   |          |   |          |   |                         |

|   | **(euro        million)** |
|--------|---------------------------|

| **Total debt**                                                                           |   | **29,415**  |   | **8,609**  |   | **3,859**  |   | **2,559**  |   | **2,027**  |   | **2,863**  |   | **9,498**   |
|------------------------------------------------------------------------------------------|--------|-------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|-------------|
| Long-term        finance debt                                                            |   | 21,268      |   | 963        |   | 3,583      |   | 2,485      |   | 2,009      |   | 2,815      |   | 9,413       |
| Short-term finance debt                                                                  |   | 6,515       |   | 6,515      |   |       |   |       |   |       |   |       |   |        |
| Fair value        of derivative instruments                                              |   | 1,632       |   | 1,131      |   | 276        |   | 74         |   | 18         |   | 48         |   | 85          |
| **Interest on finance debt**                                                             |   | **4,835**   |   | **720**    |   | **712**    |   | **654**    |   | **563**    |   | **460**    |   | **1,726**   |
| **Guarantees        to banks**                                                           |   | **339**     |   | **339**    |   |       |   |       |   |       |   |       |   |        |
| **Non-cancelable operating lease obligations**(1)                                        |   | **4,053**   |   | **1,023**  |   | **863**    |   | **587**    |   | **517**    |   | **311**    |   | **752**     |
| **Decommissioning        liabilities**(2)                                                |   | **12,726**  |   | **44**     |   | **60**     |   | **116**    |   | **362**    |   | **146**    |   | **11,998**  |
| **Environmental liabilities**(3)****                                                     |   | **2,014**   |   | **338**    |   | **307**    |   | **261**    |   | **263**    |   | **184**    |   | **661**     |
| **Purchase        obligations**(4)                                                       |   | **259,914** |   | **16,891** |   | **15,425** |   | **15,896** |   | **15,970** |   | **15,734** |   | **179,998** |
| Natural gas to be purchased in connection with        take-or-pay contracts (5)          |   | 246,889     |   | 15,708     |   | 14,403     |   | 14,961     |   | 15,004     |   | 14,788     |   | 172,025     |
| Natural        gas to be transported in connection with ship-or-pay        contracts (5) |   | 8,363       |   | 794        |   | 708        |   | 646        |   | 668        |   | 655        |   | 4,892       |
| Other take-or-pay and ship-or-pay obligations                                            |   | 1,979       |   | 169        |   | 160        |   | 165        |   | 175        |   | 168        |   | 1,142       |
| Other        purchase obligations (6)                                                    |   | 2,683       |   | 220        |   | 154        |   | 124        |   | 123        |   | 123        |   | 1,939       |
| **Other obligations**(7)                                                                 |   | **149**     |   | **4**      |   | **4**      |   | **4**      |   | **4**      |   | **4**      |   | **129**     |
| *of        which:*                                                                       |   |        |   |       |   |       |   |       |   |       |   |       |   |        |
| *- Memorandum of intent relating to Val        d’Agri*                              |   | *149*       |   | *4*        |   | *4*        |   | *4*        |   | *4*        |   | *4*        |   | *129*       |
| **TOTAL**                                                                                |   | **313,445** |   | **27,968** |   | **21,230** |   | **20,077** |   | **19,706** |   | **19,702** |   | **204,762** |
|                                                                                     |   |             |   |            |   |            |   |            |   |            |   |            |   |             |

----

| (1) |   | Operating        leases primarily regarded assets for drilling activities,        time charter and long-term rentals of vessels, lands,        service stations and office buildings. Such leases did        not include renewal options. There are no significant        restrictions provided by these operating leases which        limit the ability of the Company to pay dividend, use        assets or to take on new borrowings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | i      | Represents        the estimated future costs for the decommissioning of oil        and natural gas production facilities at the end of the        producing lives of fields, well-plugging, abandonment and        site restoration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (3) |   | Environmental        liabilities do not include the environmental charge        amounting to euro 1,109 million for the proposal to the        Ministry for the Environment to enter into a global        transaction related to nine sites of national interest        because the dates of payment cannot be reasonably        estimated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (4) | i      | Represents        any agreement to purchase goods or services that is        enforceable and legally binding and that specifies all        significant terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (5) |   | Such        arrangements include non-cancelable, long-term        contractual obligations to secure access to supply and        transport of natural gas, which include take-or-pay        clauses whereby the Company obligations consist of        offtaking minimum quantities of product or service or        paying the corresponding cash amount that entitles the        Company to off-take the product in future years. Future        obligations in connection with these contracts were        calculated by applying the forecasted prices of energy or        services included in the four-year business plan approved        by the Company’s Board of Directors and on the basis        of the long-term market scenarios used by Eni for        planning purposes to minimum take and minimum ship        quantities. See "Item 4 – Gas & Power        – Natural Gas Purchases" and "Item 3        – Risk Factors – Liberalization of the Italian        Natural Gas Market" for a discussion of nature and        importance of Eni’s take-or-pay contracts and the        related risks from the evolving regulatory environment        that could negatively impact Eni’s results. |
| (6) | i      | Mainly refers        to arrangements to purchase capacity entitlements at        certain re-gasification facilities in the USA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (7) | i      | In addition        to these amounts, Eni has certain obligations that are        not contractually fixed as to timing and amount,        including contributions to defined benefit pension plans        (see Note 22 to the Consolidated Financial Statements).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

The table below summarizes Eni’s capital expenditurecommitments for property, plant and equipment as of December 31,2010. Capital expenditures are considered to be committed whenthe project has received the appropriate level of internalmanagement approval. Such costs are included in the amountsshown. Major projects are authorized by the Company’s Boardof Directors, each of those projects generally entailsexpenditures in excess of euro 300 million.

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|   | **Total** |   | **2011** |   | **2012** |   | **2013** |   | **2014** |   | **2015 and thereafter** |
|--------|-----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-------------------------|
|   |           |   |          |   |          |   |          |   |          |   |                         |

|   | **(euro        million)** |
|--------|---------------------------|

| Committed on major projects     |   | 25,616     |   | 5,443      |   | 5,606      |   | 2,867     |   | 3,304     |   | 8,396      |
|---------------------------------|--------|------------|--------|------------|--------|------------|--------|-----------|--------|-----------|--------|------------|
| Other        committed projects |   | 24,982     |   | 7,210      |   | 4,700      |   | 4,253     |   | 2,802     |   | 6,017      |
|                            |   |            |   |            |   |            |   |           |   |           |   |            |
| **TOTAL**                       |   | **50,598** |   | **12,653** |   | **10,306** |   | **7,120** |   | **6,106** |   | **14,413** |
|                            |   |            |   |            |   |            |   |           |   |           |   |            |

> 
 

***Liquidity Risk***

Liquidity risk is the risk that suitable sources of fundingfor the Group may not be available, or the Group is unable tosell its assets on the marketplace as to be unable to meetshort-term finance requirements and to settle obligations. Such asituation would negatively impact Group results as it wouldresult in the Company incurring higher borrowing expenses to meetits obligations or under the worst of conditions the inability ofthe Company to continue as a going concern. At present, the Groupbelieves it has access to sufficient funding and has also bothcommitted and uncommitted borrowing facilities to meet currentlyforeseeable borrowing requirements. For a description of how theCompany manages the liquidity risk see "Item 18 – Note34 to the Consolidated Financial Statements".

At December 31, 2010, Eni maintained short-term committed anduncommitted unused borrowing facilities of euro 10,358 million,of which euro 2,498 million were committed, and long-termcommitted unused borrowing facilities of euro 4,901 million.These facilities were under interest rates that reflected marketconditions. Fees charged for unused facilities were notsignificant. Eni has in place a program for the issuance of EuroMedium Term Notes up to euro 15 billion, of which about euro 10.4million were drawn as of December 31, 2010.

The Group has debt ratings of A+ and A-1 respectively for long(outlook stable) and short-term debt assigned by Standard &Poor’s and Aa3 and P-1 (outlook stable) assigned byMoody’s.

A security rating is not a recommendation to buy, sell or holdsecurities. A security rating may be subject to revision orwithdrawal at any time by the assigning rating organization. Eachrating should be evaluated independently of any other rating.

 

> 
***Working Capital***

Management believes that, taking into account unutilizedcredit facilities, Eni’s credit rating and access to capitalmarkets, Eni has sufficient working capital for its foreseeablerequirements.

 

> 
***Credit Risk***

Credit risk is the potential exposure of the Group to lossesin case counterparties fail to perform or pay amounts due. For adescription of how the Company manages the Credit risk see"Item 18 – Note 34 to the Consolidated FinancialStatements". For information about credit losses in 2010 andthe allowance for doubtful accounts see "Item 18 – Note9 to the Consolidated Financial Statements".

 

> 
***Market Risk***

In the normal course of its operations, Eni is exposed tomarket risks deriving from fluctuations in commodity prices andchanges in the euro versus other currencies exchange rates,particularly the U.S. dollar, and in interest rates. For adescription of how the Company manages the Market risk see"Item 18 – Note 34 to the Consolidated FinancialStatements".

 

> 
***Research and Development***

For a description of Eni’s research and developmentoperations in 2009, see "Item 4 – Research andDevelopment".

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**Item 6. DIRECTORS, SENIOR MANAGEMENT ANDEMPLOYEES**

**Directors and Senior Management**

The following lists the Company’s Board of Directors asat April 2011:

| **Name**             |   | **Position** |   | **Year elected or appointed** |   | **Age** |
|----------------------|--------|--------------|--------|-------------------------------|--------|---------|
|                      |   |              |   |                               |   |         |
| Roberto Poli         |   | Chairman     |   | 2002                          |   | 73      |
| Paolo Scaroni        |   | CEO          |   | 2005                          |   | 65      |
| Alberto Clô     |   | Director     |   | 1999                          |   | 64      |
| Paolo Andrea Colombo |   | Director     |   | 2008                          |   | 51      |
| Paolo Marchioni      |   | Director     |   | 2008                          |   | 42      |
| Marco Reboa          |   | Director     |   | 2005                          |   | 56      |
| Mario Resca          |   | Director     |   | 2002                          |   | 66      |
| Pierluigi Scibetta   |   | Director     |   | 2005                          |   | 52      |
| Francesco Taranto    |   | Director     |   | 2008                          |   | 71      |
|                      |   |              |   |                               |   |         |

In accordance with Article 17.3 of Eni’s By-laws, theBoard of Directors is made up of 3 to 9 members. The currentBoard of Directors was elected by the ordinary Shareholders’Meeting held June 10, 2008, which also established the number ofDirectors at nine for a term of three financial years.

Roberto Poli, Paolo Scaroni, Paolo Andrea Colombo, PaoloMarchioni, Mario Resca and Pierluigi Scibetta were candidatesincluded in the list of the Ministry of Economy and Finance.Alberto Clô, Marco Reboa and Francesco Taranto were elected onthe basis of the list submitted by the institutional investors.

On the basis of Italian laws regulating the special powers ofthe State (see "Item 10 – Stock ownership limitationand voting rights restrictions"), the Minister of Economyand Finance, in agreement with the Minister for EconomicDevelopment, may appoint another member of the Board ofDirectors, without voting rights, in addition to those appointedby the Shareholders’ Meeting. On the occasion of the lastBoard appointment, the Minister of Economy and Finance opted notto exercise that power.

**Roberto Poli** Born in 1938. He has been Chairman of theBoard of Eni SpA since May 2002. He is Chairman of Poli eAssociati SpA, a consultancy firm for corporate finance,extraordinary operations, company acquisitions andrestructurings. He is currently Director of Mondadori SpA,Fininvest SpA, Coesia SpA, Maire Tecnimont SpA and PerenniusCapital Partners SGR SpA. From 1966 to 1998 he was professor ofcorporate finance at the Università Cattolica del Sacro Cuore,in Milan. He was an advisor for extraordinary finance operationsfor some of Italy’s leading industrial groups. He wasChairman of Rizzoli-Corriere della Sera SpA and Publitalia SpA.In June 2008 he was decorated as Cavaliere del Lavoro.

**Paolo Scaroni** Born in 1946. He has been Chief ExecutiveOfficer of Eni since June 2005. He is currently Director ofAssicurazioni Generali, Non-Executive Deputy Chairman of theLondon Stock Exchange Group, Director of Veolia Environnement. Heis also member of the Board of Overseers of Columbia BusinessSchool, in New York, and Director of Fondazione Teatro allaScala. After graduating in Economics and Business at the LuigiBocconi University, in Milan, in 1969, he worked for three yearsat Chevron, and obtained an MBA from Columbia University, in NewYork, and continued his career at McKinsey. In 1973 he joinedSaint Gobain, where he held a series of managerial positions inItaly and abroad, until his appointment as Head of the GlassDivision in Paris in 1984. From 1985 to 1996 he was DeputyChairman and Chief Executive Officer of Techint. In 1996 he movedto the UK and was Chief Executive Officer of Pilkington until May2002. From May 2002 to May 2005 he was Chief Executive Officerand Chief Operating Officer of Enel. From 2005 to July 2006 hewas Chairman of Alliance Unichem. In May 2004 he was decorated asCavaliere del Lavoro. In November 2007 he was decorated asOfficer of the Légion d’honneur.

**Alberto Clô** Born in 1947. He has been a Director ofEni SpA since June 1999. He is currently Director of AtlantiaSpA, Italcementi SpA, De Longhi SpA and IREN SpA. He graduated inPolitical Sciences at the University of Bologna, where he iscurrently professor of Industrial Economics and of PublicServices Economics. In 1980 he founded the magazine"Energia" of which he is the editor. He is the authorof many books and more than 100 essays and articles on industrialand energy economics and contributes to a number of newspapersand business magazines. In 1995 and 1996 he was Minister ofIndustry and ad interim Minister of Foreign Trade and alsoPresident of the Council of Industry and Energy Ministers of theEuropean Union during the six-month Italian presidency. In 1996he was decorated as Cavaliere di Gran Croce of the Republic ofItaly.

**Paolo Andrea Colombo** Born in 1960. He has been aDirector of Eni SpA since June 2008. After graduating in BusinessAdministration in 1984 at the Luigi Bocconi University, in Milan,he qualified as a professional accountant 

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and auditor in 1985. He is Lecturer in the AccountingDepartment at the Luigi Bocconi University, in Milan. He isfounder partner of Borghesi Colombo & Associati, aconsultancy firm specialized in corporate finance –including taxation and business consultancy in the context ofextraordinary operations – as well as strategic andcorporate governance consultancy. He is Director of Mediaset SpAand Ceresio SIM, Chairman of the Statutory Board of Aviva VitaSpA and GE Capital Interbanca SpA, Statutory Auditor of A.Moratti Sapa, Humanitas Mirasole SpA and Credit AgricoleAssicurazioni Italia Holding SpA. He was effective StatutoryAuditor of Eni SpA from May 2002 to May 2005, and he was Chairmanof the Board of Statutory Auditors from May 2005 to May 2008.

**Paolo Marchioni** Born in 1969. He has been a Director ofEni SpA since June 2008. He is a qualified lawyer specializing inpenal and administrative law, counselor in Supreme Court andsuperior jurisdictions. He acts as a consultant to governmentagencies and business organizations on business, corporate,administrative and local government law. He was Mayor of Baveno(Verbania) from April 1995 to June 2004 and Chairman of theAssembly of Mayors of Con.Ser.Vco from September 1995 to June1999. Until June 2004 he was a member of the Assembly of Mayorsof the Asl 14 health authority, the steering committee of theVerbania health district, the Assembly of Mayors of the ValleOssola Waste Water Consortium, the Assembly of Mayors of theVerbania social services consortium. From April 2005 to January2008 he was a member of Stresa city council. From October 2001 toApril 2004 he was Director of C.i.m SpA of Novara (merchandiseinterport center) and from December 2002 to December 2005Director and executive committee member of Finpiemonte SpA. FromJune 2005 to June 2008 he was Director of Consip. He has beenVice-president of Provincia del Verbano-Cusio-Ossola andprovincial councilor in charge of budgeting, property, legalaffairs and production activities since June 2009. He has beenChairman of the Board of Directors of Finpiemonte partecipazioniSpA since August 2010.

**Marco Reboa** Born in 1955. He has been a Director of EniSpA since May 2005. He graduated in Business Administration atthe Luigi Bocconi University, in Milan. He is a professionalaccountant and auditor. He is Professor at the Faculty of Law atthe Carlo Cattaneo University - LIUC, in Castellanza, and authorof many publications on corporate governance, economicevaluations and budget. He is the editor of "Rivista deiDottori Commercialisti" and he is a professional advisor inMilan. He is a Director of Luxottica Group SpA and InterpumpGroup SpA. He is Chairman of the Board of Statutory Auditors ofMediobanca SpA. He is Statutory Auditor of Gruppo Lactalis ItaliaSpA, Egidio Galbani SpA and Big Srl.

**Mario Resca** Born in 1945. He has been Director of EniSpA since May 2002. In 2008 he was appointed General Director ofItalian Heritage and Antiquities in the Ministry of CulturalHeritage and Activities. He is Chairman of Confimprese. He is aDirector of Mondadori SpA. He graduated in Economics at the LuigiBocconi University, in Milan. After graduating he joined ChaseManhattan Bank. In 1974 he was appointed Manager of SaifiFinanziaria (Fiat Group) and from 1976 to 1991 he was a partnerof Egon Zehnder. In this period he was Director of LancômeItalia and of companies belonging to the RCS Corriere della SeraGroup and the Versace Group. From 1995 to 2007 he was Chairmanand Chief Executive Officer of McDonald’s Italia. He wasalso Chairman of Sambonet SpA and Kenwood Italia SpA, a foundingpartner of Eric Salmon & Partners and Chairman of theAmerican Chamber of Commerce. He was decorated as Cavaliere delLavoro in June 2002.

**Pierluigi Scibetta** Born in 1959. He has been a Directorof Eni SpA since May 2005. He graduated in Economics at theUniversity La Sapienza, in Rome. He is a professional accountantand auditor and he has practiced at his own studio in Rome since1990. He was Director of Gestore del Mercato Elettrico (GME) SpA,Istituto Superiore per la Previdenza e la Sicurezza del LavoroISPESL, Nucleco SpA, FN SpA and AGITEC SpA; he was also DeputySpecial Commissioner and Director of Ente per le NuoveTecnologie, l’Energia e l’Ambiente (ENEA) and effectiveStatutory Auditor of Consorzio smantellamento impianti del ciclodel combustibile nucleare. He is Chairman of Watch Structure ofGestore dei Mercati Energetici SpA.

**Francesco Taranto** Born in 1940. He has been a Directorof Eni SpA since June 2008. He is currently a Director of Cassadi Risparmio di Firenze SpA. He began working in 1959, in a stockbrokerage in Milan; from 1965 to 1982 he worked at Banco diNapoli as Deputy Manager of the stock market and securitiesdepartment. He held a series of managerial positions in the assetmanagement field, notably he was Manager of securities funds atEurogest from 1982 to 1984, and General Manager of InterbancariaGestioni from 1984 to 1987. After moving to the Prime group (1987to 2000), he was Chief Executive Officer of the parent companyfor a long period. He was also a member of the steering councilof Assogestioni and of the corporate governance committee forlisted companies formed by Borsa Italiana. He was a Director ofEnel from October 2000 to June 2008.

 

> 
*Senior Management*

The table below sets forth the composition of Eni’sSenior Management, until December 31, 2010. It includes the CEO,as General Manager of Eni SpA, the Chief Operating Officers, theChief Financial Officer, the Chief Corporate Operations Officerand the Executives who directly report to the CEO.

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| **Name**                       |   | **Management        position**                                                                            |   | **Year first appointed to current         position** |   | **Total number        of year of service at Eni** |   | **Age** |
|--------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------------|--------|---------|
|                                |   |                                                                                                           |   |                                                      |   |                                                   |   |         |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Paolo Scaroni                  |   | General        Manager of Eni                                                                             |   | 2005                                                 |   | 6                                                 |   | 65      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Claudio        Descalzi        |   | Exploration        & Production Chief Operating Officer                                          |   | 2008                                                 |   | 30                                                |   | 56      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Domenico        Dispenza       |   | Gas &        Power Chief Operating Officer                                                            |   | 2005                                                 |   | 37                                                |   | 65      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Angelo        Fanelli (*)      |   | Refining        & Marketing Chief Operating Officer                                              |   | 2010                                                 |   | 30                                                |   | 59      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Alessandro        Bernini      |   | Chief        Financial Officer                                                                            |   | 2008                                                 |   | 15                                                |   | 51      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Salvatore        Sardo         |   | Chief        Corporate Operations Officer                                                                 |   | 2008                                                 |   | 6                                                 |   | 59      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Massimo        Mantovani       |   | General        Counsel Legal Affairs         Senior Executive Vice President                              |   | 2006                                                 |   | 18                                                |   | 48      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Rita Marino (**)               |   | Internal        Audit Senior Executive Vice President                                                     |   | 2008                                                 |   | 6                                                 |   | 47      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Leonardo        Maugeri (***)  |   | Strategies        and Development (****)        Senior Executive Vice President                           |   | 2000                                                 |   | 16                                                |   | 46      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Umberto        Vergine (*****) |   | Studies and        Researches (****)        Senior Executive Vice President                               |   | 2010                                                 |   | 27                                                |   | 54      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Stefano        Lucchini        |   | Public        Affairs and Communication         Senior Executive Vice President                           |   | 2005                                                 |   | 6                                                 |   | 49      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Roberto        Ulissi          |   | Company        Secretary         Corporate Affairs and Governance         Senior Executive Vice President |   | 2006                                                 |   | 5                                                 |   | 49      |
|                           |   |                                                                                                      |   |                                                 |   |                                              |   |    |
| Raffaella        Leone         |   | Executive        Assistant to the CEO                                                                     |   | 2005                                                 |   | 6                                                 |   | 49      |
|                                |   |                                                                                                           |   |                                                      |   |                                                   |   |         |

----

| (*)     |    | Appointed to        replace Angelo Caridi with effect from April 6, 2010.                                                        |
|---------|--------------|----------------------------------------------------------------------------------------------------------------------------------|
| (**)    |    | Until January        2011. As of January 10, 2011, Executive Vice President        Internal Audit has been Marco Petracchini.    |
| (***)   |    | Until March        4, 2010.                                                                                                      |
| (****)  |    | As of March        4, 2010, the Strategies and Development Department has        been renamed Studies and Researches Department. |
| (*****) |    | As of April        6, 2010.                                                                                                      |

The Chief Operating Officers, the Chief Financial Officer, theChief Corporate Operations Officer and the Senior Executive VicePresidents are permanent members of the Management Committee7,which advises and supports the CEO. Chief Operating Officers areappointed by the Board of Directors, upon proposal of the CEO inagreement with the Chairman. Other members of Eni’s seniormanagement are appointed by Eni’s CEO and may be removedwithout cause, except for the Senior Executive Vice President ofInternal Audit Department and the Company Secretary, who areappointed by the Board of Directors.

 

> 
*Senior Managers*

**Claudio Descalzi**Born in Milan in 1955. He graduated inPhysics in 1979 at the University of Milan. He continued hisstudies with specialist courses in Petroleum Engineering inFrance and in the US. He joined the Eni Group in 1981 as oil/gasfield petroleum engineering and project manager, following thedevelopment of North Sea, Libya, Nigeria, and Congo fields. In1990 he was appointed head of operational activities for Italy.In 1994 he was named Director of Agip Recherches Congo, withresponsibility for all local upstream operations, and in 1998become Vice Chairman & Managing Director of Naoc, an Enisubsidiary in Nigeria. From 2000 to 2001 he was Regional Managerfor Africa, Middle East and China at the Agip Division, where in2002 he was appointed Country Manager for Italy. From 2002 to2005 he was Regional Manager for Italy, Africa, Middle East atthe Eni Exploration & Production Division, and in 2006 he hasbeen named Deputy Chief Operating Officer of the Eni Exploration& Production Division. Since 2006 he has been President ofAssomineraria. He is Vice President of Confindustria Energy.Since July 30, 2008 he has been Eni SpA. Chief Operating Officerof the Exploration & Production Division.

**Domenico Dispenza** Born in Trieste in 1946. He has adegree in Aeronautical Engineering at the Politecnico of Milan.In 1973 he completed a Master’s degree in AdvancedTechnology at Sogesta in Urbino. Since January 2006 he has beenChief Operating Officer of Eni’s Gas & Power Division.He started working in 1974 at the Study Department of Snam SpA,in 1977 he became head of Systems Analysis and from 1980 to 1991he was Chief 

----

| (7) |    | Internal        Audit Senior Executive Vice President is not a permanent        member of the Management Committee. |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------|

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Negotiator for Gas Sales and Purchase Agreement. From 1991 to1999 he was Director of Gas Supplies. On June 30, 1999 he wasappointed CEO of Snam SpA. From 2002 to 2004 he was Deputy COO ofEni’s Gas & Power Division. On April 27, 2004 hewas nominated Chairman and CEO of Snam Rete Gas. DomenicoDispenza is currently: CEO of Blue Stream Pipeline Company BV,Member of the Board of Eni Trading & Shipping SpA, Member ofthe Board of the Eni Foundation, Member of the Board of UNI andMember of the Executive Committee of Eurogas.

**Angelo Fanelli** Born in Rome in 1952. He has a degree inMechanical Engineering at the University La Sapienza in Rome.After gaining experience at other companies, he joined the EniGroup in 1981, and in the first seven years held"field" positions in the Extra-network and Networkmarkets as Technical Assistant, Lubricants and Sales Promoter onthe Motorway Network. From 1988 to 1993 he was Head of theBologna and Florence sales areas. From 1994 to 2004 he held anumber of positions in the Network sector. He was appointed Headof Road Network Management, Head of the Ordinary Network andsubsequently Head of Business Network Italy and Head of the AgipRoad Transport Division, before becoming Head of Retail Businessat the R&M Division. From 2003 to 2004 he was Chairman andManaging Director of AgipRete SpA. In 2004 he was appointedCommercial Director Italy, a job he held until 2005 when he tookup the position of Head of Logistics at the Genoa headquarters.In 2006 he was appointed Commercial Director (Executive VicePresident) of the Refining & Marketing. Since 2008 he hasbeen a member of the board of Europia in Brussels. On April 6,2010 he was appointed Chief Operating Officer of Eni SpA –Refining & Marketing.

**Alessandro Bernini** Born in 1960 in Borgonuovo ValTidone, in the Province of Piacenza, Italy. He started his careerin 1979 at Neutra Revisioni SaS, based in Milan, first as JuniorAccountant in the Auditing Activities Department then asAccountant in Charge. In 1981, he joined Ernst & Youngbecoming thereafter Senior, Supervisor and Manager. On January 1,1995 he was appointed Partner of the Company and CharteredAccountant Manager for the Areas of Piacenza, Parma and Cremonaand Technical Manager for the branch based in Brescia. In thesame period he was also engaged as a lecturer for post graduatemaster’s degree courses at the universities of Pavia andParma. On the September 1, 1996 he joined the Eni Group asAdministration Department Manager for Saipem SpA. In 2006 he wasappointed Group Chief Financial Officer for Saipem SpA. He hascovered executive managerial roles in many important companies ofthe Saipem Group. From August 1, 2008 he is Chief FinancialOfficer of the Eni Group.

**Massimo Mantovani** Born in Milan in 1963. He has adegree in Law and a Master in Law (LLM) at the University ofLondon. He is registered to practice law in Italy and in Englandas solicitor. For about 5 years he worked for a number of lawfirms in Milan and London before joining the legal department ofSnam SpA in 1993. In October 2005 he was appointed Legal AffairsSenior Executive Vice President of Eni SpA after being legaldirector of the Gas & Power Division of Eni. Since 2005 hehas been a member of the Board of Directors of Snam Rete Gas SpAand is a member of the Eni Watch Structure of Eni SpA.

**Rita Marino** Born in 1964. She has been Chief InternalAuditor since July 2005 and Officer in charge of internal controlsince March 2007, and is a member of the Eni Watch Structure andSecretary of the Eni Internal Control Committee8.After gaduating in Economics and Business in 1987 at the LUISSUniversity in Rome, she worked in Stet and then in Telecom Italiacarrying out several managerial assignments in the Planning andControl Department. She has acquired extensive experience in themerger and acquisition activity, managing several importantcorporate transactions. In March 2003 she started working forEnel where she was Head of the Strategy, Control and ProcurementProcesses Area as well as Head of the Corporate Procurement. Shewas also Chief Operating Officer in a company of the Enel Groupand member of the board of several companies of Telecom ItaliaGroup and Enel Group. 

**Marco Petracchini** Born in Rome in 1964. He graduatedcum laude in Economics at the University La Sapienza in 1989, inRome. After graduation, he was hired by Esso Italiana where heheld a number of positions in the IT, finance and auditingsectors. He joined Eni in 1999, where he was rapidly promoted tothe Internal Audit Department. Since January 2011 he has beenEni’s Executive Vice President of the Internal AuditDepartment Officer in charge of internal control function. He isalso a member of the Control Body and Secretary of the InternalControl Committee of Eni SpA. He holds internationalqualifications, including that of Certified Internal Auditor(CIA), awarded by the Institute of Internal Auditors with whichhe also gained an honorable mention, and Certified Fraud Examiner(CFE), awarded by the Association of Certified Fraud Examiners.

**Stefano Lucchini** Born in Rome in 1962. He has a degreein Economics at the LUISS University in Rome. His first job wasin the research department at Montedison. After a period asassistant to the President of the Energy and Commerce Commissionof the U.S. Congress in Washington D.C., he was director ofcommunications at Montedison USA in New York. Returning to Italyin 1993, he was responsible for financial communications andinvestor relations for the Gruppo Ferruzzi Montedison. He joinedEnel in 1997, initially in financial communications (where heoversaw the company’s IPO) and subsequently as thegroup’s head of external relations. He has also been thehead of external relations for Confindustria, the Italianemployers’ federation. In June 2002 he was appointed 

----

| (8) |    | She held        these offices until January 2011. |
|-----|--------------|---------------------------------------------------|

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head of external relations for the Banca Intesa Group. SinceJuly 2005 he has been Senior Executive Vice President of PublicAffairs and Communication Department for the Eni Group. Heteaches at the Advanced School of Journalism at the CatholicUniversity of Milan, for which he is also a member of theevaluation committee. He has been a member of the Board ofDirectors of AGI (the second Italian newswire company) since2005. He is also a Commendatore della Repubblica Italiana and aSilver Medallist of the Italian Red Cross. Since 2007 he has beena member of the supervisory Board of Confindustria and theexecutive board of UPA. He is also a member of the boards ofCensis, the Fondazione Eni Enrico Mattei (FEEM) and the EniFoundation. He is a Member of the Advisory Board MBA ProgramLUISS and a Member of the Committee of Guarantors for thecelebrations of the 150th Anniversary of ItalianUnification. He is a visiting fellow of Oxford University andPresident of the Benedict XVI pro Matrimonio et FamiliaFoundation.

**Umberto Vergine** Born in Milan in 1957. He is aChartered Civil Engineer from Politecnico of Milan and joined Eniin 1984. Having began his career as a petroleum engineer, heworked in Norway, Angola and Libya, and then as ProductionManager in the Crema District in Italy until 1993. He haspreviously covered various leading positions overseas, managingdifferent exploration and production projects for Eni’scompanies. Between 1996 and 2001 he was District Manager of AgipUK in Aberdeen, District General Manager of Nigerian Agip Oil Coin Port Harcourt and General Manager of Petrobel Company inEgypt. In 2001, after the acquisition, he was Managing Directorof Lasmo Venezuela in Caracas and at the end of 2002, he wasappointed Managing Director of Ieoc in Cairo. Returned to Italyin 2004, before his current position, he held in Eni’sExploration and Production Division the responsibilities ofSenior Vice President for North Sea, Americas, Russia, Far Eastand Pacific, Senior Vice President of Technologies &Services, and Executive Vice President for South Europe, CentralAsia, Far East and Pacific. Since April 2010 he has been ofSenior Executive Vice President of Studies and Researches.

**Salvatore Sardo** Born in 1952. Chief CorporateOperations Officer of Eni SpA since November 2008. Graduated inEconomics at University of Torino. From 1976 to 1981 at Coopers& Lybrand as auditor, reaching the position of Supervisor.From 1981 at Stet, head of management control for manufacturing.Co-Central Director in 1991 and Central Director for Planning andControl. Nominated in 1997 Deputy General Manager for Finance andControl at Telecom Italia. From 1998 to June 2001, President ofSeat Pagine Gialle SpA. From 1999 Operational Head of CompartoImmobiliare di Gruppo. President of EMSA, President and ManagingDirector of EMSA Servizi and President and Managing Director ofIMMSI, as well as Executive President of TELIMM, IMSER andTelemaco. From 2001 Head of the Real Estate and General Servicesbusiness unit at Telecom Italia. From 2003 Head of Procurement,Services and Security of Enel Group. From 2005 Director of HumanResources and Business Services at Eni SpA, also assuringguidance and control of the Information & CommunicationTechnology Unit and the company EniServizi.

**Roberto Ulissi** Born in Rome in 1962. He is a lawyer.After several years as a lawyer at the Bank of Italy, in 1998 hewas appointed General Manager at the Ministry of Economy andFinance, head of the "Banking and Finance System and LegalAffairs Department". He was a director of Telecom Italia,Ferrovie dello Stato, Alitalia, Fincantieri and a governmentrepresentative on the Governing Council of the Bank of Italy. Hewas also a member of numerous Italian and European commissionsrepresenting the Ministry of Economy and Finance, including, at anational level, the Commission for the Reform of Corporate Lawand, at EU level, the Financial Services Policy Group, theBanking Advisory Committee, the European Banking Committee, theEuropean Securities Committee, and the Financial ServicesCommittee. He was also special professor of banking law at theUniversity of Cassino. He is a Grande Ufficiale della RepubblicaItaliana. Since 2006 he has been Corporate Affairs and GovernanceSenior Executive Vice President at Eni and a member of the boardof Eni International BV. He also holds the office of CompanySecretary of Eni.

**Raffaella Leone** In Eni since 2005, she is the ExecutiveAssistant to the CEO of Eni. She is President of Servizi AereiSpA, Vice President of Eni Foundation, a member of the Board ofDirectors of the news agency AGI (Agenzia Giornalistica Italia)and of the Board of Directors of the Fondazione Eni EnricoMattei. Previously, she was the Executive Assistant to the CEOsof Enel (from May 2002 to 2005) and of Pilkington (from 1996 toMay 2002).

 

**Compensation**

Board members’ emoluments are determined by theShareholders’ Meeting, while the emoluments of the Chairmanand CEO, in relation to the powers entrusted to them, aredetermined by the Board of Directors considering relevantproposals made by the Compensation Committee and afterconsultation with the Board of Statutory Auditors.

Main elements of the compensation of the Chairman, the CEO,other Board members and Eni’s three General Managers aredescribed below.

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CHAIRMANThe compensation of the Chairman of the Board of Directors hasbeen resolved by Eni’s Shareholders’ Meeting andincludes:

| (a) |   | a base salary of euro        265,000 and reimbursement of out of pocket expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | a bonus which amount is        determined in accordance with the performance of Eni        shares in the reference year as compared with the        performance of the seven largest international oil        companies for market capitalization, taking account of        the dividend paid. This bonus will amount to euro 80,000        or euro 40,000, depending on whether the performance of        Eni shares is rated first or second, or third or fourth        in the reference year, respectively. No bonus is paid in        case Eni scores a position lower than the fourth one. In        2009, Eni rated fifth and consequently no bonus was paid        in 2010. |

With regard to the powers delegated to the Chairman, the Boardof Directors determined further compensation, as follows:

| (a) |   | an annual emolument of euro        500,000; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | an annual performance bonus        based on the achievements of the Company’s target        determined in the same way as for the CEO (see below). In        2010, based on 2009 Eni’s results, a bonus equal to        112% of the target level was determined, within an        interval ranging from 85% to 130% of said target level.        The target level of the bonus is 60% of the annual        emolument. In 2010, this bonus amounted to euro 336,000,        corresponding to 67% of the annual emolument. |

Compensation of the Chairman also includes an insuranceagainst death or permanent inability caused by injury or sicknessin the exercise of his duties or under certain othercircumstances as stipulated collectively for all managers ofItalian companies producing goods and services. In particular, aspecific insurance policy has been underwritten which guaranteeseuro 500,000 to survivors.

 

CEOCompensation for the CEO has been resolved by the Board ofDirectors of Eni in connection with his position both as CEO andas General Manager of the parent company Eni SpA.

As General Manager of Eni SpA, his terms of employment areregulated by the "Contratto collettivo nazionale di lavoroper i dirigenti di aziende produttrici di beni e servizi"(the Italian national collective contract for managers ofcompanies producing goods and services), as well as by anyinternal agreement stipulated by the representatives of managersand Eni SpA.

The CEO compensation includes the following items:

| (a) |   | an annual fixed amount of        euro 1,430,000, including a base salary of euro 1,000,000        for the services as General Manager and an emolument of        euro 430,000 for the services as CEO;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | an annual performance bonus        based on the achievement of the Company targets. These        targets are approved by the Board of Directors on        proposal of the Compensation Committee and defined        consistently with the targets of the strategic plan and        yearly budget. In 2009, said targets included financial        performance (with a 30% weight), divisional operating        performance (30%), a set level of adjusted EBITDA        (earnings before interest, taxes, depreciation and        amortization) (30% weight) and reduction of        Company’s costs (10%). Results achieved have been        assessed assuming a constant trading environment and have        been verified by the Compensation Committee and approved        by the Board of Directors. The target and maximum amount        of this bonus corresponds respectively to 110% and 155%        of the fixed amount under a) above. In 2010, based on        2009 Eni’s results, a bonus equal to 112% of the        target level was determined, within an interval ranging        from 85% to 130% and a bonus of euro 1,830,000 was paid;                                                                                                                                                                                                                                                                             |
| (c) |   | a long-term incentive under        the incentive scheme as approved by the Board of        Directors on March 25, 2009 as proposed by the        Compensation Committee. This incentive scheme provides a        deferred monetary incentive with a target level        corresponding to 55% of the fixed amount under a) above.        The bonus will vest over the next three years upon        achievement of certain preset Company annual targets in        terms of EBITDA for the reference three-year period.        Vested amounts will range from 0 to 170% of the award.        The 2010 bonus that was awarded to the CEO amounted to        euro 786,500;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (d) |   | taking into account that on        the same occasion, the Board of Directors decided to        discontinue the stock option plan, based on the        resolution of the Compensation Committee, and in force of        the contractual obligation to the CEO of adopting an        alternative incentive scheme with same economic effects,        in order to replace and compensate for the discontinued        stock option incentive the CEO was awarded a further        deferred monetary bonus whose value and characteristics        are comparable with those of the former plan. This bonus        will vest over the next three years upon achievement of        certain performance targets in terms of variation of the        Adjusted Net Profit + DD&A (Depletion Depreciation        & Amortization) as compared to that of the other six        largest international oil companies for market        capitalization for the reference three-year period. The        2010 bonus that was awarded to the CEO amounted to euro        2,500,960 and will be paid in 2013 according to a        percentage ranging from 0 to 130% of the awarded amount        in relation to the performance achieved in the reference        three-year period. In 2010, the 2007 long-term incentive        scheme approved in the same year by the Board of        Directors as proposed by the Compensation Committee        vested. |

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|   |   | This incentive scheme        provided: (i) a deferred monetary incentive, linked to        the achievement of certain Company’s financial        performance annual targets in terms of EBITDA; and (ii) a        stock option awards which vested upon achievement of        certain performance targets of the Eni share measured in        terms of Total Shareholder Return (TSR) that considers        both the stock appreciation and the dividend, as compared        to that achieved by the other six largest international        oil companies for market capitalization over the        three-year vesting period. Under this scheme, based on        results achieved in the 2007-2009 three-year period, the        CEO received: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | (i)  |   | an amount equal to 143% of        the deferred monetary incentive that was granted in 2007        with a target level corresponding to 55% of the fixed        amount under a) above. In 2007, this award was accrued        for euro 1,125,000; and                                                                   |
|--------|--------|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | (ii) |   | an award of stock options        corresponding to 42% of options granted in 2007 (573,000        rights with a strike price of euro 27.451 per share        corresponding to the arithmetic average of official        prices registered on the Mercato Telematico Azionario in        the month preceding the grant); |

| (e) |   | severance payments as        regulated by Italian laws, which consist of a lump sum to        be paid to the employee upon retirement. To this end, the        Company recognizes yearly accruals computed by dividing        the total remuneration earned as General Manager (base        salary, bonuses and stock compensation) by 13.5. The        amounts accrued are revaluated yearly at a fixed rate of        1.5% plus the 75% of the yearly official consumer price        index increase;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (f) |   | as an integration to the        severance payment described above, should the employment        contract of Mr. Scaroni as General Manager of Eni SpA be        terminated upon expiry of the term of his office as CEO        or upon earlier termination of such office, he will be        entitled to receive a payment of euro 3,200,000 plus an        amount corresponding to the average performance bonus        earned in the three-year period 2008-2010, in lieu of        notice thus waiving both parties from any obligation        related to notice. This amount will not be paid if the        termination of office meets the requirement of due cause        as per Article 2119 of the Italian Civil Code, in case of        death and in case of resignation from office other than        as the result of a reduction in the powers currently        attributed to the CEO. Furthermore, upon expiry of the        contract as employee of Eni, the CEO in his capacity as        General Manager of the parent company is entitled to        receive an indemnity that is accrued along the service        period by taking into account social security        contribution rates and post-retirement benefit        computations applied to the CEO annual emolument and 50%        of the maximum bonuses earned as a Director. A provision        of euro 252,519.90 was accrued in 2010; |
| (g) |   | competition clause: the CEO        agrees not to be engaged, on his own account and        directly, in any business that may be in competition with        the businesses of Eni, as per its By-laws, in Italy,        Europe and North America for a year after termination of        office. Based on this arrangement, Eni will pay a fee        corresponding to euro 2,219,000. As a consequence of any        breach of this clause, the CEO would lose the right to        such fee and reimburse any amount already paid, and shall        pay to Eni damages in an amount agreed among the parties        to correspond to twice such non-competition fee;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (h) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS (the Italian state social security        entity) to all Italian workers. In addition, the CEO is        included in an additional pension scheme under the form        of an Eni Group pension fund agreed collectively by Eni        and Eni managers which provides integration, in the form        of a lump sum payment or perpetuity, to the pension paid        by the State. This integration is proportional to        contributions to the fund made by both the manager and        the Company in equal amounts. The integration is awarded        to the manager when eligible for the payment of the        pension from the State, provided that a minimum time        period has elapsed according to the Fund By-laws. An        agreement signed on November 9, 2009, established that        the Company’s and the manager’s payment to this        fund amounts to 4% (that could be increased up to 4.5%)        of total emoluments earned by the CEO in his position as        General Manager (i.e. the aggregate of the annual salary        and bonuses up to a maximum of euro 200,000);                                                                                                                                                                                  |
| (i) |   | like all other Eni managers,        Mr. Scaroni is entitled to participate in a health        insurance fund financed by Eni managers and Eni which        provides reimbursement of certain medical expenses on the        basis of rules and parameters as provided by the        Fund’s By-laws; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (j) |   | insurance against death or        permanent inability caused by injury or disease in the        exercise of his duties or under certain other        circumstances as stipulated collectively for all managers        of Italian manufacturing companies. In particular a        specific insurance policy has been underwritten on behalf        of Mr. Scaroni which guarantees euro 7.5 million to        beneficiaries in case of death or disability, however        determined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

> 
 

MEMBERS OF THE BOARD OF DIRECTORSThe compensation of members of the Board of Directors has beendetermined by Eni’s Shareholders’ Meeting and includes:

| (a) |   | an annual emolument of euro        115,000 and reimbursement of out of pocket expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | a bonus determined in        accordance with the performance of the Eni share in the        reference year as compared with the performance of the        seven largest international oil companies for market        capitalization, taking account of the dividend paid. This        bonus will amount to euro 20,000 or euro 10,000 depending        on whether the performance of Eni shares is rated first        or second, or third or fourth in the reference year,        respectively. No bonus is paid in case Eni scores a        position lower than the fourth one. In 2009, Eni rated        fifth and consequently no bonus was paid in 2010. |

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The Board of Directors in the meeting of June 11, 2008,reasserting its previous decision of 2006, as proposed by theCompensation Committee and advised by the Board of StatutoryAuditors, confirmed the additional element of remuneration forthe Board members holding positions in Board’s committees,with the exclusion of the Chairman and CEO. Said fee amounts toeuro 30,000 and euro 20,000 for the position of chairman of acommittee and of member of a committee, respectively. This amountdecreases to euro 27,000 and euro 18,000 in case a member holdspositions in more than one committee.

 

GENERAL MANAGERSThe terms of employment of the General Managers of Eni’sDivisions are regulated by the "Contratto collettivonazionale di lavoro per i dirigenti di aziende produttrici dibeni e servizi" (the Italian national collective contractfor managers of companies producing goods and services), as wellas by any internal agreement stipulated by the representatives ofmanagers and Eni SpA. The General Managers of Divisions may beappointed as members of the Board of Directors of Enisubsidiaries and affiliates; compensation deriving from suchappointments as provided for by Article 2389 of the Italian CivilCode is to be repaid to Eni as it is included in theirremuneration under section a) below.

Their remuneration includes:

| (a) |   | a base salary, defined        considering the position held and their specific        responsibilities, with reference to appropriate market        levels as benchmarked against national and international        companies of comparable size, complexity and scope in the        oil and gas, industrial and service sectors. Base        salaries are reviewed and adjusted on a yearly basis        considering individual performance and career        progression;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | a performance bonus paid        yearly, based on the achievement of specific financial,        operational and strategic targets and of individual        performance goals pertaining to each business units        defined consistently with the Company’s targets in        the strategic plan and yearly budget. The target level of        the bonus corresponds to 60% of the base salary;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (c) |   | a long-term incentives in        the form of a deferred monetary bonus linked to the        achievement of certain Company’s financial        performance annual targets in terms of EBITDA, according        to the same scheme as the CEO. Under this scheme the        three General Managers have received in 2010 a yearly        award of the deferred monetary bonus of 38% of the base        salary;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (d) |   | a new long-term monetary        incentive scheme approved in 2010 by the Board of        Directors and addressed to critical managerial resources        in order to support achievement of better returns than        those of the main competitors over the long-term. The        scheme was intended to replace a stock option plan that        was discontinued in 2009. This plan provides for award of        a base incentive to be paid after a vesting period of        three years. The amount that will be actually paid in a        percentage ranging from 0 to 130% of the base amount, is        subject to achievement of a performance parameter        represented by Adjusted Net Profit + Depletion,        Depreciation & Amortization (DD&A) recorded in        the 2010-2012 three-year period as benchmarked to the        performance achieved by a panel of the largest        international oil companies for market capitalization.        Under this scheme the three General Managers have        received in 2010 a yearly award of the long-term monetary        bonus of 48 % of the base salary; |
| (e) |   | a severance payment as        regulated by Italian laws, which consists of a lump sum        to be paid to the employee upon retirement. To this end,        the Company recognizes yearly accruals computed by        dividing the yearly remuneration (base salary, bonuses        and stock compensation) by 13.5. These amounts are        revaluated yearly at the rate of 1.5% plus the 75% of the        official yearly consumer price index increase;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (f) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS to all Italian workers. In addition, the        General Managers are included in the additional pension        scheme of Eni managers which provides an integration to        the public pension. For further details see section g) of        the description of compensation of the CEO;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (g) |   | like all other Eni managers,        they are entitled to participate in a health insurance        Fund financed by Eni managers and Eni which provides        reimbursement of certain medical expenses on the basis of        rules and parameters as provided for by the Fund’s        By-laws; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (h) |   | an insurance against death        or permanent inability caused by injury or disease in the        exercise of his duties or under certain other        circumstances as stipulated collectively for all managers        of Italian manufacturing companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

With the exception of the CEO as described above, none of theDirectors of Eni has service contracts with the Company or any ofits subsidiaries providing for benefits upon termination ofemployment.

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Pursuant to Article 78 of Consob Decision No. 11971 of May 14,1999, and subsequent modifications, including the latest DecisionDEM/11012984 of February 24, 2011, the table below reportsindividual remuneration earned in 2010 by each member of theBoard of Directors, Statutory Auditors and Division ChiefOperating Officers. The overall amount earned by other managerswith strategic responsibilities is reported too. Following thementioned Consob Decision, the table reports the total amount ofemoluments accrued in the 2010 financial statements, withseparate evidence of amounts accrued in 2010 and yet to be paidand amount accrued in previous reporting periods which have beenpaid in 2010.

| Name |   | Position |   | Term of office |   | Expiry date of the position        (a) |   | Emoluments for service at        Eni SpA |   | Committees membership        emoluments |   | Non-monetary benefits |   | Bonuses and other        incentives |   | Salaries and other        remuneration |   | Emoluments accrued in 2010,        total |   | Emoluments accrued in 2010,        yet to be paid, total |   | Emoluments accrued in        previous years paid in 2010, total |   | Emoluments paid in 2010,        total |
|------|--------|----------|--------|----------------|--------|----------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|-----------------------|--------|-------------------------------------|--------|----------------------------------------|--------|------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------|--------|---------------------------------------|
|      |   |          |   |                |   |                                        |   |                                          |   |                                         |   |                       |   |                                     |   |                                        |   |                                          |   |                                                          |   |                                                                 |   |                                       |

|    |    |    |    |    |    |    |    | **(euro thousand)** |
|--------------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|---------------------|
|         |         |         |         |         |         |         |         |                     |

| **Board of Directors**                                               |   |                            |   |        |   |    |   |      |      |   |    |   |   |   |      |      |   |      |      |   |       |   |    |   |    |   |       |
|----------------------------------------------------------------------|--------|---------------------------------|--------|-------------|--------|---------|--------|-----------|-----------|--------|---------|--------|--------|--------|-----------|-----------|--------|-----------|-----------|--------|------------|--------|---------|--------|---------|--------|------------|
| Roberto        Poli                                                  |   | Chairman                        |   | 01.01-12.31 |   | 04.2011 |   | 765       |      |   |    |   |   |   | 336       |      |   |      |      |   | 1,101      |   |    |   |    |   | 1,101      |
| Paolo Scaroni                                                        |   | CEO         and General Manager |   | 01.01-12.31 |   | 04.2011 |   | 430       |  (b) |   |    |   | 3      |   | 2,955     |  (c) |   | 1,032     |      |   | 4,420      |   |    |   |    |   | 4,420      |
| Alberto        Clô                                              |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 45      |   |   |   |      |      |   |      |      |   | 160        |   | 23      |   | 45      |   | 182        |
| Paolo Andrea Colombo                                                 |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 36      |   |   |   |      |      |   |      |      |   | 151        |   |    |   | 94      |   | 245        |
| Paolo        Marchioni                                               |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 20      |   |   |   |      |      |   |      |      |   | 135        |   | 39      |   | 49      |   | 145        |
| Marco Reboa                                                          |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 45      |   |   |   |      |      |   |      |      |   | 160        |   | 160     |   | 160     |   | 160        |
| Mario        Resca                                                   |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 45      |   |   |   |      |      |   |      |      |   | 160        |   | 23      |   | 45      |   | 182        |
| Pierluigi Scibetta                                                   |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 36      |   |   |   |      |      |   |      |      |   | 151        |   |    |   | 94      |   | 245        |
| Francesco        Taranto                                             |   | Director                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   | 36      |   |   |   |      |      |   |      |      |   | 151        |   | 18      |   | 36      |   | 169        |
| **Board         of Statutory Auditors**                              |   |                            |   |        |   |    |   |      |      |   |    |   |   |   |      |      |   |      |      |   |       |   |    |   |    |   |       |
| Ugo        Marinelli                                                 |   | Chairman                        |   | 01.01-12.31 |   | 04.2011 |   | 115       |      |   |    |   |   |   |      |      |   |      |      |   | 115        |   | 57      |   | 57      |   | 115        |
| Roberto Ferranti                                                     |   | Auditor                         |   | 01.01-12.31 |   | 04.2011 |   | 80        |  (d) |   |    |   |   |   |      |      |   |      |      |   | 80         |   | 40      |   | 40      |   | 80         |
| Luigi        Mandolesi                                               |   | Auditor                         |   | 01.01-12.31 |   | 04.2011 |   | 80        |      |   |    |   |   |   |      |      |   |      |      |   | 80         |   | 40      |   | 40      |   | 80         |
| Tiziano Onesti                                                       |   | Auditor                         |   | 01.01-12.31 |   | 04.2011 |   | 80        |      |   |    |   |   |   |      |      |   | 39        |  (e) |   | 119        |   | 79      |   | 79      |   | 119        |
| Giorgio        Silva                                                 |   | Auditor                         |   | 01.01-12.31 |   | 04.2011 |   | 80        |      |   |    |   |   |   |      |      |   |      |      |   | 80         |   | 40      |   | 80      |   | 120        |
| **Chief Operating Officers**                                         |   |                            |   |        |   |    |   |      |      |   |    |   |   |   |      |      |   |      |      |   |       |   |    |   |    |   |       |
| Claudio        Descalzi                                              |   | Exploration & Production    |   | 01.01-12.31 |   |    |   |      |      |   |    |   | 2      |   | 886       |  (f) |   | 1,267     |  (g) |   | 2,155      |   |    |   |    |   | 2,155      |
| Domenico Dispenza                                                    |   | Gas & Power                 |   | 01.01-12.31 |   |    |   |      |      |   |    |   | 1      |   | 836       |  (h) |   | 759       |      |   | 1,596      |   |    |   |    |   | 1,596      |
| Angelo        Caridi                                                 |   | Refining & Marketing        |   | 01.01-04.05 |   |    |   |      |      |   |    |   |   |   | 374       |      |   | 176       |  (i) |   | 550        |   |    |   |    |   | 550        |
| Angelo Fanelli                                                       |   | Refining & Marketing        |   | 04.06-12.31 |   |    |   |      |      |   |    |   | 1      |   | 116       |  (j) |   | 376       |  (k) |   | 493        |   |    |   |    |   | 493        |
| **Other        managers         with strategic responsibilities**(l) |   |                            |   |        |   |    |   |      |      |   |    |   | 13     |   | 4,127     |  (m) |   | 4,182     |      |   | 8,322      |   |    |   |    |   | 8,322      |
|                                                                 |   |                            |   |        |   |    |   | **2,435** |      |   | **263** |   | **20** |   | **9,630** |      |   | **7,831** |      |   | **20,179** |   | **519** |   | **819** |   | **20,479** |
|                                                                      |   |                                 |   |             |   |         |   |           |           |   |         |   |        |   |           |           |   |           |           |   |            |   |         |   |         |   |            |

----

| (a) | i | The term of        position expires with the Shareholders’ Meeting        approving the financial statements for the year ended        December 31, 2010.                                                                                             |
|-----|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | i | The amount        includes the emolument approved by the Shareholders’        Meeting of June 10, 2008, for the position as Director of        the Board.                                                                                             |
| (c) | i | The amount        includes the payment of euro 1,125 thousand relating the        monetary deferred incentive granted in 2007.                                                                                                                             |
| (d) | i | Compensation        for the service is paid to the Ministry of Economy and        Finance.                                                                                                                                                                 |
| (e) | i | Includes        emoluments for the service as Chairman of the Board of        Statutory Auditors of AGI and Servizi Aerei.                                                                                                                                 |
| (f) | i | The amount        includes the payment of euro 237 thousand relating to the        deferred monetary incentive granted in 2007.                                                                                                                            |
| (g) | i | The amount        includes the emolument of euro 520 thousand for the        position as Chairman of Eni UK.                                                                                                                                               |
| (h) | i | The amount        includes the payment of euro 383 thousand relating to the        deferred monetary incentive granted in 2007.                                                                                                                            |
| (i) | i | Pro-rata        emolument related to the actual term of position.                                                                                                                                                                                          |
| (j) | i | Amount        related to deferred monetary incentive granted in 2007.                                                                                                                                                                                      |
| (k) | i | Pro-rata        emolument related to the actual term of position.                                                                                                                                                                                          |
| (l) | i | Managers who        have been members of the Eni’s Management Committee,        with the CEO and the General Managers of Eni’s        Divisions, and Eni Senior Executive Vice Presidents who        report directly to the CEO (nine managers). |
| (m) | i | The amount        includes the payment of euro 1,297 thousand for deferred        monetary incentive granted in 2007.                                                                                                                                      |

In details:

| • |   | the column "Emoluments        for the service at Eni SpA" reports fixed emoluments        paid to the Chairman and to the CEO, the fixed emoluments        of non-executive directors, as well as fixed emoluments        paid to the Chairman of the Board of Statutory Auditors        and to the Statutory Auditors in charge. Emolument        schemes do not contemplate any attendance allowances,        expense reimbursement as well as any profit sharing;                                                                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the column "Committees        membership emoluments" reports emoluments paid to        directors who are appointed to the Committees established        by the Board of Directors;                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | the column        "Non-monetary benefits" reports fringe        benefits, including insurance policies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | the column "Bonuses and        other incentives" reports the variable portion of        emoluments due to the Directors, the Chairman of the        Board and the CEO. It also includes the variable part of        the salaries paid to the CEO for his office as General        Manager, of the salaries paid to the Chief Operating        Officers of Eni’s Divisions and other managers with        strategic responsibilities. In this table, the deferred        monetary incentive and the long-term monetary incentive        are reported only in the vesting year in which the        granted bonus is paid; and |
| • |   | the column "Salaries        and other remuneration" reports base salaries and        other elements associated to the base salary paid to the        CEO and General Manager, the Chief Operating Officers of        Eni’s Divisions and other managers with strategic        responsibilities. Also emoluments for offices held in        Eni’s subsidiaries, as                                                                                                                                                                                                                                                      |

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|   |   | well as indemnities paid        upon termination of the employment contract are reported        within such column. Emoluments paid for positions held on        the Board of Statutory Auditors in Eni’s        subsidiaries are also reported. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Total compensation accrued in the year 2010 pertaining to allof board members amounted to euro 9.7 million; it amounted toeuro 469,000 in the case of the Statutory Auditors. Such amountsinclude, in addition to each item of emolument reported in thetable above, amounts accrued in the year for pension benefits,social security contributions and other elements of theremuneration associated with roles performed, which represent acost for the Company.

For the year ended December 31, 2010, remuneration of personsin key positions in planning, direction and control functions ofEni Group companies, including executive and non-executiveDirectors, Chief Operating Officers and other managers withstrategic responsibilities amounted to euro 33 million and wasaccrued in Eni’s Consolidated Financial Statements for theyear ended December 31, 2010. The break-down is as follows:

|   | **2010**           |
|--------|--------------------|
|   |                    |
|   | **(euro million)** |

| Fees and salaries                      |   | 20     |
|----------------------------------------|--------|--------|
| Post        employment benefits        |   | 1      |
| Other long-term benefits               |   | 10     |
| Fair value        stock grants/options |   | 2      |
|                                   |   | **33** |
|                                   |   |        |

The above amounts include salaries, fees for attendingmeetings, lump-sum amounts paid in lieu of expensereimbursements, stock-based compensation and other deferredincentive bonuses, health and pension contributions and amountsaccrued to the reserve for employee termination indemnities,which is used to pay severance pay as required by Italian law toemployees upon termination of employment. The members of theBoard of Directors in their capacity as such are not entitled toreceive such severance pay. As of December 31, 2010, the totalamount accrued to the reserve for employee terminationindemnities with respect to members of the Board of Directors whowere also employees of Eni, the three Chief Operating Officers ofEni’s Divisions and Eni’s senior managers, was euro1,763 thousand.

The break-down of this amount is presented in the table below:

| **Name** | **(euro thousand)** |
|----------|---------------------|
|     |                     |

| Paolo Scaroni           |   | CEO and General Manager of Eni                         |   | 171       |
|-------------------------|--------|--------------------------------------------------------|--------|-----------|
| Claudio        Descalzi |   | Chief        Operating Officer of the E&P Division |   | 312       |
| Domenico Dispenza       |   | Chief Operating Officer of the G&P Division        |   | 437       |
| Angelo        Fanelli   |   | Chief        Operating Officer of the R&M Division |   | 225       |
| Senior managers (a)     |   |                                                   |   | 618       |
|                    |   |                                                   |   |           |
|                    |   |                                                   |   | **1,763** |
|                    |   |                                                   |   |           |

----

| (a) |   | No. 8        managers. |
|-----|--------|------------------------|

 

> 
***Deferred Monetary Incentive***

The deferred bonus scheme approved for the 2009-2011three-year period provides for the award of a basic monetarybonus to be paid after three years from grant according to avariable amount equal to a percentage ranging from 0 to 170%subject to achievement of a preset level of profitability interms of EBITDA achieved in the reference three-year period asapproved by the Board of Directors. The recipient or his/herheirs will preserve the right to participate in this scheme indefinite measure with reference to the time period which elapsesbetween grant and the possible occurrence of any of the followingevents: (i) termination of the employment contract by mutualconsent; (ii) death of the recipient; (iii) loss of control byEni SpA of the subsidiary where the recipient is employed; and(iv) divestment to a non-controlled entity of the subsidiary orthe business where the recipient is employed. In case ofunilateral termination of the employment contract, the right tothe incentive expires. The following table sets out the basicbonus awarded in the year 2010 to the CEO and to the ChiefOperating Officers of Eni’s Divisions, and the total amountawarded to the Company’s managers with strategicresponsibilities.

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| **Name** | **Deferred bonus awarded** |
|----------|----------------------------|
|     |                            |
|     | **(euro thousand)**        |

| Paolo Scaroni                                      |   | CEO and General Manager of Eni                         |   | 787   |
|----------------------------------------------------|--------|--------------------------------------------------------|--------|-------|
| Claudio        Descalzi                            |   | Chief        Operating Officer of the E&P Division |   | 275   |
| Domenico Dispenza                                  |   | Chief Operating Officer of the G&P Division        |   | 281   |
| Angelo        Fanelli                              |   | Chief        Operating Officer of the R&M Division |   | 194   |
| Other managers with strategic responsibilities (a) |   |                                                   |   | 1,223 |
|                                               |   |                                                   |   |       |

----

| (a) |   | No. 9        managers. |
|-----|--------|------------------------|

 

> 
***Long-term Monetary Incentive***

Eni’s Board of Directors approved a new long-termmonetary incentive scheme addressed to critical managerialresources in order to support achievement of better returns thanthose of the Company’s main competitors over the long-term.Managers involved in this scheme are in positions which aredirectly linked to the Company’ results or are otherwise ofstrategic interest to the Company. The scheme was intended toreplace a stock-based compensation plan that was discontinued in2009.

This plan provides for award of a base incentive to be paidafter a vesting period of three years. The amount that will beactually paid is a percentage ranging from 0 to 130% of the baseamount, and is subject to achievement of a performance parameterrepresented by a measure of Adjusted Net Profit + Depletion,Depreciation & Amortization (DD&A) recorded in the2010-2012 three-year period as benchmarked to the performanceachieved by a panel of the largest international oil companies bymarket capitalization. The recipient or his/her heirs willpreserve the right to participate in this scheme in definitemeasure with reference to the time period which elapses betweengrant and the possible occurrence of any of the following events:(i) termination of the employment contract by mutual consent;(ii) death of the recipient; (iii) loss of control by Eni SpA ofthe subsidiary where the recipient is employed; and(iv) divestment to a non-controlled entity of the subsidiaryor the business where the recipient is employed. In case ofunilateral termination of the employment contract, the right tothe incentive expires. A similar scheme was approved for the CEOand General Manager. In case of termination of his employmentcontract before the end of the vesting period, the incentive willstill be paid when it vests on the basis of the assessment of theperformance achieved in the reference three-year period. Thefollowing table sets out the bonuses awarded in 2010 to the CEO,the Chief Operating Officers of Eni’s Divisions, and thetotal amount awarded to the Company’s managers withstrategic responsibilities.

| **Name** | **Long-term incentive        awarded** |
|----------|----------------------------------------|
|     |                                        |
|     | **(euro thousand)**                    |

| Paolo Scaroni                                      |   | CEO and General Manager of Eni                         |   | 2,501  |
|----------------------------------------------------|--------|--------------------------------------------------------|--------|--------|
| Claudio        Descalzi                            |   | Chief        Operating Officer of the E&P Division |   | 347    |
| Domenico Dispenza                                  |   | Chief Operating Officer of the G&P Division        |   |   |
| Angelo        Fanelli                              |   | Chief        Operating Officer of the R&M Division |   | 244    |
| Other managers with strategic responsibilities (a) |   |                                                   |   | 1,597  |
|                                               |   |                                                   |   |        |

----

| (a) |   | No. 9        managers. |
|-----|--------|------------------------|

 

> 
***Stock Options***

At December 31, 2010, a total of 15,737,120 options wereoutstanding for the purchase of an equal amount of Eni ordinaryshares with a nominal value of euro 1.00 at an average strikeprice of euro 23.005. The Company discontinued any stock-basedcompensation scheme in 2009; as such, options outstanding as ofthe end of the year pertained to stock options schemes adopted inprevious reporting periods.

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The following table shows the evolution of stock optionactivity in 2009 and 2010.

|   | **2009** |   | **2010** |
|--------|----------|--------|----------|
|   |          |   |          |

|   | **Number of shares** |   | **Weighted average        exercise price**(euro) |   | **Market price**        (a)****(euro) |   | **Number of shares** |   | **Weighted average        exercise price**(euro) |   | **Market price**        (a)****(euro) |
|--------|----------------------|--------|--------------------------------------------------|--------|---------------------------------------|--------|----------------------|--------|--------------------------------------------------|--------|---------------------------------------|
|   |                      |   |                                                  |   |                                       |   |                      |   |                                                  |   |                                       |

| **Options as of January 1**                       |   | **23,557,425** |   | **23.540** |   | **16.556** |   | **19,482,330** |   | **23.576** |   | **17.811** |
|---------------------------------------------------|--------|----------------|--------|------------|--------|------------|--------|----------------|--------|------------|--------|------------|
| New        options granted                        |   |           |   |       |   |       |   |           |   |       |   |       |
| Options exercised in the period                   |   | 2,000          |   | 13.743     |   | 16.207     |   | 88,500         |   | 14.941     |   | 16.048     |
| Options        cancelled in the period            |   | 4,073,095      |   | 23.374     |   | 14.866     |   | 3,656,710      |   | 26.242     |   | 16.918     |
| **Options outstanding as of December 31**         |   | **19,482,330** |   | **23.576** |   | **17.811** |   | **15,737,120** |   | **23.005** |   | **16.398** |
| **of        which exercisable as of December 31** |   | **7,298,155**  |   | **21.843** |   | **17.811** |   | **8,896,125**  |   | **23.362** |   | **16.398** |
|                                              |   |                |   |            |   |            |   |                |   |            |   |            |

----

| (a) |   | Market price        relating to new rights assigned, rights exercised in the        period and rights cancelled in the period correspond to        the average market value (arithmetic average of official        prices recorded on Mercato Telematico Azionario in the        month preceding: (i) the date of grant; (ii) the date of        the recording in the securities account of the managers        to whom the options have been granted; and (iii) the date        of the unilateral termination of employment for rights        cancelled). The market share price of grants outstanding        as of the beginning and the end of the year, is the price        recorded as of December 31. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Pursuant to Article 78 of Consob Decision No. 11971 of May 14,1999, and to its subsequent modifications, the following tablesets out the stock options awarded to the CEO, the ChiefOperating Officers of Eni’s Divisions and to other managerswith strategic responsibilities. As any stock-based compensationscheme was discontinued by the Company in 2009, options pertainedto grants made in previous reporting periods ante 2009. The tableshows also stock options of Directors who held a position in 2010for a fraction of the year.

The following table presents the amount of stock optionsawarded to Eni’s CEO, the three Chief Operating Officers andEni’s senior managers.

|                                                        | **CEO and General Manager        of****Eni** |      | **COO         of E&P Division** |    | **COO        of G&P Division** |    | **COO        of R&M Division** |      | **Other managers with        strategic responsilities**(a) |
|-------------------------------------------------------------|----------------------------------------------|-----------|-------------------------------------|---------|------------------------------------|---------|------------------------------------|-----------|------------------------------------------------------------|
|                                                        |                                              |      |                                     |    |                                    |    |                                    |      |                                                            |
|                                                        | Paolo        Scaroni (b)                     |      | Claudio        Descalzi             |    | Domenico        Dispenza           |    | Angelo        Caridi (c)           |      | Angelo Fanelli (d)                                         |   |   |
|                                                        |                                              |      |                                     |    |                                    |    |                                    |      |                                                            |   |  |
| Options outstanding         at the beginning of the period: |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - number        of option                                   |                                         | 2,226,570 |                                | 223,720 |                               | 315,075 | 142,000                            |  (e) |                                                       | 150,500 | 107,300 |   |   | 114,685 |   | 1,524,375 | 36,000 |  (g) |
| - average exercise price                                    | (euro)                                       | 23.875    |                                | 24.173  |                               | 24.357  | 4.399                              |      |                                                       | 22.534 | 21.588 |   |   | 24.138 |   | 23.777 | 26.521 |   |
| - average        maturity in months                         |                                         | 45        |                                | 46      |                               | 46      | 42                                 |      |                                                       | 53 | 36 |   |   | 46 |   | 46 | 43 |   |
| Options granted during the period:                          |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - number        of options                                  |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - average exercise price                                    | (euro)                                       |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - average        maturity in months                         |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| Options exercised         at the end of the period:         |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - number        of options                                  |                                         |      |                                |    |                               |    |                               |      |                                                       |   | 100,025 |  (f) |   |   |   |   | 30,600 |  (g) |
| - average exercise price                                    | (euro)                                       |      |                                |    |                               |    |                               |      |                                                       |   | 21.229 |   |   |   |   |   | 26.521 |   |
| - average        market price at date of        exercise    | (euro)                                       |      |                                |    |                               |    |                               |      |                                                       |   | 26.683 |   |   |   |   |   | 28.614 |   |
| Options expired during the period:                          |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - number        of options                                  |                                         | 332,340   |                                | 40,890  |                               | 63,800  |                               |      |                                                       | 72,000 | 7,275 |  (f) |   | 20,590 |   | 239,540 | 5,400 |  (g) |
| Options outstanding         at the end of the period:       |                                         |      |                                |    |                               |    |                               |      |                                                       |   |   |   |   |   |   |   |   |   |
| - number        of options                                  |                                         | 1,894,230 |                                | 182,830 |                               | 251,275 | 142,000                            |      |                                                       | 78,500 |   |   |   | 94,095 |   | 1,284,835 |   |   |
| - average exercise price                                    | (euro)                                       | 23.247    |                                | 23.439  |                               | 23.571  | 4.399                              |      |                                                       | 22.528 |   |   |   | 23.413 |   | 23.092 |   |   |
| - average        maturity in months                         |                                         | 33        |                                | 34      |                               | 35      | 30                                 |      |                                                       | 19 |   |   |   | 35 |   | 35 |   |   |
|                                                        |                                         |           |                                |         |                               |         |                                    |           |                                                       |  |  |  |   |  |   |  |  |  |

----

| (a) | i | No. 9        managers.                                                                                                                                                                                                                                                                      |
|-----|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | i | Due to the        underperformance of the Eni share in the three-year        vesting period 2008-2010, 80,500 options expired in 2010        with a strike price of euro 27.451 which were granted to        the CEO in 2007 as integration to the monetary incentive        for that year. |
| (c) | i | In charge        until April 5, 2010.                                                                                                                                                                                                                                                       |
| (d) | i | In charge        from April 6, 2010.                                                                                                                                                                                                                                                        |
| (e) | i | Options on        Snam Rete Gas shares: granted by the company to Domenico        Dispenza who held the position of Chairman of Snam Rete        Gas until December 23, 2005.                                                                                                               |
| (f) | i | Options on        Saipem shares: granted by the company to Angelo Caridi        who held the position of CEO of Snamprogetti until August        2, 2007.                                                                                                                                   |
| (g) | i | Options on        Saipem shares.                                                                                                                                                                                                                                                            |

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The recipient or his/her heirs will preserve the right toparticipate in these schemes in definite measure with referenceto the time period which elapses between award and the possibleoccurrence of any of the following events: (i) termination of theemployment contract by mutual consent; (ii) death of therecipient; (iii) loss of control by Eni SpA of the subsidiarywhere the recipient is employed; and (iv) divestment to anon-controlled entity of the subsidiary or the business where therecipient is employed. In case of unilateral termination of theemployment contract, the abovementioned stock option rightsexpires.

 

**Board Practices**

> 
*Corporate Governance*

The corporate governance structure of Eni SpA follows theItalian traditional model, which assigns corporate management tothe Board of Directors, the core of the organizational system,supervisory functions to the Board of Statutory Auditors andauditing of the accounts to the audit firm appointed by theShareholders’ Meeting.

The names of Eni’s Directors, their positions, the yearwhen each of them was initially appointed as a Director and theirages are reported in the related table above.

The Board of Directors will expire at the date of theShareholders’ Meeting approving Eni’s 2010 financialstatements.

 

> 
*Board of Directors’ duties and responsibilities*

The Board of Directors has the widest powers for the ordinaryand extraordinary administration of the Company in relation toits purpose. In a resolution dated June 11, 2008, the Boardappointed Paolo Scaroni as CEO and General Manager entrusting himwith the widest powers for the ordinary and extraordinaryadministration of the Company, while exclusively reserving themost important strategic, operational and organizational powersin addition to those that cannot be delegated by law. 

In particular, performing the powers as specified in the EniCode, and in consultation with the relevant committees, the CEO,and/or the Chairman where applicable, the Board, among othertasks: defines the system of corporate governance of the Companyand the Group; establishes the internal committees of the Board;assigns and revokes proxies to the CEO and to the Chairman anddefines the limits and modalities for exercising such proxies;defines the fundamental guidelines pertaining to theorganizational, administrative and accounting structure of theCompany and the internal control system; examines and approvesthe Company and Group’s strategic, industrial and financialplans and agreements, annual budgets and the semi-annualfinancial report and the interim reports, as well as theSustainability Report; receives information from Directors withproxies relative to activities implemented during the exercisingof proxies and receives periodical half-year information from theinternal committees of the Board; assesses the general managementtrends of the Company and of the Group paying particularattention to conflicts of interest; examines and approves theoperations of the Company and its subsidiaries which aresignificant from a strategic, economic and financial perspective,particularly with regards to situations in which one or moreDirectors retain personal or third party interests as well asrelated parties transactions9; appoints and dismissesthe Chief Operating Officer, the Officer in charge of preparingfinancial reports, the Officer in charge of internal control anda Senior Executive Vice President of Internal Audit; definesremuneration criteria for top management of the Company and theGroup; resolves on the exercise of voting rights and on theappointment of members of corporate bodies of the primarysubsidiaries; formulates the proposals to present to theShareholders’ Meeting; and examines and resolves on otherissues which Directors with proxies believe it is appropriate topresent to the Board due to their particular relevance orsensitivity.

 

> 
*Directors’ independence*

The Board of Directors has confirmed that the non-executiveDirectors Clô, Colombo, Marchioni, Reboa, Resca, Scibetta andTaranto are independent. This determination was made by the Boardat its meeting on March 10, 2011 on the basis of statements madeand information available to the Company, and taking into accountthe criteria of independence set forth in Italian regulation andthe Corporate Governance Code of Borsa Italiana. Director Clôwas confirmed as being independent under the terms of the EniCode as well, even though he has held the position

----

| (9) |    | With regard        to transactions involving interests of directors and        statutory auditors and transactions with related parties,        the powers of the Board of Directors have been defined in        the procedures adopted by the Board in November 18, 2010. |
|-----|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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for over nine years, because he was appointed by the minorityshareholders (specifically the institutional investors) andbecause of his recognized professional skills and independence ofjudgment.

The Board of Statutory Auditors has consistently verified, atits meeting on March 10, 2011, the correct application of thecriteria and procedures adopted by the Board for assessing theindependence of its members. The above-referenced independencecriteria may not be equivalent to the independence criteria setforth by the NYSE listing standards applicable to a U.S. domesticcompany.

 

> 
*Board Committees*

The Board of Directors has established three internalcommittees with consulting and advisory functions: (a) theInternal Control Committee; (b) the Compensation Committee; and(c) the Oil-Gas Energy Committee. The Internal Control Committeeand the Compensation Committee are required by the CorporateGovernance Code of Borsa Italiana. The composition, role andfunctioning of these committees are governed by their relativeregulations which are approved by the Board, in compliance withthe criteria outlined in the Eni Code.

The committees required by the Code (Internal ControlCommittee and Compensation Committee) are composed of not lessthan three members and, in any case, fewer than the majority ofmembers of the Board. The committees are currently composed ofnon-executive Directors, all of whom are independent. 

In performing their functions, the committees retain the rightto access any information and Company departments that arenecessary to carry out their tasks. They are also provided withadequate financial resources and retain the right to availthemselves of external consultants according to terms establishedby the Board of Directors. The Chairman of the Board of StatutoryAuditors or a Statutory Auditor appointed by him may participatein Committee meetings. Non-members may also participate incommittee meetings upon explicit invitation and with reference tospecific topics on the agenda of the day. Minutes of allcommittee meetings are drafted by the respective secretaries.Committees’ meetings are summarized by the respectivesecretaries. The current members of the committees have beenappointed at a meeting of the Board of Directors held on June 11,2008.

 

> 
*Compensation Committee*

Members: Mario Resca (Chairman), Francesco Taranto, AlbertoClô and Paolo Andrea Colombo.

Established by the Board of Directors in 1996, this committeeadvises Board of Directors regarding the remuneration payable toDirectors with proxies and to the members of the Board’scommittees and, on instructions from the CEO, regarding: (i)annual and long-term incentive plans; (ii) general criteria forthe remuneration of executives with strategic responsibilities;and (iii) objectives and results of the Performance and IncentivePlans. It performs the tasks assigned by the Management SystemGuideline on "Transactions involving interests of Directorsand Statutory Auditors and transactions with relatedparties", adopted in November 2010 by the Board of Directorspursuant to Consob regulation of March 12, 2010.

During 2010, the Compensation Committee met six times, with a100% attendance rate, and made proposals regarding: (i)Eni’s 2009 results and 2010 objectives for the purposes ofthe Annual and Long-Term Incentive Plans; (ii) the variableremuneration of the Chairman, CEO and Directors based on theresults achieved in 2009; (iii) the criteria of the remunerationpolicy for executives with strategic responsibilities; (iv)establishment of the 2010 Long-Term Monetary Incentive Plan forthe CEO, to replace and compensate for the Eni Stock Option Plan;(v) implementation of the 2010 Long-Term Monetary IncentivePlan, to replace the Stock Option Plan, for critical managerialresources; and (vi) 2010 implementation of the Deferred MonetaryIncentive Plan and its assignment to the CEO.

The composition, appointment and operating methods, tasks,powers and resources of the Committee are governed by anappropriate regulation approved by the Board of Directors.

 

> 
*Internal Control Committee*

Members: Marco Reboa (Chairman), Francesco Taranto, PierluigiScibetta and Paolo Marchioni.

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The Internal Control Committee, established within Eni in1994, is entrusted with providing consulting and advisoryservices to the Board of Directors as regards the internalcontrol system. It is exclusively made up of non-executive andindependent Directors who possess the necessary skills for thetasks they are required to perform10.

The Committee reports to the Board of Directors both on itsactivities and on the adequacy of the internal control system, atleast once every six months. 

The periodic reports for the Board of Directors are drafted bythe Committee by taking into account the opinions expressed– in their respective periodic reports – by the Officerin charge of preparing financial reports, the Officer in chargeof Internal Control, the Eni Watch Structure and, in general, onthe basis of the evidence acquired in carrying out itsactivities. In particular, the Internal Control Committeeperforms the following activities: 

| (i)   |   | examining and assessing        – with the Officer in charge of preparing financial        reports and the Audit firm – the proper use of        accounting principles and their homogeneity for the        drafting of the annual and half-year financial        statements;                                                                            |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | assisting, with consulting        and advisory functions, the Board in defining the        guidelines for the internal control system;                                                                                                                                                                                                                            |
| (iii) |   | providing an evaluation        – upon request by the CEO – on specific aspects        concerning the process used to identify the main risks        related to the Company as well as on the planning,        implementation and management of the internal control        system;                                                                      |
| (iv)  |   | overseeing the activities of        Internal Audit Department and of the Officer in charge of        Internal Control and examining and eventually proposing        observations and integrations for the proposal of the        Audit plan and the annual budget of the Internal Audit        Department as well as on potential changes during the        year; |
| (v)   |   | examining and assessing the        following:                                                                                                                                                                                                                                                                                                                     |

|   |   | (a) |   | the outcomes of internal        audit reports as well as any evidence on related        monitoring activities on improvement actions on internal        control system;                                                                                                                                                                                       |
|--------|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | (b) |   | the periodical reports on        the outcomes of the monitoring activities conducted on        the state of the internal control system applied to        financial reporting, on its adequacy and actual        application, as well as the adequacy of the powers and        means assigned to the Officer in charge of preparing        financial reports; |
|   |   | (c) |   | communications and        information received from the Board of Statutory Auditors        and Statutory Auditors, also in reference to the outcomes        of preliminary inquiries conducted by the Internal Audit        Department following reports received also in anonymous        form (whistleblowing);                                             |
|   |   | (d) |   | evidence emerging from the        reports and management letters issued by the Audit firm;                                                                                                                                                                                                                                                                    |
|   |   | (e) |   | periodical reports issued by        Eni Watch Structure, also in its capacity as Guarantor of        the Code of Ethics;                                                                                                                                                                                                                                      |
|   |   | (f) |   | evidence emerging from the        periodical reports issued by the Officer in charge of        preparing financial reports and by the Officer in charge        of internal control; and                                                                                                                                                                       |
|   |   | (g) |   | information on the internal        control system concerning the Company’s structure,        also through periodical meetings with management, as well        as enquiries and reviews carried out by third parties;                                                                                                                                     |

| (vi)  |   | performing other specific        activities aimed at formulating analyses and opinions on        topics falling under its competence and based on the        Board’s requests for details; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vii) |   | performing the tasks        assigned by the Management System Guideline on        "Transactions involving interests of Directors and        Statutory Auditors and transactions with related        parties", adopted in November 2010 by Eni’s        Board of Directors pursuant to Consob Regulation of March        12, 2010, on which the Internal Control Committee        expressed its unanimous approval in its capacity as        committee of independent Directors provided for by the        mentioned regulation. In particular, the Committee        provides an opinion on the interest of the Company in the        completion of transactions with related parties, as well        as on the convenience and substantial correctness of the        underlying terms. Moreover, for transactions with related        parties of greater importance, the Committee is involved        in the preparatory stage of these transactions. |

> 
 

*Board of Statutory Auditors*

In accordance with Italian legislation, as specified inArticle 28 of Eni’s By-laws, the Board of Statutory Auditorsconsists of five effective members (and two alternate members)who shall comply with specific independence, expertise andintegrity requirements.

----

| (10) |    | The Corporate        Governance Code of Eni establishes that at least two        members of the Committee – and not one as set forth        in the corporate Governance Code of Borsa Italiana (the        Italian Stock Exchange) – must possess adequate        experience on financial and accounting matters, as        assessed by the Board of Directors at the time of their        appointment. |
|------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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The members of the Board of Statutory Auditors were elected bythe Ordinary Shareholders’ Meeting held on June 10, 2008 fora three financial year term, until the Shareholders’ Meetingapproval of Eni’s 2010 Financial Statements.

| **Name**                       |   | **Position**             |   | **Year first appointed to Board        of Statutory Auditors** |
|--------------------------------|--------|--------------------------|--------|----------------------------------------------------------------|
|                                |   |                          |   |                                                                |
| Ugo        Marinelli           |   | Chairman                 |   | 2008                                                           |
| Roberto Ferranti               |   | Auditor                  |   | 2008                                                           |
| Luigi        Mandolesi         |   | Auditor                  |   | 2008                                                           |
| Tiziano Onesti                 |   | Auditor                  |   | 2008                                                           |
| Giorgio        Silva           |   | Auditor                  |   | 1999                                                           |
| Francesco Bilotti              |   | Alternate Auditor        |   | 2005                                                           |
| Pietro        Alberico Mazzola |   | Alternate        Auditor |   | 2005                                                           |
|                                |   |                          |   |                                                                |

Roberto Ferranti, Luigi Mandolesi, Tiziano Onesti andFrancesco Bilotti were candidates in the list presented by theMinistry of Economy and Finance; Ugo Marinelli, Giorgio Silva andPietro Alberico Mazzola were candidates in the list presented byinstitutional investors coordinated by institutional investors.

Pursuant to the Consolidated Law on Finance, the Board ofStatutory Auditors oversees: (i) the compliance with the law andthe By-laws; (ii) the observance of the principles of correctadministration, the adequacy of the Company’s organizationalstructure for matters within the scope of the Board itself, theadequacy of the internal control system and of theadministrative-accounting system, as well as the reliability ofthe latter in correctly representing the Company’stransactions; (iii) the arrangements for implementing thecorporate governance rules provided for in the Code of BorsaItaliana to which the Company adheres; and (iv) the adequacy ofthe instructions imparted by the Company to its subsidiaries, inorder to guarantee full compliance with legal reportingrequirements.

Moreover, under Article 19 of Legislative Decree No. 39/2010,the Board shall perform the functions assigned to it as"audit committee and internal auditing". In thiscapacity, the Board supervises (a) the financial reportingprocess, (b) the effectiveness of internal control systems,internal audit, if applicable, and risk management, (c) the auditof annual accounts and consolidated accounts, and (d) theindependence of auditors or audit firms, particularly as regardsthe provision of non-audit services.

The Board of Statutory Auditors submits a documented proposalto the Shareholders’ Meeting concerning the granting ofauditing responsibilities as well as compensation for the auditfirm. In addition, pursuant to Article 19, paragraph 1, lettersc) and d) of the Legislative Decree No. 39/2010, it monitorsauditing activities and, also in compliance with the provisionsof Article 10.C.5. of Eni Code, the independence of the Auditfirm, the compliance of the latter with all applicable regulatoryprovisions as well as the nature and size of non-auditingservices provided to Eni Group, either directly or throughcompanies within Audit firm’s network. The outcomes of thismonitoring activity are included in the Report which shall beprepared pursuant to Article 153 of the Consolidated Law onFinance, and attached to the documentation accompanying thefinancial statements.

In 2005, the Board of Directors, as allowed by the rules ofthe U.S. Securities and Exchange Commission applicable to foreignissuers listed on the regulated U.S. markets, identified theBoard of Statutory Auditors as the body that, since June 1, 2005,has been fulfilling, within the limits set forth by Italian laws,the responsibilities assigned to the Audit Committee of suchforeign issuers by the Sarbanes-Oxley Act and by SEC regulations.On June 15, 2005, the Board of Statutory Auditors approved theregulations concerning the fulfillment of the responsibilitiesassigned pursuant to the aforementioned U.S. regulations, thetext of which is available on Eni’s website.

The key functions performed by the Board of Statutory Auditorsacting as Audit Committee as provided for by SEC rules are asfollows:

| • |   | evaluating the proposals        presented by the external auditors for their appointment        and making its prompt recommendation to the        Shareholders’ Meeting about the proposal for the        appointment or the retention of the external auditor;                                                                                                          |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | performing the activities of        oversight of the work of the external auditor engaged for        the audit or performing other audit, review or attest        services;                                                                                                                                                                                                    |
| • |   | making recommendations to        the Board of Directors on the resolution of disagreements        between management and the auditor regarding financial        reporting;                                                                                                                                                                                                     |
| • |   | approving the procedures        for: (a) the receipt, retention, and treatment of        complaints received by the Company regarding accounting,        internal accounting controls, or auditing matters; and        (b) the confidential, anonymous submission by employees        of the Company of concerns regarding questionable        accounting or auditing matters; |

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| • |   | approving the procedures for        the pre-approval of admissible non-audit services,        analytically identified, and examine the information on        the execution of the authorized services;                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | evaluating any request to        have recourse to the external auditor engaged for the        audit for admissible non audit services and expresses its        opinion to the Board of Directors;                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | examining the periodical        communications from the external auditor relating to: (a)        all critical accounting policies and practices to be        used; (b) all alternative treatments of financial        information within generally accepted accounting        principles that have been discussed with management        officials of the Company, ramifications of the use of        such alternative disclosures and treatments, and the        treatment preferred by the external auditor; and (c)        other material written communication between the external        auditor and the management; |
| • |   | examining complaints        received by the CEO and the CFO concerning any        significant deficiency in the design or operation of        internal controls which are reasonably likely to        adversely affect the Company’s ability to record,        process, summarize and report financial information and        any material weakness in internal controls; and                                                                                                                                                                                                                                         |
| • |   | examining complaints        received by the CEO and the CFO concerning any fraud that        involves management or other employees who have a        significant role in the Company’s internal controls.                                                                                                                                                                                                                                                                                                                                                                                                            |

 

> 
*Eni Watch Structure and Model 231*

According to the Italian regulations pertaining to the"administrative liability of legal entities deriving fromoffences", pursuant to Legislative Decree No. 231 of June 8,2001 (hereinafter, "Legislative Decree No. 231 of2001"), associations, including corporations, may be heldliable – and therefore charged with the payment of a penaltyor placed under injuction, with regard to certain offences thatare attempted or committed in Italy or abroad in the interest orfor the benefit of the Company. The companies may, in any case,adopt organizational, management and control models suitable tothe prevention of possible offences. With regards to this issue,Eni SpA’s Board of Directors – in its meetings ofDecember 15, 2003 and January 28, 2004 – has approved anorganizational, managerial and control model pursuant toLegislative Decree No. 231 of 2001 ("Model 231") andhas appointed the Eni Watch Structure11. Thecomposition of the Eni Watch Structure, initially consisting ofonly three members, was amended in 2007 with the addition of twoexternal members, one of them appointed Chairman of the Eni WatchStructure and selected from among university professors andprofessionals of proven experience and expertise in economics andbusiness management. The internal members are represented by theSenior Executive Vice President of Legal Affairs, the ExecutiveVice President of Human Resources and Organization and the SeniorExecutive Vice President of Internal Audit Department of theCompany (or their direct reports).

 

> 
*Audit firm*

The auditing of the Company’s accounts is entrusted, asper current legislation, to an independent audit firm whoseappointment falls under the competency of the Shareholders’Meeting, upon the Board of Statutory Auditors opinion.

In addition to the obligations set forth in national auditingregulations, Eni’s listing on the New York Stock Exchangerequires that the Audit firm issues a report on the Annual Reporton Form 20-F, in compliance with the auditing principlesgenerally accepted in the USA. Moreover, the Audit firm isrequired to issue an opinion on the efficacy of the internalcontrol system applied to financial reporting.

For the most part, the subsidiaries’ financial statementsare subject to auditing by Eni’s Audit firm. Moreover,Eni’s Audit firm, for the purpose of issuing an opinion onthe consolidated financial statements, assumes the responsibilityfor the auditing activities performed by other audit firms withrespect to subsidiaries’ financial statements, whichrepresent altogether an irrelevant part of the company’sassets and consolidated turnover.

Upon the Board of Statutory Auditors’ opinion, theShareholders’ Meeting of April 29, 2010 appointed RecontaErnst & Young SpA for the financial years 2010-2018.

 

> 
*Court of Auditors ("Corte dei conti")*

The financial management of Eni is monitored by the Court ofAuditors (Italian "Corte dei conti") in order toprotect public finances. This activity has been carried out bythe Court Judge, Raffaele Squitieri (whose substitute is 

----

| (11) |    | The Eni Watch        Structure is also the Guarantor of the Code of Ethics. |
|------|--------------|-----------------------------------------------------------------------------|

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Amedeo Federici), appointed on October 28, 2009. The CourtJudge attends the meetings of the Board of Directors, of theBoard of Statutory Auditors and of the Internal ControlCommittee.

 

**Employees**

As of December 31, 2010, Eni had a total of 79,941 employees,an increase of 2,223 employees, or 2.9% from December 31, 2009,which reflects an increase of 3,334 employees hired and workingoutside Italy and a decrease of 1,111 employees hired in Italy.

Employees hired in Italy were 33,974 (42.5% of all Groupemployees). During the year 2,439 persons left their job at Eni,of these 1,842 had an open-end contract and 597 a fixed-termcontract. Declines were registered in all business segments dueto efficiency actions.

The process of improvement in the quality mix of employeescontinued in 2010 with the hiring of 1,516 persons, of which 703had fixed-term contracts. A total of 813 persons were hired withopen-ended and apprenticeship contracts, most of them withuniversity qualifications (412 persons) and 355 persons with ahigh school diploma. 

Employees hired and working outside Italy were 45,967 (57.5%of all Group employees), an increase of 3,334 persons, mainly inthe Engineering & Construction segment due to new contracts,in France in the Gas & Power segment (Altergaz) and inAustria in the Refining & Marketing segment.

| **Employees        at year end** |   | **2008** |   | **2009** |   | **2010** |
|----------------------------------|--------|----------|--------|----------|--------|----------|
|                             |   |          |   |          |   |          |

|   |   | **(units)** |
|--------|--------|-------------|

| Exploration & Production      |   | 10,236     |   | 10,271     |   | 10,276     |
|-----------------------------------|--------|------------|--------|------------|--------|------------|
| Gas &        Power            |   | 11,692     |   | 11,404     |   | 11,245     |
| Refining & Marketing          |   | 8,327      |   | 8,166      |   | 8,022      |
| Petrochemicals                    |   | 6,274      |   | 6,068      |   | 5,972      |
| Engineering & Construction    |   | 35,629     |   | 35,969     |   | 38,826     |
| Other        activities           |   | 1,070      |   | 968        |   | 939        |
| Corporate and financial companies |   | 4,866      |   | 4,872      |   | 4,661      |
|                              |   |            |   |            |   |            |
|                              |   | **78,094** |   | **77,718** |   | **79,941** |
|                              |   |            |   |            |   |            |

 

 

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The table below sets forth Eni’s employees as of December31, 2008, 2009 and 2010 in Italy and outside Italy:

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(units)** |
|--------|--------|-------------|

| Exploration & Production      | Italy                |   | 4,054      |   | 3,883      |   | 3,906      |
|-----------------------------------|----------------------|--------|------------|--------|------------|--------|------------|
|                              | Outside        Italy |   | 6,182      |   | 6,388      |   | 6,370      |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 10,236     |   | 10,271     |   | 10,276     |
|                              |                 |   |            |   |            |   |            |
| Gas &        Power            | Italy                |   | 9,029      |   | 8,842      |   | 8,652      |
|                              | Outside Italy        |   | 2,663      |   | 2,562      |   | 2,593      |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 11,692     |   | 11,404     |   | 11,245     |
|                              |                 |   |            |   |            |   |            |
| Refining & Marketing          | Italy                |   | 6,609      |   | 6,467      |   | 6,162      |
|                              | Outside        Italy |   | 1,718      |   | 1,699      |   | 1,860      |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 8,327      |   | 8,166      |   | 8,022      |
|                              |                 |   |            |   |            |   |            |
| Petrochemicals                    | Italy                |   | 5,224      |   | 5,045      |   | 4,903      |
|                              | Outside Italy        |   | 1,050      |   | 1,023      |   | 1,069      |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 6,274      |   | 6,068      |   | 5,972      |
|                              |                 |   |            |   |            |   |            |
| Engineering & Construction    | Italy                |   | 5,420      |   | 5,174      |   | 4,915      |
|                              | Outside        Italy |   | 30,209     |   | 30,795     |   | 33,911     |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 35,629     |   | 35,969     |   | 38,826     |
|                              |                 |   |            |   |            |   |            |
| Other        activities           | Italy                |   | 1,070      |   | 968        |   | 939        |
|                              | Outside Italy        |   | -          |   | -          |   | -          |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 1,070      |   | 968        |   | 939        |
|                              |                 |   |            |   |            |   |            |
| Corporate and financial companies | Italy                |   | 4,717      |   | 4,706      |   | 4,497      |
|                              | Outside        Italy |   | 149        |   | 166        |   | 164        |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | 4,866      |   | 4,872      |   | 4,661      |
|                              |                 |   |            |   |            |   |            |
| **Total**                         | Italy                |   | 36,123     |   | 35,085     |   | 33,974     |
| **Total**                         | Outside Italy        |   | 41,971     |   | 42,633     |   | 45,967     |
|                              |                 |   |            |   |            |   |            |
|                              |                 |   | **78,094** |   | **77,718** |   | **79,941** |
|                              |                 |   |            |   |            |   |            |
| of which senior managers          |                 |   | 1,594      |   | 1,562      |   | 1,574      |
|                              |                 |   |            |   |            |   |            |

 

**Share Ownership**

As of February 28, 2011, the cumulative number of shares ownedby Eni’s directors, statutory auditors and senior managers,including the three Chief Operating Officers, was 239,189 lessthan 0.1% of Eni’s share capital outstanding as of the samedata. Eni issues only ordinary shares, each bearing one-voteright; therefore shares held by those persons have no differentvoting rights. The break-down of share ownership for each ofthose persons is provided below.

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| **Name** | **Position** | **Number of shares owned** |   | **Option granted** |
|----------|--------------|----------------------------|--------|--------------------|
|     |         |                            |   |                    |

| **Board of Directors**          |   |                                                   |   |       |   |          |
|---------------------------------|--------|--------------------------------------------------------|--------|------------|--------|---------------|
| Roberto        Poli             |   | Chairman                                               |   |       |   |          |
| Paolo Scaroni                   |   | CEO and COO of Eni                                     |   | 56,250     |   | 1,894,230     |
| Alberto        Clô         |   | Director                                               |   |       |   |          |
| Paolo Andrea Colombo            |   | Director                                               |   | 1,650      |   |          |
| Paolo        Marchioni          |   | Director                                               |   | 600        |   |          |
| Marco Reboa                     |   | Director                                               |   |       |   |          |
| Mario        Resca              |   | Director                                               |   |       |   |          |
| Pierluigi Scibetta              |   | Director                                               |   |       |   |          |
| Francesco        Taranto        |   | Director                                               |   | 500        |   |          |
| **Chief Executive Officers**    |   |                                                   |   |       |   |          |
| Claudio        Descalzi         |   | Chief        Operating Officer of the E&P Division |   | 24,455     |   | 182,830       |
| Domenico Dispenza               |   | Chief Operating Officer of the G&P Division        |   | 99,715     |   | 251,275       |
| Angelo        Fanelli           |   | Chief        Operating Officer of the R&M Division |   | 30,800     |   | 4,095         |
| **Board of Statutory Auditors** |   |                                                   |   | **1,000**  |   |          |
| **Senior        managers**      |   |                                                   |   | **24,219** |   | **1,025,560** |
|                            |   |                                                   |   |            |   |               |

 

**Item 7. MAJOR SHAREHOLDERS AND RELATED PARTYTRANSACTIONS**

**Major Shareholders**

As of March 21, 2011, the following persons were known by Enito own more than 2% of any class of Eni SpA’s votingsecurities. At such date, the total amount of Eni SpA’svoting securities owned by these shareholders was:

| **Title        of class**            |   | **Number of shares owned** |   | **Percent of class** |
|--------------------------------------|--------|----------------------------|--------|----------------------|
|                                      |   |                            |   |                      |
| Ministry of Economy and Finance      |   | 157,552,137                |   | 3.93                 |
| Cassa        Depositi e Prestiti (a) |   | 1,056,179,478              |   | 26.37                |
|                                      |   |                            |   |                      |

----

| (a)    | i | Cassa        Depositi e Prestiti is an entity controlled by the same        Ministry.                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | i | With Decree        of the Ministry of Economy and Finance of November 30,        2010, published in the Official Gazette No. 293 of        December 16, 2010, a share trade in has been decided        which entails, among other things, the transfer to Cassa        Depositi e Prestiti SpA a total of 655,891,140 Eni’s        ordinary shares held by the Ministry of Economy and        Finance. According to said Decree, the transfer of shares        has been finalized on December 21, 2010. |

The following mutual funds reported to hold more than 2% ofEni’s share capital: (i) Capital Research and Management fora total number of shares corresponding to 2.01% of Eni’sordinary share capital on July 10, 2009; and (ii) BlackrockInvestment Inc for a total number of shares corresponding to2.68% of Eni’s ordinary share capital on May 20, 2010.

The Ministry of Economy and Finance, in agreement with theMinistry for Economic Development, retains certain special powersover Eni. See "Item 10 – Additional Information –Memorandum and Articles of Association – Limitations onVoting and Shareholdings – Special Powers of theState". As of March 21, 2011 there were 35,091,381 ADRs,each representing two Eni ordinary shares outstandingcorresponding to approximately 2% of Eni’s share capital.See "Item 9 – The Offer and the Listing".

 

**Related Party Transactions**

In the ordinary course of its business, Eni enters intotransactions concerning the exchange of goods, provision ofservices and financing with non-consolidated subsidiaries andaffiliates as well as other companies owned or controlled by theItalian Government. All such transactions are conducted on anarm’s length basis and in the interest of Eni companies.

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Amounts and types of trade and financial transactions withrelated parties and their impact on consolidated earnings andcash flow, and on the Group’s assets and financial conditionare reported in Note 42 to the Consolidated Financial Statements.

 

**Item 8. FINANCIAL INFORMATION**

**Consolidated Statements and Other FinancialInformation**

See "Item 18 – Financial Statements".

 

> 
***Legal Proceedings***

Eni is a party to a number of civil actions and administrativearbitral and other judicial proceedings arising in the ordinarycourse of business. Based on information available to date, andtaking into account the existing risk provisions, Eni believesthat the foregoing will not have an adverse effect on Eni’sConsolidated Financial Statements.

For a description of legal proceedings in which Eni isinvolved and which may affect Eni’s financial position andresults of operations see Note 34 to the Consolidated FinancialStatements.

 

> 
***Dividends***

Eni’s dividend policy in future periods, and thesustainability of the current amount of dividends over the nextfour-year period, will depend upon a number of factors includingfuture levels of profitability and cash flow provided byoperating activities, a sound balance sheet structure, capitalexpenditures and development plans, in light of the "RiskFactors" set out in Item 3. The parent Company’s netprofit and, therefore, the amounts of earnings available for thepayment of dividends will also depend on the level of dividendsreceived from Eni’s subsidiaries. However, subject to suchfactors, under the Company’s scenario for Brent prices at 70$/BBL flat over the next four years, management plans to grow thedividend in line with OECD inflation from 2011. If managementassumptions on oil prices were to change, management may revisethe dividend and reset the basis for progressive dividendincreases.

Management intends to propose to the Annual Shareholders’Meeting scheduled on May 5, 2011, the distribution of a dividendof euro 1.00 per share for fiscal year 2010, of which euro 0.50was already paid as interim dividend in September 2010. Totalcash outlay for the 2010 dividend is expected at approximatelyeuro 3.6 billion (including the euro 1.8 billion already paid inSeptember 2010) in case the Annual Shareholders’ Meetingapproves the annual dividend. In future years, management expectsto continue paying interim dividends for each fiscal year, withthe balance to the full-year dividend to be paid in eachfollowing year.

 

**Significant Changes**

See "Item 5 – Recent Developments" for adiscussion of significant events occurred after 2010 year end upto the latest practicable date. 

 

**Item 9. THE OFFER AND THE LISTING**

**Offer and Listing Details**

The principal trading market for the ordinary shares of EniSpA ("Eni"), nominal value euro 1.00 each (the"Shares"), is the Mercato Telematico Azionario(Electronic Share Market or "MTA"). MTA, which is theprincipal trading market for shares in Italy, is a regulatedmarket organized and managed by Borsa Italiana SpA ("Borsa

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Italiana"). Eni’s American Depositary Receipts("ADRs"), each representing two Shares, are listed onthe New York Stock Exchange. The ratio has changed from one ADRper five Shares to one ADR per two Shares, effective January 10,2006.

The table below sets forth the reported high and low referenceprices of Shares on MTA and of ADRs on the New York StockExchange, respectively. Due to the ratio change, the historicalprices of ADRs have been adjusted by an adjustment factor of 2.5.See "Item 3 – Key Information – ExchangeRates" regarding applicable exchange rates during theperiods indicated below.

|   | **MTA** |   | **New York        Stock Exchange** |
|--------|---------|--------|------------------------------------|
|   |         |   |                                    |

|   | **High** |   | **Low** |   | **High** |   | **Low** |
|--------|----------|--------|---------|--------|----------|--------|---------|
|   |          |   |         |   |          |   |         |

|   | **(euro per share)** |   | **(U.S. $ per ADR)** |
|--------|----------------------|--------|----------------------|

| 2006                                |   | 25.730 |   | 21.820 |   | 67.690 |   | 54.650 |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2007                                |   | 28.330 |   | 22.760 |   | 78.290 |   | 60.220 |
| 2008                                |   | 26.930 |   | 13.798 |   | 84.140 |   | 37.220 |
| 2009                                |   | 18.350 |   | 12.300 |   | 54.450 |   | 31.070 |
| 2010                                |   | 18.560 |   | 14.610 |   | 53.890 |   | 35.370 |
|                                |   |   |   |   |   |   |   |   |
| **2009**                            |   |   |   |   |   |   |   |   |
| First        quarter                |   | 17.830 |   | 12.300 |   | 49.440 |   | 31.070 |
| Second quarter                      |   | 18.350 |   | 14.510 |   | 51.800 |   | 37.240 |
| Third        quarter                |   | 17.700 |   | 15.860 |   | 52.100 |   | 44.400 |
| Fourth quarter                      |   | 18.220 |   | 16.500 |   | 54.450 |   | 48.660 |
|                                |   |   |   |   |   |   |   |   |
| **2010**                            |   |   |   |   |   |   |   |   |
| First        quarter                |   | 18.560 |   | 16.010 |   | 53.890 |   | 43.950 |
| Second quarter                      |   | 17.800 |   | 14.610 |   | 48.550 |   | 35.370 |
| Third        quarter                |   | 16.590 |   | 14.710 |   | 43.870 |   | 36.970 |
| Fourth quarter                      |   | 16.670 |   | 15.350 |   | 46.950 |   | 40.320 |
|                                |   |   |   |   |   |   |   |   |
| **2011**                            |   |   |   |   |   |   |   |   |
| First        quarter                |   |   |   |   |   |   |   |   |
| January 2011                        |   | 17.720 |   | 16.420 |   | 48.820 |   | 43.990 |
| February        2011                |   | 18.420 |   | 17.080 |   | 50.300 |   | 46.680 |
| March 2011 (through March 21, 2011) |   | 17.950 |   | 16.520 |   | 49.770 |   | 45.380 |
|                                |   |        |   |        |   |        |   |        |

JPMorgan Chase Bank NA (the "Depositary") functionsas depositary bank issuing ADRs pursuant to a deposit agreement(the "Deposit Agreement") among Eni, the Depositary andthe beneficial owners ("Beneficial Owners") andregistered holders from time to time of ADRs issued hereunder.

As of March 21, 2011 there were 35,091,381 ADRs outstanding,representing 70,182,762 ordinary shares or approximately 2% ofall Eni’s shares outstanding, held by 115 holders of record(including the Depository Trust Company) in the United States ofAmerica, 113 of which are U.S. residents. Since certain of suchADRs are held by nominees, the number of holders may not berepresentative of the number of Beneficial Owners in the USA orelsewhere.

The Shares are included in the FTSE MIB Index (the "FTSEMIB"), the primary benchmark index for the Italian stockmarket. Capturing approximately 80% of the domestic marketcapitalization, the FTSE MIB measures the performance of 40highly liquid, leading companies across leading industries listedon MTA and seeks to replicate the broad sector weights of theItalian stock market. The constituents of the FTSE MIB areselected according to the following criteria: sectorrepresentation, market capitalization of free-float shares andliquidity. The FTSE MIB is market cap-weighted after adjustingconstituents for float. Since June 1, 2009 the FTSE MIB(previously S&P/MIB Index) is the principal indicator used totrack the performance of the Italian stock market and is thebasis for future and option contracts traded in the ItalianDerivatives Market ("IDEM") managed by Borsa Italiana.The Shares are the first largest component of the FTSE MIB, witha weighting of approximately 15.1%, as established by FTSE afterthe quarterly rebalancing for FTSE MIB effective March 21, 2011.

Trading in the MTA is allowed in any quantity of the Shares aswell as other financial instruments. Where necessary, BorsaItaliana may specify a minimum lot for each financial instrument.Since March 28, 2000, a three-day rolling cash settlement hasbeen applied to all trades of equity securities in Italy, insteadof the previous five-day settlement. In addition, future andoption contracts on the Shares are traded on IDEM and securitizedderivatives based on the Shares are traded on the ItalianSecuritized Derivatives Market ("SeDeX"). IDEMfacilitates the 

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trading of future and option contracts on index and sharesissued by companies that meet certain required capitalization andliquidity thresholds. SeDeX is the Borsa Italiana electronicregulated market where it is possible to trade securitizedderivatives (covered warrants and certificates). 

Borsa Italiana disseminates daily market data and news foreach listed security, including volume traded and high and lowprices. At the end of each trading day an "officialprice", calculated as the weighted average price of thetotal volume of each security traded in the market during thesession, and a "reference price", calculated as theclosing-auction price, are reported by Borsa Italiana. For thepurposes of the automatic control of the regularity of trading onMTA, the following price variation limits shall apply tocontracts concluded on shares making up the FTSE MIB, effectiveDecember 20, 2010: (i) ± 5.0% (or such other amount establishedby Borsa Italiana in the "Guide to the Parameters" fortrading on the regulated markets organized and managed by BorsaItaliana) with respect to the static price (the static priceshall be the previous day’s reference price, in the openingauction, or the auction price, in the continuous trading phase);and (ii) ± 3.5% (or such other amount established by BorsaItaliana in the "Guide to the Parameters") with respectto the dynamic price (the price of the last contract concludedduring the continuous trading phase). Where the price of acontract that is being concluded exceeds one of the pricevariation limits referred to above, trading in that security willbe automatically suspended and a volatility auction phase begunfor a certain period of time.

 

**Markets**

The Commissione Nazionale per le Società e la Borsa (theNational Commission for Companies and the Stock Exchange or"Consob"), is the public authority responsible forregulating and supervising the Italian securities markets toensure the transparency and regularity of the dealings andprotect the investing public. Borsa Italiana, which is partof London Stock Exchange Group, following the mergereffective October 1, 2007, is a joint stock companyauthorized by Consob to operate regulated markets in Italy; it isresponsible for the organization and management of the Italianstock exchange. One of the fundamental characteristics of thefinancial market organization in Italy is the separationof responsibility for supervision (Consob and the Bank ofItaly) from that of market management (Borsa Italiana). Mainresponsibilities of Borsa Italiana are the admission, exclusionand suspension of financial instruments and intermediaries to andfrom trading and the surveillance of the markets.

According to Consob Regulations, Borsa Italiana has issuedrules governing the organization and management of the ItalianRegulated Markets it is responsible for, which are MTA (shares,convertible bonds, pre-emptive rights, warrants and Funds), TAH(After Hours trading market), ETFplus (Exchange Traded Funds andExchange Traded Commodities market), IDEM (index and stockderivatives market), SeDeX (covered warrants and certificates),MOT (bond market) and MIV (Investment Vehicles Market), as wellas the admission to listing on and trading on these markets.

According to EU Markets in Financial Instruments Directive(2004/39/EC) ("MiFID") and Consob Regulations, orderscan be routed not only to Regulated Markets but also to eitherMultilateral Trading Facilities ("MTF"s) or SystematicInternalisers. A MTF is a multilateral system, operated by aninvestment firm or a market operator, which brings togethermultiple third-party buying and selling interests in financialinstruments – in the system and in accordance withnon-discretionary rules – in a way that results in acontract. A Systematic Internaliser is an investment firm or abank which deals on own account by executing client ordersoutside a Regulated Market or a MTF. Outside Regulated Markets,block trading is also permitted for orders that meet certainminimum size requirements and must be notified to Consob andBorsa Italiana.

According to Legislative Decree No. 58 of February 24, 1998("Decree No. 58"), the Consolidated Law on FinancialIntermediation, the provision of investment services andactivities to the public on a professional basis is reserved tobanks and investment firms ("authorized persons"). TheBank of Italy and Consob shall exercise supervisory powers overauthorized persons. They shall each supervise the observance ofregulatory and legislative provisions according to theirrespective responsibilities. In particular, in connection withthe pursuance of the safeguarding of faith in the financialsystem, the protection of investors, the stability and correctoperation of the financial system, the competitiveness of thefinancial system and the observance of financial provisions, theBank of Italy shall be responsible for risk containment, assetstability and the sound and prudent management of intermediarieswhilst Consob shall be responsible for the transparency andcorrectness of conduct.

The Bank of Italy, in agreement with Consob, also regulatesthe operation of the clearing and settlement service fortransactions involving financial instruments. The regulations andmeasures of general application adopted by Consob and the Bank ofItaly are available on the website of Consob (www.consob.it) orBank of Italy (www.bancaditalia.it). The regulations adopted byBorsa Italiana are available on its website(www.borsaitaliana.it).

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**Item 10. ADDITIONAL INFORMATION**

**Memorandum and Articles of Association**

> 
***Register office***

"Eni SpA" results from the privatization of EnteNazionale Idrocarburi, a public law agency, established by LawNo. 136 of February 10, 1953 and it is registered at the RomeCompanies Register, with identification number (and Tax number)00484960588, and Vat number 0090581106. The registered headoffice of the Company is located in Rome, Italy, and the Companyhas two secondary registered offices in San Donato Milanese(Milan).

The full text of Eni’s By-laws is attached as an exhibitto this annual report (last amended on June 3, 2010). See"Exhibit 1".

 

> 
*Company objects and purpose*

According to Article 4 of Eni’s By-laws, Company’sobjects include: management of activities in the field ofhydrocarbons and natural vapors, all in respect of concessionsprovided by the law; management of activities in the field ofchemicals, nuclear fuels, geothermal, renewable energy sourcesand energy in general, industrial plant construction andengineering, mining, metallurgy, textile machinery, waterderivation, purification and distribution, environmentalprotection and treatment and disposal of waste, as well as in anyother business activity that is instrumental, supplemental orcomplementary with the aforementioned activities. The Companymanages the technical and financial co-ordination of subsidiariesand affiliated companies. Moreover, the Company may takeshareholdings and interests in other companies or business withsimilar purposes, comparable or complementary to its own or thoseof its subsidiaries or affiliates, either in Italy or abroad, andit may provide collateral and/or personal guarantees for both itsown and third-party commitments.

 

> 
***Directors’ issues***

The Eni’s Board of Directors is invested with the fullestpowers for ordinary and extraordinary management of the Companyand, in particular, the Board has the power to perform all actsit deems advisable for the implementation and achievement of theCompany purpose, except for the acts that the law or Eni’sBy-laws reserve to the Shareholders’ Meeting.

If the Shareholders’ Meeting has not appointed a Chairmanof the Board, the Board shall elect one among its members.

The Board of Directors appoints a Chief Executive Officer anddelegates to him all necessary powers for the management of theCompany, with the exception of those powers that cannot bedelegated in accordance with current legislation and thoseretained exclusively by the Board of Directors on the mattersregarding major strategic, operational and organizationaldecisions.

According to Eni’s By-laws, the Board of Directors maydelegate powers to the Chairman for researching and promotingintegrated projects and international agreements of strategicsignificance. 

The Board of Directors may at any time withdraw the powersdelegated hereon, proceeding, in the case of revocation of thepowers delegated to the Chief Executive Officer, tosimultaneously appoint another Chief Executive Officer. The Boardof Directors, upon proposal of the Chairman and in agreement withthe Chief Executive Officer, may delegate powers for single actsor classes of acts to other among its members.

According with Eni’s By-laws, the quorum for meeting ofthe Board shall be the majority of the Directors in office whoare entitled to vote. Resolutions shall be adopted by an absolutemajority of the Directors present who are entitled to vote; incase of a tie, the vote of the person chairing the meeting shallbe decisive.

 

> 
*Interests in Company’s transactions*

As provided by Italian Civil Code, when a Director retains apersonal interest or an interest on behalf of third parties inCompany’s transactions, he shall disclose it to the Board ofDirectors, specifying the nature, terms, origin and extent ofsuch interest. Based on this provision and in compliance withConsob Regulation on March 12, 2010, and taking also into accountrecommendations established by Eni Code, the Board of Directors– on November 18, 2010 – approved unanimously theManagement System Guidelines (MSG) "Operations with theinterests of 

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directors and statutory auditors and transactions with relatedparties", which will apply from January 1, 2011. Theseprocedures, that replace the previous similar guidelines,received the prior favorable opinion, expressed unanimously, ofthe Internal Control Committee, composed entirely of independentdirectors under the Corporate Governance Code of Borsa ItalianaSpA and in accordance with Consob Regulation, to detail theabovementioned disclosure obligations (extending them to theStatutory Auditors). MSG specifies commitments of monitoring,evaluation and motivation related to the preliminary phase andcompletion of a transaction with a subject of interest ofdirectors or statutory auditors. In this regard, both in thepreliminary and deliberation phase, is requested a detailed anddocumented examination of the reason of the operation,highlighting the interest of company in its completion and theconvenience and fairness of underlying terms. Directors involvedin matters subject to the Board resolution normally shall notparticipate in the correspondent discussion and decision andshall leave the room during these procedures. If the personinvolved is the Chief Executive Officer and the transaction isunder his jurisdiction, he shall in any case abstain from takingpart in the transaction and shall entrust the matter to the Boardof Directors (as provided by Article 2391 of the Civil Code). Inany case, if the operation is under the responsibility of theBoard of Directors of Eni, it is provided for a non-bindingopinion from the Internal Control Committee. Moreover, to ensurecompliance with the preliminary and authorizing proceduresdescribed, Eni’s Directors and Statutory Auditors shallperiodically issue a statement representing the potentialinterests each one of them has with respect to the Company andthe Group, and in any case they shall promptly notify the ChiefExecutive Officer (or the Chairman, if the matter concerns thelatter’s interest) – who shall inform the otherDirectors and the Statutory Auditors – of the individualtransactions that the Company intends to perform, in which theyhave an interest.

 

> 
*Compensation*

Directors’ compensation shall be determined by theShareholders’ Meeting, as required by Italian civil law,while compensation of Directors invested with particular tasks inaccordance with the By-laws (such as the Board Chairman and theCEO), or for participation in Board Committees, shall bedetermined by the Board of Directors, upon proposal of theCompensation Committee after consultation with the Board ofStatutory Auditors (for more details about compensation policy in2010, see "Item 6 – Compensation").

 

> 
*Borrowing powers*

Borrowing powers are included in the Company purpose.Moreover, according to the Article 11 of the By-laws, the Companymay issue bonds, including convertibles and warrant bonds incompliance with the law.

 

> 
*Retirement and shareholdings*

There are no provisions in the By-laws relating to both theretirement based on age-limit requirements and the number ofshares required for director’s qualification.

 

> 
***Company’s shares***

According to Article 5 of the By-laws, the Company’sshare capital amounts to euro 4,005,358,876, fully-paid, and isrepresented by 4,005,358,876 ordinary nominative shares with anominal value of euro 1 (one) each. As required by Italianlegislation on dematerialization of financial instruments,Eni’s shares must be held with "Monte Titoli SpA"(the Italian Central Depository for financial instrument) andtheir beneficial owners may exercise their rights through specialdeposit accounts opened with authorized intermediaries, such asbanks, brokers and securities dealers.

Shares are indivisible and each share is entitled to one vote.Shareholders are allowed to vote at ordinary and extraordinaryShareholders’ Meeting, also through proxy or mail.

Moreover, according to Article 9 of the By-laws, theShareholders’ Meeting might resolve to increase the Companycapital by issuing shares, including shares of different classes,to be assigned for no consideration to Eni’s employees,pursuant to Article 2349 of the Italian Civil Code. This facultyhas not been exercised.

In 1995, Eni established a sponsored ADR (American DepositaryReceipts) program directed to U.S. investors. Each of Eni’sADR is equal to two of Eni’s ordinary shares; Eni’s ADRare listed on the New York Stock Exchange.

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> 
*Dividend rights*

Shareholders have the right to participate in profits and anyother right as provided by the law and subject to any applicablelegal limitations: in particular, the ordinary Shareholders’Meeting called for the approval of the annual financialstatements may allocate the net income resulting after theallotment to the legal reserve, to the payment of a finaldividend per share. In addition, during the course of thefinancial year, the Board of Directors has the faculty, asallowed by the By-laws, to pay interim dividends to theshareholders. Dividends not collected within five years from theday in which they are payable will be prescribed in favor of theCompany and allocated to reserves.

 

> 
*Voting rights*

The general provisions on the shares’ "votingrights" are described at the point 6 below. In relation tothe appointment of the Board of Directors (Eni’s Board isnot a "staggered board") and the Board of StatutoryAuditors (see Item 6), Eni’s By-laws provide a voting listsystem. In particular, pursuant to Article 17 of the By-laws andaccording to the applicable law, lists may be presented both byshareholders, either individually or jointly with others,representing at least 1% of the share capital, or the differentpercentage fixed by Consob (the public authority responsible forregulating the Italian securities market) in its regulation, orby the Board of Directors. Each shareholder may present orcontribute towards presenting, and vote for, a single list.

There are no provisions in Eni’s By-laws relating to:rights to share in the Company’s profits; redemptionprovisions; sinking fund provisions; liability to further capitalcalls by the Company.

 

> 
*Liquidation rights*

In case of liquidation of the Company, the Shareholders’Meeting would appoint one or more liquidators and determine theirpowers and remuneration. According to the Italian Law,shareholders would be entitled to the distribution of theremaining liquidated assets of the Company in proportion to thenominal value of their shares, only after payments of allCompany’s liabilities and satisfaction of all othercreditors.

 

> 
***Change in shareholders’ rights***

To change the shareholders’ rights it is necessary ashareholders’ resolution. In case of any modification of theBy-laws provisions relating to voting and dividend rights,resolved by the Shareholders’ Meeting, with the attendanceand decision quorum established by the law for extraordinarymeetings, shareholders are entitled with a withdrawal right,provided by the Italian Law.

 

> 
***Shareholders’ Meeting***

The Shareholders’ Meeting resolves on the issues setforth by applicable law and Eni’s By-laws, in"ordinary" or "extraordinary" form.Resolutions of ordinary and extraordinary Shareholders’Meetings in first, second or third call must be approved with thequorum and voting majorities provided for by the law in eachcase. The Board of Directors may, if it is deemed necessary,determine that both the ordinary and the extraordinaryShareholders’ Meeting shall be called for only one date,with the quorum and voting majorities provided for by the law.

Shareholders’ Meetings are usually held at theCompany’s registered office, unless otherwise resolved bythe Board of Directors, provided however they are held in Italy.

A Shareholders’ Meeting shall be called by noticepublished on the Company’s website, as well as in the waysspecified by Consob in its regulation, within the legal terms andin accordance with current law. The call notice, which content isdefined by the law and Eni’s By-laws, contains all theinformation to attend and to vote at the meeting including,information on proxy voting and vote by mail (the information isalso available on the Company’s website). In the same mannerand within the same deadline for publishing the notice callingthe meeting, unless otherwise specified by the regulations, theBoard of Directors issues a report on the meeting’s agenda.

An ordinary Shareholders’ Meeting is called at least oncea year, within 180 days of the end of the Company financial year(on December 31), to approve the financial statements, as theCompany is required to draw up consolidated financial statements.

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The right to attend the Shareholders’ Meeting applies tothose on behalf of whom the intermediary – authorizedpursuant to applicable regulations – has sent to theCompany, upon request of the person entitled to the right, thestatement certifying the ownership of the relative right, at theend of the seventh trading day prior to the date of theShareholders’ Meeting on first or single call. Credit anddebit records entered on accounts after this deadline shall notbe considered for the purpose of legitimizing the exercise ofvoting rights at the Shareholders’ Meeting. The statementmade by the authorized intermediary must be received by theCompany by the end of the third trading day prior to the date ofthe Shareholders’ Meeting on first or single call, or otherdeadline fixed by Consob regulation issued in agreement with theBank of Italy. The right to attend and to vote at theShareholders’ Meeting still remains even if the statement isreceived by the Company after the deadline indicated above, aslong as it is received by the opening of the Shareholders’Meeting. Those who are entitled to vote may appoint arepresentative in the Shareholders’ Meeting according tolaw, by means of a written proxy (or in electronic form when thisis provided for in specific regulations) and in the ways setforth therein. In this latter case, electronic notification ofthe proxy may be carried out by using a special section of theCompany’s Website, in the ways indicated in the noticecalling the meeting. In order to simplify the casting of vote byproxy issued by shareholders who are employees of the Company orof its subsidiaries and members of shareholders associationsincorporated under and managed pursuant to current legislationregulating proxies collection, notice boards for communicationsand rooms to allow proxies collection are made available to saidassociations according to terms and conditions agreed from timeto time by the Company with the legal representatives of saidassociations. The right to vote may also be exercised by mailaccording to specific laws and regulations. If envisaged in thenotice calling the meeting, those persons entitled to vote mayattend the Shareholders’ Meeting through telecommunicationmeans, and exercise their right to vote by electronic means, inaccordance with the law, the specific regulatory provisions andthe meeting Regulations. The Company may designate arepresentative for each Shareholders’ Meeting to whom theshareholders may confer a proxy with voting instructions on allor some of the proposals on the agenda in the ways provided bythe law and the regulatory provisions, by the end of the secondtrading day preceding the date set for the Shareholders’Meeting on first or single call. The proxy is not valid forproposals on which no voting instructions have been provided.

The Chairman of the meeting ensures the regularity of proxiesand, in general, the right to attend the meeting.

Shareholders’ Meetings are regulated by the"Eni’s Shareholders’ Meeting Regulation"approved by the ordinary Shareholders’ Meeting of Eni onDecember 4, 1998, in order to guarantee an efficient developmentof meetings and the right of each shareholder to express his/heropinion on the items on the agenda.

During Shareholders’ Meetings, the Board of Directorsprovides wide disclosure on items examined and shareholders canrequire information on issues in the agenda. Information isprovided taking into account of applicable rules on insideinformation.

 

> 
***Stock ownership limitation and voting rights    restrictions***

There are no limitations imposed by Italian law or byEni’s By-laws on the rights of non-residents in Italy orforeign people to hold shares or vote other than the limitationsdescribed below (which are equally applicable to residents andnon-residents in Italy).

In accordance with Article 6 of the By-laws, and applying thespecial rules pursuant to Article 3 of Law Decree No. 332/1994,converted into Law No. 474 of 1994 (Law No. 474/1994), under nocircumstances may any party own shares in the Company whichconstitute a direct or indirect shareholding of more than 3% ofthe share capital. Exceeding this limit results in a ban onexercising the voting rights and other rights, except for theright to participate in profits, relative to any shareholdingthat exceeds the limit.

Pursuant to Article 32 of the By-laws and the abovementionedprovision of law, shareholdings owned by the Ministry of Economyand Finance, public bodies or organization controlled by them areexempt from this ban.

Finally, this special rule provides that the clause regardingshareholding limits will lose effect if the limit is exceeded asa result of a take-over bid, provided that, as a result of thetakeover, the bidder will own a shareholding of at least 75% ofthe share capital with the right to vote on resolutionsconcerning the appointment or dismissal of Directors.

 

> 
***Limitation on changes in control of the Company    (Special Powers of the Italian State)***

Pursuant to Article 6.2 of the By-laws and to the specialrules set out in Law No. 474/1994, the Ministry of Economy andFinance, in agreement with the Ministry for Economic Development,holds special powers that can be exercised in accordance with thecriteria set out in the Prime Ministerial Decree of June 10,2004.

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These special powers are briefly the following:

| (a) |   | objection to the purchase,        by parties who are subject to the shareholding limit, of        significant shareholdings, i.e. shareholdings that        represent at least 3% of the share capital and consist of        shares with the right to vote in ordinary        Shareholders’ Meetings. The objection, duly        justified, must be expressed if the transaction is deemed        to be prejudicial to the vital interests of the State,        within ten days of the date of the notification which        Directors are required to send when a request is made for        registration in the register of shareholders. During the        period of time allowed for the right of objection to be        exercised, the voting rights and other rights, except for        the right to participate in profits, connected with the        shares that represent the significant shareholding remain        suspended. In the event of the right of objection being        exercised, by means of a duly justified decision based on        the actual prejudicial effect caused by the transaction        to the vital interests of the State, the assignee will be        forbidden from exercising its voting rights and any        rights other than property rights connected with the        shares that represent the significant shareholding, and        will be required to assign these same shares within one        year. In the event of a failure to comply, the Court, at        the request of the Ministry of Economy and Finance, will        order the sale of the shares representing the significant        shareholding according to the procedures set out in        Article 2359-ter of the Civil Code; |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | objection to the signing of        agreements, as defined in Article 122 of the Consolidated        Law on Finance, in the event that at least 3% of the        share capital consisting of shares with the right to vote        in ordinary Shareholders’ Meetings is represented in        the agreements. For the purpose of allowing the right of        objection to be exercised, Consob will inform the        Ministry of Economy and Finance of any significant        agreements of which it has been notified under the terms        of the aforementioned Article 122 of the Consolidated Law        on Finance. The right of objection must be exercised        within ten days of the date of Consob’s        notification. During the period of time allowed for the        right of objection to be exercised, the voting rights and        any rights other than property rights of the shareholders        signing up to the agreement are suspended. If an        objection decision is issued with due justification        detailing the actual prejudicial effect of the aforesaid        agreements to the vital interests of the State, the        agreement will be null and void. If the conduct during        the Shareholders’ Meeting of the shareholders bound        by the agreement reveals that the undertakings given        under an agreement pursuant to the aforesaid Article 122        of the Consolidated Law on Finance have been maintained,        any resolutions passed with the casting vote of these        same shareholders may be challenged;                                                                                                                                        |
| (c) |   | veto power, if duly        justified by an actual prejudicial effect to the vital        interests of the State, of resolutions to dissolve the        Company, transfer the Company, merge, demerge, transfer        the registered office overseas, change the Company        purpose, amend the By-laws in a way that withdraws or        modifies the powers detailed in letters (a), (b), (c) and        the subsequent letter (d); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (d) |   | appointment of a Director        with no right to vote in Board meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

Decisions to exercise the powers detailed in letters (a), (b)and (c) may be challenged within sixty days, by the partiesentitled to do so, before the Regional Administrative Court ofLazio.

The special powers shall be exercisable with regard tosignificant and binding cases of general interest (public order,public security, public health and defense) in an appropriate wayand measure and proportionally to the safeguarding of theseinterests, even by means of necessary time limits, withoutprejudice to compliance with the national and Europeanprinciples, and in particular with the non-discriminationprinciple.

The Italian Prime Ministerial Decree of May 20, 2010, aftersome decisions of the European Court of Justice, repealedparagraph 2 of first article of Prime Ministerial Decree of June10, 2004, related to the specific circumstances in which thespecial powers may be exercised.

In order to "promote privatization and the spread ofinvestment in shares" of companies in which the State has asignificant shareholding, Article 1, paragraphs 381 to 384 of LawNo. 266 of 2005 (2006 Financial Law) introduced the power to addprovisions to the By-laws of privatized companies primarilycontrolled by the State, like Eni, which allow shares orparticipating financial instruments to be issued that grant thespecial meeting of its holders the right to request that newshares, even at par value, or new financial instruments be issuedto them with the right to vote in ordinary and extraordinaryShareholders’ Meetings. Making this amendment to the By-lawswould lead to the shareholding limit referred to in Article 6.1of the By-laws being removed. At the present time, however,Eni’s By-laws do not contain such any provision.

 

> 
***Shareholder ownership thresholds***

There are no By-laws provisions governing the disclosure ofthe ownership threshold because the matter is regulated by theItalian law. Under Consolidated Law on Finance12 andConsob Regulation13, any direct or indirect 

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| (12) |    | Legislative        Decree No. 58 of February 24, 1998, with specific        reference to Articles 120-122. |
|------|--------------|------------------------------------------------------------------------------------------------------------|
| (13) |    | Article 117        of Consob Decision No. 11971/1999 and subsequently        amendments.                   |

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holding in the voting shares of a listed issuer in excess of2%14, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%,66.6%, 75%, 90% and 95% must be promptly disclosed to theinvestee company and to Consob. The same disclosure requirementsrefer to holdings which fall below one of the specifiedthreshold. Due declarations shall be made within five tradingdays of the date of the transaction triggering the obligation tonotify, regardless of the date on which it is to take effect,using the specific forms attached to the abovementionedRegulation.

The relevant thresholds noted above shall be calculatedincluding: (i) shares owned by the reporting person, even if thevoting rights belong or are assigned to third parties, or aresuspended, as well as shares of which the voting rights belong orare assigned to him; and (ii) shares held through third parties(and shares whose voting rights are assigned to such thirdparties) such as nominees, trustees or subsidiary companies. Theobligation to notify also applies to any direct or indirectparticipation owned through ADRs. Specific disclosurerequirements (with partially different thresholds), are connectedto the so-called "potential holdings" (such as holdingsof derivatives or other equity-linked securities).

Voting rights attached to listed shares which have not beennotified pursuant the abovementioned disclosure requirements maynot be exercised. Any resolution or act adopted in violation ofsuch limitation, with the contribution of those undisclosedshares, could be voided if challenged in Court, under the CivilCode, by shareholders or by Consob itself.

The Consolidated Law on Finance regulates additionalcross-ownership matters as follows.

Cross-ownership between listed and non-listed companies maynot exceed 2% of the shares of the listed company or 10% of theshares of the non-listed company (applying, for calculating theseownership thresholds, the same rules established for holdings inlisted companies). The company that last exceed the limit of 2%or 10% interest in a listed or unlisted company respectively, maynot exercise the voting rights on the shares held in excess ofsuch thresholds and must sell such shares within the following 12months. In the event of failure to make the disposal within suchtime limit, the suspension of voting rights shall apply to theentire shareholding, and any resolution or act adopted with thecontribution of relevant shares, could be challenged under theCivil Code. If anyone holds an interest exceeding 2% of the sharecapital of a listed company, such listed company or any entitycontrolling such listed company may not acquire an interestexceeding 2% of the share capital of a listed company controlledby said holder. If the foregoing limit is exceeded, the holderwho last exceeded the foregoing limit (or both the holders, if itis not possible to ascertain which holder exceeded such limitlast) may not exercise the voting right related to the sharesexceeding the foregoing limit. In the event of non-compliance,the voting rights attached to the shares in excess of the limitspecified shall be suspended and any resolution or act adoptedwith the contribution of relevant shares could be challengedunder the Italian Civil Code. Described limitations are notapplicable in case of a takeover bid or exchange tender offer foracquiring at least 60% of the ordinary shares of a listedcompany.

Under the same Consolidated Law on Finance, any agreement, inwhatever form, regarding the exercise of voting rights in alisted company or in its parent company, must be, within fivedays of stipulation: (i) notified to Consob; (ii) published inabstract form, in the Italian daily press; (iii) filed in theRegister of Companies in which the listed company is registered;and (iv) notified to the company with listed shares. In the eventof non-compliance with these requirements, the agreements shallbe null and void and the voting rights connected to the relevantshares may not be exercised and any resolution or act adoptedwith the contribution of such shares could be challenged underthe Italian Civil Code.

The same provisions also apply to agreements, in whateverform, that: (a) create obligations of consultation prior to theexercise of voting rights in a listed company and in itscontrolling companies; (b) set limits on the transfer of therelated shares or of other financial instruments that entitleholders to buy or subscribe for them; (c) provide for thepurchase of the shares or of abovementioned financialinstruments; (d) have as their object or effect the exercise,jointly or otherwise, of dominant influence on such companies;and (d-bis) which aim to encourage or frustrate a takeover bid orequity swap, including commitments relating to non-participationin a takeover bid.

Moreover, under the Italian Civil Code (Article 2359-bis), asubsidiary may acquire shares of the parent company only withinthe limits of distributable profits and available reserves asresulting from the last approved balance sheet. Only fully-paidshares can be purchased. The purchase must be approved by theShareholders’ Meeting and, in any case, the nominal value ofshares purchased may not exceed a fifth of the capital of theparent company – if the latter is a listed company –taking into account for this purpose the shares held by the sameparent company or its subsidiaries.

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| (14) |    | Moreover,        based on reasoned investor protection and/or market        efficiency aims, Consob is entitled to fix the first        relevant threshold to a measure lower than 2%, by its        decree (as provided for Law Decree No. 5 of February 2,        2009, converted into Law No. 33 of April 9, 2009). This        faculty may be exercised only for definite period of        time, with regard to public companies with high        capitalization level. |
|------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Finally, in accordance with Law No. 287 of October 10, 1990,any merger or acquisition of sole or joint control over a companythat would create or strengthen a dominant position in thedomestic market in a manner that eliminates or significantlyreduces competition is prohibited and mergers and acquisition ofspecified dimension must be subject to preventive authorizationof Italian Antitrust Authority15. However, if theacquiring party and the company to be acquired operate in morethan one EU member state and together exceed certain revenuethresholds, the antitrust approval of the acquisition fallswithin the exclusive jurisdiction of the European Commission.

 

> 
***Changes in share capital***

Eni’s By-laws do not provide for more stringentconditions than is required by the law.

Share capital increases are resolved by a shareholders’resolution at an extraordinary Shareholders’ Meeting.According to Italian law, shareholders have a pre-emptive rightto subscribe for new issues of shares and corporate bondsconvertible into shares in proportion to their respectiveshareholdings. Subject to definite conditions, designated toprevent reduction of (actual) shareholders rights, and topreserve the Company’s interest, the pre-emptive right maybe waived or limited by a shareholders’ resolution at anextraordinary Shareholders’ Meeting with the consent of morethan 50% of the shares outstanding. The shareholders’pre-emptive right is also waived by the law, in case ofcontributions in-kind.

 

**Material Contracts**

None.

 

**Exchange Controls**

There are no exchange controls in Italy. Residents andnon-residents in Italy may effect any investments, divestmentsand other transactions that entail a transfer of assets to orfrom Italy, subject only to the reporting, record-keeping anddisclosure requirements described below. In particular, residentsof Italy may hold foreign currency and foreign securities of anykind, within and outside Italy, while non-residents may invest inItalian securities without restriction and may export from Italycash, instruments of credit or payment and securities, whether inforeign currency or euro, representing interest, dividends, otherasset distributions and the proceeds of dispositions.

Updated reporting and record-keeping requirements arecontained in the Italian legislation which implements an EUdirective regarding the free movement of capital. Suchlegislation requires that transfers into or out of Italy of cashor securities in excess of euro 12.5 thousand be reported inwriting to the Ufficio Italiano Cambi (the Italian ExchangeOffice) by residents or non-residents that effect such transfersdirectly, or by banks, securities dealers or Poste Italiane SpA(Italian Mail) that effect such transactions on their behalf. Inaddition, banks, securities dealers or Poste Italiane SpAeffecting such transactions on behalf of residents ornon-residents of Italy are required to maintain records of suchtransactions for five years, which records may be inspected atany time by Italian tax and judicial authorities.

Non-compliance with these reporting and record-keepingrequirements may result in administrative fines or, in the caseof false reporting and in certain cases of incomplete reporting,criminal penalties. The Ufficio Italiano Cambi will maintainreports for a period of ten years and may use them, directly orthrough other government offices, to police money laundering, taxevasion and any other crime or violation.

 

**Taxation**

*The information set forth below is a summary only, andItalian, the United States and other tax laws may change fromtime to time. Holders of shares and ADRs should consult withtheir professional advisors as to the tax consequences of theirownership and disposition of the shares and ADRs, including, inparticular, the effect of tax laws of any other jurisdiction.*

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| (15) |    | Autorità        garante per la concorrenza ed il mercato (AGCM -        www.agcm.it). |
|------|--------------|--------------------------------------------------------------------------------------------|

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> 
***Italian Taxation***

The following is a summary of the material Italian taxconsequences of the ownership and disposition of shares or ADRsas at the date hereof and does not purport to be a completeanalysis of all potential tax effects relevant to the ownershipor disposition of shares or ADRs.

 

> 
*Income tax*

Dividends, in respect of 2010 profits, received by Italianresident individuals in relation to interest exceeding 2% of thevoting rights or 5% of the share capital ("substantialinterest") are included in the taxable income subject topersonal income tax to the extent of 49.72% of their amount.Personal income tax applies at progressive rates ranging from 23%to 43% plus local surtaxes. Dividends received by Italianresident individuals in relation to non-substantial interest notrelated to the conduct of a business are subject to a substitutetax of 12.5% withheld at the source by the dividend paying agent.This being the case, the dividend is not to be included in theindividual’s tax return. If the non-substantial interest isrelated to the conduct of a business, dividends received inrespect of 2009 profits are included in the taxable businessincome to the extent of 49.72% of their amount.

Despite the above statement, dividends are included in thetaxable income at 40% to the extent they relate to un-distributedprofit of 2007 and previous years.

Dividends received by Italian pension funds are included inthe overall result of the pension funds subject to an 11%substitute tax. Dividends received by Italian collectiveinvestment funds are included in the overall result of thecollective investment funds subject to a 12.5% substitute tax.Dividends received by Italian real estate investment funds arenot subject to tax in the hands of the real estate investmentfunds (under certain circumstances a 1% tax on net asset value isapplied). Entities exempt from Ires (company income tax) aresubject to the substitute tax at the rate of 27%.

Dividends paid to non-Italian residents are subject to thesame substitute tax levied at source by the dividend paying agentat the rate of 27%, provided that the interest is not connectedto an Italian permanent establishment. Up to four-ninths of thesubstitute tax withheld might be recovered by the non-residentshareholder from the Italian Tax Authorities upon provision ofevidence of full payment of income tax on such dividend inhis/her country of residence in an amount at least equal to thetotal refund claimed.

Dividends are subject to the 1.375% substitute tax introducedby Financial Bill for 2008 where the conditions in Article 27,paragraph 3-ter, Presidential Decree No. 600 of 1973 are met,i.e. dividends are paid to companies and entities subject to acorporate income tax in a European Union member state or inNorway.

The substitute tax may also be reduced under the tax treaty inforce between Italy and the country of residence of theBeneficial Owner of the dividend. Italy has executed income taxtreaties with approximately 70 foreign countries, including allEU member states, Argentina, Australia, Brazil, Canada, Japan,New Zealand, Norway, Switzerland, the USA and some countries inAfrica, the Middle East and the Far East. Generally speaking, itshould be noted that tax treaties are not applicable where theholder is a tax-exempt entity or, with few exceptions, apartnership or a trust.

In order to obtain the treaty benefit (reduced substitute taxrate) at the same time of payment, the Beneficial Owner must filean application to the dividend paying agent chosen by theDepositary stating the existence of the conditions for theapplicability of the treaty benefit, together with acertification issued by the foreign Tax Authorities stating thatthe shareholder is a resident of that country for treatypurposes.

Under the tax treaty between the USA and Italy, dividendsderived and beneficially owned by a U.S. resident who holds lessthan 25% of the Company’s shares are subject to an Italianwithholding or substitute tax at a reduced rate of 15%, providedthat the interest is not effectively connected with a permanentestablishment in Italy through which the U.S. resident carries ona business or a fixed establishment in Italy through which suchU.S. resident performs independent personal services (for furtherdetails please refer to the relevant provisions set forth in theItaly-U.S. Tax Treaty). In the absence of such conditions, thedividend paying agent will deduct from the gross amount of thedividend the substitute tax at the statutory rate of 27%. Basedon the certification procedure required by the Italian TaxAuthorities, to benefit from the direct application of the 15%substitute tax the U.S. shareholder must provide the dividendpaying agent with a certificate obtained from the U.S. InternalRevenue Service (the "IRS") with respect to eachdividend payment. The request for that certificate must include astatement, signed under penalties for perjury, to the effect thatthe shareholder is a U.S. resident individual or corporation, anddoes not maintain a permanent establishment in Italy, and mustset forth other required information. The normal time forprocessing requests for certification by the IRS is normallyabout six to eight weeks.

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Where the Beneficial Owner has not provided the abovementioneddocumentation, the dividend paying agent will deduct from thegross amount of the dividend the substitute tax at the statutoryrate of 27%. The U.S. recipient will then be entitled to claimfrom the Italian Tax Authorities the difference ("treatyrefund") between the domestic rate and the treaty one byfiling specific forms (certificate) with the Italian TaxAuthorities.

According to the Italian tax law as reflected in the DepositAgreement, the Company is not involved: (i) in withholdingamounts due by holders of ADRs to relevant taxing authorities inconnection with any distributions relating to ADRs; or (ii) inthe procedures through which certain holders of ADRs may obtaintax rebates, credits, refunds or other similar benefits. Pursuantto the Deposit Agreement, the custodian and the Depositary haveundertaken to use reasonable efforts to make and maintainarrangements to enable persons that are considered to be residentin the USA for purposes of applicable law to receive any rebatesor tax credits (pursuant to treaty or otherwise) relating todistributions on the ADRs to which such persons are entitled. Inaddition, the Depositary has agreed to establish procedures toenable all holders to take advantage of any rebates or taxcredits (pursuant to treaty or otherwise) relating todistributions on the ADRs to which such holders are entitled andto provide, at least annually, a written notice, in a formpreviously agreed to by the Company, to the holders of ADRs ofany necessary actions to be undertaken by such Holders.

 

> 
*Capital gains tax*

This paragraph applies with respect to capital gains out ofthe scope of a business activity carried out in Italy.

Gains realized by Italian resident individuals upon the saleof substantial interest is included in the taxable base subjectto personal income tax to the extent of 49.72% of their amount,while gains realized upon the sale of non-substantial interest issubject to a substitute tax at a 12.5% rate.

For gains deriving from the sale of non-substantial interest,two different systems may be applied at the option of theshareholder as an alternative to the filing of the tax return:

| • |   | the so-called        "administered savings" tax regime (risparmio        amministrato), based on which intermediaries acting as        shares depositaries shall apply a substitute tax (12.5%)        on each gain, on a cash basis. If the sale of shares        generated a loss, said loss may be carried forward up to        the fourth following year; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the so-called        "portfolio management" tax regime (risparmio        gestito) which is applicable when the shares form part of        a portfolio managed by an Italian asset management        company. The accrued net profit of the portfolio is        subject to a 12.5% substitute tax to be applied by the        portfolio.                           |

Gains realized by non-residents from non substantial interestin listed companies are deemed not to be realized in Italy andconsequently are not subject to the capital gains tax.

On the contrary, gains realized by non-residents fromsubstantial interest even in listed companies are deemed to berealized in Italy and consequently they are subject to thecapital gains tax.

However, double taxation treaties may eliminate the capitalgains tax. Under the income tax convention between the USA andItaly, a U.S. resident will not be subject to the capital gainstax unless the shares or ADRs form part of the business propertyof a permanent establishment of the holder in Italy or pertain toa fixed establishment available to a shareholder in Italy for thepurposes of performing independent personal services. U.S.residents who sell shares may be required to produce appropriatedocumentation establishing that the abovementioned conditions ofnon-taxability pursuant to the convention have been satisfied.

 

> 
*Inheritance and gift tax*

Pursuant to Law Decree No. 262 of October 3, 2006, convertedwith amendments by Law No. 286 of November 24, 2006 effectivefrom November 29, 2006, and Law No. 296 of December 27, 2006, thetransfers of any valuable assets (including shares) as a resultof death or donation (or other transfers for no consideration)and the creation of liens on such assets for a specific purposeare taxed as follows:

| (a) |   | 4 per cent: if the transfer        is made to spouses and direct descendants or ancestors;        in this case, the transfer is subject to tax on the value        exceeding euro 1,000,000 (per beneficiary);        |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | 6 per cent: if the transfer        if made to brothers and sisters; in this case, the        transfer is subject to the tax on the value exceeding        euro 100,000 (per beneficiary);                             |
| (c) |   | 6 per cent: if the transfer        is made to relatives up to the fourth degree, to persons        related by direct affinity as well as to persons related        by collateral affinity up to the third degree; and |
| (d) |   | 8 per cent: in all other        cases.                                                                                                                                                                                |

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If the transfer is made in favor of persons with severedisabilities, the tax applies on the value exceeding euro1,500,000. Moreover, an anti-avoidance rule is provided for byLaw No. 383 of October 18, 2001 for any gift of assets (includingshares) which, if sold for consideration, would give rise tocapital gains subject to a substitute tax (imposta sostitutiva)provided for by Decree No. 461 of November 21, 1997. Inparticular, if the donee sells the shares for considerationwithin five years from the receipt thereof as a gift, the doneeis required to pay a relevant substitute tax on capital gains asif the gift had never taken place.

 

***United States Taxation***

The following is a summary of certain U.S. federal income taxconsequences to U.S. Holders (as defined below) of the ownershipand disposition of Shares or ADSs. This summary is addressed toU.S. Holders that hold Shares or ADSs as capital assets, and doesnot purport to address all material tax consequences of theownership of Shares or ADSs. The summary does not address specialclasses of investors, such as tax-exempt entities, dealers insecurities, traders in securities that elect to mark-to-market,certain insurance companies, broker-dealers, investors liable foralternative minimum tax, investors that actually orconstructively own 10% or more of Eni SpA’s Shares,investors that hold Shares or ADSs as part of a straddle or ahedging or conversion transaction and investors whose"functional currency" is not the U.S. dollar.

This summary is based on the tax laws of the USA (includingthe Internal Revenue Code of 1986, as amended, (the"Code"), its legislative history, existing and proposedregulations thereunder, published rulings and court decisions) asin effect on the date hereof, and which are subject to change (orchanges in interpretation), possibly with retroactive effect. Thesummary is based in part on representations of the Depositary andassumes that each obligation in the Deposit Agreement and anyrelated agreement will be performed in accordance with its terms.U.S. Holders should consult their own tax advisors to determinethe U.S. federal, state and local and foreign tax consequences tothem of the ownership and disposition of Shares or ADSs.

If a partnership holds the Shares or ADSs, the USA federalincome tax treatment of a partner will generally depend on thestatus of the partner and the tax treatment of the partnership. Apartner in a partnership holding the Shares or ADSs shouldconsult its tax advisor with regard to the USA federal income taxtreatment of an investment in the 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 USA; (ii) a domesticcorporation; (iii) an estate the income of which is subject tothe U.S. federal income tax without regard to its source; or (iv)a trust if a court within the USA is able to exercise primarysupervision over the administration of the trust and one or moreUSA persons have the authority to control all substantialdecisions of the trust.

The discussion does not address any aspects of USA taxationother than federal income taxation. In particular, U.S. Holdersare urged to confirm their eligibility for benefits under theincome tax convention between the USA and Italy with theiradvisors and to discuss with their advisors any possibleconsequences of their failure to qualify for such benefits.

In general, and taking into account the earlier assumptions,for the U.S. federal income tax purposes, U.S. Holders who ownADSs evidencing ADSs will be treated as owners of the underlyingShares. Exchanges of Shares for ADSs and ADSs for Sharesgenerally will not be subject to the U.S. federal income tax.

 

> 
*Dividends*

Subject to the passive foreign investment company, or PFIC,rules discussed below, distributions paid on the shares generallywill be treated as dividends for U.S. federal income tax purposesto the extent paid out of Eni SpA’s current or accumulatedearnings and profits as determined for U.S. federal income taxpurposes, but will not be eligible for the dividends-receiveddeduction generally allowed to corporations. To the extent that adistribution exceeds Eni SpA’s earnings and profits, it willbe treated, first, as a non-taxable return of capital to theextent of the U.S. Holder’s tax basis in the Shares or ADSs,and thereafter as capital gain. A U.S. Holder will be subject toU.S. federal taxation, on the date of actual or constructivereceipt by the U.S. Holder (in the case of Shares) or by theDepositary (in the case of ADSs) with respect to the gross amountof any dividends, including any Italian tax withheld therefrom,without regard to whether any portion of such tax may be refundedto the U.S. Holder by the Italian tax Authorities. If you are anon-corporate U.S. Holder, dividends paid to you in taxable yearsbeginning before January 1, 2013 that constitute qualifieddividend income will be taxable to you at a maximum tax rate of15% provided that you hold the Shares or ADSs for more than 60days during the 121-day period beginning 60 days before theex-dividend date and meet other holding period requirements.Dividends we pay with respect to the Shares or ADSs generallywill be qualified dividend income. The amount of the dividenddistribution that you must 

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include in your income as a U.S. Holder will be the U.S.dollar value of the euro payments made, determined at the spoteuro/U.S. dollar rate on the date the dividend distribution isincludible in your income, regardless of whether the payment isin fact converted into U.S. dollars. Generally, any gain or lossresulting from currency exchange fluctuations during the periodfrom the date you include the dividend payment in income to thedate you convert the payment into U.S. dollars will be treated asordinary income or loss and will not be eligible for the specialtax rate applicable to qualified dividend income. The gain orloss generally will be income or loss from sources within the USAfor foreign tax credit limitation purposes.

Subject to certain conditions and limitations, Italian taxwithheld from dividends will be treated as a foreign income taxeligible for credit against the U.S. Holder’s U.S. federalincome tax liability. Special rules apply in determining theforeign tax credit limitation with respect to dividends that aresubject to the maximum 15% tax rate. To the extent a refund ofthe tax withheld is available to a U.S. Holder under Italian lawor under the income tax convention, the amount of tax withheldthat is refundable will not be eligible for credit against yourUSA federal income tax liability. See "Italian Taxation– Income Tax" above, for the procedures for obtaining atax refund. For foreign tax credit purposes, dividends paid onthe shares will be income from sources outside the USA and will,depending on your circumstances, generally be either"passive" or "general" income for purposes ofcomputing the foreign tax credit allowable to you.

 

> 
*Sale or exchange of shares*

Subject to the PFIC rules discussed below, a U.S. Holdergenerally will recognize gain or loss for U.S. federal income taxpurposes on the sale or exchange of Shares or ADSs equal to thedifference between the U.S. Holder’s adjusted basis in theShares or ADSs (determined in U.S. dollars), as the case may be,and the amount realized on the sale or exchange (or if the amountrealized is denominated in a foreign currency its U.S. dollarequivalent, determined at the spot rate on the date ofdisposition). Generally, such gain or loss will be treated ascapital gain or loss if the Shares or ADSs are held as capitalassets and will be a long-term capital gain or loss if the Sharesor ADSs have been held for more than one year on the date of suchsale or exchange. Long-term capital gain of a non-corporate U.S.Holder that is recognized in taxable years beginning beforeJanuary 1, 2013 is generally subject to a maximum tax rate of15%. In addition, any such gain or loss realized by a U.S. Holdergenerally will be treated as U.S. source income or loss for U.S.foreign tax credit purposes.

 

> 
*PFIC rules*

Eni SpA believes that Shares and ADSs should not be treated asstock of a PFIC for USA federal income tax purposes, but thisconclusion is a factual determination that is made annually andthus may be subject to change. If Eni SpA were to be treated as aPFIC, unless a U.S. holder elects to be taxed annually on amark-to-market basis with respect to the Shares or ADSs, gainrealized on the sale or other disposition of your Shares or ADSswould in general not be treated as capital gain. Instead, if youare a U.S. holder, you would be treated as if you had realizedsuch gain and certain "excess distributions" ratablyover your holding period for the Shares or ADSs and would betaxed at the highest tax rate in effect for each such year towhich the gain or distribution was allocated, together with aninterest charge in respect of the tax attributable to each suchyear. With certain exceptions, your Shares or ADSs will betreated as stock in a PFIC if Eni SpA were a PFIC at any timeduring your holding period in your Shares or ADSs. Dividends thatyou receive from Eni SpA will not be eligible for the special taxrates applicable to qualified dividend income if Eni SpA istreated as a PFIC with respect to you either in the taxable yearof the distribution or the preceding taxable year, but insteadwill be taxable at rates applicable to ordinary income.

 

**Documents on Display**

Eni’s Annual Report and Accounts and any other documentconcerning the Company are also available online on the Companywebsite at:http://www.eni.com/en_IT/documentation/documentation.page?type=bilrap&header=documentazione&doc_from=hpeni_header.

The Company is subject to the information requirements of theU.S. Security Exchange Act of 1934 applicable to foreign privateissuers.

In accordance with these requirements, Eni files its annualreport on Form 20-F and other related documents with the SEC.It’s possible to read and copy documents that have beenfiled with the SEC at the SEC’s public reference roomlocated at 100 F Street NE, Washington, DC 20549, USA.

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You may also call the SEC at +1 800-SEC-0330 or log on towww.sec.gov.

It is also possible to read and copy documents referred to inthis annual report on Form 20-F at the New York Stock Exchange,20 Broad Street, 17th floor, New York, USA.

 

**Item 11. QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK**

Market risk is the possibility that the exposure tofluctuations in currency exchange rates, interest rates orcommodity prices will adversely affect the value of theGroup’s financial assets, liabilities or expected futurecash flows. Eni’s financial performance is particularlysensitive to changes in the price of crude oil and movements inthe euro/U.S. $ exchange rate. Overall, a rise in the price ofcrude oil has a positive effect on Eni’s results fromoperations and liquidity due to increased revenues from oil andgas production. Conversely, a decline in crude oil prices reducesEni’s results from operations and liquidity.

The impact of changes in crude oil prices on theCompany’s downstream gas and refining and marketingbusinesses and petrochemical operations depends upon the speed atwhich the prices of finished products adjust to reflect changesin crude oil prices. In addition, the Group’s activitiesare, to various degrees, sensitive to fluctuations in theeuro/U.S. $ exchange rate as commodities are generally pricedinternationally in U.S. dollars or linked to dollar denominatedproducts as in the case of gas prices. Overall, an appreciationof the euro against the U.S. dollar reduces the Group’sresults from operations and liquidity, and vice versa.

Due to a changed competitive environment in the European gasmarket and also considering the development of highly liquid spotmarkets for gas and volatile gas margins, management adopted in2010 new risk management policies and instruments to safeguardthe value of the Company’s assets in the gas value chain andto seek to profit from market and trading opportunities. Thesenew policies and instrument will be fully implemented in 2011. Aspart of its new risk management strategy, the Company plans toenter into commodity derivatives transactions targeting differentobjectives.

| (i)  |   | On one hand, management        plans to enter commodity derivative transactions to hedge        the risk of variability in future cash flows on already        contracted or highly probable future sales exposed to        commodity risk depending on the circumstance that costs        of supplies may be indexed to different market and oil        benchmarks compared to the indexing of selling prices.        Management plans to implement tight correlation between        such commodity derivatives transactions and underlying        physical contracts in order to account for those        derivatives in accordance with hedging accounting in        compliance with IAS 39, where possible;                                                                                                                                                                         |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | on the other hand,        management plans to enter purchase/sale commodity        contracts in both commodity and financial markets for        speculative purposes in order to alter the risk profile        associated with a portfolio of gas contracts (purchase        contracts, transport entitlements, storage capacity) or        leverage any price differences in the marketplace,        seeking to increase margins on existing assets in case of        favourable trends in the commodity pricing environment or        seeking a potential profit based on expectations of        future prices. These contracts may lead to gains as well        as losses, which, in each case, may be significant. Those        derivatives will be accounted for through profit and        loss, resulting in higher volatility in the gas        business’ operating profit. |

The Company may also enters into commodity derivatives fromtime to time, to hedge exposure to variability in future cashflows due to movements in commodity prices, in view of pursuingacquisitions of oil and gas reserves as part of theCompany’s ordinary asset portfolio management or otherstrategic initiatives.

As part of its financing and cash management activities, theCompany uses derivative instruments to manage its exposure tochanges in interest rates and foreign exchange rates. Theseinstruments are principally interest rate and currency swaps.

Please refer to Note 34 to the Consolidated FinancialStatements for a qualitative and quantitative discussion of theCompany’s exposure to market risks.

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**Item 12. DESCRIPTION OF SECURITIES OTHERTHAN EQUITY SECURITIES**

**Item 12A. Debt Securities**

Not applicable.

 

**Item 12B. Warrants and Rights**

Not applicable.

 

**Item 12C. Other Securities**

Not applicable.

 

**Item 12D. American Depositary Shares**

In the USA, Eni’s securities are traded in the form ofADSs (American Depositary Shares) which are listed on the NewYork Stock Exchange. ADSs are evidenced by American DepositaryReceipts (ADRs), and each ADR represents two Eni ordinary shares.Eni’s ADRs are issued, cancelled and exchanged at the officeof JP Morgan Chase Bank of New York, 1 Chase Manhattan Plaza,Floor 58, New York, NY, 10005-1401, as depositary (the"Depositary") under the Deposit Agreement between Eni,the Depositary and the holders of ADRs.

JP Morgan Chase Bank is also the transfer agent for Eni’sADRs, and its principal office is 161 North Concord Exchange,South St Paul, MN, 55075.

BNP Paribas is the custodian (the "Custodian") onbehalf of the holders of Eni’s ADRs, and its principaloffice is located in Milan, Italy.

 

> 
*Fees and charges paid by ADR holders*

The Depositary collects fees for delivery and surrender ofADSs directly from investors depositing shares or surrenderingADSs for the purpose of withdrawal or from intermediaries actingon their behalf. The Depositary collects fees for makingdistributions to investors by deducting those fees from theamounts distributed or by selling a portion of distributableproperty to pay the fees.

 

 

 

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The table below sets forth all fees and charges that a holderof Eni’s ADRs may have to pay, either directly orindirectly, to JP Morgan, as Depositary.

| **Type of service**                                          |   | **Amount of fees or charges**(1)                                                                                                                                                       |   | **Depositary Actions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (a)        Depositing or substituting the underlying shares. |   | U.S.        $ 5.00 for each 100 ADSs        (or portion thereof)                                                                                                                       |   | Each        person to whom ADRs are issued against deposits of        shares, including deposits and issuances in respect of:         • Share distributions, stock split, rights, merger.        • Exchange of securities or any other transaction or        event or other distribution affecting the ADSs or the        Deposited Securities.                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (b)        Selling or exercising rights.                     |   | U.S.        $5.00 for each 100 ADSs        (or portion thereof)                                                                                                                        |   | Distribution        or sale of securities, the fee being in an amount equal        to the fee for the execution and delivery of ADSs which        would have been charged as a result of the deposit of        such securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (c)        Withdrawing an underlying security.               |   | U.S.        $5.00 for each 100 ADSs        (or portion thereof)                                                                                                                        |   | Acceptance        of ADRs surrendered for withdrawal of deposited        securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (d)        Transferring, splitting or grouping receipts.     |   | U.S.        $1.50 per ADS                                                                                                                                                              |   | Transfers,        combining or grouping of depositary receipts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (e)        Expenses of the depositary.                       |   | Expenses        payable at the sole discretion of the Depositary by        billing holders or by deducting charges from one or more        cash dividends or other cash distributions. |   | Expenses        incurred on behalf of holders in connection with:         • Compliance with foreign exchange control        regulations or any law or regulation relating to foreign        investment.        • The depositary’s or its custodian’s        compliance with applicable law, rule or regulation.        • Stock transfer or other taxes and other        governmental charges.        • Cable, telex, facsimile transmission/delivery.        • Expenses of the depositary in connection with the        conversion of foreign currency into U.S. dollars (which        are paid out of such foreign currency).        • Any other charge payable by Depositary or its        agents. |
|                                                              |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

| (1) |   | All fees and        charges are paid by ADR holders to JP Morgan Chase Bank        as Depositary and Transfer agent. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------|

> 
 

*Fees and payments made by the Depositary to the issuer*

The Depositary has agreed to reimburse certain companyexpenses related to the ADR Program and incurred in connectionwith the program and the listing of Eni’s ADSs on the NewYork Stock Exchange. These expenses are mainly related to legaland accounting fees incurred in connection with the preparationof regulatory filings and other documentation related to ongoingSEC compliance, NYSE listing fees, listing and custodian bankfees, advertising, certain investor relationship programs orspecial investor relations activities.

For the year 2010, as agreed in the Deposit Agreement andsubsequent amendments, the Depositary will reimburse to Eni up toU.S. $900,000 in connection with abovementioned expenditures.

 

> 
*Expenses waived or paid directly to third parties by    the Depositary*

There are no agreements whereby the Depositary has agreed towaive Eni for any fees associated with the administration of theADRs Program or other services thereof, nor to directly pay feesto third-parties.

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**PART II**

**Item 13. DEFAULTS, DIVIDEND ARREARAGES ANDDELINQUENCIES**

None.

 

 

**Item 14. MATERIAL MODIFICATIONS TO THERIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

None.

 

 

**Item 15. CONTROLS AND PROCEDURES**

> 
*Disclosure controls and procedures*

In designing and evaluating the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the"Exchange Act"), the Company’s management,including the Chief Executive Officer and the Chief FinancialOfficer, recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and theCompany’s management necessarily was required to apply itsjudgment in evaluating the cost benefit relationship of possiblecontrols and procedures. Because of the inherent limitations inall control systems, no evaluation of controls can provideabsolute assurance that all control issues and instances offraud, if any, within the Company have been detected.

It should be noted that the Company has investments in certainnon-consolidated entities. As the Company does not control ormanage these entities, its disclosure controls and procedureswith respect to such entities are necessarily more limited thanthose it maintains with respect to its consolidated subsidiaries.

The Company’s management, with the participation of theprincipal executive officer and principal financial officer, hasevaluated the effectiveness of the design and operation of itsdisclosure controls and procedures pursuant to Rule 13a-14(c)under the Exchange Act as of the end of the period covered bythis Annual Report on Form 20-F. Based on that evaluation, theprincipal executive officer and principal financial officer haveconcluded that these disclosure controls and procedures areeffective.

 

> 
*Management’s Annual Report on Internal Control    over Financial Reporting*

The Company’s management is responsible for establishingand maintaining adequate internal control over financialreporting as defined in Exchange Act Rules 13a-15(f). Because ofits inherent limitations, internal control over financialreporting may not prevent or detect misstatements and even whendetermined to be effective can only provide reasonable assurancewith respect to financial statement preparation and presentation.Also, the effectiveness of an internal control system may changeover time.

The Internal Control Committee assists the Board of Directorsin setting out the main principles for the internal controlsystem so as to appropriately identify and adequately evaluate,manage, and monitor the main risks related to the Company and itssubsidiaries, by laying down the compatibility criteria betweensaid risks and sound corporate management. In addition thisCommittee assesses, at least annually, the adequacy,effectiveness, and actual operations of the internal controlsystem.

The Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer, conducted an evaluationof the effectiveness of its internal control over financialreporting based on the Internal Control -Integrated Frameworkissued by the Committee of Sponsoring Organizations of theTreadway Commission ("COSO"). Based on the results ofthis evaluation, the Group’s management concluded that itsinternal control over financial reporting was effective as ofDecember 31, 2010.

The effectiveness of the Company’s internal control overfinancial reporting as of December 31, 2010, has been audited byReconta Ernst & Young SpA, an independent registered publicaccounting firm, as stated in its report that is included on pageF-2 of this Annual Report on Form 20-F.

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> 
*Changes in Internal Control over Financial Reporting*

There have not been changes in the Company’s internalcontrol over financial reporting that occurred during the periodcovered by this Form 20-F that have materially affected, or arereasonably likely to materially affect, the Company’sinternal control over financial reporting.

 

**Item 16A. Board of Statutory AuditorsFinancial Expert**

Eni’s Board of Statutory Auditors has determined thatfive members of Eni’s Board of Statutory Auditors, qualifyas "audit committee financial expert", as defined inItem 16A of Form 20-F. These five members are: Ugo Marinelli, whois the Chairman of the Board, and Roberto Ferranti, LuigiMandolesi, Tiziano Onesti and Giorgio Silva. All members areindependent.

 

**Item 16B. Code of Ethics**

Eni adopted a code of ethics that applies to all Eni’semployees including Eni’s principal executive officer,principal financial officer and principal accounting officer. Enipublished its code of ethics on Eni’s website. It isaccessible at www.eni.it, under the section Sustainability –Corporate Governance and Corporate Ethics – Code of Ethics.A copy of this code of ethics is included as an exhibit to thisAnnual Report on Form 20-F.

Eni’s code of ethics contains ethical guidelines,describes corporate values and requires standards of businessconduct and moral integrity. The ethical guidelines are designedto deter wrongdoing and to promote honest and ethical conduct,compliance with applicable laws and regulations and internalreporting of violations of the guidelines. The code affirms theprinciples of accounting transparency and internal control andendorses human rights and the issue of the sustainability of thebusiness model.

 

**Item 16C. Principal Accountant Fees andServices**

Reconta Ernst & Young SpA has served as Eni’sprincipal independent public auditor for fiscal year 2010 forwhich audited Consolidated Financial Statements appear in thisAnnual Report on Form 20-F.

PricewaterhouseCoopers SpA has served as Eni’s principalindependent public auditor for fiscal years 2008 and 2009 forwhich audited Consolidated Financial Statements appear in thisAnnual Report on Form 20-F.

The following table shows total fees paid by Eni, itsconsolidated and non-consolidated subsidiaries and Eni’sshare of fees incurred by joint ventures for services provided byEni to its public auditors Reconta Ernst & Young SpA andPricewaterhouseCoopers SpA and their respective member firms, forthe years ended December 31, 2010, 2009 and 2008, respectively:

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

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **(euro thousand)** |
|--------|--------|---------------------|

| Audit fees                |   | 27,962     |   | 30,748     |   | 21,113     |
|---------------------------|--------|------------|--------|------------|--------|------------|
| Audit-related        fees |   | 152        |   | 276        |   | 183        |
| Tax fees                  |   | 46         |   | 51         |   | 166        |
| All other        fees     |   | 1          |   | -          |   | -          |
| **Total**                 |   | **28,161** |   | **31,075** |   | **21,462** |
|                      |   |            |   |            |   |            |

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Audit Fees include professional services rendered by theprincipal accountant for the audit of the registrant’sannual financial statements or services that are normallyprovided by the accountant in connection with statutory andregulatory filings or engagements, including the audit on theCompany’s internal control over financial reporting.

Audit Related Fees include assurance and related services bythe principal accountant that are reasonably related to theperformance of the audit or review of the registrant’sfinancial statements and are not reported as Audit Fees in thisItem. The fees disclosed in this category mainly include auditsof pension and benefit plans, merger and acquisition duediligence, audit and consultancy services rendered in connectionwith acquisition deals, certification services not provided forby law and regulations and consultations concerning financialaccounting and reporting standards.

Tax Fees include professional services rendered by theprincipal accountant for tax compliance, tax advice, and taxplanning. The fees disclosed in this category mainly include feesbilled for the assistance with compliance and reporting of incomeand value added taxes, assistance with assessment of new orchanging tax regimes, tax consultancy in connection with mergerand acquisition deals, services rendered in connection with taxrefunds, assistance rendered on occasion of tax inspections andin connection with tax claims and recourses and assistance withassessing relevant rules, regulations and facts going into Enicorrespondence with tax authorities.

All Other Fees include products and services provided by theprincipal accountant, other than the services reported in AuditFees, Audit-Related Fees and Tax Fees of this Item and consistsprimarily of fees billed for consultancy services related to ITand secretarial services that are permissible under applicablerules and regulations.

 

> 
*Pre-approval policies and procedures of the Internal    Control Committee*

The Board of Statutory Auditors has adopted a pre-approvalpolicy for audit and non-audit services that set forth theprocedures and the conditions pursuant to which services proposedto be performed by the principal auditors may be pre-approved.Such policy is applied to entities within the Eni Group which areeither controlled or jointly-controlled (directly or indirectly)by Eni SpA. According to this policy, permissible services withinthe other audit services category are pre-approved by the Boardof Statutory Auditors. The Board of Statutory Auditors approvalis required on a case by case basis for those requests regarding:(i) audit-related services; and (ii) non-audit services to beperformed by the external auditors which are permissible underapplicable rules and regulations. In such cases, theCompany’s internal audit department is charged withperforming an initial assessment of each request to be submittedto the Board of Statutory Auditors for approval. The internalaudit department periodically reports to Eni’s Board ofStatutory Auditors on the status of both pre-approved servicesand services approved on a case-by-case basis rendered by theexternal auditors.

During 2010, no audit-related fees, tax fees or othernon-audit fees were approved by the Board of Statutory Auditorspursuant to the de minimis exception to the pre-approvalrequirement provided by paragraph (c)(7)(i) (c) of Rule 2-01 ofRegulation S-X.

 

**Item 16D. Exemptions from the ListingStandards for Audit Committees**

Making use of the exemption provided by Rule 10A-3(c)(3) fornon-U.S. private issuers, Eni has identified the Board ofStatutory Auditors as the body that, starting from June 1, 2005,is performing the functions required by the SEC rules and theSarbanes-Oxley Act to be performed by the audit committees ofnon-U.S. companies listed on the NYSE (see "Item 6 –Board of Statutory Auditors" above).

 

**Item 16E. Purchases of Equity Securities bythe Issuer and Affiliated Purchasers**

The Issuer and its affiliated purchasers have not executed anypurchase of equity securities of the Issuer from 2009 as of thedate of the 20-F filing for the year ended December 31, 2010. Allrelevant authorizations previously granted by the GeneralShareholders’ Meeting to the Company management to executeany purchase of equity securities have expired. As of December31, 2010, Eni’s treasury shares in portfolio amounted to No.382,952,240 (nominal value euro 1 each) corresponding to 9.56% ofshare capital of Eni, for a total book value of euro 6,756million. The decrease of No. 88,507 shares held in treasury fromDecember 31, 2009 (No. 382,952,240 shares) 

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consisted of No. 7 shares granted to shareholders of theformer Snam SpA and to the sale of No. 88,500 shares followingthe 2002 and 2003 stock option plans.

 

**Item 16F. Change in Registrant’sCertifying Accountant**

Not applicable.

 

**Item 16G. Significant Differences inCorporate Governance Practices as per Section 303A.11 of the NewYork Stock Exchange Listed Company Manual**

*Corporate governance.* Eni’s governance structurefollows the traditional model as defined by the Italian CivilCode which provides for two main separate corporate bodies, theBoard of Directors and the Board of Statutory Auditors to whommanagement and monitoring duties are respectively entrusted.

This model differs from the U.S. one-tier model which providesfor the Board of Directors as the sole corporate body responsiblefor management and for the establishment of an Audit Committeewithin the same Board, for monitoring activities.

Below is a description of the most significant differencesbetween corporate governance practices followed by U.S. domesticcompanies under the NYSE standards and those followed by Eni,also with reference to Corporate Governance Code promoted byBorsa Italiana (hereafter Borsa Italiana Code), which Eni hasadopted.

 

> 
**Independent Directors**

*NYSE standards.*Under NYSE standards U.S. listedcompanies’ Boards shall have a majority of independentdirectors. A director qualifies as independent when the Boarddetermines that such director does not have a materialrelationship with the listed company (and its subsidiaries),either directly or indirectly. In particular, a director may notbe deemed independent if he/she or an immediate family member hasa specific relationship with the issuer, its auditors orcompanies that have material business relationships with theissuer (e.g. he/she is an employee of the issuer or a partner ofthe auditor).In addition, a director cannot be considered independent in thethree-year "cooling-off" period following thetermination of any relationship that compromised adirector’s independence.*Eni standards*. In Italy, the Consolidated Law on Financestates that at least one member, or two members if the Board iscomposed by more than seven members, shall possess theindependence requirements provided for Statutory Auditors oflisted companies.In particular, a director may not be deemed independent if he/sheor an immediate family member has relationships with the issuer,with its directors or with the companies in the same group of theissuer that could influence his or her judgment.Eni’s By-laws increases the number of independent directorsprovided by the law and states that at least one member, if theBoard is made up by up to five members, or three Board members,in case the Board is made up by more than five members, shallhave the independence requirement.Eni’s Code foresees further independence requirements, inline with the ones provided by the Borsa Italiana Code, thatrecommends that the Board of Directors includes an adequatenumber of independent non-executive directors; independence isdefined as not being currently or recently involved in anycommercial relationship – either directly or indirectly– with the issuer or other parties associated with theissuer and which may influence his/her independent judgment.In accordance with Eni’s By-laws, the Board of Directors,after its appointment by the Shareholders’ Meeting andperiodically, evaluates the independence of directors. Eni’sCode also provides for the Board of Statutory Auditors to verifythe proper application of criteria and procedures adopted by theBoard of Directors to evaluate the independence of its members.The results of the assessments of the Board shall be communicatedto the market.

In accordance with Eni’s By-laws, should the independencerequirements be impaired or cease or the minimum number ofindependent directors diminish below the threshold set byEni’s By-laws, the Board declares the termination of officeof the member lacking said requirements and provides for hissubstitution. Board members are

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expected to inform the Company in case they lose theirindependence requirements or of any reasons for ineligibility orincompatibility that might arise.

 

> 
**Meetings of non Executive Directors**

*NYSE standards.* Non-executive directors, includingthose who are not independent, must meet on a regularly basis inthe absence of management.In addition, if the group of non-executive directors includesdirectors who are not independent, independent directors shouldmeet separately at least once a year.

*Eni standards.* The Eni Code allows independentdirectors to decide whether to meet in the absence of the otherdirectors for discussion of topics deemed relevant to thefunctioning of the Board. This express provision allowing suchmeetings to take place was requested by the independent directorsthemselves, in order to have greater flexibility, to deal withactual requirements. In 2010, the independent directors, inconsideration of the frequency of the Board meetings, hadnumerous opportunities to meet, holding formal and informalmeetings to hold discussions and exchange opinions.

 

> 
**Audit Committee**

*NYSE standards.* U.S. listed companies shall have anaudit committee that satisfies the requirements of Rule 10A-3under the Securities Exchange Act of 1934 and that complies withthe further provisions of the Sarbanes-Oxley Act and of Section303A.07 of the NYSE Listed Company Manual.

*Eni standards*. In 2005, the Board of Directors, asallowed by the rules of the U.S. Securities and ExchangeCommission applicable to foreign issuers listed on the regulatedU.S. markets, identified the Board of Statutory Auditors as thebody that, since June 1, 2005, has been fulfilling, within thelimits set forth by Italian laws, the responsibilities assignedto the Audit Committee of such foreign issuers by theSarbanes-Oxley Act and the SEC regulations (see "Item 6– Board of Statutory Auditors").Under Section 303A.07 of the NYSE listed Company Manual auditcommittees of U.S. companies have further functions andresponsibilities which are not mandatory for non-U.S. privateissuers and which therefore are not included in the list offunctions shown in "Item 6 – Board of StatutoryAuditors".

 

> 
**Nominating/Corporate Governance Committee**

*NYSE standards.* U.S. listed companies shall have anominating/corporate governance committee (or equivalent body)composed entirely of independent directors that is entrusted,among others, with the responsibility to identify individualsqualified to become board members and to select or recommenddirector nominees for submission to the Shareholders’Meeting, as well as to develop and recommend to the Board ofDirectors a set of corporate governance guidelines.

*Eni standards.* This provision is not applicable tonon-U.S. private issuers. The Borsa Italiana Code allows listedcompanies to have within the Board of Directors a committee fordirectors’ nominees proposals, above all when the Board ofDirectors detects difficulties in the shareholders’submission of nominees proposals, as could happen in publiclyowned companies.Eni has not set up a nominating committee, considering the natureof its shareholding as well as the circumstance that, underEni’s By-laws, directors are appointed by theShareholders’ Meeting based on lists presented byshareholders.

 

> 
**Code of Business Conduct and Ethics**

*NYSE standards.* The NYSE listing standards require eachU.S. listed company to adopt a code of business conduct andethics for its directors, officers and employees, and promptlydisclose any waivers of the code for directors or executiveofficers.

*Eni standards*. Eni’s Code of Ethics – adoptedon March 14, 2008, replacing the previous version of 1998 –represents a clear definition of the value system that Enirecognizes, accepts and upholds and the responsibilities that Eniassumes internally and externally in order to ensure that allbusiness activities are conducted in compliance with laws, in acontext of fair competition, with honesty, integrity, correctnessand in good faith, respecting the legitimate 

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interests of all stakeholders with which Eni relates onongoing basis: shareholders, employees, suppliers, customers,commercial and financial partners, and the local communities andinstitutions of the Countries where Eni operates. These valuesare stated in the Code of Ethics and all the people working forEni, without exception or distinction, starting from Directors,senior management and members of Company’s bodies, as alsorequested by the SEC rules and the Sarbanes-Oxley Act, arecommitted to observing and enforcing these principles withintheir function and responsibility. The Guarantor for the Code ofEthics – that is the Watch Structure of the "Model231" for the organizational, management and controlaccording to Legislative Decree No. 231/2001 – acts for theprotection and promotion of the abovementioned principles andevery six months presents a report on the implementation of theCode to the Internal Control Committee, to the Board of StatutoryAuditors and to the Chairman and the CEO, who reports on this tothe Board of Directors.

 

 

 

 

 

 

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**PART III**

**Item 17. FINANCIAL STATEMENTS**

Not applicable.

 

 

**Item 18. FINANCIAL STATEMENTS**

Index to Financial Statements:

|                                                                                                                               | **Page** |
|------------------------------------------------------------------------------------------------------------------------------------|----------|
| Report of Independent        Registered Public Accounting Firm                                                                     | F-1      |
| Consolidated Balance Sheet        as of December 31, 2010 and 2009                                                                 | F-4      |
| Consolidated profit and loss        account for the years ended December 31, 2010, 2009 and        2008                            | F-5      |
| Consolidated Statements of        comprehensive income for the years ended December 31,        2010, 2009 and 2008                 | F-6      |
| Consolidated Statements of        changes in shareholder’s equity for the years ended        December 31, 2010, 2009 and 2008 | F-7      |
| Consolidated Statement of        cash flows for the years ended December 31, 2010, 2009        and 2008                            | F-10     |
| Notes to the Consolidated        Financial Statements                                                                              | F-12     |

 

 

**Item 19. EXHIBITS**

1. By-laws of Eni SpA

8. List of subsidiaries

11. Code of Ethics

Certifications:

12.1. Certification pursuant to Rule13a-14(a) of the Securities Exchange Act12.2. Certification pursuant to Rule 13a-14(a)of the Securities Exchange Act

13.1. Certification furnished pursuant toRule 13a-14(b) of the Securities Exchange Act (such certificateis not deemed filed for purpose of Section 18 of the Exchange Actand not incorporated by reference with any filing under theSecurities Act)13.2. Certification furnished pursuant to Rule13a-14(b) of the Securities Exchange Act (such certificate is notdeemed filed for purpose of Section 18 of the Exchange Act andnot incorporated by reference with any filing under theSecurities Act)

15.a(i) Report of DeGolyer and MacNaughton15.a(ii) Report of Ryder Scott Co

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**REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

> 
 

The Board of Directors and Shareholders of Eni S.p.A

We have audited the accompanying consolidated balance        sheet of Eni S.p.A as of December 31, 2010 and the        related consolidated profit and loss account and        consolidated statements of comprehensive income, changes        in shareholders' equity and cash flows for the year then        ended. 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 audit.

We conducted our audit in accordance with the        standards of the Public Company Accounting Oversight        Board (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. 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 audit provides a reasonable basis for        our opinion.

In our opinion, the financial statements referred to        above present fairly, in all material respects, the        consolidated financial position of Eni S.p.A at December        31, 2010, and the consolidated results of its operations        and its cash flows for the year then ended, in conformity        with International Financial Reporting Standards as        issued by the International Accounting Standards Board. 

We also have audited, in accordance with the standards        of the Public Company Accounting Oversight Board (United        States), Eni S.p.A’s internal control over financial        reporting as of December 31, 2010, based on criteria        established in Internal Control-Integrated Framework        issued by the Committee of Sponsoring Organizations of        the Treadway Commission and our report dated April 7,        2011 expressed an unqualified opinion thereon.

/s/ Reconta Ernst & Young S.p.A.

Rome, Italy        April 7, 2011

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**REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

 

> 
The Board of Directors and Shareholders of Eni S.p.A 

We have audited Eni S.p.A’s internal control over        financial reporting as of December 31, 2010, based on        criteria established in Internal Control—Integrated        Framework issued by the Committee of Sponsoring        Organizations of the Treadway Commission (the COSO        criteria). Eni S.p.A management is responsible for        maintaining effective internal control over financial        reporting, and for its assessment of the effectiveness of        internal control over financial reporting included in the        accompanying Management’s Annual Report on Internal        Control over Financial Reporting on page 171. Our        responsibility is to express an opinion on the        company’s internal control over financial reporting        based on our audit.

We conducted our audit in accordance with the        standards of the Public Company Accounting Oversight        Board (United States). Those standards require that we        plan and perform the audit to obtain reasonable assurance        about whether effective internal control over financial        reporting was maintained in all material respects. Our        audit included obtaining an understanding of internal        control over financial reporting, assessing the risk that        a material weakness exists, testing and evaluating the        design and operating effectiveness of internal control        based on the assessed risk, and performing such other        procedures as we considered necessary in the        circumstances. We believe that our audit provides a        reasonable basis for our opinion.

A company’s internal control over financial        reporting is a process designed to provide reasonable        assurance regarding the reliability of financial        reporting and the preparation of financial statements for        external purposes in accordance with generally accepted        accounting principles. A company’s internal control        over financial reporting includes those policies and        procedures that (1) pertain to the maintenance of records        that, in reasonable detail, accurately and fairly reflect        the transactions and dispositions of the assets of the        company; (2) provide reasonable assurance that        transactions are recorded as necessary to permit        preparation of financial statements in accordance with        generally accepted accounting principles, and that        receipts and expenditures of the company are being made        only in accordance with authorizations of management and        directors of the company; and (3) provide reasonable        assurance regarding prevention or timely detection of        unauthorized acquisition, use, or disposition of the        company’s assets that could have a material effect        on the financial statements.

Because of its inherent limitations, internal control        over financial reporting may not prevent or detect        misstatements. Also, projections of any evaluation of        effectiveness to future periods are subject to the risk        that controls may become inadequate because of changes in        conditions, or that the degree of compliance with the        policies or procedures may deteriorate.

In our opinion, Eni S.p.A maintained, in all material        respects, effective internal control over financial        reporting as of December 31, 2010, based on the COSO        criteria.

We also have audited, in accordance with the standards        of the Public Company Accounting Oversight Board (United        States), the consolidated balance sheet of Eni S.p.A as        of December 31, 2010 and the related consolidated profit        and loss account and consolidated statements of        comprehensive income, changes in shareholders' equity and        cash flows for the year then ended and our report dated        April 7, 2011 expressed an unqualified opinion thereon.

/s/ Reconta Ernst & Young S.p.A.

Rome, Italy.        April 7, 2011

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**REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

 

> 
To the Board of Directors and Shareholders of Eni SpA

In our opinion, the consolidated balance sheet as of    December 31, 2009 and the related consolidated profit and    loss accounts, consolidated statements of comprehensive    income, consolidated statements of changes in    shareholders’ equity and consolidated statements of cash    flows for each of the two years in the period ended December    31, 2009 present fairly, in all material respects, the    financial position of Eni SpA and its subsidiaries at    December 31, 2009, and the results of their operations and    their cash flows for each of the two years in the period    ended December 31, 2009, in conformity with International    Financial Reporting Standards as issued by the International    Accounting Standards Board. 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 of    these statements in accordance with the standards of the    Public Company Accounting Oversight Board (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. An audit    includes examining, on a test basis, evidence supporting the    amounts and disclosures in the financial statements,    assessing the accounting principles used and significant    estimates made by management, and evaluating the overall    financial statement presentation. We believe that our audits    provide a reasonable basis for our opinion.

 

 

PricewaterhouseCoopers SpA

Rome, Italy    April 26, 2010

 

 

 

 

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**CONSOLIDATED BALANCE SHEET****(euro million)**

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

|   |    | Note |    | Total amount |    | *of which with         related parties* |    | Total amount |    | *of which with         related parties* |
|--------|--------------|------|--------------|--------------|--------------|-----------------------------------------|--------------|--------------|--------------|-----------------------------------------|
|   |         |      |         |              |         |                                         |         |              |         |                                         |

| **ASSETS**                                                           |   |   |   |        |   |   |    |   |        |   |   |    |
|----------------------------------------------------------------------|--------|--------|--------|-------------|--------|--------|---------|--------|-------------|--------|--------|---------|
| **Current        assets**                                            |   |   |   |        |   |   |    |   |        |   |   |    |
| Cash and cash equivalents                                            |   | (7)    |   | 1,608       |   |   |    |   | 1,549       |   |   |    |
| Other        financial assets held for trading or available for sale |   | (8)    |   | 348         |   |   |    |   | 382         |   |   |    |
| Trade and other receivables                                          |   | (9)    |   | 20,348      |   |   | *1,355* |   | 23,636      |   |   | *1,356* |
| Inventories                                                          |   | (10)   |   | 5,495       |   |   |    |   | 6,589       |   |   |    |
| Current tax assets                                                   |   | (11)   |   | 753         |   |   |    |   | 467         |   |   |    |
| Other        current tax assets                                      |   | (12)   |   | 1,270       |   |   |    |   | 938         |   |   |    |
| Other current assets                                                 |   | (13)   |   | 1,307       |   |   | *9*     |   | 1,350       |   |   | *9*     |
|                                                                 |   |   |   | **31,129**  |   |   |    |   | **34,911**  |   |   |    |
| **Non-current assets**                                               |   |   |   |        |   |   |    |   |        |   |   |    |
| Property,        plant and equipment                                 |   | (14)   |   | 59,765      |   |   |    |   | 67,404      |   |   |    |
| Inventory - compulsory stock                                         |   | (15)   |   | 1,736       |   |   |    |   | 2,024       |   |   |    |
| Intangible        assets                                             |   | (16)   |   | 11,469      |   |   |    |   | 11,172      |   |   |    |
| Equity-accounted investments                                         |   | (17)   |   | 5,828       |   |   |    |   | 5,668       |   |   |    |
| Other        investments                                             |   | (17)   |   | 416         |   |   |    |   | 422         |   |   |    |
| Other financial assets                                               |   | (18)   |   | 1,148       |   |   | *438*   |   | 1,523       |   |   | *668*   |
| Deferred        tax assets                                           |   | (19)   |   | 3,558       |   |   |    |   | 4,864       |   |   |    |
| Other non-current receivables                                        |   | (20)   |   | 1,938       |   |   | *40*    |   | 3,355       |   |   | *16*    |
|                                                                 |   |   |   | **85,858**  |   |   |    |   | **96,432**  |   |   |    |
| **Assets held for sale**                                             |   | (31)   |   | **542**     |   |   |    |   | **517**     |   |   |    |
| **TOTAL        ASSETS**                                              |   |   |   | **117,529** |   |   |    |   | **131,860** |   |   |    |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                        |   |   |   |        |   |   |    |   |        |   |   |    |
| **Current        liabilities**                                       |   |   |   |        |   |   |    |   |        |   |   |    |
| Short-term debt                                                      |   | (21)   |   | 3,545       |   |   | *147*   |   | 6,515       |   |   | *127*   |
| Current        portion of long-term debt                             |   | (26)   |   | 3,191       |   |   |    |   | 963         |   |   |    |
| Trade and other payables                                             |   | (22)   |   | 19,174      |   |   | *1,241* |   | 22,575      |   |   | *1,297* |
| Income        taxes payable                                          |   | (23)   |   | 1,291       |   |   |    |   | 1,515       |   |   |    |
| Other taxes payable                                                  |   | (24)   |   | 1,431       |   |   |    |   | 1,659       |   |   |    |
| Other        current liabilities                                     |   | (25)   |   | 1,856       |   |   | *5*     |   | 1,620       |   |   | *5*     |
|                                                                 |   |   |   | **30,488**  |   |   |    |   | **34,847**  |   |   |    |
| **Non-current        liabilities**                                   |   |   |   |        |   |   |    |   |        |   |   |    |
| Long-term debt                                                       |   | (26)   |   | 18,064      |   |   |    |   | 20,305      |   |   |    |
| Provisions        for contingencies                                  |   | (27)   |   | 10,319      |   |   |    |   | 11,792      |   |   |    |
| Provisions for employee benefits                                     |   | (28)   |   | 944         |   |   |    |   | 1,032       |   |   |    |
| Deferred        tax liabilities                                      |   | (29)   |   | 4,907       |   |   |    |   | 5,924       |   |   |    |
| Other non-current liabilities                                        |   | (30)   |   | 2,480       |   |   | *49*    |   | 2,194       |   |   | *45*    |
|                                                                 |   |   |   | **36,714**  |   |   |    |   | **41,247**  |   |   |    |
| **Liabilities directly associated with assets        held for sale** |   | (31)   |   | **276**     |   |   |    |   | **38**      |   |   |    |
| **TOTAL        LIABILITIES**                                         |   |   |   | **67,478**  |   |   |    |   | **76,132**  |   |   |    |
| **SHAREHOLDERS’ EQUITY**                                        |   | (32)   |   |        |   |   |    |   |        |   |   |    |
| **Non-controlling        interest**                                  |   |   |   | **3,978**   |   |   |    |   | **4,522**   |   |   |    |
| **Eni shareholders’ equity**                                    |   |   |   |        |   |   |    |   |        |   |   |    |
| Share        capital                                                 |   |   |   | 4,005       |   |   |    |   | 4,005       |   |   |    |
| Reserves                                                             |   |   |   | 46,269      |   |   |    |   | 49,450      |   |   |    |
| Treasury        shares                                               |   |   |   | (6,757      | )      |   |    |   | (6,756      | )      |   |    |
| Interim dividend                                                     |   |   |   | (1,811      | )      |   |    |   | (1,811      | )      |   |    |
| Net profit                                                           |   |   |   | 4,367       |   |   |    |   | 6,318       |   |   |    |
| **Total Eni shareholders’ equity**                              |   |   |   | **46,073**  |   |   |    |   | **51,206**  |   |   |    |
| **TOTAL        SHAREHOLDERS’ EQUITY**                           |   |   |   | **50,051**  |   |   |    |   | **55,728**  |   |   |    |
| **TOTAL LIABILITIES AND SHAREHOLDERS’        EQUITY**           |   |   |   | **117,529** |   |   |    |   | **131,860** |   |   |    |
|                                                                 |   |        |   |             |        |   |         |   |             |        |   |         |

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**CONSOLIDATED PROFIT AND LOSSACCOUNT****(****euro million****except as otherwise stated)**

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |    | Note |    | Total amount |    | *of which with         related parties* |    | Total amount |    | *of which with         related parties* |    | Total amount |    | *of which with         related parties* |
|--------|--------------|------|--------------|--------------|--------------|-----------------------------------------|--------------|--------------|--------------|-----------------------------------------|--------------|--------------|--------------|-----------------------------------------|
|   |         |      |         |              |         |                                         |         |              |         |                                         |         |              |         |                                         |

| **REVENUES**                                                              |   |   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
|---------------------------------------------------------------------------|--------|--------|--------|-------------|--------|--------|---------|--------|--------|------------|--------|--------|---------|--------|--------|------------|--------|--------|---------|
| Net sales        from operations                                          |   | (35)   |   | 108,082     |   |   | *5,048* |   |   | 83,227     |   |   | *3,300* |   |   | 98,523     |   |   | *3,274* |
| Other income and revenues                                                 |   |   |   | 728         |   |   | *39*    |   |   | 1,118      |   |   | *26*    |   |   | 956        |   |   | *58*    |
|                                                                      |   |   |   | **108,810** |   |   |    |   |   | **84,345** |   |   |    |   |   | **99,479** |   |   |    |
| **OPERATING EXPENSES**                                                    |   | (36)   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
| Purchases,        services and other                                      |   |   |   | 76,350      |   |   | *6,298* |   |   | 58,351     |   |   | *4,999* |   |   | 69,135     |   |   | *5,825* |
| *- of which non-recurring charge (income)*                                |   |   |   | *(21*       | *)*    |   |    |   |   | *250*      |   |   |    |   |   | *(246*     | *)*    |   |    |
| Payroll        and related costs                                          |   |   |   | 4,004       |   |   |    |   |   | 4,181      |   |   |    |   |   | 4,785      |   |   |    |
| **OTHER OPERATING (EXPENSE) INCOME**                                      |   |   |   | **(124**    | **)**  |   | *58*    |   |   | **55**     |   |   | *44*    |   |   | **131**    |   |   | *41*    |
| **DEPRECIATION,        DEPLETION, AMORTIZATION AND IMPAIRMENTS**          |   |   |   | **9,815**   |   |   |    |   |   | **9,813**  |   |   |    |   |   | **9,579**  |   |   |    |
| **OPERATING PROFIT**                                                      |   |   |   | **18,517**  |   |   |    |   |   | **12,055** |   |   |    |   |   | **16,111** |   |   |    |
| **FINANCE        INCOME (EXPENSE)**                                       |   | (37)   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
| Finance income                                                            |   |   |   | 7,985       |   |   | *42*    |   |   | 5,950      |   |   | *27*    |   |   | 6,117      |   |   | *41*    |
| Finance        expense                                                    |   |   |   | (8,198      | )      |   | *(17*   | *)*    |   | (6,497     | )      |   | *(4*    | *)*    |   | (6,713     | )      |   |    |
| Derivative financial instruments                                          |   |   |   | (427        | )      |   |    |   |   | (4         | )      |   |    |   |   | (131       | )      |   |    |
|                                                                      |   |   |   | **(640**    | **)**  |   |    |   |   | **(551**   | **)**  |   |    |   |   | **(727**   | **)**  |   |    |
| **INCOME (EXPENSE) FROM INVESTMENTS**                                     |   | (38)   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
| Share of        profit (loss) of equity-accounted investments             |   |   |   | 640         |   |   |    |   |   | 393        |   |   |    |   |   | 537        |   |   |    |
| Other gain (loss) from investments                                        |   |   |   | 733         |   |   |    |   |   | 176        |   |   |    |   |   | 619        |   |   |    |
|                                                                      |   |   |   | **1,373**   |   |   |    |   |   | **569**    |   |   |    |   |   | **1,156**  |   |   |    |
| **PROFIT BEFORE INCOME TAXES**                                            |   |   |   | **19,250**  |   |   |    |   |   | **12,073** |   |   |    |   |   | **16,54**0 |   |   |    |
| Income        taxes                                                       |   | (39)   |   | (9,692      | )      |   |    |   |   | (6,756     | )      |   |    |   |   | (9,157     | )      |   |    |
| **Net profit**                                                            |   |   |   | **9,558**   |   |   |    |   |   | **5,317**  |   |   |    |   |   | **7,383**  |   |   |    |
| **Attributable        to:**                                               |   |   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
| - Eni                                                                     |   |   |   | 8,825       |   |   |    |   |   | 4,367      |   |   |    |   |   | 6,318      |   |   |    |
| -        Non-controlling interest                                         |   | (32)   |   | 733         |   |   |    |   |   | 950        |   |   |    |   |   | 1,065      |   |   |    |
|                                                                      |   |   |   | **9,558**   |   |   |    |   |   | **5,317**  |   |   |    |   |   | **7,383**  |   |   |    |
| **Earnings        per share attributable to Eni**        (euro per share) |   | (40)   |   |        |   |   |    |   |   |       |   |   |    |   |   |       |   |   |    |
| Basic                                                                     |   |   |   | 2.43        |   |   |    |   |   | 1.21       |   |   |    |   |   | 1.74       |   |   |    |
| Diluted                                                                   |   |   |   | 2.43        |   |   |    |   |   | 1.21       |   |   |    |   |   | 1.74       |   |   |    |
|                                                                      |   |        |   |             |        |   |         |        |   |            |        |   |         |        |   |            |        |   |         |

 

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**CONSOLIDATED****STATEMENTSOF COMPREHENSIVE INCOME****(euro million)**

|   |   | Note |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|------|--------|----------|--------|----------|--------|----------|
|   |   |      |   |          |   |          |   |          |

| **Net profit**                                                                             |   |   |   | **9,558**  |   |   | **5,317**  |   |   | **7,383** |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
| **Other        items of comprehensive income**                                             |   |   |   |       |   |   |       |   |   |      |   |
| Foreign currency translation differences                                                   |   |   |   | 1,077      |   |   | (869       | )      |   | 2,169     |   |
| Change in        the fair value of cash flow hedging derivatives                           |   | (32)   |   | 1,969      |   |   | (481       | )      |   | 443       |   |
| Change in the fair value of available-for-sale        securities                           |   | (32)   |   | 3          |   |   | 1          |   |   | (9        | )      |
| Share of        "Other comprehensive income" on        equity-accounted entities |   |   |   |       |   |   | 2          |   |   | (10       | )      |
| Taxation                                                                                   |   | (32)   |   | (767       | )      |   | 202        |   |   | (175      | )      |
|                                                                                       |   |   |   | **2,282**  |   |   | **(1,145** | **)**  |   | **2,418** |   |
| **Total comprehensive income**                                                             |   |   |   | **11,840** |   |   | **4,172**  |   |   | **9,801** |   |
| **Attributable        to:**                                                                |   |   |   |       |   |   |       |   |   |      |   |
| - Eni                                                                                      |   |   |   | 11,148     |   |   | 3,245      |   |   | 8,699     |   |
| -        Non-controlling interest                                                          |   |   |   | 692        |   |   | 927        |   |   | 1,102     |   |
|                                                                                       |   |   |   | **11,840** |   |   | **4,172**  |   |   | **9,801** |   |
|                                                                                       |   |        |   |            |        |   |            |        |   |           |        |

 

 

F-6

----

##### Table of Contents

**CONSOLIDATED STATEMENTSOF CHANGES IN SHAREHOLDERS’ EQUITY****(million euro)**

|   | **Eni shareholders’ equity** |   |
|--------|-----------------------------------|--------|
|   |                                   |   |

|   |   | Share capital |   | Legal reserve of Eni SpA |   | Reserve for treasury shares |   | Reserve related to the fair value of cash flow        hedging derivatives net of the tax effect |   | Reserve related to the fair value of        available-for-sale securities net of the tax effect |   | Other reserves |   | Cumulative currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Non-controlling interest |   | Total shareholders’ equity |
|--------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|----------------|--------|----------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|--------------------------|--------|---------------------------------|
|   |   |               |   |                          |   |                             |   |                                                                                                 |   |                                                                                                 |   |                |   |                                                    |   |                 |   |                   |   |                  |   |                         |   |       |   |                          |   |                                 |

| **Balance at December 31, 2007**                                                                                                          |   | **4,005** |   |   | **959** |   |   | **7,207** |   |   | **(1,344** | **)**  |   | **2**  |   |   | **428**    |   |   | **(2,233** | **)**  |   | **(5,999** | **)**  |   | **29,591** |   |   | **(2,199** | **)**  |   | **10,011**  |   |   | **40,428** |   |   | **2,439** |   |   | **42,867** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit for the year**                                                                                                        |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **8,825**   |   |   | **8,825**  |   |   | **733**   |   |   | **9,558**  |   |
| **Other items of comprehensive income**                                                                                                   |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   |      |   |   |       |   |
| Change in        the fair value of cash flow hedge derivatives net of the        tax effect                                               |   |      |   |   |    |   |   |      |   |   | 1,255      |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   | 1,255      |   |   | (52       | )      |   | 1,203      |   |
| Change in the fair value of avaible-for-sale        securities net of the tax effect                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   | 2      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   | 2          |   |   |      |   |   | 2          |   |
| Foreign        currency translation differences                                                                                           |   |      |   |   |    |   |   |      |   |   | 25         |   |   |   |   |   |       |   |   | 1,264      |   |   |       |   |   | (223       | )      |   |       |   |   |        |   |   | 1,066      |   |   | 11        |   |   | 1,077      |   |
|                                                                                                                                      |   |      |   |   |    |   |   |      |   |   | **1,280**  |   |   | **2**  |   |   |       |   |   | **1,264**  |   |   |       |   |   | **(223**   | **)**  |   |       |   |   |        |   |   | **2,323**  |   |   | **(41**   | **)**  |   | **2,282**  |   |
| **Total        recognized income and (expense) for the year**                                                                             |   |      |   |   |    |   |   |      |   |   | **1,280**  |   |   | **2**  |   |   |       |   |   | **1,264**  |   |   |       |   |   | **(223**   | **)**  |   |       |   |   | **8,825**   |   |   | **11,148** |   |   | **692**   |   |   | **11,840** |   |
| **Transactions with shareholders**                                                                                                        |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   |      |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.70 per share in        settlement of 2007 interim dividend of euro 0.60 per        share) |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 2,199      |   |   | (4,750      | )      |   | (2,551     | )      |   |      |   |   | (2,551     | )      |
| Interim dividend distribution of Eni SpA (euro        0.65 per share)                                                                     |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (2,359     | )      |   |        |   |   | (2,359     | )      |   |      |   |   | (2,359     | )      |
| Dividend        distribution of other companies                                                                                           |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   | (297      | )      |   | (297       | )      |
| Payments by non-controlling interest                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   | 20        |   |   | 20         |   |
| Allocation        of 2007 net profit                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   | 5,261      |   |   |       |   |   | (5,261      | )      |   |       |   |   |      |   |   |       |   |
| Share repurchased                                                                                                                         |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   | (778       | )      |   |       |   |   |       |   |   |        |   |   | (778       | )      |   |      |   |   | (778       | )      |
| Treasury        shares sold under incentive plans for Eni managers                                                                        |   |      |   |   |    |   |   | (20       | )      |   |       |   |   |   |   |   | 13         |   |   |       |   |   | 20         |   |   | (1         | )      |   |       |   |   |        |   |   | 12         |   |   |      |   |   | 12         |   |
| Difference between the carrying amount and        strike price of stock options exercised by Eni managers                                 |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   | 2          |   |   |       |   |   |        |   |   | 2          |   |   |      |   |   | 2          |   |
| Net effect        related to the purchase of treasury shares by Saipem SpA                                                                |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   | (31       | )      |   | (31        | )      |
| Put option granted to Publigaz SCRL (the        Distrigas NV non-controlling interest)                                                    |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   | (1,495     | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   | (1,495     | )      |   |      |   |   | (1,495     | )      |
| Non-controlling        interest recognized following the acquisition of        Distrigas NV and Hindustan Oil Exploration Co Ltd          |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   | 1,261     |   |   | 1,261      |   |
|                                                                                                                                      |   |      |   |   |    |   |   | **(20**   | **)**  |   |       |   |   |   |   |   | **(1,482** | **)**  |   |       |   |   | **(758**   | **)**  |   | **5,262**  |   |   | **(160**   | **)**  |   | **(10,011** | **)**  |   | **(7,169** | **)**  |   | **953**   |   |   | **(6,216** | **)**  |
| **Other        changes in shareholders’ equity**                                                                                     |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |       |   |   |      |   |   |       |   |
| Cost related to stock options and stock grant                                                                                             |   |      |   |   |    |   |   |      |   |   |       |   |   |   |   |   |       |   |   |       |   |   |       |   |   | 18         |   |   |       |   |   |        |   |   | 18         |   |   |      |   |   | 18         |   |
| Other        changes                                                                                                                      |   |      |   |   |    |   |   |      |   |   | (26        | )      |   |   |   |   |       |   |   |       |   |   |       |   |   | 37         |   |   |       |   |   |        |   |   | 11         |   |   | (10       | )      |   | 1          |   |
|                                                                                                                                      |   |      |   |   |    |   |   |      |   |   | **(26**    | **)**  |   |   |   |   |       |   |   |       |   |   |       |   |   | **55**     |   |   |       |   |   |        |   |   | **29**     |   |   | **(10**   | **)**  |   | **19**     |   |
| **Balance        at December 31, 2008**                                                                                                   |   | **4,005** |   |   | **959** |   |   | **7,187** |   |   | **(90**    | **)**  |   | **4**  |   |   | **(1,054** | **)**  |   | **(969**   | **)**  |   | **(6,757** | **)**  |   | **34,685** |   |   | **(2,359** | **)**  |   | **8,825**   |   |   | **44,436** |   |   | **4,074** |   |   | **48,510** |   |
|                                                                                                                                      |   |           |        |   |         |        |   |           |        |   |            |        |   |        |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |             |        |   |            |        |   |           |        |   |            |        |

F-7

----

##### Table of Contents

**CONSOLIDATED****STATEMENTSOF CHANGES IN SHAREHOLDERS’ EQUITY***continued***(million euro)**

|   | **Eni shareholders’ equity** |   |
|--------|-----------------------------------|--------|
|   |                                   |   |

|   |   | Share capital |   | Legal reserve of Eni SpA |   | Reserve for treasury shares |   | Reserve related to the fair value of cash flow        hedging derivatives net of the tax effect |   | Reserve related to the fair value of        available-for-sale securities net of the tax effect |   | Other reserves |   | Cumulative currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Non-controlling interest |   | Total shareholders’ equity |
|--------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|----------------|--------|----------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|--------------------------|--------|---------------------------------|
|   |   |               |   |                          |   |                             |   |                                                                                                 |   |                                                                                                 |   |                |   |                                                    |   |                 |   |                   |   |                  |   |                         |   |       |   |                          |   |                                 |

| **Balance at December 31, 2008**                                                                                                       |   | **4,005** |   |   | **959** |   |   | **7,187** |   |   | **(90**  | **)**  |   | **4**  |   |   | **(1,054** | **)**  |   | **(969**   | **)**  |   | **(6,757** | **)**  |   | **34,685** |   |   | **(2,359** | **)**  |   | **8,825**  |   |   | **44,436** |   |   | **4,074**  |   |   | **48,510** |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|----------|--------|--------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| **Net        profit for the year**                                                                                                     |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **4,367**  |   |   | **4,367**  |   |   | **950**    |   |   | **5,317**  |   |
| **Other items of comprehensive income**                                                                                                |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Change in        the fair value of cash flow hedge derivatives net of the        tax effect                                            |   |      |   |   |    |   |   |      |   |   | (279     | )      |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (279       | )      |   |       |   |   | (279       | )      |
| Change in the fair value of available-for-sale        securities net of the tax effect                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   | 1      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1          |   |   |       |   |   | 1          |   |
| Share of        "Other comprehensive income" on        equity-accounted entities                                             |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | 2          |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 2          |   |   |       |   |   | 2          |   |
| Foreign currency translation differences                                                                                               |   |      |   |   |    |   |   |      |   |   | 1        |   |   |   |   |   |       |   |   | (696       | )      |   |       |   |   | (151       | )      |   |       |   |   |       |   |   | (846       | )      |   | (23        | )      |   | (869       | )      |
|                                                                                                                                   |   |      |   |   |    |   |   |      |   |   | **(278** | **)**  |   | **1**  |   |   | **2**      |   |   | **(696**   | **)**  |   |       |   |   | **(151**   | **)**  |   |       |   |   |       |   |   | **(1,122** | **)**  |   | **(23**    | **)**  |   | **(1,145** | **)**  |
| **Total recognized income and (expense) for the        year**                                                                          |   |      |   |   |    |   |   |      |   |   | **(278** | **)**  |   | **1**  |   |   | **2**      |   |   | **(696**   | **)**  |   |       |   |   | **(151**   | **)**  |   |       |   |   | **4,367**  |   |   | **3,245**  |   |   | **927**    |   |   | **4,172**  |   |
| **Transactions        with shareholders**                                                                                              |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Dividend distribution of Eni SpA (euro 0.65 per        share in settlement of 2008 interim dividend of euro 0.65        per share)     |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 2,359      |   |   | (4,714     | )      |   | (2,355     | )      |   |       |   |   | (2,355     | )      |
| Interim        dividend distribution of Eni SpA (euro 0.50 per share)                                                                  |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,811     | )      |   |       |   |   | (1,811     | )      |   |       |   |   | (1,811     | )      |
| Dividend distribution of other companies                                                                                               |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (350       | )      |   | (350       | )      |
| Payments        by non-controlling interest                                                                                            |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,560      |   |   | 1,560      |   |
| Allocation of 2008 net profit                                                                                                          |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   | 4,111      |   |   |       |   |   | (4,111     | )      |   |       |   |   |       |   |   |       |   |
| Put option        granted to Publigaz SCRL (the Distrigas NV        non-controlling interest)                                          |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | 1,495      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,495      |   |   |       |   |   | 1,495      |   |
| Effect related to the purchase of Italgas SpA        and Stoccaggi Gas SpA by Snam Rete Gas SpA                                        |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | 1,086      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,086      |   |   | (1,086     | )      |   |       |   |
| Non-controlling        interest acquired following the mandatory tender offer        and the squeeze-out on the shares of Distrigas NV |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,146     | )      |   | (1,146     | )      |
|                                                                                                                                   |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | **2,581**  |   |   |       |   |   |       |   |   | **4,111**  |   |   | **548**    |   |   | **(8,825** | **)**  |   | **(1,585** | **)**  |   | **(1,022** | **)**  |   | **(2,607** | **)**  |
| **Other        changes in shareholders’ equity**                                                                                  |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
|                                                                                                                                   |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Utilization        of the reserve for the acquisition of treasury shares                                                               |   |      |   |   |    |   |   | (430      | )      |   |     |   |   |   |   |   | 1          |   |   |       |   |   |       |   |   | 429        |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Cost related to stock options                                                                                                          |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   | 13         |   |   |       |   |   |       |   |   | 13         |   |   |       |   |   | 13         |   |
| Stock        option expired                                                                                                            |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |       |   |   |       |   |   |       |   |   | (7         | )      |   |       |   |   |       |   |   | (7         | )      |   |       |   |   | (7         | )      |
| Other changes                                                                                                                          |   |      |   |   |    |   |   |      |   |   | (71      | )      |   |   |   |   | (38        | )      |   |       |   |   |       |   |   | 80         |   |   |       |   |   |       |   |   | (29        | )      |   | (1         | )      |   | (30        | )      |
|                                                                                                                                   |   |      |   |   |    |   |   | **(430**  | **)**  |   | **(71**  | **)**  |   |   |   |   | **(37**    | **)**  |   |       |   |   |       |   |   | **515**    |   |   |       |   |   |       |   |   | **(23**    | **)**  |   | **(1**     | **)**  |   | **(24**    | **)**  |
| **Balance at December 31, 2009**                                                                                                       |   | **4,005** |   |   | **959** |   |   | **6,757** |   |   | **(439** | **)**  |   | **5**  |   |   | **1,492**  |   |   | **(1,665** | **)**  |   | **(6,757** | **)**  |   | **39,160** |   |   | **(1,811** | **)**  |   | **4,367**  |   |   | **46,073** |   |   | **3,978**  |   |   | **50,051** |   |
|                                                                                                                                   |   |           |        |   |         |        |   |           |        |   |          |        |   |        |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |

F-8

----

##### Table of Contents

**CONSOLIDATED****STATEMENTSOF CHANGES IN SHAREHOLDERS’ EQUITY***continued***(million euro)**

|   | **Eni shareholders’ equity** |   |
|--------|-----------------------------------|--------|
|   |                                   |   |

|   |   | Share capital |   | Legal reserve of Eni SpA |   | Reserve for treasury shares |   | Reserve related to the fair value of cash flow        hedging derivatives net of the tax effect |   | Reserve related to the fair value of        available-for-sale securities net of the tax effect |   | Other reserves |   | Cumulative currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Non-controlling interest |   | Total shareholders’ equity |
|--------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|----------------|--------|----------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|--------------------------|--------|---------------------------------|
|   |   |               |   |                          |   |                             |   |                                                                                                 |   |                                                                                                 |   |                |   |                                                    |   |                 |   |                   |   |                  |   |                         |   |       |   |                          |   |                                 |

| **Balance at December 31, 2009**(Note 32)                                                                                            |   | **4,005** |   |   | **959** |   |   | **6,757** |   |   | **(439** | **)**  |   | **5**  |   |   | **1,492** |   |   | **(1,665** | **)**  |   | **(6,757** | **)**  |   | **39,160** |   |   | **(1,811** | **)**  |   | **4,367**  |   |   | **46,073** |   |   | **3,978** |   |   | **50,051** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|----------|--------|--------|--------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit for the year**                                                                                                   |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **6,318**  |   |   | **6,318**  |   |   | **1,065** |   |   | **7,383**  |   |
| **Gains (losses) recognized directly in equity**                                                                                     |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Change in        the fair value of cash flow hedge derivatives net of the        tax effect (Note 32)                                |   |      |   |   |    |   |   |      |   |   | 267      |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 267        |   |   |      |   |   | 267        |   |
| Change in the fair value of available-for-sale        securitiesnet of the tax effect (Note 32)                                      |   |      |   |   |    |   |   |      |   |   |     |   |   | (8     | )      |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (8         | )      |   |      |   |   | (8         | )      |
| Share of        "Other comprehensive income" on        equity-accounted entities                                           |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | (5        | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (5         | )      |   | (5        | )      |   | (10        | )      |
| Foreign currency translation differences                                                                                             |   |      |   |   |    |   |   |      |   |   | (2       | )      |   |   |   |   |      |   |   | 2,204      |   |   |       |   |   | (75        | )      |   |       |   |   |       |   |   | 2,127      |   |   | 42        |   |   | 2,169      |   |
|                                                                                                                                 |   |      |   |   |    |   |   |      |   |   | **265**  |   |   | **(8** | **)**  |   | **(5**    | **)**  |   | **2,204**  |   |   |       |   |   | **(75**    | **)**  |   |       |   |   |       |   |   | **2,381**  |   |   | **37**    |   |   | **2,418**  |   |
| **Total recognized income and (expense) for the        year**                                                                        |   |      |   |   |    |   |   |      |   |   | **265**  |   |   | **(8** | **)**  |   | **(5**    | **)**  |   | **2,204**  |   |   |       |   |   | **(75**    | **)**  |   |       |   |   | **6,318**  |   |   | **8,699**  |   |   | **1,102** |   |   | **9,801**  |   |
| **Transactions        with shareholders**                                                                                            |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Dividend distribution of Eni SpA (euro 0.50 per        share in settlement of 2009 interim dividend of euro 0.50        per share)   |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 1,811      |   |   | (3,622     | )      |   | (1,811     | )      |   |      |   |   | (1,811     | )      |
| Interim        dividend distribution of Eni SpA (euro 0.50 per share)                                                                |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   | (1,811     | )      |   |       |   |   | (1,811     | )      |   |      |   |   | (1,811     | )      |
| Dividend distribution of other companies                                                                                             |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (514      | )      |   | (514       | )      |
| Allocation        of 2009 net profit                                                                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   | 745        |   |   |       |   |   | (745       | )      |   |       |   |   |      |   |   |       |   |
| Effect related to the purchase of Italgas SpA        and Stoccaggi Gas SpA by Snam Rete Gas SpA                                      |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | 56        |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 56         |   |   | (56       | )      |   |       |   |
| Treasury        shares sold following the exercise of stock options by        Eni managers                                           |   |      |   |   |    |   |   | (1        | )      |   |     |   |   |   |   |   |      |   |   |       |   |   | 1          |   |   | 1          |   |   |       |   |   |       |   |   | 1          |   |   |      |   |   | 1          |   |
| Treasury shares sold following the exercise of        stock options by Saipem and Snam Rete Gas managers                             |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   | 10         |   |   |       |   |   |       |   |   | 10         |   |   | 27        |   |   | 37         |   |
| Non-controlling        interest recognized following the acquisition of the        control stake in the share capital of Altergaz SA |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 7         |   |   | 7          |   |
| Non-controlling interest excluded following the        divestment of the control stake in the share capital of        GreenStream BV |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (37       | )      |   | (37        | )      |
|                                                                                                                                 |   |      |   |   |    |   |   | **(1**    | **)**  |   |     |   |   |   |   |   | **56**    |   |   |       |   |   | **1**      |   |   | **756**    |   |   |       |   |   | **(4,367** | **)**  |   | **(3,555** | **)**  |   | **(573**  | **)**  |   | **(4,128** | **)**  |
| **Other changes in shareholders’ equity**                                                                                       |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Cost        related to stock options                                                                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   | 7          |   |   |       |   |   |       |   |   | 7          |   |   |      |   |   | 7          |   |
| Stock option expired                                                                                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   | (6         | )      |   |       |   |   |       |   |   | (6         | )      |   |      |   |   | (6         | )      |
| Stock        warrants on Altergaz SA                                                                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | (25       | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (25        | )      |   |      |   |   | (25        | )      |
| Other changes                                                                                                                        |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   |      |   |   |       |   |   |       |   |   | 13         |   |   |       |   |   |       |   |   | 13         |   |   | 15        |   |   | 28         |   |
|                                                                                                                                 |   |      |   |   |    |   |   |      |   |   |     |   |   |   |   |   | **(25**   | **)**  |   |       |   |   |       |   |   | **14**     |   |   |       |   |   |       |   |   | **(11**    | **)**  |   | **15**    |   |   | **4**      |   |
| **Balance at December 31, 2010**(Note 32)                                                                                            |   | **4,005** |   |   | **959** |   |   | **6,756** |   |   | **(174** | **)**  |   | **(3** | **)**  |   | **1,518** |   |   | **539**    |   |   | **(6,756** | **)**  |   | **39,855** |   |   | **(1,811** | **)**  |   | **6,318**  |   |   | **51,206** |   |   | **4,522** |   |   | **55,728** |   |
|                                                                                                                                 |   |           |        |   |         |        |   |           |        |   |          |        |   |        |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |            |        |

F-9

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##### Table of Contents

**CONSOLIDATED STATEMENTOF CASH FLOWS******(euro million)**

|   |   |    ** ****Note**** ** |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|------------------------------------------------|--------|----------|--------|----------|--------|----------|
|   |   |                                                |   |          |   |          |   |          |

| Net profit of the year                                                                                       |   |   |   | 9,558       |   |   | 5,317       |   |   | 7,383       |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| **Adjustments        to reconcile net profit to net cash provided by operating        activities**           |   |   |   |        |   |   |        |   |   |        |   |
| Depreciation, depletion and amortization                                                                     |   | (36)   |   | 8,422       |   |   | 8,762       |   |   | 8,881       |   |
| Impairments        of tangible and intangible assets, net                                                    |   | (36)   |   | 1,393       |   |   | 1,051       |   |   | 698         |   |
| Share of profit (loss) of equity-accounted        investments                                                |   | (38)   |   | (640        | )      |   | (393        | )      |   | (537        | )      |
| Gain on        disposal of assets, net                                                                       |   |   |   | (219        | )      |   | (226        | )      |   | (552        | )      |
| Dividend income                                                                                              |   | (38)   |   | (510        | )      |   | (164        | )      |   | (264        | )      |
| Interest        income                                                                                       |   |   |   | (592        | )      |   | (352        | )      |   | (96         | )      |
| Interest expense                                                                                             |   |   |   | 809         |   |   | 603         |   |   | 571         |   |
| Income        taxes                                                                                          |   | (39)   |   | 9,692       |   |   | 6,756       |   |   | 9,157       |   |
| Other changes                                                                                                |   |   |   | (375        | )      |   | (319        | )      |   | (39         | )      |
| *Changes        in working capital:*                                                                         |   |   |   |        |   |   |        |   |   |        |   |
| - inventories                                                                                                |   |   |   | 546         |   |   | 52          |   |   | (1,150      | )      |
| - trade        receivables                                                                                   |   |   |   | (479        | )      |   | 1,431       |   |   | (1,918      | )      |
| - trade payables                                                                                             |   |   |   | 1,171       |   |   | (2,559      | )      |   | 2,770       |   |
| -        provisions for contingencies                                                                        |   |   |   | 387         |   |   | 517         |   |   | 588         |   |
| - other assets and liabilities                                                                               |   |   |   | 2,864       |   |   | (636        | )      |   | (2,010      | )      |
| *Cash        flow from changes in working capital*                                                           |   |   |   | *4,489*     |   |   | *(1,195*    | *)*    |   | *(1,720*    | *)*    |
| Net change in the provisions for employee        benefits                                                    |   |   |   | (8          | )      |   | 16          |   |   | 21          |   |
| Dividends        received                                                                                    |   |   |   | 1,150       |   |   | 576         |   |   | 799         |   |
| Interest received                                                                                            |   |   |   | 266         |   |   | 594         |   |   | 126         |   |
| Interest        paid                                                                                         |   |   |   | (852        | )      |   | (583        | )      |   | (600        | )      |
| Income taxes paid, net of tax receivables        received                                                    |   |   |   | (10,782     | )      |   | (9,307      | )      |   | (9,134      | )      |
| **Net        cash provided by operating activities**                                                         |   |   |   | **21,801**  |   |   | **11,136**  |   |   | **14,694**  |   |
| *- of which with related parties*                                                                            |   | (42)   |   | *(62*       | *)*    |   | *(1,188*    | *)*    |   | *(1,749*    | *)*    |
| Investing        activities:                                                                                 |   |   |   |        |   |   |        |   |   |        |   |
| - tangible assets                                                                                            |   | (14)   |   | (12,082     | )      |   | (12,032     | )      |   | (12,308     | )      |
| -        intangible assets                                                                                   |   | (16)   |   | (2,480      | )      |   | (1,663      | )      |   | (1,562      | )      |
| - consolidated subsidiaries and businesses                                                                   |   |   |   | (3,634      | )      |   | (25         | )      |   | (143        | )      |
| -        investments                                                                                         |   | (17)   |   | (385        | )      |   | (230        | )      |   | (267        | )      |
| - securities                                                                                                 |   |   |   | (152        | )      |   | (2          | )      |   | (50         | )      |
| -        financing receivables                                                                               |   |   |   | (710        | )      |   | (972        | )      |   | (866        | )      |
| - change in payables and receivables in relation        to investing activities and capitalized depreciation |   |   |   | 367         |   |   | (97         | )      |   | 261         |   |
| *Cash        flow from investing activities*                                                                 |   |   |   | *(19,076*   | *)*    |   | *(15,021*   | *)*    |   | *(14,935*   | *)*    |
| Disposals:                                                                                                   |   |   |   |        |   |   |        |   |   |        |   |
| - tangible        assets                                                                                     |   |   |   | 318         |   |   | 111         |   |   | 272         |   |
| - intangible assets                                                                                          |   |   |   | 2           |   |   | 265         |   |   | 57          |   |
| -        consolidated subsidiaries and businesses                                                            |   |   |   | 149         |   |   |        |   |   | 215         |   |
| - investments                                                                                                |   |   |   | 510         |   |   | 3,219       |   |   | 569         |   |
| -        securities                                                                                          |   |   |   | 145         |   |   | 164         |   |   | 14          |   |
| - financing receivables                                                                                      |   |   |   | 1,293       |   |   | 861         |   |   | 841         |   |
| - change        in payables and receivables in relation to disposals                                         |   |   |   | (299        | )      |   | 147         |   |   | 2           |   |
| *Cash flow from disposals*                                                                                   |   |   |   | *2,118*     |   |   | *4,767*     |   |   | *1,970*     |   |
| **Net        cash used in investing activities**                                                             |   |   |   | **(16,958** | **)**  |   | **(10,254** | **)**  |   | **(12,965** | **)**  |
| *- of which with related parties*                                                                            |   | (42)   |   | *(1,598*    | *)*    |   | *(1,262*    | *)*    |   | *(1,626*    | *)*    |
|                                                                                                         |   |        |   |             |        |   |             |        |   |             |        |

F-10

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##### Table of Contents

**CONSOLIDATED STATEMENT OFCASH FLOWS*****continued*****(euro million)**

|   |   |    ** ****Note**** ** |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|------------------------------------------------|--------|----------|--------|----------|--------|----------|
|   |   |                                                |   |          |   |          |   |          |

| Proceeds from long-term debt                                                                                    |   |   |   | 3,774      |   |   | 8,774      |   |   | 2,953      |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Repayments        of long-term debt                                                                             |   |   |   | (2,104     | )      |   | (2,044     | )      |   | (3,327     | )      |
| Increase (decrease) in short-term debt                                                                          |   |   |   | (690       | )      |   | (2,889     | )      |   | 2,646      |   |
|                                                                                                            |   |   |   | **980**    |   |   | **3,841**  |   |   | **2,272**  |   |
| Net capital contributions by non-controlling        interest                                                    |   |   |   | 20         |   |   | 1,551      |   |   |       |   |
| Net        acquisition of treasury shares different from Eni SpA                                                |   |   |   | (50        | )      |   | 9          |   |   | 37         |   |
| Acquisition of additional interests in        consolidated subsidiaries                                         |   |   |   |       |   |   | (2,068     | )      |   |       |   |
| Dividends        paid to Eni’s shareholders                                                                |   |   |   | (4,910     | )      |   | (4,166     | )      |   | (3,622     | )      |
| Dividends paid to non-controlling interest                                                                      |   |   |   | (297       | )      |   | (350       | )      |   | (514       | )      |
| Net        purchase of treasury shares                                                                          |   |   |   | (768       | )      |   |       |   |   |       |   |
| **Net cash used in financing activities**                                                                       |   |   |   | **(5,025** | **)**  |   | **(1,183** | **)**  |   | **(1,827** | **)**  |
| *- of        which with related parties*                                                                        |   | (42)   |   | *14*       |   |   | *(14*      | *)*    |   | *(23*      | *)*    |
| Effect of change in consolidation        (inclusion/exclusion of significant/insignificant        subsidiaries) |   |   |   | (1         | )      |   |       |   |   |       |   |
| Effect of        exchange rate changes on cash and cash equivalents and        other changes                    |   |   |   | 8          |   |   | (30        | )      |   | 39         |   |
| **Net cash flow for the year**                                                                                  |   |   |   | **(175**   | **)**  |   | **(331**   | **)**  |   | **(59**    | **)**  |
| **Cash        and cash equivalents - beginning of year**                                                        |   | (7)    |   | **2,114**  |   |   | **1,939**  |   |   | **1,608**  |   |
| **Cash and cash equivalents - end of year**                                                                     |   | (7)    |   | **1,939**  |   |   | **1,608**  |   |   | **1,549**  |   |
|                                                                                                            |   |        |   |            |        |   |            |        |   |            |        |

 

 

 

 

F-11

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##### Table of Contents

**Notes to the Consolidated FinancialStatements**

**1 Basis of presentation**

The Consolidated Financial Statements of Eni Group have beenprepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International AccountingStandards Board (IASB). Oil and natural gas exploration andproduction activity is accounted for in conformity withinternationally accepted accounting principles. Specifically,this concerns the determination of the amortization expensesusing the unit-of-production method and the recognition of theproduction-sharing agreement and buy-back contracts. TheConsolidated Financial Statements have been prepared on ahistorical cost basis, taking into account where appropriate ofany value adjustments, except for certain items that under IFRSmust be recognized at fair value as described in the summary ofsignificant accounting policies paragraph.

The Consolidated Financial Statements include the statutoryaccounts of Eni SpA and the accounts of subsidiaries where thecompany holds the right to directly or indirectly exercisecontrol, determine financial and management decisions and obtaineconomic and financial benefits. For entities acting assole-operator in the management of oil and gas contracts onbehalf of companies participating in a joint venture, theactivities are financed proportionately based on a budgetapproved by the participating companies upon presentation ofperiodical reports of proceeds and expenses. Costs and revenuesand other operating data (production, reserves, etc.) of theproject, as well as the related obligations arising from theproject, are recognized proportionally directly in the financialstatements of the companies involved. The exclusion fromconsolidation of some subsidiaries, which are not material eitherindividually or overall, has not produced significant1economic and financial effects on the Consolidated FinancialStatements. These interests are accounted for as described belowunder the item "Financial fixed assets".

Subsidiaries’ financial statements are audited by theindependent auditors who examine and certify also the informationrequired for the preparation of the Consolidated FinancialStatements. The 2010 Consolidated Financial Statements approvedby Eni’s Board of Directors on March 10, 2011 were auditedby the independent auditor Reconta Ernst & Young SpA. Theindependent auditor of Eni SpA, as the main auditor is wholly incharge of the auditing activities of the Consolidated FinancialStatements; when there are other independent auditors, it takesthe responsibility of their work. Amounts in the financialstatements and in the notes are expressed in millions of euros(euro million).

 

**2 Principles of consolidation**

**Interest in consolidated companies**Assets and liabilities, revenues and expenses related tofully consolidated subsidiaries are wholly incorporated in theConsolidated Financial Statements; the book value of interests inthese subsidiaries is eliminated against the corresponding shareof the shareholders’ equity by attributing to each of thebalance sheet items its fair value at the acquisition date. Whenacquired, the net equity of controlled subsidiaries is initiallyrecognized at fair value. The excess of the purchase price of anacquired entity over the total fair value assigned to assetsacquired and liabilities assumed is recognized as goodwill;negative goodwill is recognized in the profit and loss account.

Equity and net profit of non-controlling interests areincluded in specific lines of equity and profit and loss account.If the partial control is acquired, this share of equity isdetermined using the proportionate share of the fair value ofassets and liabilities, excluding any related goodwill, at thetime when control is acquired (partial goodwill); as analternative, it is allowed the recognition of the entire amountof goodwill deriving from the acquisition, taking into accounttherefore also the portion attributable to the non-controllinginterests (full goodwill method); on this regard, thenon-controlling interests are measured at their total fair valuewhich therefore includes the goodwill attributable to them2.The method of measuring goodwill (partial goodwill or fullgoodwill) is selective for each business combination.

The purchase of additional ownership interests in subsidiariesfrom non-controlling interests is recognized in equity andrepresents the excess of the amount paid over the carrying valueof the non-controlling interests acquired; similarly, arerecognized in equity the effects associated with the sale ofnon-controlling interests in consolidated subsidiaries withoutloss of control.

----

| (1) |    | According to        the requirements of the Framework of international        accounting standards, information is material if its        omission or misstatement could influence the economic        decisions that users make on the basis of the financial        statements. |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | The choice        between partial goodwill and full goodwill method is        available also for business combinations resulting in the        recognition of a "negative goodwill" in profit        or loss account (gain on bargain purchase).                        |

F-12

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##### Table of Contents

**Inter-company transactions**Inter-company transactions, balances and unrealized gains ontransactions between group companies are eliminated.

Unrealized losses are not eliminated since they are consideredan impairment indicator of the asset transferred.

 

**Foreign currency translation**Financial statements of foreign companies having a functionalcurrency other than the euro, that represents the Group’sfunctional currency, are translated into the presentationcurrency using closing exchange rates for assets and liabilities,historical exchange rates for equity accounts and average ratesfor the period for the profit and loss account (source: Bank ofItaly). Cumulative exchange rate differences resulting from thistranslation are recognized in shareholders’ equity under"Other reserves" in proportion to the Group’sinterest and under "Non-controlling interest" for theportion related to non-controlling interests’ share.Cumulative exchange rate differences are charged to the profitand loss account when the entity disposes the entire interest ina foreign operation or at the loss of control of a foreignsubsidiary. On the partial disposal, without losing control, theproportionate share of cumulative amount of exchange differencesrelated to the disposed interest is recognized in equity tonon-controlling interests. Financial statements of foreignsubsidiaries which are translated into the euro are denominatedin the functional currencies of the countries where the entitiesoperate. The U.S. dollar is the prevalent functional currency forthe entities that do not use the euro. The main foreign exchangerates used to translate the financial statements adopting adifferent functional currency are indicated below:

| (currency        amount for euro 1) | Annual average exchange        rate 2008 |   | Exchange rate at         Dec. 31, 2008 |   | Annual average exchange        rate 2009 |   | Exchange rate at         Dec. 31, 2009 |   | Annual average exchange        rate 2010 |   | Exchange rate at         Dec. 31, 2010 |
|-------------------------------------|------------------------------------------|--------|----------------------------------------|--------|------------------------------------------|--------|----------------------------------------|--------|------------------------------------------|--------|----------------------------------------|
|                                |                                          |   |                                        |   |                                          |   |                                        |   |                                          |   |                                        |

| U.S. Dollar              |   | 1.47   |   | 1.39   |   | 1.39   |   | 1.44   |   | 1.33   |   | 1.34   |
|--------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Pound        Sterling    |   | 0.80   |   | 0.95   |   | 0.89   |   | 0.89   |   | 0.86   |   | 0.86   |
| Norwegian Krone          |   | 8.22   |   | 9.75   |   | 8.73   |   | 8.30   |   | 8.00   |   | 7.80   |
| Australian        Dollar |   | 1.74   |   | 2.03   |   | 1.77   |   | 1.60   |   | 1.44   |   | 1.31   |
| Hungarian Forint         |   | 251.51 |   | 266.70 |   | 280.33 |   | 270.42 |   | 275.48 |   | 277.95 |
|                     |   |        |   |        |   |        |   |        |   |        |   |        |

 

**3 Summary of significant accounting policies**

The most significant accounting policies used in thepreparation of the Consolidated Financial Statements aredescribed below.

**Current assets**Held for trading financial assets and available-for-salefinancial assets are measured at fair value with gains or lossesrecognized in the profit and loss account under "Financialincome (expense)"3 and to the equity reserverelated to other comprehensive income, respectively. In thelatter case, changes in fair value recognized in equity arecharged to the profit and loss account when they are impaired orrealized. The objective evidence that an impairment loss hasoccurred is verified considering, inter alia, significantbreaches of contracts, serious financial difficulties or the highprobability of insolvency of the counterparty; asset write downsare included in the carrying amount.

Available-for-sale financial assets include financial assetsother than derivative financial instruments, loans andreceivables, held for trading financial assets andheld-to-maturity financial assets.

The fair value of financial instruments is determined bymarket quotations or, in their absence, it is estimated adoptingsuitable financial valuation models which take into account allthe factors adopted by market operators and prices obtained insimilar recent transactions in the market.

Interests and dividends on financial assets stated at fairvalue with gains or losses reflected in the profit and lossaccount are accounted for on an accrual basis in "Financialincome (expense)" and "Other gain (loss) frominvestments", respectively. When the purchase or sale of afinancial asset under a contract whose terms require 

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| (3) |    | Starting from        2009, changes in the fair value of non-hedging        derivatives on commodities, also including the effects of        settlements, are recognized in the profit and loss        account item "Other operating income        (expense)". |
|-----|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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delivery of the asset within the time frame generallyestablished by regulation or convention in the marketplaceconcerned, the transaction is accounted for on the settlementdate.

Receivables are measured at amortized cost (see item"Financial fixed assets" below).

Transferred financial assets are derecognized when thecontractual rights to receive the cash flows of the financialassets are transferred together with the risks and rewards of theownership.

Inventories, including compulsory stocks and excludingcontract work in progress, are stated at the lower of purchase orproduction cost and net realizable value. Net realizable value isthe estimated selling price less the costs to sell, or, withreference to inventories of crude oil and petroleum productsalready included in binding sale contracts, the contractual saleprice. Inventories of natural gas which are principally acquiredwith the purpose of selling in the near future and generating aprofit from fluctuations in price are measured at fair value lesscosts to sell.

The cost for inventories of hydrocarbons (crude oil,condensates and natural gas) and petroleum products is determinedby applying the weighted-average cost method on a three-monthbasis, or monthly, when it is justified by the use and theturnover of inventories of crude oil and petroleum products; thecost for inventories of the Petrochemical segment is determinedby applying the weighted-average cost on an annual basis.

Contract work in progress is measured using the cost-to-costmethod whereby contract revenue is recognized based on the stageof completion as determined by the cost incurred. Advances arededucted from inventories within the limits of contractualconsiderations; any excess of such advances over the value of theinventories is recorded as a liability. Losses related toconstruction contracts are recognized immediately as an expensewhen it is probable that total contract costs will exceed totalcontract revenues. Contract work in progress not yet invoiced,whose payment will be made in a foreign currency, is translatedto euro using the current exchange rates at year end and theeffect of rate changes is reflected in the profit and lossaccount.

When take-or-pay clauses are included in long-term natural gaspurchase contracts, uncollected gas volumes which imply the"pay" clause, measured using the price formulascontractually defined, are recognized under "Otherassets" as "Deferred costs" as an offset to"Other payables" or, after the settlement, to"Cash and Cash equivalents". The allocated deferredcosts are charged to the profit and loss account: (i) whennatural gas is actually delivered – the related cost isincluded in the determination of the weighted-average cost ofinventories; and (ii) for the portion which is not recoverable,when it is not possible to collect gas that was previouslyuncollected within the contractually defined deadlines.Furthermore, the allocated deferred costs are tested for economicrecoverability by comparing the related carrying amount and theirnet realizable value, measured adopting the same criteriadescribed for inventories.

Hedging instruments are described in the section"Derivative Instruments".

 

**Non-current assets**

**Property, plant and equipment**4****Tangible assets, including investment properties, arerecognized using the cost model and stated at their purchase orself-construction cost including any costs directly attributableto bringing the asset into operation. In addition, when asubstantial period of time is required to make the asset readyfor use, the purchase price or self-construction cost includesthe borrowing costs incurred that could have otherwise been savedhad the investment not been made.

In the case of a present obligation for the dismantling andremoval of assets and the restoration of sites, the carryingvalue includes, with a corresponding entry to a specificprovision, the estimated (discounted) costs to be incurred at themoment the asset is retired. Changes in estimate of the carryingamounts of provisions due to the passage of time and changes indiscount rates are recognized under "Provisions forcontingencies"5.

Property, plant and equipment is not revalued for financialreporting purposes.

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| (4) |    | Recognition        and evaluation criteria of exploration and production        activities are described in the section "Exploration        and production activities" below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) |    | The company        recognizes material provisions for the retirement of        assets in the Exploration & Production business. No        significant asset retirement obligations associated with        any legal obligations to retire refining, marketing and        transportation (downstream) and chemical long-lived        assets are generally recognized, as undetermined        settlement dates for asset retirements do not allow a        reasonable estimate of the fair value of the associated        retirement obligation. The company performs periodic        reviews of its downstream and chemical long-lived assets        for any changes in facts and circumstances that might        require recognition of a retirement obligation. |

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Assets carried under financial leasing or concerningarrangements that do not take the legal form of a finance leasebut substantially transfer all the risks and rewards of ownershipof the leased asset are recognized at fair value, net of taxesdue from the lessor or, if lower, at the present value of theminimum lease payments. Leased assets are included withinproperty, plant and equipment. A corresponding financial debtpayable to the lessor is recognized as a financial liability.These assets are depreciated using the criteria described below.When the renewal is not reasonably certain, leased assets aredepreciated over the shorter of the lease term or the estimateduseful life of the asset. Expenditures on renewals, improvementsand transformations which provide additional economic benefitsare capitalized to property, plant and equipment. Tangibleassets, from the moment they begin or should begin to be used,are depreciated systematically using a straight-line method overtheir useful life6 which is an estimate of the periodover which the assets will be used by the company. When tangibleassets are composed of more than one significant element withdifferent useful lives, each component is depreciated separately.The amount to be depreciated is the book value less the estimatednet realizable value at the end of the useful life, if it issignificant and can be reasonably determined. Land is notdepreciated, even when purchased with a building. Tangible assetsheld for sale are not depreciated (see item "Non-currentassets held for sale" below). Assets that can be used freeof charge by third parties are depreciated over the shorter termof the duration of the concession or the asset’s usefullife. Replacement costs of identifiable components in complexassets are capitalized and depreciated over their useful life;the residual book value of the component that has beensubstituted is charged to the profit and loss account.Expenditures for ordinary maintenance and repairs are expensed asincurred. The carrying value of property, plant and equipment isreviewed for impairment whenever events indicate that thecarrying amounts for those assets may not be recoverable. Therecoverability of an asset is assessed by comparing its carryingvalue with the recoverable amount, which is the higher of fairvalue less costs to sell or its value in use. If there is nobinding sales agreement, fair value is estimated on the basis ofmarket values, recent transactions, or the best availableinformation that shows the proceeds that the company couldreasonably expect to collect from the disposal of the asset.Value in use is the present value of the future cash flowsexpected to be derived from the use of the asset and, ifsignificant and reasonably determinable, the cash flows derivingfrom its disposal at the end of its useful life, net of disposalcosts. Cash flows are determined on the basis of reasonable anddocumented assumptions that represent the best estimate of thefuture economic conditions during the remaining useful life ofthe asset, giving more importance to independent assumptions.Oil, natural gas and petroleum products prices (and to prices forproducts which derive there from) used to quantify the expectedfuture cash flows are estimated based on forward pricesprevailing in the marketplace for the first four years andmanagement’s long-term planning assumptions thereafter.Discounting is carried out at a rate that reflects a currentmarket valuation of the time value of money and of those specificrisks of the asset that are not reflected in the estimate of thefuture cash flows. In particular, the discount rate used is theWeighted Average Cost of Capital (WACC) adjusted for the specificcountry risk of the activity. The evaluation of the specificcountry risk to be included in the discount rate is provided byexternal parties. The WACC differs considering the riskassociated with individual operating segments; in particular forthe assets belonging to the Gas & Power and Engineering &Construction segments, taking into account the different riskcompared with Eni, specific WACC rates have been defined (for Gas& Power segment on the basis of a sample of companiesoperating in the same segment; for Engineering & Constructionsegment on the basis of the market quotation); WACC used forimpairments in the Gas & Power segment is adjusted to takeinto consideration the risk premium of the specific country ofthe activity while WACC used for impairments in the Engineering& Construction segment is not adjusted for country risk asmost of the company assets are not located in a specific country.For the regulated activities, the discount rate used for themeasurement of the value in use is equal to the rate returndefined by the Regulator. For the other segments, a single WACCis used considering that the risk is the same to that of Eni as awhole. Value in use is calculated net of the tax effect as thismethod results in values similar to those resulting fromdiscounting pre-tax cash flows at a pre-tax discount ratederiving, through an iteration process, from a post-taxvaluation. Valuation is carried out for each single asset or, ifthe realizable value of a single asset cannot be determined, forthe smallest identifiable group of assets that generatesindependent cash inflows from their continuous use, the so-called"cash-generating unit". When the reasons for theirimpairment cease to exist, Eni makes a reversal that isrecognized in the profit or loss account as income from assetrevaluation. This reversed amount cannot exceed the carryingamount that would have been determined, net of depreciation, hadno impairment loss been recognized for the asset in prior years.

 

**Intangible assets**Intangible assets are assets without physical substance,controlled by the company and able to produce future economicbenefits, and goodwill acquired in business combinations. Anasset is classified as intangible when management is able todistinguish it clearly from goodwill. This condition is normallymet when: (i) the intangible 

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| (6) |    | With        reference to the preparation of the Consolidated        Financial Statements 2010, prospectively starting from        January 1, 2010, management has reviewed: (i) the        useful life of pipelines (from 40 to 50 years),        consistently with the review made by the Electricity and        Gas Authority for tariff purposes. The positive impact on        annual results has been euro 31 million (gross of taxes);        and (ii) the residual useful lives of refineries and        related facilities due to a change in the expected        pattern of consumption of the expected future economic        benefit embodied in those assets. In doing so, the        Company has aligned with practices prevailing among        integrated oil companies, particularly the European        companies. Management’s conclusions have been        supported by an independent technical review. The        positive impact on annual results has been euro 76        million (gross of taxes). |
|-----|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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asset arises from contractual or legal rights, or (ii) theasset is separable, i.e. can be sold, transferred, licensed,rented or exchanged, either individually or as an integral partof other assets. An entity controls an asset if it has the powerto obtain the future economic benefits generated by theunderlying asset and to restrict the access of others to thosecash flows.

Intangible assets are initially stated at cost as determinedby the criteria used for tangible assets and they are notrevalued for financial reporting purposes.

Intangible assets with a definite useful life are amortizedsystematically over their useful life estimated as the periodover which the assets will be used by the company; the amount tobe amortized and the recoverability of the carrying amount areverified in accordance with the criteria described in the section"Property, plant and equipment".

Goodwill and other intangible assets with an indefinite usefullife are not amortized. The recoverability of their carryingvalue is reviewed at least annually and whenever events orchanges in circumstances indicate that the carrying value may notbe recoverable. Goodwill is tested for impairment at the level ofthe smallest aggregate on which the company, directly orindirectly, evaluates the return on the capital expenditure towhich goodwill relates. When the carrying amount of thecash-generating unit, including goodwill allocated thereto,exceeds the cash-generating unit’s recoverable amount7,the excess is recognized as impairment. The impairment loss isfirst allocated to reduce the carrying amount of goodwill; anyremaining excess to be allocated to the assets of the unit isapplied pro-rata on the basis of the carrying amount of eachasset in the unit. Impairment charges against goodwill are notreversed8.

Costs of technological development activities are capitalizedwhen: (i) the cost attributable to the development activity canbe reasonably determined; (ii) there is the intention,availability of funding and technical capacity to make the assetavailable for use or sale; and (iii) it can be demonstrated thatthe asset is able to generate future economic benefits.

Intangible assets also include public to private serviceconcession arrangements concerning the development, financing,operation and maintenance of infrastructures under concession, inwhich: (i) the grantor controls or regulates what services theoperator must provide with the infrastructure, and at what price;and (ii) the grantor controls – by the ownership, beneficialentitlement or otherwise – any significant residual interestin the infrastructure at the end of the concession arrangement.

According to the agreements, the operator has the right tooperate the infrastructure, controlled by the grantor, in orderto provide the public service9.

 

**Exploration and production activities**10 11

*Acquisition of mineral rights*Costs associated with the acquisition of mineral rights arecapitalized in connection with the assets acquired (such asexploratory potential, probable and possible reserves and provedreserves). When the acquisition is related to a set ofexploratory potential and reserves, the cost is allocated to thedifferent assets acquired on the basis of the value of therelevant discounted cash flows. Expenditure for the exploratorypotential, represented by the costs for the acquisition of theexploration permits and for the extension of existing permits, isrecognized under "Intangible assets" and is amortizedon a straight-line basis over the period of the exploration ascontractually established. If the exploration is abandoned, theresidual expenditure is charged to the profit and loss account.Acquisition costs for proved reserves and for possible andprobable reserves are recognized in the balance sheet as assets.Costs associated with proved reserves are amortized on a UOPbasis, as detailed in the section "Development",considering both developed and undeveloped reserves. Expendituresassociated with possible and probable reserves 

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| (7)  |    | For the        definition of recoverable amount see item "Property,        plant and equipment".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8)  |    | Impairment        charges recognized in an interim period are not reversed        also when, considering conditions existing in a        subsequent interim period, they would have been        recognized in a smaller amount or would not have been        recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (9)  |    | When the        operator has an unconditional contractual right to        receive cash or another financial asset from or at the        direction of the grantor, considerations received or        receivable by the operator for construction or upgrade of        infrastructure are recognized as a financial asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (10) |    | IFRS does not        have specific criteria for hydrocarbon exploration and        production activities. Eni continues to use existing        accounting policies for exploration and evaluation of        assets previously applied before the introduction of IFRS        6 "Exploration for and evaluation of mineral        resources".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (11) |    | With        reference to the preparation of the Consolidated        Financial Statements 2010, prospectively starting from        April 1, 2010, Eni has updated the natural gas conversion        factor from 5,742 to 5,550 standard cubic feet of gas per        barrel of oil equivalent. This update reflected changes        in Eni’s gas properties that took place in recent        years and was assessed by collecting data on the heating        power of gas in all Eni’s 230 gas fields on stream        at the end of 2009. Therefore, starting from second        quarter 2010, UOP depreciation rate for oil and gas        assets is defined considering productions and reserves        determined using updated gas conversion factor to oil and        gas joint production reservoirs. The effect of this        update on production expressed in boe was 26 KBOE/d for        the full year 2010. Other per boe indicators were only        marginally affected by the update (e.g. realization        prices, costs per boe) and also negligible was the impact        on depletion charges. Other oil companies may use        different conversion rates. |

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are not amortized until classified as proved reserves; in caseof a negative result, the costs are charged to the profit andloss account.

*Exploration*Costs associated with exploratory activities for oil and gasproducing properties incurred both before and after theacquisition of mineral rights (such as acquisition of seismicdata from third parties, test wells and geophysical surveys) areinitially capitalized in order to reflect their nature as aninvestment and subsequently amortized in full when incurred.

*Development*Development costs are those costs incurred to obtain accessto proved reserves and to provide facilities for extracting,gathering and storing oil and gas. They are then capitalizedwithin property, plant and equipment and amortized generally on aUOP basis, as their useful life is closely related to theavailability of feasible reserves. This method provides forresidual costs at the end of each quarter to be amortized at arate representing the ratio between the volumes extracted duringthe quarter and the proved developed reserves existing at the endof the quarter, increased by the volumes extracted during thequarter. This method is applied with reference to the smallestaggregate representing a direct correlation between investmentsand proved developed reserves. Costs related to unsuccessfuldevelopment wells or damaged wells are expensed immediately aslosses on disposal. Impairments and reversal of impairments ofdevelopment costs are made on the same basis as those fortangible assets.

*Production*Production costs are those costs incurred to operate andmaintain wells and field equipment and are expensed as incurred.

*Production-sharing agreements and buy-back contracts*Oil and gas reserves related to production-sharing agreementsand buy-back contracts are determined on the basis of contractualclauses related to the repayment of costs incurred for theexploration, development and production activities executedthrough the use of company’s technologies and financing(cost oil) and the company’s share of production volumes notdestined to cost recovery (profit oil). Revenues from the sale ofthe production entitlements against both cost oil and profit oilare accounted for on an accrual basis whilst exploration,development and production costs are accounted for according tothe policies mentioned above. The company’s share ofproduction volumes and reserves representing the profit oilincludes the share of hydrocarbons which corresponds to the taxesto be paid, according to the contractual agreement, by thenational government on the behalf of the company. As aconsequence the company has to recognise at the same time anincrease in the taxable profit, through the increase of therevenues, and a tax expense.

*Retirement*Costs expected to be incurred with respect to the retirementof a well, including costs associated with removal of productionfacilities, dismantlement and site restoration, are capitalizedand amortized on a UOP basis, consistent with the policydescribed under "Property, plant and equipment".

 

**Grants**Grants related to assets are recorded as a reduction ofpurchase price or production cost of the related assets whenthere is reasonable assurance that all the required conditionsattached to them, agreed upon with government entities, have beenmet.

Grants not related to capital expenditure are recognized inthe profit and loss account.

 

**Financial fixed assets**

*Investments*Investments in subsidiaries excluded from consolidation,jointly controlled entities and associates are accounted forusing the equity method12. When there is objectiveevidence of impairment (see also section "Currentassets"), the recoverability is tested by comparing thecarrying amount and the related recoverable amount determined byadopting the criteria indicated in the section "Property,plant and equipment".

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| (12) |    | In the case        of step acquisition of a significant influence (or joint        control), the investment is recognized at the acquisition        date of significant influence (joint control) at the        amount deriving from the use of the equity method        assuming the adoption of this method since initial        acquisition; the "step-up" of the carrying        amount of interests owned before the acquisition of        significant influence (joint control) is taken to equity. |
|------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Subsidiaries, joint ventures and associates excluded fromconsolidation are accounted for at cost, adjusted for impairmentlosses if this does not result in a misrepresentation of thecompany’s financial condition. When the reasons for theirimpairment cease to exist, investments accounted for at cost arere-valued within the limit of the impairment made and theireffects are included in "Other income (expense) frominvestments".

Other investments, included in non-current assets, arerecognized at their fair value and their effects are included inthe equity reserve related to other comprehensive income; thechanges in fair value recognized in equity are charged to theprofit and loss account when it is impaired or realized. Wheninvestments are not traded in a public market and fair valuecannot be reasonably determined, investments are accounted for atcost, adjusted for impairment losses; impairment losses may notbe reversed13.

The risk deriving from losses exceeding shareholders’equity is recognized in a specific provision to the extent theparent company is required to fulfill legal or implicitobligations towards the subsidiary or to cover its losses.

*Receivables and financial assets to be held to maturity*Receivables and financial assets to be held to maturity arestated at cost represented by the fair value of the initialexchanged amount adjusted to take into account direct externalcosts related to the transaction (e.g. fees of agents orconsultants, etc.). The initial carrying value is then adjustedto take into account capital repayments, devaluations andamortization of the difference between the reimbursement valueand the initial carrying value. Amortization is carried out onthe basis of the effective interest rate of return represented bythe rate that equalizes, at the moment of the initialrevaluation, the current value of expected cash flows to theinitial carrying value (so-called "amortized costmethod"). Receivables for finance leases are recognized atan amount equal to the present value of the lease payments andthe purchase option price or any residual value; the amount isdiscounted at the interest rate implicit in the lease.

Any impairment is recognized by comparing the carrying valuewith the present value of the expected cash flows discounted atthe effective interest rate as defined at initial recognition, orat the moment of its updating to reflect re-pricingscontractually established.

Receivables and financial assets to be held to maturity arerecognized net of the allowance for impairment losses; when theimpairment loss is definite the allowance for impairment lossesis reversed for excess charges. Changes to the carrying amount ofreceivables or financial assets in accordance with the amortizedcost method are recognized as "Financial income(expense)".

 

**Non-current assets held for sale**Non-current assets and current and non-current assetsincluded within disposal groups, whose carrying amount will berecovered principally through a sale transaction rather thanthrough their continuing use, are classified as held for sale.

Non-current assets held for sale, current and non-currentassets included within disposal groups that have been classifiedas held for sale and the liabilities directly associated withthem are recognized in the balance sheet separately from theentity’s other assets and liabilities.

Non-current assets held for sale are not depreciated and theyare measured at the lower of the fair value less costs to sell ortheir carrying amount.

Any difference between the carrying amount and the fair valueless costs to sell is taken to the profit or loss account as animpairment loss; any subsequent reversal is recognized up to thecumulative impairment losses, including those recognized prior toqualification of the asset as held for sale.

 

**Financial liabilities**Debt is measured at amortized cost (see item "Financialfixed assets" above).

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| (13) |    | Impairment        charges recognized in an interim period are not reversed        also when, considering conditions existing in a        subsequent interim period, they would have been        recognized in a smaller amount or would not have been        recognized. |
|------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Provisions for contingencies**Provisions for contingencies are liabilities for risks andcharges of a definite nature and whose existence is certain orprobable but for which at year-end the timing or amount of futureexpenditure is uncertain. Provisions are recognized when: (i)there is a current obligation (legal or constructive), as aresult of a past event; (ii) it is probable that the settlementof that obligation will result in an outflow of resourcesembodying economic benefits; and (iii) the amount of theobligation can be reliably estimated. The amount recognized as aprovision is the best estimate of the expenditure required tosettle the present obligation at the balance sheet date or totransfer it to third parties at that time. The amount recognizedfor onerous contracts is the lower of the cost necessary tofulfill the obligations, net of expected economic benefitsderiving from the contracts, and any indemnity or penalty arisingfrom failure to fulfill these obligations. If the effect of thetime value is material, and the payment date of the obligationscan be reasonably estimated, provisions to be accrued are thepresent value of the expenditures expected to be required tosettle the obligation at a discount rate that reflects thecompany’s average borrowing rate taking into account therisks associated with the obligation. The increase in theprovision due to the passage of time is recognized as"Financial income (expense)".

When the liability regards a tangible asset (e.g. siterestoration and abandonment), the provision is stated with acorresponding entry to the asset to which it refers. Charges tothe profit and loss account are made with the amortizationprocess.

Costs that the company expects to bear in order to carry outrestructuring plans are recognized when the company formallydefines the plan and the interested parties have developed thereasonable expectation that the restructuring will happen.

Provisions are periodically updated to show the variations ofestimates of costs, production times and actuarial rates. Theestimated revisions to the provisions are recognized in the sameprofit and loss account item that had previously held theprovision, or, when the liability regards tangible assets (i.e.site restoration and abandonment) with a corresponding entry tothe assets to which they refer.

In the notes to the Consolidated Financial Statements, thefollowing potential liabilities are described: (i) possible,but not probable obligations deriving from past events, whoseexistence will be confirmed only when one or more future eventsbeyond the company’s control occur; and (ii) currentobligations deriving from past events whose amount cannot bereasonably estimated or whose fulfillment will probably notresult in an outflow of resources embodying economic benefits.

 

**Employee benefits**Post-employment benefit plans, including constructiveobligations, are classified as either defined contribution plansor defined benefit plans depending on the economic substance ofthe plan as derived from its principal terms and conditions. Inthe first case, the company’s obligation, which consists ofmaking payments to the State or a trust or a fund, is determinedon the basis of contributions due. The liabilities related todefined benefit plans, net of any plan assets, are determined onthe basis of actuarial assumptions and charged on an accrualbasis during the employment period required to obtain thebenefits.

The actuarial gains and losses of defined benefit plans arerecognized pro-rata on service, in the profit and loss accountusing the corridor method, if and to the extent that netcumulative unrecognized actuarial gains and losses at the end ofthe previous reporting period exceed the greater of 10% of thepresent value of the defined benefit obligation or 10% of thefair value of the plan assets, over the expected averageremaining working lives of the employees participating in theplan. Such actuarial gains and losses derive from changes in theactuarial assumptions used or from a change in the conditions ofthe plan. Obligations for long-term benefits are determined byadopting actuarial assumptions. The effect of changes inactuarial assumptions or a change in the characteristics of thebenefit are taken to the profit or loss in their entirety.

 

**Treasury shares**Treasury shares are recorded at cost and as a reduction ofequity. Gains resulting from subsequent sales are recorded inequity.

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**Revenues and costs**Revenues associated with sales of products and services arerecorded when significant risks and rewards of ownership pass tothe customer or when the transaction can be considered settledand the associated revenue can be reliably measured. Inparticular, revenues are recognized for the sale of:

| • |   | crude oil, generally upon        shipment; |
|--------|--------|--------------------------------------------|

| • |   | natural gas, upon delivery        to the customer;                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | petroleum products sold to        retail distribution networks, generally upon delivery to        the service stations, whereas all other sales of        petroleum products are generally recognized upon        shipment; |
| • |   | chemical products and other        products, generally upon shipment.                                                                                                                                                       |

Revenues are recognized upon shipment when, at that date,significant risks are transferred to the buyer.

Revenues from crude oil and natural gas production fromproperties in which Eni has an interest together with otherproducers are recognized on the basis of Eni’s net workinginterest in those properties (entitlement method). Differencesbetween Eni’s net working interest volume and actualproduction volumes are recognized at current prices at year end.

Income related to partially rendered services is recognized inthe measurement of accrued income if the stage of completion canbe reliably determined and there is no significant uncertainty asto the collectability of the amount and the related costs. Whenthe outcome of the transaction cannot be estimated reliably,revenue is recognized only to the extent of the expensesrecognized that are recoverable.

Revenues accrued during the year related to constructioncontracts are recognized on the basis of contractual revenueswith reference to the stage of completion of a contract measuredon the cost-to-cost basis. For service concession arrangements(see item "Intangible assets" above) in which customersfees do not provide a reliable distinction between thecompensation for construction/update of the infrastructure andthe compensation for operating it and in the absence of externalbenchmarks, revenues recognized during the construction phase arelimited to the amount of the costs incurred.

Additional revenues, derived from a change in the scope ofwork, are included in the total amount of revenues when it isprobable that the customer will approve the variation and therelated amount. Claims deriving from additional costs incurredfor reasons attributable to the client are included in the totalamount of revenues when it is probable that the counterparty willaccept them. Tangible assets, different from an infrastructureused in service concession arrangements, transferred fromcustomers (or constructed using cash transferred from customers)and used to connect them to a network to supply goods andservices, are recognized at their fair value as an offset torevenues. When more than one separately identifiable service isprovided (for example, connection to a network and supply ofgoods) the entity shall assess for which one service it receivesthe transferred asset from the customer and it shall consistentlyrecognize a revenue when the connection is delivered or over thelesser period between the length of the supply and the usefullife of the transferred asset.

Revenues are stated net of returns, discounts, rebates,bonuses and direct taxation.

Award credits, related to customer loyalty programs, arerecognized as a separate component of the sales transaction whichgrant the right to customers. Therefore, the portion of revenuesrelated to the fair value of award credits granted is recognizedas an offset to the item "Other liabilities". Theliability is charged to the profit and loss account in the periodin which the award credits are redeemed by customers or therelated right is lost.

The exchange of goods and services of a similar nature andvalue do not give rise to revenues and costs as they do notrepresent sale transactions.

Costs are recorded when the related goods and services aresold, consumed or allocated, or when their future benefits cannotbe determined.

Costs associated with emission quotas, determined on the basisof the average prices of the main European markets at period end,are reported in relation to the amount of the carbon dioxideemissions that exceed the amount assigned. Costs related to thepurchase of the emission rights are recorded as intangible assetsnet of any negative difference between the amount of emissionsand the quotas assigned. Revenues related to emission quotas arerecognized when they are realized for the related sale. In caseof sale, if applicable, the acquired emission rights areconsidered as the first to be sold. Monetary receivables grantedas a substitution of emission rights awarded free of charge arerecognized as an offset to item "Other income" of theprofit and loss account.

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Operating lease payments are recognized in the profit and lossaccount over the length of the contract.

Labor costs include stock options granted to managers,consistent with their actual remunerative nature. The instrumentsgranted are recorded at fair value on the vesting date and arenot subject to subsequent adjustments; the current portion iscalculated pro-rata over the vesting period14. Thefair value of stock options is determined using valuationtechniques which consider conditions related to the exercise ofoptions, current share prices, expected volatility and therisk-free interest rate. The fair value of stock options isrecorded as a charge to "Other reserves".

The costs for the acquisition of new knowledge or discoveries,the study of products or alternative processes, new techniques ormodels, the planning and construction of prototypes or, in anycase, costs incurred for other scientific research activities ortechnological development, which cannot be capitalized, areincluded in the profit and loss account.

 

**Exchange rate differences**Revenues and costs associated with transactions in currenciesother than the functional currency are translated into thefunctional currency by applying the exchange rate at the date ofthe transaction.

Monetary assets and liabilities denominated in currenciesother than functional currency are converted by applying the yearend exchange rate and the effect is stated in the profit and lossaccount. Non-monetary assets and liabilities denominated incurrencies other than the functional currency valued at cost aretranslated at the initial exchange rate. Non-monetary assets thatare re-measured to fair value, recoverable amount or realizablevalue are translated at the exchange rate applicable at the dateof re-measurement.

 

**Dividends**Dividends are recognized at the date of the generalshareholders’ meeting in which they were declared, exceptwhen the sale of shares before the ex-dividend date is certain.

 

**Income taxes**Current income taxes are determined on the basis of estimatedtaxable income. The estimated liability is included in"Income taxes payables". Current income tax assets andliabilities are measured at the amount expected to be paid to(recovered from) the tax authorities, using tax laws that havebeen enacted or substantively enacted as of the balance sheetdate and the tax rates estimated on annual basis.

Deferred tax assets or liabilities are provided on temporarydifferences arising between the carrying amounts of the assetsand liabilities and their tax bases, based on tax rates (taxlaws) that have been enacted or substantively enacted for futureyears. Deferred tax assets are recognized when their realizationis considered probable.

Relating to the temporary differences associated withinvestments in subsidiaries, associates and jointly controlledentities, the related deferred tax liabilities are not recognizedif the investor is able to control the timing of reversal of thetemporary differences and it is probable that the temporarydifference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are included innon-current assets and liabilities and are offset at a singleentity level if related to offsettable taxes. The balance of theoffset, if positive, is recognized in the item "Deferred taxassets"; if negative, in the item "Deferred taxliabilities". When the results of transactions arerecognized directly in shareholders’ equity, current taxes,deferred tax assets and liabilities are also charged to theshareholders’ equity.

 

**Derivatives**Derivatives, including embedded derivatives which areseparated from the host contract, are assets and liabilitiesrecognized at their fair value which is estimated by using thecriteria described in the section "Current assets".When there is objective evidence that an impairment loss hasoccurred for reasons different from fair value decreases (see"Current assets" paragraph) derivative are recognizednet of the allowance for impairment losses.

Derivatives are designated as hedging instruments when therelationship between the derivative and the hedged item isformally documented and the hedge is highly effective andregularly reviewed. When hedging instruments cover the risk ofvariation of the fair value of the hedged item (fair value hedge,e.g. hedging of the variability on the 

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| (14) |    | The period        between the date of the award and the date at which the        option can be exercised. |
|------|--------------|-----------------------------------------------------------------------------------------------------------|

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fair value of fixed interest rate assets/liabilities) thederivatives are stated at fair value and the effects charged tothe profit and loss account. Hedged items are consistentlyadjusted to reflect the variability of fair value associated withthe hedged risk. When derivatives hedge the cash flow variationrisk of the hedged item (cash flow hedge, e.g. hedging thevariability on the cash flows of assets/liabilities as a resultof the fluctuations of exchange rate), changes in the fair valueof the derivatives, considered effective are initially stated inequity and then recognized in the profit and loss accountconsistent with the economic effects produced by the hedgedtransaction. The changes in the fair value of derivatives that donot meet the conditions required to qualify for hedge accountingare reported in the profit and loss account.

Economic effects of transactions, which relate to purchase orsales contracts for commodities entered into to meet theentity’s normal operating requirements and for which thesettlement is provided with the delivery of the goods, arerecognized on an accrual basis (the so-called normal sale andnormal purchase exemption or own use exemption).

 

**Financial statements**15****Assets and liabilities on the balance sheet are classified ascurrent16 and non-current. Items on the profit andloss account are presented by nature17.

The statement of comprehensive income shows net profitintegrated with income and expenses that are recognized directlyin equity according to IFRS.

The statement of changes in shareholders’ equity includesprofit and loss for the year, transactions with shareholders andother changes in shareholders’ equity.

The statement of cash flows is presented using the indirectmethod, whereby net profit is adjusted for the effects ofnon-cash transactions.

 

**4 Changes in accounting principles**There are no changes in accounting principles to thoseapplied in 2009.

 

**5 Use of accounting estimates**The preparation of the Consolidated FinancialStatements requires the use of estimates and assumptions thataffect the assets, liabilities, revenues and expenses reported inthe financial statements, as well as amounts included in thenotes thereto, including discussion and disclosure of contingentliabilities. Estimates made are based on complex or subjectivejudgments and past experience of other assumptions deemedreasonable in consideration of the information available at thetime. The accounting policies and areas that require the mostsignificant judgments and estimates to be used in the preparationof the Consolidated Financial Statements are in relation to theaccounting for oil and natural gas activities, specifically inthe determination of proved and proved developed reserves,impairment of fixed assets, intangible assets and goodwill, assetretirement obligations, business combinations, pensions and otherpost-retirement benefits, recognition of environmentalliabilities and recognition of revenues in the oilfield servicesconstruction and engineering businesses. Although the companyuses its best estimates and 

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| (15) |    | The financial        statements are the same reported in the Annual Report        2009 with the exception of the cash flow statement that        has been updated, consistently with the statement        presented by the main competitors, in order to provide a        different articulation of the items included in the        "Net cash provided from operating activities".        In particular, the main changes concerned: (i) the        elimination of the items "Cash generated from        operating profit before changes in working capital"        and "Cash from operations"; (ii) the addition        of the item "Share of profit (loss) of        equity-accounted investments"; (iii) the inclusion        in the item "Changes in working capital" of the        net impairments (reversals) related to inventories, trade        receivables and change in the fair value of derivatives,        previously included in the item "Revaluations,        net"; (iv) the inclusion in the item related to        "Changes in working capital" of changes of        provisions for contingencies; and (v) the        presentation of the change in the provisions for employee        benefits after the "new" item which includes        the "Cash flow from changes in working        capital". |
|------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (16) |    | Starting from        2009, non-hedging derivative instruments are recognized        in the items "Other current assets        (liabilities)" and "Other non-current assets        (liabilities)" based on the expected settlement        date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (17) |    | Further        information on financial instruments as classified in        accordance with IFRS is provided in Note 34 –        Guarantees, commitments and risks – Other        information about financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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judgments, actual results could differ from the estimates andassumptions used. A summary of significant estimates follows.

 

**Oil and gas activities**Engineering estimates of the Company’s oil and gasreserves are inherently uncertain. Proved reserves are theestimated volumes of crude oil, natural gas and gas condensates,liquids and associated substances which geological andengineering data demonstrate that can be economically produciblewith reasonable certainty from known reservoirs under existingeconomic conditions and operating methods. Although there areauthoritative guidelines regarding the engineering criteria thatmust be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data,engineering and geological interpretation and judgment. Fieldreserves will only be categorized as proved when all the criteriafor attribution of proved status have been met. At this stage,all booked reserves are classified as proved undeveloped. Volumesare subsequently reclassified from proved undeveloped to proveddeveloped as a consequence of development activity. The firstproved developed bookings occur at the point of first oil or gasproduction.

Major development projects typically take one to four yearsfrom the time of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revision may be madeto the initial booking of reserves due to production, reservoirperformance, commercial factors, acquisition and divestmentactivity and additional reservoir development activity.

In particular, changes in oil and natural gas prices couldimpact the amount of Eni’s proved reserves in regards to theinitial estimate and, in the case of production-sharingagreements and buy-back contracts, the share of production andreserves to which Eni is entitled. Accordingly, the estimatedreserves could be materially different from the quantities of oiland natural as that ultimately will be recovered. Oil and naturalgas reserves have a direct impact on certain amounts reported inthe Consolidated Financial Statements. Estimated proved reservesare used in determining depreciation and depletion expenses andimpairment expense. Depreciation rates on oil and gas assetsusing the UOP basis are determined from the ratio between theamount of hydrocarbons extracted in the quarter and proveddeveloped reserves existing at the end of the quarter increasedby the amounts extracted during the quarter. Assuming all othervariables are held constant, an increase in estimated proveddeveloped reserves for each field decreases depreciation,depletion and amortization expense. Conversely, a decrease inestimated proved developed reserves increases depreciation,depletion and amortization expense. In addition, estimated provedreserves are used to calculate future cash flows from oil and gasproperties, which serve as an indicator in determining whether ornot property impairment is to be carried out. The larger thevolume of estimated reserves, the lower the likelihood of assetimpairment.

 

**Impairment of assets**Eni assesses its tangible assets and intangible assets,including goodwill, for possible impairment if there are eventsor changes in circumstances that indicate the carrying values ofthe assets are not recoverable. Such indicators include changesin the Group’s business plans, changes in commodity pricesleading to unprofitable performance, a reduced utilization of theplants and, for oil and gas properties, significant downwardrevisions of estimated proved reserve quantities or significantincrease of the estimated development costs. Determination as towhether and how much an asset is impaired involves managementestimates on highly uncertain matters such as future commodityprices, the effects of inflation and technology improvements onoperating expenses, production profiles and the outlook forglobal or regional market supply and demand conditions for crudeoil, natural gas, commodity chemicals and refined products.Similar remarks are valid for the physical recoverability ofassets recognized in the balance sheet (deferred cost – seeNote 20) related to natural gas volumes not collected underlong-term purchase contracts with take-or-pay clauses.

The amount of an impairment loss is determined by comparingthe book value of an asset with its recoverable amount. Therecoverable amount is the greater of fair value net of disposalcost or the value in use. The estimated value in use is based onthe present values of expected future cash flows net of disposalcosts. The expected future cash flows used for impairmentanalyses are based on judgmental assessments of future productionvolumes, prices and costs, considering available information atthe date of review and are discounted by using a rate related tothe activity involved.

For oil and natural gas properties, the expected future cashflows are estimated principally based on developed andnon-developed proved reserves including, among other elements,production taxes and the costs to be incurred for the reservesyet to be developed. Oil, natural gas and petroleum productprices (and prices from products which 

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are derived there from) used to quantify the expected futurecash flows are estimated based on forward prices prevailing inthe marketplace for the first four years and management’slong-term planning assumptions thereafter. The estimate of thefuture amount of production is based on assumptions related tothe commodity future prices, lifting and development costs,market demand and other factors. The discount rate reflects thecurrent market valuation of the time value of money and of thespecific risks of the asset not reflected in the estimate of thefuture cash flows. Goodwill and other intangible assets with anindefinite useful life are not subject to amortization. Thecompany tests such assets at the cash-generating unit level forimpairment on an annual basis and between annual tests if anevent occurs or circumstances change that would more likely thannot reduce the fair value below its carrying amount. Inparticular, goodwill impairment is based on the determination ofthe fair value of each cash-generating unit to which goodwill canbe attributed on a reasonable and consistent basis. Acash-generating unit is the smallest aggregate on which thecompany, directly or indirectly, evaluates the return on thecapital expenditure. If the recoverable amount of acash-generating unit is lower than the carrying amount, goodwillattributed to that cash-generating unit is impaired up to thatdifference; if the carrying amount of goodwill is less than theamount of impairment, assets of the cash-generating unit areimpaired on a pro-rata basis for the residual difference.

 

**Asset retirement obligations**Obligations to remove tangible equipment and restore land orseabed require significant estimates in calculating the amount ofthe obligation and determining the amount required to be recordedpresently in the Consolidated Financial Statements.

Estimating future asset retirement obligations is complex. Itrequires management to make estimates and judgments with respectto removal obligations that will come to term many years into thefuture and contracts and regulations are often unclear as to whatconstitutes removal. In addition, the ultimate financial impactof environmental laws and regulations is not always clearly knownas asset removal technologies and costs constantly evolve in thecountries where Eni operates, as do political, environmental,safety and public expectations. The subjectivity of theseestimates is also increased by the accounting method used thatrequires entities to record the fair value of a liability for anasset retirement obligation in the period when it is incurred(typically, at the time the asset is installed at the productionlocation). When liabilities are initially recorded, the relatedfixed assets are increased by an equal corresponding amount. Theliabilities are increased with the passage of time (i.e. interestaccretion) and any change in the estimates following themodification of future cash flows and discount rate adopted. Therecognized asset retirement obligations are based on futureretirement cost estimates and incorporate many assumptions suchas: expected recoverable quantities of crude oil and natural gas,abandonment time, future inflation rates and the risk-free rateof interest adjusted for the Company’s credit costs.

 

**Business combinations**Accounting for business combinations requires the allocationof the purchase price to the various assets and liabilities ofthe acquired business at their respective fair values. Anypositive residual difference is recognized as"Goodwill". Negative residual differences are creditedto the profit and loss account. Management uses all availableinformation to make these fair value determinations and, formajor business acquisitions, typically engages an independentappraisal firm to assist in the fair value determination of theacquired assets and liabilities.

 

**Environmental liabilities**Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, production and other activities. They includelegislations that implement international conventions orprotocols. Environmental costs are recognized when it becomesprobable that a liability has been incurred and the amount can bereasonably estimated. Management, considering the actions alreadytaken, insurance policies obtained to cover environmental risksand provision for risks accrued, does not expect any materialadverse effect on Eni’s consolidated results of operationsand financial position as a result of such laws and regulations.However, there can be no assurance that there will not be amaterial adverse impact on Eni’s consolidated results ofoperations and financial position due to: (i) the possibility ofan unknown contamination; (ii) the results of the ongoing surveysand other possible effects of statements required by Decree No.471/1999 of the Ministry for the Environment concerning theremediation of contaminated sites; (iii) the possible effects offuture environmental legislations and rules; (iv) the effects ofpossible technological changes relating to future remediation;and (v) the possibility of litigation and the difficulty ofdetermining Eni’s liability, if any, against otherpotentially responsible parties with respect to such litigationsand the possible insurance recoveries.

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**Employee benefits**Defined benefit plans are evaluated with reference touncertain events and based upon actuarial assumptions includingamong others discount rates, expected rates of return on planassets, expected rates of salary increases, medical cost trends,estimated retirement dates and mortality rates. The significantassumptions used to account for defined benefit plans aredetermined as follows: (i) discount and inflation rates reflectthe rates at which benefits could be effectively settled, takinginto account the duration of the obligation. Indicators used inselecting the discount rate include rates of annuity contractsand rates of return on high quality fixed-income investments. Theinflation rates reflect market conditions observed country bycountry; (ii) the future salary levels of the individualemployees are determined including an estimate of future changesattributed to general price levels (consistent with inflationrate assumptions), productivity, seniority and promotion; (iii)healthcare cost trend assumptions reflect an estimate of theactual future changes in the cost of the healthcare relatedbenefits provided to the plan participants and are based on pastand current healthcare cost trends including healthcareinflation, changes in healthcare utilization and changes inhealth status of the participants; (iv) demographic assumptionssuch as mortality, disability and turnover reflect the bestestimate of these future events for individual employeesinvolved, based principally on available actuarial data; and (v)determination of the expected rates of return on assets is madethrough compound averaging. For each plan, the distribution ofinvestments among bonds, equities and cash and their specificaverage expected rate of return is taken into account.Differences between expected and actual costs and between theexpected return and the actual return on plan assets routinelyoccur and are called actuarial gains and losses.

Eni applies the corridor method to amortize its actuariallosses and gains. This method amortizes on a pro-rata basis thenet cumulative unrecognized actuarial gains and losses at the endof the previous reporting period that exceed 10% of the greaterof: (i) the present value of the defined benefit obligation; and(ii) the fair value of plan assets, over the average expectedremaining working lives of the employees participating in theplan. Additionally, obligations for other long-term benefits aredetermined by adopting actuarial assumptions. The effect ofchanges in actuarial assumptions or a change in thecharacteristics of the benefit are taken to the profit or loss intheir entirety.

 

**Contingencies**In addition to accruing the estimated costs for environmentalliabilities, asset retirement obligation and employee benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining the appropriate amount toaccrue is a complex estimation process that includes subjectivejudgments.

 

**Revenue recognition in the Engineering & Constructionsegment**Revenue recognition in the Engineering & Constructionsegment is based on the stage of completion of a contract asmeasured on the cost-to-cost basis applied to contractualrevenues. Use of the stage of completion method requiresestimates of future gross profit on a contract by contract basis.The future gross profit represents the profit remaining afterdeducting costs attributable to the contract from revenuesprovided for in the contract. The estimate of future gross profitis based on a complex estimation process that includesidentification of risks related to the geographical region,market conditions in that region and any assessment that isnecessary to estimate with sufficient precision the total futurecosts as well as the expected timetable. Additional income isderived from a change in the scope of work is included in thetotal amount of revenues when it is probable that the customerwill approve the variation and the related amount. Claimsderiving from additional costs incurred for reasons attributableto the client are included in the total amount of revenues whenit is probable that the counterparty will accept them.

 

**6 Recent accounting principles**

**Accounting standards and interpretations issued by IASB/IFRIC and endorsed by EU**By Commission Regulation No. 632/2010 of July 19, 2010 therevised IAS 24 "Related Party Disclosures" has beenendorsed. The standard: (i) enhances the definition of a relatedparty requiring new cases; and (ii) for transactions betweenentities related to the same Government, allows to limitquantitative disclosures to significant transactions. The revisedstandard shall be applied for annual periods beginning on orafter January 1, 2011.

By Commission Regulation No. 662/2010 of July 23, 2010 IFRIC19 "Extinguishing Financial Liabilities with EquityInstruments" (hereinafter IFRIC 19) has been endorsed. Theinterpretation defines the accounting treatment to adopt when afinancial liability is settled by issuing equity instruments tothe creditor (debt for equity swaps).

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In particular, equity instruments issued to extinguish aliability in full or in part, are measured at their fair valueor, if fair value cannot be reliably measured, at the fair valueof the financial liability extinguished. The difference betweenthe carrying amount of the financial liability extinguished andthe fair value of equity instruments issued shall be recognizedin the profit or loss account. IFRIC 19 provisions shall beapplied for annual periods beginning on or after July 1, 2010(for Eni: 2011 financial statements).

By Commission Regulation No. 149/2011 of February 18, 2011,"Improvements to IFRSs" have been endorsed. Thedocument includes only changes to the existing standards andinterpretation with a technical and editorial nature. Theprovisions come into effect starting from 2011.

 

**Accounting standards and interpretations issued byIASB/IFRIC and not yet been endorsed by EU**On November 12, 2009 IASB issued IFRS 9 "FinancialInstruments" which changes recognition and measurementcriteria of financial assets and their classification in thefinancial statements. In particular, new provisions require,inter alia, a classification and measurement model of financialassets based exclusively on the following categories: (i)financial assets measured at amortized cost; and (ii) financialassets measured at fair value. New provisions also require thatinvestments in equity instruments, other than subsidiaries,jointly controlled entities or associates, shall be measured atfair value with effects taken to the profit and loss account. Ifthese investments are not held for trading purposes, subsequentchanges in the fair value can be recognized in othercomprehensive income, even if dividends are taken to the profitand loss account. Amounts taken to other comprehensive incomeshall not be subsequently transferred to the profit or lossaccount even at disposal. In addition, on October 28, 2010 theIASB added to IFRS 9 the requirements on the accounting forfinancial liabilities. In particular, new provisions require,inter alia, that if a financial liability is measured at fairvalue through profit or loss, subsequent changes in the fairvalue attributable to changes in the own credit risk shall bepresented in the other comprehensive income; the componentrelated to own credit risk is recognized in profit and lossaccount if the treatment of the changes in own credit risk wouldcreate or enlarge an accounting mismatch. IFRS 9 provisions shallbe applied for annual periods beginning on or after January 1,2013.

On October 7, 2010 the IASB issued Amendment to IFRS 7"Disclosures - Transfers of financial assets", thatprovides supplementary disclosures on financial instruments, withreference to transfers of financial assets, to describe any risksthat may remain with the entity that transferred the assets. Theamendments also require additional disclosures if adisproportionate amount of transfer transactions are undertakenaround the end of a reporting period. New provisions shall beapplied for annual periods beginning on or after July 1, 2011(for Eni: 2012 financial statements).

Eni is currently reviewing these new IFRS and interpretationsto determine the likely impact on the Group’s results.

 

 

 

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**Current assets****7 Cash and cash equivalents**Cash and cash equivalents of euro 1,549 million (euro1,608 million at December 31, 2009) included financingreceivables originally due within 90 days for euro 339 million(euro 450 million at December 31, 2009). The latter were relatedto amounts on deposit with financial institutions accessible onlyon a 48-hour notice.

The average maturity of financing receivables due within 90days was 30 days and the effective interest rate amounted to0.6%.

**8 Other financial assets held for tradingor available for sale**Other financial assets held for trading oravailable for sale are set out below:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Securities held for operating purposes**                                           |   |    |   |    |
|--------------------------------------------------------------------------------------|--------|---------|--------|---------|
| Listed        Italian treasury bonds                                                 |   | 113     |   | 48      |
| Listed securities issued by foreign financial        institutions                    |   | 171     |   | 219     |
| Non-quoted        securities                                                         |   |    |   | 6       |
|                                                                                 |   | **284** |   | **273** |
| **Securities        held for non-operating purposes**                                |   |    |   |    |
| Listed Italian treasury bonds                                                        |   | 49      |   | 87      |
| Listed        securities issued by Italian and foreign financial        institutions |   | 14      |   | 22      |
| Non-quoted securities                                                                |   | 1       |   |    |
|                                                                                 |   | **64**  |   | **109** |
| **Total securities**                                                                 |   | **348** |   | **382** |
|                                                                                 |   |         |   |         |

Securities of euro 382 million (euro 348 million at December31, 2009) were available-for-sale securities. At December 31,2009 and December 31, 2010, Eni did not own financial assets heldfor trading.

The effects of the valuation at fair value of securities areset below:

| (euro        million) |   | **Value at****Dec. 31, 2009** |   | **Changes recognized in        the reserves of shareholders' equity** |   | **Value at****Dec. 31, 2010** |
|-----------------------|--------|-------------------------------|--------|-----------------------------------------------------------------------|--------|-------------------------------|
|                  |   |                               |   |                                                                       |   |                               |

| Fair value                                      |   | 6     |   |   | (9     | )      |   | (3     | )      |
|-------------------------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|
| Deferred        tax liabilities                 |   | (1    | )      |   | 1      |   |   |   |   |
| **Other reserves of shareholders’ equity** |   | **5** |   |   | **(8** | **)**  |   | **(3** | **)**  |
|                                            |   |       |        |   |        |        |   |        |        |

Securities held for operating purposes of euro 273 million(euro 284 million at December 31, 2009) were designed to providecoverage of technical provisions of the Group’s insurancecompany Eni Insurance Ltd for euro 267 million (euro 284 millionat December 31, 2009).

The fair value of securities was determined by reference toquoted market prices.

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**9 Trade and other receivables**Trade and other receivables were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Trade receivables**                                                             |   | **14,916** |   | **17,221** |
|-----------------------------------------------------------------------------------|--------|------------|--------|------------|
| Financing        receivables:                                                     |   |       |   |       |
| - for operating purposes - short-term                                             |   | 339        |   | 436        |
| - for        operating purposes - current portion of long-term        receivables |   | 113        |   | 220        |
| - for non-operating purposes                                                      |   | 73         |   | 6          |
|                                                                              |   | **525**    |   | **662**    |
| Other receivables:                                                                |   |       |   |       |
| - from        disposals                                                           |   | 82         |   | 86         |
| - other                                                                           |   | 4,825      |   | 5,667      |
|                                                                              |   | **4,907**  |   | **5,753**  |
|                                                                              |   | **20,348** |   | **23,636** |
|                                                                              |   |            |   |            |

Receivables are stated net of the allowance forimpairment losses of euro 1,524 million (euro 1,647 million atDecember 31, 2009):

| (euro        million) |   | **Value at****Dec. 31, 2009** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at****Dec. 31, 2010** |
|-----------------------|--------|-------------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|-------------------------------|
|                  |   |                               |   |               |   |                |   |                   |   |                               |

| Trade receivables            |   | 942       |   | 201     |   | (191     | )      |   | 10      |   |   | 962       |
|------------------------------|--------|-----------|--------|---------|--------|----------|--------|--------|---------|--------|--------|-----------|
| Financing        receivables |   | 6         |   |    |   |     |   |   |    |   |   | 6         |
| Other receivables            |   | 699       |   | 21      |   | (67      | )      |   | (97     | )      |   | 556       |
|                         |   | **1,647** |   | **222** |   | **(258** | **)**  |   | **(87** | **)**  |   | **1,524** |
|                         |   |           |   |         |   |          |        |   |         |        |   |           |

During the course of 2010, Eni transferred withoutnotification to factoring institutions certain trade receivableswithout recourse due in 2011 for euro 1,279 million. Thereceivables sold related to the Refining & Marketing segment(euro 910 million) and to the Gas & Power segment (euro 369million). Following contractual arrangements, Eni collects thosereceivables sold and, within limits of collected amounts,transfers the amounts received to the factors.

The increase in trade receivables of euro 2,305 millionprimarily related to the Gas & Power segment (euro 1,360million), of which euro 112 million related to the outstandingamount of certain receivables associated with pre-paymentsreceived upon triggering the take-or-pay clause in gas salescontracts. Other increases related to the Refining &Marketing segment (euro 330 million) and to the Engineering &Construction segment (euro 309 million).

Trade and other receivables were as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro million) |   | Trade receivables |   | Other receivables |   | Total |   | Trade receivables |   | Other receivables |   | Total |
|----------------|--------|-------------------|--------|-------------------|--------|-------|--------|-------------------|--------|-------------------|--------|-------|
|           |   |                   |   |                   |   |       |   |                   |   |                   |   |       |

| **Neither impaired nor past due**                          |   | **11,557** |   | **3,004** |   | **14,561** |   | **14,122** |   | **4,451** |   | **18,573** |
|------------------------------------------------------------|--------|------------|--------|-----------|--------|------------|--------|------------|--------|-----------|--------|------------|
| **Impaired        (net of the valuation allowance)**       |   | **1,037**  |   | **58**    |   | **1,095**  |   | **1,142**  |   | **51**    |   | **1,193**  |
| Not impaired and past due in the following        periods: |   |       |   |      |   |       |   |       |   |      |   |       |
| - within        90 days                                    |   | 1,168      |   | 772       |   | 1,940      |   | 1,291      |   | 74        |   | 1,365      |
| - 3 to 6 months                                            |   | 503        |   | 56        |   | 559        |   | 196        |   | 56        |   | 252        |
| - 6 to 12        months                                    |   | 294        |   | 439       |   | 733        |   | 177        |   | 663       |   | 840        |
| - over 12 months                                           |   | 357        |   | 578       |   | 935        |   | 293        |   | 458       |   | 751        |
|                                                       |   | **2,322**  |   | **1,845** |   | **4,167**  |   | **1,957**  |   | **1,251** |   | **3,208**  |
|                                                       |   | **14,916** |   | **4,907** |   | **19,823** |   | **17,221** |   | **5,753** |   | **22,974** |
|                                                       |   |            |   |           |   |            |   |            |   |           |   |            |

Trade receivables not impaired and past due primarilypertained to high-credit-quality public administrations and otherhighly-reliable counterparties for oil, natural gas and chemicalproducts supplies.

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Additions to allowances for impairment losses of tradereceivables of euro 201 million (euro 260 million in 2009)primarily related to the Gas & Power (euro 136 million) andthe Refining & Marketing segments (euro 31 million).Deductions to allowances for impairment losses amounted to euro191 million (euro 15 million at December 31, 2009) and wererecorded on the write-down of trade receivables (euro 101million) and collection of previously impaired receivables (euro90 million). Deductions in the Gas & Power segment were euro99 million; in the Exploration & Production segment they wereeuro 41 million.

Trade receivables included guarantees for work in progress foreuro 70 million (euro 168 million at December 31, 2009).

Trade receivables in currencies other than euro amounted toeuro 5,069 million.

Other receivables for euro 482 million (euro 461 million atDecember 31, 2009) associated with cost recovery in theExploration & Production segment are currently undergoingarbitration procedure.

Receivables for financing operating activities of euro 656million (euro 452 million at December 31, 2009) included euro 470million due from unconsolidated subsidiaries, joint ventures andassociates (euro 245 million at December 31, 2009), euro 159million cash deposit to provide coverage of Eni Insurance Ltdtechnical provisions (euro 179 million at December 31, 2009) andreceivables for financial leasing for euro 19 million (the sameamount as of December 31, 2009). More information aboutreceivables for financial leasing is included in the Note 18– Other financial assets.

Receivables for financing non-operating activities amounted toeuro 6 million (euro 73 million at December 31, 2009) related torestricted deposits of the Engineering & Construction segment(euro 67 million at December 31, 2009).

Financing receivables in currencies other than euro amountedto euro 458 million.

Other receivables were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Accounts receivable from:                                      |   |      |   |      |
|----------------------------------------------------------------|--------|-----------|--------|-----------|
| - joint        venture operators in exploration and production |   | 2,372     |   | 3,017     |
| - Italian non-financial government entities                    |   | 457       |   | 457       |
| - insurance        companies                                   |   | 194       |   | 131       |
|                                                           |   | **3,023** |   | **3,605** |
| Prepayments        for services                                |   | 860       |   | 1,085     |
| Receivables relating to factoring arrangements                 |   | 156       |   | 190       |
| Other        receivables                                       |   | 868       |   | 873       |
|                                                           |   | **4,907** |   | **5,753** |
|                                                           |   |           |   |           |

Receivables deriving from factoring arrangements of euro 190million (euro 156 million at December 31, 2009) were related toSerfactoring SpA and consisted primarily of advances forfactoring arrangements with recourse and receivables forfactoring arrangements without recourse.

Other receivables in currencies other than euro amounted toeuro 3,837 million.

Receivables with related parties are described in Note 42– Transactions with related parties.

Because of the short-term maturity of trade receivables, thefair value approximated their carrying amount.

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**10 Inventories******Inventories were as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro million) |   | Crude oil, gas and petroleum products |   | Chemical products |   | Work in progress |   | Other |   | Total |   | Crude oil, gas and petroleum products |   | Chemical products |   | Work in progress |   | Other |   | Total |
|----------------|--------|---------------------------------------|--------|-------------------|--------|------------------|--------|-------|--------|-------|--------|---------------------------------------|--------|-------------------|--------|------------------|--------|-------|--------|-------|
|           |   |                                       |   |                   |   |                  |   |       |   |       |   |                                       |   |                   |   |                  |   |       |   |       |

| Raw and auxiliary materials and consumables                |   | 616       |   | 150     |   |    |   | 1,363     |   | 2,129     |   | 878       |   | 167     |   |    |   | 1,516     |   | 2,561     |
|------------------------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|-----------|--------|-----------|
| Products        being processed and semi finished products |   | 74        |   | 17      |   |    |   | 9         |   | 100       |   | 117       |   | 33      |   |    |   | 1         |   | 151       |
| Work in progress                                           |   |      |   |    |   | 759     |   |      |   | 759       |   |      |   |    |   | 428     |   |      |   | 428       |
| Finished        products and goods                         |   | 1,889     |   | 552     |   |    |   | 66        |   | 2,507     |   | 2,721     |   | 666     |   |    |   | 62        |   | 3,449     |
|                                                       |   | **2,579** |   | **719** |   | **759** |   | **1,438** |   | **5,495** |   | **3,716** |   | **866** |   | **428** |   | **1,579** |   | **6,589** |
|                                                       |   |           |   |         |   |         |   |           |   |           |   |           |   |         |   |         |   |           |   |           |

Contract work in progress for euro 428 million (euro 759million at December 31, 2009) are net of prepayments for euro 16million (euro 13 million at December 31, 2009) within the limitsof contractual considerations.

Changes in inventories and in provisions for impairments wereas follows:

| (euro million) |   | **Value at the beginning         of the year** |   | **Changes** |   | **Additions** |   | **Deductions** |   | **Changes in the scope of        consolidation** |   | **Currency translation        differences** |   | **Other changes** |   | **Value         at the end         of the year** |
|----------------|--------|------------------------------------------------|--------|-------------|--------|---------------|--------|----------------|--------|--------------------------------------------------|--------|---------------------------------------------|--------|-------------------|--------|--------------------------------------------------|
|           |   |                                                |   |             |   |               |   |                |   |                                                  |   |                                             |   |                   |   |                                                  |

| **Dec. 31, 2009**          |   |      |   |   |       |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |      |   |
|----------------------------|--------|-----------|--------|--------|------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|
| Gross        value         |   | 6,779     |   |   | (1,157     | )      |   |    |   |   |    |   |   | 2       |   |   | (35     | )      |   | 9      |   |   | **5,598** |   |
| Provisions for impairments |   | (697      | )      |   |       |   |   | (36     | )      |   | 550     |   |   |    |   |   | 1       |   |   | 79     |   |   | **(103**  | **)**  |
| **Net        value**       |   | **6,082** |   |   | **(1,157** | **)**  |   | **(36** | **)**  |   | **550** |   |   | **2**   |   |   | **(34** | **)**  |   | **88** |   |   | **5,495** |   |
| **Dec. 31, 2010**          |   |      |   |   |       |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |      |   |
| Gross        value         |   | 5,598     |   |   | 822        |   |   |    |   |   |    |   |   | 124     |   |   | 112     |   |   | 38     |   |   | **6,694** |   |
| Provisions for impairments |   | (103      | )      |   |       |   |   | (16     | )      |   | 23      |   |   |    |   |   | (2      | )      |   | (7     | )      |   | **(105**  | **)**  |
| **Net        value**       |   | **5,495** |   |   | **822**    |   |   | **(16** | **)**  |   | **23**  |   |   | **124** |   |   | **110** |   |   | **31** |   |   | **6,589** |   |
|                       |   |           |        |   |            |        |   |         |        |   |         |        |   |         |        |   |         |        |   |        |        |   |           |        |

Changes in the amount of euro 822 million essentiallyrepresented the Refining & Marketing segment (euro 817million). Deductions in the amount of euro 23 million essentiallyrepresented the Petrochemical segment (euro 13 million). Changesin the scope of consolidation of euro 124 million essentiallyrelated to the inclusion of Altergaz SA following the acquisitionof the control stake (euro 137 million) and the exclusion ofGreenStream BV following the divestment of the control stake(euro 20 million).

**11 Current tax assets**Current tax assets were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Italian subsidiaries        |   | 570     |   | 297     |
|-----------------------------|--------|---------|--------|---------|
| Foreign        subsidiaries |   | 183     |   | 170     |
|                        |   | **753** |   | **467** |
|                        |   |         |   |         |

The decrease in other current tax assets of euro 286 millionessentially related to receivables for interim tax payments madeby Eni SpA in 2009, which exceeded the full-year tax payable, andwere used, during 2010, to offset the payables of the year (euro193 million).

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**12 Other current tax assets**Other current tax assets were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| VAT                              |   | 889       |   | 431     |
|----------------------------------|--------|-----------|--------|---------|
| Excise and        customs duties |   | 119       |   | 192     |
| Other taxes and duties           |   | 262       |   | 315     |
|                             |   | **1,270** |   | **938** |
|                             |   |           |   |         |

The decrease in Valued Added Tax in the amount ofeuro 458 million essentially related to receivables for interimtax payments made by Eni SpA in 2009, which exceeded thefull-year tax payable (euro 263 million).

**13 Other current assets******Other current assets were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 698       |   | 626       |
|--------------------------------------------------|--------|-----------|--------|-----------|
| Fair value        of cash flow hedge derivatives |   | 236       |   | 210       |
| Other assets                                     |   | 373       |   | 514       |
|                                             |   | **1,307** |   | **1,350** |
|                                             |   |           |   |           |

The fair value of derivative contracts which donot meet the criteria to be classified as hedges under IFRS wasas follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro        million) |    | Fair value |    | Purchase        commitments |    | Sale        commitments |    | Fair value |    | Purchase        commitments |    | Sale        commitments |
|-----------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|

|                                                |   |         |   |           |   |           |   |         |   |           |   |           |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|
| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |      |   |    |   |      |   |      |
| Interest        currency swap                       |   | 2       |   | 113       |   |      |   |    |   |      |   |      |
| Currency swap                                       |   | 64      |   | 1,855     |   | 1,117     |   | 123     |   | 1,357     |   | 4,411     |
| Other                                               |   | 142     |   | 174       |   | 537       |   | 1       |   | 80        |   | 162       |
|                                                |   | **208** |   | **2,142** |   | **1,654** |   | **124** |   | **1,437** |   | **4,573** |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |      |   |    |   |      |   |      |
| Interest rate swap                                  |   | 1       |   | 133       |   |      |   |    |   |      |   |      |
| Other                                               |   | 9       |   | 9         |   |      |   |    |   |      |   |      |
|                                                |   | **10**  |   | **142**   |   |      |   |    |   |      |   |      |
| **Non-hedging        derivatives on commodities**   |   |    |   |      |   |      |   |    |   |      |   |      |
| Over the counter                                    |   | 469     |   | 1,383     |   | 1,257     |   | 383     |   | 2,739     |   | 525       |
| Future                                              |   | 10      |   | 234       |   |      |   | 33      |   | 418       |   |      |
| Other                                               |   | 1       |   |      |   | 8         |   | 86      |   |      |   | 448       |
|                                                |   | **480** |   | **1,617** |   | **1,265** |   | **502** |   | **3,157** |   | **973**   |
|                                                |   | **698** |   | **3,901** |   | **2,919** |   | **626** |   | **4,594** |   | **5,546** |
|                                                |   |         |   |           |   |           |   |         |   |           |   |           |

Fair value of the derivative contracts is determined usingmarket quotations provided by primary info-provider, or in theabsence of market information, appropriate valuation methods usedon the marketplace.

Fair values of non-hedging derivatives of euro 626 million(euro 698 million at December 31, 2009) essentially consisted ofderivative contracts that do not meet the formal criteria to bedesignated as hedges under IFRS because they were entered into inorder to manage the net business exposures in foreign currencyexchange rates, interest rates or commodity prices. Therefore,such derivatives were not related to specific trade or financingtransactions.

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Fair value of cash flow hedge derivatives of euro 210 million(euro 236 million at December 31, 2009) essentially pertained tothe Gas & Power segment (euro 209 million). These derivativeswere designated to hedge surpluses or deficits of gas to achievea proper balance in the gas portfolio. Other commodityderivatives were entered into to hedge variability in future cashflows on highly probable future sale transactions or on alreadycontracted sales due to different movements in commodity pricesas sales prices can be indexed to spot market benchmarks quotedon continental hub, whereas purchase costs are indexed to theprice of oil and products. A similar scheme applies to exchangerate hedging derivatives.

Negative fair value of contracts expiring by 2011 is given inNote 25 – Other current liabilities; positive and negativefair value of contracts expiring beyond 2011 is given in Note 20– Other non-current receivables and in Note 30 – Othernon-current liabilities. The effects of the evaluation at fairvalue of cash flow hedge derivatives are given in the Note 32– Shareholders’ equity and in the Note 36 –Finance income (expense).

The nominal value of cash flow hedge derivatives for purchaseand sale commitments was euro 1,145 million and euro 273 million,respectively.

Information on the hedged risks and the hedging policies isgiven in Note 34 – Guarantees, commitments and risks –Risk factors.

Other assets amounted to euro 514 million (euro 373 million atDecember 31, 2009) and included prepayments and accrued incomefor euro 155 million (euro 104 million at December 31, 2009),insurance premiums for euro 52 million (euro 18 million atDecember 31, 2009) and rentals for euro 20 million (euro 35million at December 31, 2009).

**Non-current assets****14 Property, plant and equipment******Analysis of tangible assets is set out below:

| (euro        million) |   | **Net value at the beginning of the year** |   | **Investments** |   | **Depreciation** |   | **Impairments** |   | **Change in the scope of consolidation** |   | **Currency translation differences** |   | **Other changes** |   | **Net value at the end of the year** |   | **Gross value at the end of the year** |   | **Provisions for****depreciation****and impairments** |
|-----------------------|--------|--------------------------------------------|--------|-----------------|--------|------------------|--------|-----------------|--------|------------------------------------------|--------|--------------------------------------|--------|-------------------|--------|--------------------------------------|--------|----------------------------------------|--------|-------------------------------------------------------|
|                  |   |                                            |   |                 |   |                  |   |                 |   |                                          |   |                                      |   |                   |   |                                      |   |                                        |   |                                                       |

| **Dec. 31, 2009**                        |   |       |   |       |   |       |   |   |     |   |   |     |   |   |      |   |   |    |   |   |       |   |        |   |       |
|------------------------------------------|--------|------------|--------|------------|--------|------------|--------|--------|----------|--------|--------|----------|--------|--------|-----------|--------|--------|---------|--------|--------|------------|--------|-------------|--------|------------|
| Land                                     |   | 625        |   | 10         |   |       |   |   |     |   |   | 2        |   |   | (3        | )      |   | (16     | )      |   | 618        |   | 646         |   | 28         |
| Buildings                                |   | 850        |   | 35         |   | (99        | )      |   | (37      | )      |   | 25       |   |   | (34       | )      |   | 45      |   |   | 785        |   | 3,057       |   | 2,272      |
| Plant and        machinery               |   | 36,120     |   | 3,530      |   | (6,277     | )      |   | (496     | )      |   | 3        |   |   | (184      | )      |   | 7,162   |   |   | 39,858     |   | 96,280      |   | 56,422     |
| Industrial and commercial equipment      |   | 601        |   | 112        |   | (152       | )      |   | (2       | )      |   | 16       |   |   | (18       | )      |   | 230     |   |   | 787        |   | 1,948       |   | 1,161      |
| Other        assets                      |   | 377        |   | 152        |   | (130       | )      |   | (4       | )      |   |     |   |   | (8        | )      |   | 156     |   |   | 543        |   | 1,920       |   | 1,377      |
| Tangible assets in progress and advances |   | 17,360     |   | 8,193      |   |       |   |   | (451     | )      |   | 2        |   |   | (281      | )      |   | (7,649  | )      |   | 17,174     |   | 18,715      |   | 1,541      |
|                                     |   | **55,933** |   | **12,032** |   | **(6,658** | **)**  |   | **(990** | **)**  |   | **48**   |   |   | **(528**  | **)**  |   | **(72** | **)**  |   | **59,765** |   | **122,566** |   | **62,801** |
| **Dec. 31, 2010**                        |   |       |   |       |   |       |   |   |     |   |   |     |   |   |      |   |   |    |   |   |       |   |        |   |       |
| Land                                     |   | 618        |   | 3          |   |       |   |   |     |   |   | 18       |   |   | 4         |   |   | 22      |   |   | 665        |   | 693         |   | 28         |
| Buildings                                |   | 785        |   | 35         |   | (94        | )      |   | (1       | )      |   | 19       |   |   | 21        |   |   | 67      |   |   | 832        |   | 3,194       |   | 2,362      |
| Plant and        machinery               |   | 39,858     |   | 3,280      |   | (6,755     | )      |   | (150     | )      |   | (652     | )      |   | 1,721     |   |   | 5,689   |   |   | 42,991     |   | 108,464     |   | 65,473     |
| Industrial and commercial equipment      |   | 787        |   | 115        |   | (170       | )      |   |     |   |   |     |   |   | 17        |   |   | 242     |   |   | 991        |   | 2,309       |   | 1,318      |
| Other        assets                      |   | 543        |   | 143        |   | (122       | )      |   |     |   |   | 74       |   |   | 18        |   |   | 516     |   |   | 1,172      |   | 2,583       |   | 1,411      |
| Tangible assets in progress and advances |   | 17,174     |   | 8,732      |   |       |   |   | (106     | )      |   | (58      | )      |   | 833       |   |   | (5,822  | )      |   | 20,753     |   | 22,369      |   | 1,616      |
|                                     |   | **59,765** |   | **12,308** |   | **(7,141** | **)**  |   | **(257** | **)**  |   | **(599** | **)**  |   | **2,614** |   |   | **714** |   |   | **67,404** |   | **139,612** |   | **72,208** |

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

Capital expenditures of euro 12,308 million (euro 12,032million at December 31, 2009) essentially related to theExploration & Production segment (euro 8,622 million), theEngineering & Construction segment (euro 1,541 million), theGas & Power segment (euro 1,251 million) and the Refining& Marketing segment (euro 704 million). Capital expendituresincluded capitalized finance expenses of euro 186 million (euro221 million at December 31, 2009) essentially related to theEngineering & Construction segment (euro 66 million), theExploration & Production segment (euro 57 million), theGas & Power segment (euro 37 million) and the Refining &Marketing 

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segment (euro 24 million). The interest rate used for thecapitalization of finance expense ranged from 0.8% to 4.8% (1.9%and 3.7% at December 31, 2009).

The depreciation rates used were as follows:

| (%)                                 |   |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Buildings                           |   |   |   |   | 2      |   | -      | 10     |   |
| Plant and machinery                 |   |   |   |   | 2      |   | -      | 10     |   |
| Industrial and commercial equipment |   |   |   |   | 4      |   | -      | 33     |   |
| Other assets                        |   |   |   |   | 6      |   | -      | 33     |   |

The break-down by segment of impairments amounting to euro 257million (euro 990 million at December 31, 2009) and theassociated tax effect is provided below:

| (euro        million) |   | **2009** |   | **2010** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| **Impairment**                                |   |    |   |    |
|-----------------------------------------------|--------|---------|--------|---------|
| Exploration        & Production           |   | 576     |   | 123     |
| Refining & Marketing                      |   | 287     |   | 72      |
| Petrochemicals                                |   | 121     |   | 52      |
| Other segments                                |   | 6       |   | 10      |
|                                          |   | **990** |   | **257** |
| **Tax effect**                                |   |    |   |    |
| Exploration        & Production           |   | 197     |   | 49      |
| Refining & Marketing                      |   | 108     |   | 28      |
| Petrochemicals                                |   | 33      |   | 15      |
| Other segments                                |   | 2       |   | 3       |
|                                          |   | **340** |   | **95**  |
| **Impairment net of the relevant tax effect** |   |    |   |    |
| Exploration        & Production           |   | 379     |   | 74      |
| Refining & Marketing                      |   | 179     |   | 44      |
| Petrochemicals                                |   | 88      |   | 37      |
| Other segments                                |   | 4       |   | 7       |
|                                          |   | **650** |   | **162** |
|                                          |   |         |   |         |

In assessing whether impairment is required, the carryingvalue of an asset, item of property, plant and equipment, iscompared with its recoverable amount. The recoverable amount isthe higher of the asset’s fair value less costs to sell andvalue in use. Given the nature of Eni’s activities,information on the fair value of an asset is usually difficult toobtain unless negotiations with potential purchasers are inplace. Eni assesses individual assets or groups of assets (CashGenerating Units - CGUs) which represent the lowest level atwhich there are identifiable cash flows that are largelyindependent of the cash flows of other groups of assets. TheGroup’s main CGUs are: (i) in the Exploration &Production segment, individual oilfields or pools of oilfieldswhereby technical, economic or contractual features make theunderlying cash flows interdependent; (ii) in the Gas & Powersegment, transport and distribution networks and relatedfacilities, storage sites and re-gasification facilities in aconsistent way with the gas segments of operations that aredefined by Regulatory Authorities for the purpose of tariffsettings. Other CGUs in the Gas & Power segment are gascarrier ships and plants for the production of electricity; (iii)in the Refining & Marketing segment, refining plants andcommercial facilities relating to each distribution channels andby country (ordinary network, high-ways network, and wholesaleactivity); (iv) in the Petrochemical segment, production plantsby business and related facilities; and (v) in the Engineering& Construction segment, the Business Units Offshore andOnshore constructions, Onshore drilling facilities and individualRigs for Offshore operations. The recoverable amount iscalculated by discounting the estimated cash flows deriving fromthe use of the CGU and, if significant and reasonablydeterminable, the cash flows deriving from its disposal at theend of its useful life. Recoverable amounts of the CGUs in theregulated businesses of gas transportation, distribution, storageand re-gasification equal their respective net borrowingsrecognized by Regulatory Authority, considering that theoperating cost structure borne is recognized in the tariff regimeset by Regulatory Authority (Regulatory Asset Base - RAB).

Cash flows are determined on the basis of the best informationavailable at the moment of the assessment deriving: (i) for thefirst four years of the projection, from the Company’sfour-year plan approved by the top management which providesinformation on expected oil and gas production volumes, salesvolumes, capital expenditures, operating costs and margins andindustrial and marketing set-up, as well as trends on the main 

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macroeconomic variables, including inflation, nominal interestrates and exchange rates; (ii) for the subsequent years,considering management’s assumptions of long-term trends inthe main macroeconomic variables (inflation rates, oil prices,etc.), cash flow projections are based on the following factors:(a) for the oil and gas CGUs, the residual life of the reservesand associated projections of operating costs and developmentexpenditures; (b) for the CGUs of the Refining & Marketingsegment, the economical and technical life of the plants andassociated projections of operating costs, expenditures tosupport plant efficiency and refining and marketing margins; (c)for the CGUs of the Petrochemical segment, the economical andtechnical life of the plants and associated projections ofexpenditures to support plant efficiency, and normalizedoperating results plus depreciation (normalized EBITDA); (d) forthe CGUs of the gas market and the Engineering & Constructionsegment, the perpetuity method of the last-year plan by using anominal growth rate ranging from 0% to 2%; and (e) for theregulated businesses of gas transportation, distribution, storageand regasification, a terminal value equal to the regulatoryasset base of the last-year plan; and (iii) the commodity priceshave been assessed based on the forward prices prevailing in themarketplace as of the balance sheet date for the first four yearsof the cash flow projections and the long-term price assumptionsadopted by the Company’s management for strategic planningpurposes for the following years (see Note 3 – Summary ofsignificant accounting policies).

Value-in-use is determined by discounting post-tax cash flowsat the rate which corresponds for the Exploration &Production, Refining & Marketing and Petrochemical segmentsto the Company’s weighted average cost of capital, adjustedto consider risks specific to each country of activity (adjustedpost-tax WACC). In 2010, the adjusted post-tax rates used forassessing value-in-use decreased by 0.5 percentage points onaverage from the previous year reflecting a reduced marketpremium for the equity risk and a slight decrease in the cost ofborrowings to Eni following expected trends in the main marketbenchmarks. Such trends were partially offset by increased marketyields on assets risk-free due to an higher risk premium forItaly. In 2010 the adjusted WACC used for impairment testpurposes ranged from 8% to 13%.

Post-tax cash flows and discount rates were adopted as theyresulted in an assessment that substantially approximated apre-tax assessment.

In 2010, the Exploration & Production segment recordedimmaterial asset impairments, if individually considered, for atotal amount of euro 123 million which primarily related to gasproperties located in USA and Egypt as a result of a changedprice environment and downward reserve revisions, particularlyassociated to unproved properties.

Other impairments were recorded in both the Refining &Marketing and the Petrochemical segments as expenditures made inthe year were entirely written off due to lack of economicperspectives associated with the relevant CGUs which were totallyimpaired in previous reporting periods.

Foreign currency translation differences of euro 2,614 millionwere primarily related to translation of entities accountsdenominated in U.S. dollar (euro 2,221 million).

Other changes of euro 714 million included the initialrecognition and change in the estimated amount of the costs fordismantling and restoring oil sites and expenditures associatedwith certain social projects of the Exploration & Productionsegment for euro 556 million, of which euro 287 million relatedto the recognition of social projects by Eni North Africa BV andthe reclassification from assets held for sale following thedecision of the proposed buyer not to acquire the 100% stake inthe share capital of Società Adriatica Idrocarburi SpA for euro292 million. The book value of assets disposed of amounted toeuro 95 million.

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The following is a description of unproved mineral interests,included in tangible assets in progress and advances: 

| (euro        million) |    | **Value at the beginning        of the year** |    | **Acquisitions** |    | **Impairments** |    | **Reclassification to        Proved Mineral Interest** |    | **Other changes and        currency translation differences** |    | **Net value at the end of        the year** |
|-----------------------|--------------|-----------------------------------------------|--------------|------------------|--------------|-----------------|--------------|--------------------------------------------------------|--------------|---------------------------------------------------------------|--------------|---------------------------------------------|
|                  |         |                                               |         |                  |         |                 |         |                                                        |         |                                                               |         |                                             |

| **Dec. 31, 2009**        |   |      |   |    |   |     |   |   |     |   |   |     |   |   |      |
|--------------------------|--------|-----------|--------|---------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|-----------|
| Congo                    |   | 1,497     |   | 42      |   |     |   |   | (333     | )      |   | (42      | )      |   | 1,164     |
| USA                      |   | 1,331     |   | 43      |   | (231     | )      |   | (229     | )      |   | (32      | )      |   | 882       |
| Turkmenistan             |   | 685       |   |    |   |     |   |   | (13      | )      |   | (23      | )      |   | 649       |
| Algeria                  |   | 689       |   |    |   |     |   |   | (220     | )      |   | (17      | )      |   | 452       |
| Other        countries   |   | 288       |   | 137     |   | (54      | )      |   | (140     | )      |   |     |   |   | 231       |
|                     |   | **4,490** |   | **222** |   | **(285** | **)**  |   | **(935** | **)**  |   | **(114** | **)**  |   | **3,378** |
| **Dec.        31, 2010** |   |      |   |    |   |     |   |   |     |   |   |     |   |   |      |
| Congo                    |   | 1,164     |   |    |   |     |   |   | (7       | )      |   | 91       |   |   | 1,248     |
| USA                      |   | 882       |   |    |   | (84      | )      |   | (150     | )      |   | 70       |   |   | 718       |
| Turkmenistan             |   | 649       |   |    |   |     |   |   | (12      | )      |   | 51       |   |   | 688       |
| Algeria                  |   | 452       |   |    |   |     |   |   | (43      | )      |   | 37       |   |   | 446       |
| Other countries          |   | 231       |   |    |   |     |   |   | (61      | )      |   | (9       | )      |   | 161       |
|                     |   | **3,378** |   |    |   | **(84**  | **)**  |   | **(273** | **)**  |   | **240**  |   |   | **3,261** |

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

The accumulated provisions for impairmentsamounted to euro 5,680 million and euro 6,186 million at December31, 2009 and 2010, respectively.

At December 31, 2010, Eni pledged property, plant andequipment for euro 28 million primarily as collateral againstcertain borrowings (the same amount as of December 31, 2009).

Government grants recorded as a decrease of property, plantand equipment amounted to euro 753 million (euro 642 million atDecember 31, 2009).

Assets acquired under financial lease agreements amounted toeuro 27 million (euro 28 million at December 31, 2009), of which,euro 20 million related to FPSO ships used by the Exploration& Production segment to support oil production and treatmentactivities and euro 7 million related to service stations in theRefining & Marketing segment.

Contractual commitments related to the purchase of property,plant and equipment are included in Note 34 – Guarantees,commitments and risks – Liquidity risk.

Property, plant and equipment under concession arrangementsare described in Note 34 – Guarantees, commitments and risks– Asset under concession arrangements.

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**Property, plant and equipment by segment**

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Property, plant and equipment, gross**                                |   |        |   |   |        |   |
|-------------------------------------------------------------------------|--------|-------------|--------|--------|-------------|--------|
| Exploration        & Production                                     |   | 71,189      |   |   | 85,494      |   |
| Gas & Power                                                         |   | 22,040      |   |   | 22,510      |   |
| Refining        & Marketing                                         |   | 13,378      |   |   | 14,177      |   |
| Petrochemicals                                                          |   | 5,174       |   |   | 5,226       |   |
| Engineering        & Construction                                   |   | 9,163       |   |   | 10,714      |   |
| Other activities                                                        |   | 1,592       |   |   | 1,614       |   |
| Corporate        and financial companies                                |   | 373         |   |   | 372         |   |
| Elimination of intra-group profits                                      |   | (343        | )      |   | (495        | )      |
|                                                                    |   | **122,566** |   |   | **139,612** |   |
| **Accumulated depreciation, amortization and        impairment losses** |   |        |   |   |        |   |
| Exploration        & Production                                     |   | 36,727      |   |   | 44,973      |   |
| Gas & Power                                                         |   | 8,262       |   |   | 8,634       |   |
| Refining        & Marketing                                         |   | 8,981       |   |   | 9,411       |   |
| Petrochemicals                                                          |   | 4,321       |   |   | 4,236       |   |
| Engineering        & Construction                                   |   | 2,858       |   |   | 3,292       |   |
| Other activities                                                        |   | 1,513       |   |   | 1,536       |   |
| Corporate        and financial companies                                |   | 194         |   |   | 201         |   |
| Elimination of intra-group profits                                      |   | (55         | )      |   | (75         | )      |
|                                                                    |   | **62,801**  |   |   | **72,208**  |   |
| **Property, plant and equipment, net**                                  |   |        |   |   |        |   |
| Exploration        & Production                                     |   | 34,462      |   |   | 40,521      |   |
| Gas & Power                                                         |   | 13,778      |   |   | 13,876      |   |
| Refining        & Marketing                                         |   | 4,397       |   |   | 4,766       |   |
| Petrochemicals                                                          |   | 853         |   |   | 990         |   |
| Engineering        & Construction                                   |   | 6,305       |   |   | 7,422       |   |
| Other activities                                                        |   | 79          |   |   | 78          |   |
| Corporate        and financial companies                                |   | 179         |   |   | 171         |   |
| Elimination of intra-group profits                                      |   | (288        | )      |   | (420        | )      |
|                                                                    |   | **59,765**  |   |   | **67,404**  |   |
|                                                                    |   |             |        |   |             |        |

 

**15********Inventory - compulsorystock******Inventory - compulsory stock was as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Crude oil and petroleum products |   | 1,586     |   | 1,874     |
|----------------------------------|--------|-----------|--------|-----------|
| Natural        gas               |   | 150       |   | 150       |
|                             |   | **1,736** |   | **2,024** |
|                             |   |           |   |           |

Compulsory stock was primarily held by Italian companies (euro1,724 million and euro 2,010 million at December 31, 2009 and2010, respectively) in accordance with minimum stock requirementsof oil, petrochemical products and natural gas set forth byapplicable laws.

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**16 Intangible assets**Intangible assets were as follows:

| (euro        million) |   | **Net value at the beginning of the year** |   | **Investments** |   | **Amortization** |   | **Impairments** |   | **Changes in the scope of consolidation** |   | **Currency translation differences** |   | **Other changes** |   | **Net value         at the end         of the year** |   | **Gross value         at the end         of the year** |   | **Provisions for amortization        and****impairments** |
|-----------------------|--------|--------------------------------------------|--------|-----------------|--------|------------------|--------|-----------------|--------|-------------------------------------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------------------------|--------|--------------------------------------------------------|--------|-----------------------------------------------------------|
|                  |   |                                            |   |                 |   |                  |   |                 |   |                                           |   |                                      |   |                   |   |                                                      |   |                                                        |   |                                                           |

| **Dec. 31, 2009**                                          |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
|------------------------------------------------------------|--------|------------|--------|-----------|--------|------------|--------|--------|----------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|------------|--------|------------|--------|-----------|
| **Intangible        assets with finite useful lives**      |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
| Exploration expenditures                                   |   | 971        |   | 1,273     |   | (1,615     | )      |   |     |   |   |    |   | (20    | )      |   | 22      |   |   | 631        |   | 2,259      |   | 1,628     |
| Industrial        patents and intellectual property rights |   | 149        |   | 10        |   | (85        | )      |   | (2       | )      |   |    |   |   |   |   | 66      |   |   | 138        |   | 1,275      |   | 1,137     |
| Concessions, licenses, trademarks and similar        items |   | 733        |   | 20        |   | (153       | )      |   |     |   |   |    |   | 1      |   |   | 70      |   |   | 671        |   | 2,403      |   | 1,732     |
| Service        concession arrangements                     |   | 3,322      |   | 268       |   | (121       | )      |   |     |   |   |    |   | 17     |   |   | (74     | )      |   | 3,412      |   | 5,958      |   | 2,546     |
| Intangible assets in progress and advances                 |   | 580        |   | 83        |   |       |   |   | (4       | )      |   |    |   | 1      |   |   | (79     | )      |   | 581        |   | 584        |   | 3         |
| Other        intangible assets                             |   | 1,733      |   | 9         |   | (136       | )      |   |     |   |   |    |   | 15     |   |   | 5       |   |   | 1,626      |   | 2,035      |   | 409       |
|                                                       |   | **7,488**  |   | **1,663** |   | **(2,110** | **)**  |   | **(6**   | **)**  |   |    |   | **14** |   |   | **10**  |   |   | **7,059**  |   | **14,514** |   | **7,455** |
| **Intangible        assets with indefinite useful lives**  |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
| Goodwill                                                   |   | 3,531      |   |      |   |       |   |   | (56      | )      |   | 15      |   | 8      |   |   | 912     |   |   | 4,410      |   |       |   |      |
|                                                       |   | **11,019** |   | **1,663** |   | **(2,110** | **)**  |   | **(62**  | **)**  |   | **15**  |   | **22** |   |   | **922** |   |   | **11,469** |   |       |   |      |
| **Dec. 31, 2010**                                          |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
| **Intangible        assets with finite useful lives**      |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
| Exploration expenditures                                   |   | 631        |   | 1,038     |   | (1,235     | )      |   |     |   |   | 16      |   | 52     |   |   | 36      |   |   | 538        |   | 2,323      |   | 1,785     |
| Industrial        patents and intellectual property rights |   | 138        |   | 38        |   | (87        | )      |   |     |   |   |    |   |   |   |   | 61      |   |   | 150        |   | 1,374      |   | 1,224     |
| Concessions, licenses, trademarks and similar        items |   | 671        |   | 40        |   | (160       | )      |   |     |   |   | 6       |   | 1      |   |   | 17      |   |   | 575        |   | 2,410      |   | 1,835     |
| Service        concession arrangements                     |   | 3,412      |   | 300       |   | (134       | )      |   | (10      | )      |   |    |   | 6      |   |   | (12     | )      |   | 3,562      |   | 6,205      |   | 2,643     |
| Intangible assets in progress and advances                 |   | 581        |   | 138       |   |       |   |   | (1       | )      |   |    |   |   |   |   | (60     | )      |   | 658        |   | 664        |   | 6         |
| Other        intangible assets                             |   | 1,626      |   | 8         |   | (128       | )      |   |     |   |   |    |   | 9      |   |   | (1      | )      |   | 1,514      |   | 2,048      |   | 534       |
|                                                       |   | **7,059**  |   | **1,562** |   | **(1,744** | **)**  |   | **(11**  | **)**  |   | **22**  |   | **68** |   |   | **41**  |   |   | **6,997**  |   | **15,024** |   | **8,027** |
| **Intangible        assets with indefinite useful lives**  |   |       |   |      |   |       |   |   |     |   |   |    |   |   |   |   |    |   |   |       |   |       |   |      |
| Goodwill                                                   |   | 4,410      |   |      |   |       |   |   | (430     | )      |   | 173     |   | 17     |   |   | 5       |   |   | 4,175      |   |       |   |      |
|                                                       |   | **11,469** |   | **1,562** |   | **(1,744** | **)**  |   | **(441** | **)**  |   | **195** |   | **85** |   |   | **46**  |   |   | **11,172** |   |       |   |      |

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

Exploration expenditures of euro 538 million mainly related tolicense acquisition costs that are amortized on a straight-linebasis over the contractual term of the exploration lease or fullywritten off against profit and loss upon expiration of terms ormanagement’s decision to cease any exploration activities.Additions for the year included exploration drilling expenditureswhich were fully amortized as incurred for euro 1,009 million(euro 1,271 million at December 31, 2009).

Concessions, licenses, trademarks and similar items for euro575 million primarily comprised transmission rights for naturalgas imported from Algeria (euro 406 million) and concessions formineral exploration (euro 121 million).

Service concession arrangements of euro 3,562 millionprimarily pertained to Italian gas distribution activity (euro3,340 million and euro 3,492 million as of December 31, 2009 and2010, respectively). Such activity is conducted in concession onthe basis of municipal assignments, as the definition throughrelevant decrees of over-municipal minimum territorial reaches isstill pending. At the expiration date of the concession,following the sale to a new operator of the gas distributionnetwork, the outgoing operator is entitled to receive areimbursement base on an industrial assessment of the relevantassets. Tariffs for the distribution service are defined by theItalian Authority for Electricity and Gas. Applicable regulationsaward concessions to distribution companies exclusively by meansof competitive bid. Concessions are granted for a maximum term of12 years. Government grants recorded as a decrease in thecarrying amounts of service concession arrangements amounted toeuro 729 million (euro 693 million as of December 31, 2009).

Other intangible assets with finite useful lives of euro 1,514million primarily pertained to: (i) customer relationship andorder backlog for euro 1,140 million (euro 1,244 million atDecember 31, 2009) recognized upon the business combination ofDistrigas NV. These assets are amortized on the basis of thesupply contract with the longest term (19 years) and the residualuseful life of sale contracts (4 years); (ii) an option todevelop offshore 

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storage capacity for the commercial modulation of gas in theBritish North Sea which was recognized upon acquisition of EniHewett Ltd amounting to euro 241 million (euro 234 million atDecember 31, 2009). The asset impairment test confirmedrecoverability of the book value; (iii) royalties for the use oflicenses by Polimeri Europa SpA amounting to euro 64 million(euro 68 million at December 31, 2009); and (iv) estimated costsfor Eni’s social responsibility projects in relation to oildevelopment programs in Val d’Agri connected to mineralrights under concession for euro 35 million (euro 38 million atDecember 31, 2009) following commitments made with the BasilicataRegion.

The depreciation rates used were as follows:

| (%)                                                        |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Exploration expenditures                                   |   |   |   |   | 14     |   | -      | 33     |   |
| Industrial patents and        intellectual property rights |   |   |   |   | 20     |   | -      | 33     |   |
| Concessions, licenses, trademarks and similar        items |   |   |   |   | 3      |   | -      | 33     |   |
| Concessions, licenses,        trademarks and similar items |   |   |   |   | 2      |   | -      | 20     |   |
| Other intangible assets                                    |   |   |   |   | 4      |   | -      | 25     |   |

Impairments of intangible assets with indefinite useful life(goodwill) of euro 430 million essentially pertained to the Gas& Power segment (euro 426 million), as described below.Change in the consolidation area of euro 173 million related torecognition of goodwill following the purchase price allocationin connection with the business combinations of Altergaz SA (euro97 million) and Eni Mineralölhandel GmbH including itssubsidiary Eni Marketing Austria GmbH (euro 76 million). Moreinformation is included in Note 33 – Other information– Main acquisitions.

The carrying amount of goodwill at the end of the year waseuro 4,175 million (euro 4,410 million at December 31, 2009). Thebreak-down by operating segment is as follows:

| (euro        million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Exploration & Production          |   | 249       |   | 262       |
|---------------------------------------|--------|-----------|--------|-----------|
| Gas &        Power                |   | 3,328     |   | 3,000     |
| Refining & Marketing              |   | 84        |   | 164       |
| Engineering        & Construction |   | 749       |   | 749       |
|                                  |   | **4,410** |   | **4,175** |
|                                  |   |           |   |           |

Goodwill acquired through business combinations has beenallocated to the cash-generating units ("CGUs") thatare expected to benefit from the synergies of the acquisition.The CGUs of the Gas & Power segment are composed of suchcommercial business units whose cash flows are interdependent andtherefore benefit from acquisition synergies. The recoverableamounts of the CGUs are determined by discounting the future cashflows deriving from the continuing use of the CGUs and, ifsignificant and reasonably determinable, the cash flows derivingfrom its disposal at the end of their useful lives. Recoverableamounts of the CGUs in the regulated businesses of gastransportation, distribution, storage and re-gasification equaltheir respective regulatory asset base, considering that theoperating cost structure borne is recognized in the tariff regimeset by Regulatory Authority (RAB - Regulatory Asset Base).

Cash flows are determined on the basis of the best informationavailable at the moment of the assessment deriving: (i) for thefirst four years of the projection, from the Company’sfour-year plan approved by the top management which providesinformation on expected oil and gas production volumes, salesvolumes, capital expenditures, operating costs and margins andindustrial and marketing set-up, as well as trends on the mainmacroeconomic variables, including inflation, nominal interestrates and exchange rates; (ii) for the subsequent years,considering management’s assumptions of long-term trends inthe main macroeconomic variables (inflation rates, oil prices,etc.), cash flow projections are based on the following factors:(a) for the oil and gas CGUs, the residual life of the reservesand associated projections of operating costs and developmentexpenditures; (b) for the CGUs of the Refining & Marketingsegment, the economical and technical life of the plants andassociated projections of operating costs, expenditures tosupport plant efficiency and refining and marketing margins; (c)for the CGUs of the gas market and the Engineering &Construction segment, the perpetuity method of the last-year planby using a nominal growth rate ranging from 0% to 2%; and (d) forCGU of the regulated businesses of gas transportation - Italy,distribution, storage and re-gasification, a terminal value equalto the regulatory asset base of the last-year plan; and (iii) thecommodity prices have been assessed based on the forward pricesprevailing in the marketplace as of the balance sheet date forthe first four years of the cash flow projections and thelong-term price

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assumptions adopted by the Company’s management forstrategic planning purposes for the following years (see Note 3– Summary of significant accounting policies).

Value-in-use is determined by discounting post-tax cash flowsat the rate which corresponds: (i) for the Exploration &Production and Refining & Marketing segments to theCompany’s weighted average cost of capital, adjusted toconsider risks specific to each country of activity (adjustedpost-tax WACC). In 2010, the adjusted post-tax rates used forassessing value-in-use decreased by 0.5 percentage points onaverage from the previous year reflecting a reduced marketpremium for the equity risk and a slight decrease in the cost ofborrowings to Eni following expected trends in the main marketbenchmarks. Such trends were partially offset by increased marketyields on assets risk-free due to an higher risk premium forItaly. In 2010 the adjusted WACC used for impairment testpurposes ranged from 8% to 13%; (ii) the impairment test rate forthe Gas & Power segment was estimated on the basis of asample of comparable companies in the utility industry. Theimpairment test rate for the Engineering & Constructionsegment was derived from market data. Rates used in the Gas &Power segment were adjusted to take into consideration risksspecific to each country of activity, while rates used in theEngineering & Construction segment did not reflect anycountry risks as most of the company assets are not permanentlylocated in a specific country. Rates for the Gas & Powersegment ranged from 7% to 8%, unchanged from the previous year asthe decrease observed in the equity risks for gas companies waslower than the oil sector and was completely absorbed by theimpact of rising yields on assets risk-free. In the Engineering& Construction segment, the discount rate was 9%, an increaseof 0.5 percentage points from the previous year due to an higherequity risk and higher rates of risk-free assets; and (iii) forthe regulated activities in the Italian natural gas sector, thediscount rates were assumed to be equal to the rates of returndefined by the Italian Authority for Electricity and Gas.

Post-tax cash flows and discount rates were adopted as theyresulted in an assessment that substantially approximated apre-tax assessment.

Goodwill has been allocated to the following CGUs:

**Gas & Power segment**

| (euro        million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Domestic gas market                                |   | 766       |   | 767       |
|----------------------------------------------------|--------|-----------|--------|-----------|
| Foreign gas        market                          |   | 2,247     |   | 1,918     |
| *- of which European market (Distrigas)*           |   | *2,148*   |   | *1,722*   |
| Domestic        natural gas transportation network |   | 305       |   | 305       |
| Other                                              |   | 10        |   | 10        |
|                                               |   | **3,328** |   | **3,000** |
|                                               |   |           |   |           |

Goodwill allocated to the CGU domestic gas market primarilypertained to goodwill recognized upon the buy-out of Italgas SpAminorities in 2003 through a public offering (euro 706 million).The relevant CGU is engaged in supplying gas to residentialcustomers and small businesses. The impairment review performedat the balance sheet date confirmed the recoverability of thecarrying amount of that CGU, including the allocated goodwill.

Goodwill allocated to the CGU European market pertained togoodwill recognized upon allocating the purchase price of theDistrigas business combination in 2009. The CGU comprisesDistrigas marketing activities and those activities manageddirectly or indirectly by the Gas & Power division of theparent company Eni SpA, which includes marketing activities inEurope including France, Germany, Benelux, the UK, Switzerlandand Austria. Those business units jointly benefited from thebusiness combination synergies. In performing the impairmentreview of the recoverability of the CGU carrying amount at thebalance sheet date, management recognized an impairment lossamounting to euro 426 million considering weak 2010 results and areduced outlook for profitability.

The key assumptions adopted for determining future cash flowprojections of both the CGUs Italian market and European marketincluded marketing margins, forecast sales volumes, the discountrate and the growth rates adopted to determine the terminalvalue. Information on these drivers was derived from thefour-year plan approved by the Company’s top management thatwas revised downwards with respect to past years futureprojections for returns and cash flows of the Company’s gasbusiness, particularly the European market, due to expectationsfor weak demand and supply fundamentals, rising competitivepressures and increased commercial risk. The European market isexpected to be negatively affected by lowering marketing marginsover the next four years. This reflects ongoing development ofvery liquid spot markets for gas and the circumstance that spotprices have increasingly become the prevailing reference pricefor contractual formulae in supplies outside Italy whereasEni’s purchase costs for gas are 

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mainly indexed to the price of oil and refined products.Trends in spot prices as compared to those in oil-linked purchasecosts have been de-coupling until recently resulting in negativespreads during the course of 2010; management expects that thosenegative trends will re-couple in 2014 at the earliest. Comparedto the previous year exercise of four-year financial projections,management is now assuming that the CGU European market will beaffected by the following negative factors: (i) an averagereduction of 47% in unit marketing margins that will be earned onfuture gas sales relating to determination of value in use ofthat CGU; (ii) an average reduction of 7% in planned salesvolumes; and (iii) the discount rate and the growth rate areunchanged from previous assumptions. The industrial and financialforecasts for the next four-year plan of the gas business as wellas the amount of the impairment loss recognized in 2010consolidated accounts both take into consideration managementassumptions to renegotiate better economic terms within theCompany’s long-term gas purchase contracts, so as to restorethe competitiveness of the Company’s cost position in thecurrent depressed scenario for the gas sector. The renegotiationof revised contractual terms, including any price revisions andcontractual flexibility, is established by such contractualclauses whereby parties are held to bring the contract back tothe economic equilibrium in case of significant changes in themarket environment, like the ones that have occurred since fromthe second half 2008. In the course of 2010, Eni has finalized anumber of important contractual renegotiations by obtainingimproved economic conditions for supplies and wider contractualflexibility with a benefit to its commercial programs. A numberof renegotiations have been commenced or are due to commence inthe near future involving all the Company’s main suppliersof gas based on long-term contracts. Should the outcome of thoserenegotiations fall short of management’s expectations andabsent a solid recovery in fundamentals of the gas sector,management believes that future results of operations and cashflows of the Company’s gas business will be negativelyaffected with further consequences in terms of recoverability ofthe carrying amounts of the CGU European market.

The terminal value of the CGUs was estimated based on theperpetuity method of the last year of the plan assuming along-term nominal growth rate equal to zero and 1.6% for the CGUItalian market and the CGU European market, respectively. Valuein use of the CGU European market was assessed by discounting theassociated post-tax cash flows at a post-tax rate of 7.5% thatcorresponds to the pre-tax rate of 9.3% (7.5% and 10%,respectively in the previous year). Value in use of the CGUItalian market was assessed by discounting the associatedpost-tax cash flows at a post-tax rate of 7% that corresponds tothe pre-tax rate of 11.7% (7% and 11.9%, respectively in theprevious year).

The excess of the recoverable amount of the CGU domestic gasmarket over its carrying amount including the allocated portionof goodwill (headroom) amounting to euro 344 million would bereduced to zero under each of the following alternativehypothesis: (i) a decrease of 26% on average in the projectedcommercial margins; (ii) a decrease of 26% on average in theprojected sales volumes; (iii) an increase of 2.8 percentagepoints in the discount rate; and (iv) a negative nominal growthrate of 3.5%. The recoverable amount of the CGU and the relevantsensitivity analysis were calculated solely on the basis ofretail margins, thus excluding wholesale and business clientmargins (industrial, thermoelectric and others).

Goodwill allocated to the domestic natural gas transportationnetwork CGU was recognized alongside the repurchase of own sharesby Snam Rete Gas SpA and equals the difference between thepurchase cost over the carrying amount of the corresponding shareof net equity. The recoverable amount of the CGU is assessedbased on its Regulatory Asset Base (RAB) as recognized by theItalian Authority for Electricity and Gas and is higher than itscarrying amount, including the allocated goodwill. Managementbelieves that no reasonably possible change in the assumptionsadopted would cause the headroom of the CGU to be reduced tozero.

**Engineering & Construction segment**

| (euro        million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Offshore constructions       |   | 416     |   | 415     |
|------------------------------|--------|---------|--------|---------|
| Onshore        constructions |   | 317     |   | 318     |
| Other                        |   | 16      |   | 16      |
|                         |   | **749** |   | **749** |
|                         |   |         |   |         |

The segment goodwill of euro 749 million was mainly recognizedfollowing the acquisition of Bouygues Offshore SA, now Saipem SA(euro 711 million) and allocated to the CGUs Offshore andOnshore. The impairment review performed at the balance sheetdate confirmed the recoverability of the carrying amounts of boththose CGUs, including the allocated portions of goodwill.

The key assumptions adopted for assessing the recoverableamounts of those two CGUs which exceed their respective carryingamounts related to operating results, the discount rate and thegrowth rates adopted to determine 

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the terminal value. Information on those drivers has beencollected from the four-year plan approved by the Company’stop management, while the terminal value was estimated by using aperpetual nominal growth rate of 2% applied to the cash flow ofthe last year in the four-year plan. Value in use of both CGUswas assessed by discounting the associated post-tax cash flows ata post-tax rate of 9% (8.5% in 2009) which corresponds to thepre-tax rate of 11.8% and 13% for the Offshore business unit andthe Onshore one respectively (10.8% and 12.3%, respectively inthe previous year). The headroom of the Offshore business unit ofeuro 4,338 million would be reduced to zero under each of thefollowing alternative changes in the above mentioned assumptions:(i) a decrease of 55% in the operating result of the four-yearplan; (ii) an increase of about 9 percentage points of thediscount rate; and (iii) negative real growth rate.

Changes in each of the assumptions that would cause theheadroom of the Onshore business unit to be reduced to zero aregreater than those of the Offshore construction CGU describedabove.

The Exploration & Production and the Refining &Marketing segments tested their goodwill, yielding the followingresults: (i) in the Exploration & Production segment withgoodwill amounting to euro 262 million, management believes thatthere are no reasonably possible changes in the pricingenvironment and production/cost profiles that would cause theheadroom of the relevant CGUs to be reduced to zero. Goodwillmainly refers to the portion of the purchase price that was notallocated to proved or unproved mineral interests of the businesscombinations Lasmo, Burren Energy (Congo) and First Calgary(Algeria) executed in previous reporting periods; and (ii) in theRefining & Marketing segment goodwill amounted to euro 164million at the balance sheet date. Goodwill amounting to euro 66million pertained to retail networks in the Czech Republic,Hungary and Slovakia which were purchased in 2008, for which thegrowth expectations improved in respect of the previous yearfollowing to a demand recovery and a better marketing position.Goodwill amounting to euro 76 million represented the allocationof the purchase price of a business combination involving aservice station in Austria which was acquired in August 2010.

**17 Investments**

**Investments accounted for using the equity method**Equity-accounted investments were as follows:

| (euro        million) |   | **Value at the beginning         of the year** |   | **Acquisitions and subscriptions** |   | **Sales and reimbursements** |   | **Share of profit of equity-accounted        investments** |   | **Share of loss         of equity-accounted investments** |   | **Deduction         for dividends** |   | **Currency translation differences** |   | **Other changes** |   | **Value at the end of the year** |
|-----------------------|--------|------------------------------------------------|--------|------------------------------------|--------|------------------------------|--------|------------------------------------------------------------|--------|-----------------------------------------------------------|--------|-------------------------------------|--------|--------------------------------------|--------|-------------------|--------|----------------------------------|
|                  |   |                                                |   |                                    |   |                              |   |                                                            |   |                                                           |   |                                     |   |                                      |   |                   |   |                                  |

| **Dec. 31, 2009**                                               |   |      |   |    |   |     |   |   |    |   |     |   |   |     |   |   |    |   |   |     |   |   |      |
|-----------------------------------------------------------------|--------|-----------|--------|---------|--------|----------|--------|--------|---------|--------|----------|--------|--------|----------|--------|--------|---------|--------|--------|----------|--------|--------|-----------|
| Investments        in unconsolidated entities controlled by Eni |   | 177       |   | 1       |   | (14      | )      |   | 42      |   | (4       | )      |   | (8       | )      |   | (3      | )      |   | 26       |   |   | 217       |
| Joint ventures                                                  |   | 3,257     |   | 25      |   | (111     | )      |   | 478     |   | (81      | )      |   | (254     | )      |   | (54     | )      |   | 67       |   |   | 3,327     |
| Associates                                                      |   | 2,037     |   | 200     |   | (24      | )      |   | 173     |   | (156     | )      |   | (122     | )      |   | (31     | )      |   | 207      |   |   | 2,284     |
|                                                            |   | **5,471** |   | **226** |   | **(149** | **)**  |   | **693** |   | **(241** | **)**  |   | **(384** | **)**  |   | **(88** | **)**  |   | **300**  |   |   | **5,82**8 |
| **Dec.        31, 2010**                                        |   |      |   |    |   |     |   |   |    |   |     |   |   |     |   |   |    |   |   |     |   |   |      |
| Investments in unconsolidated entities        controlled by Eni |   | 217       |   | 32      |   | (3       | )      |   | 75      |   | (18      | )      |   | (38      | )      |   | 9       |   |   | (18      | )      |   | 256       |
| Joint        ventures                                           |   | 3,327     |   | 44      |   | (526     | )      |   | 379     |   | (124     | )      |   | (312     | )      |   | 124     |   |   | (177     | )      |   | 2,735     |
| Associates                                                      |   | 2,284     |   | 187     |   | (33      | )      |   | 263     |   | (7       | )      |   | (130     | )      |   | 81      |   |   | 32       |   |   | 2,677     |
|                                                            |   | **5,828** |   | **263** |   | **(562** | **)**  |   | **717** |   | **(149** | **)**  |   | **(480** | **)**  |   | **214** |   |   | **(163** | **)**  |   | **5,668** |

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

Acquisitions and subscriptions for euro 263 million related tothe subscription of capital increase, of which euro 183 millionrelated to Angola LNG Ltd.

Sales and reimbursements of equity-accounted investments ofeuro 562 million mainly pertained to the capital reimbursement ofArtic Russia BV (euro 526 million) following the divestment of a51% stake in the Eni-Enel joint venture OOO"SeverEnergia" as Gazprom exercised a call option onSeptember 23, 2009. On March 31, 2010, Eni collected a secondinstallment of the transaction amounting to euro 526 million (asconverted at the EUR/USD exchange rate of 1.35 as of thetransaction date, corresponding to approximately $710 million).

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Share of profit of equity-accounted investments and thedecrease following the distribution of the dividends pertained tothe following companies:

| (euro        million) |    | **Dec. 31, 2009** |         | **Dec. 31, 2010** |
|-----------------------|--------------|-------------------|--------------|-------------------|
|             |    |                   |    |                   |

|    |    | Share of profit of        equity-accounted investments |    | Deduction for dividends |    | Eni’s interest % |    | Share of profit of        equity-accounted investments |    | Deduction for dividends |    | Eni’s interest % |
|--------------|--------------|--------------------------------------------------------|--------------|-------------------------|--------------|-----------------------|--------------|--------------------------------------------------------|--------------|-------------------------|--------------|-----------------------|
|         |         |                                                        |         |                         |         |                       |         |                                                        |         |                         |         |                       |

| Galp Energia SGPS SA              |   | 116     |   | 64      |   | 33.34  |      |   | 147     |   | 55      |   | 33.34  |      |
|-----------------------------------|--------|---------|--------|---------|--------|--------|-----------|--------|---------|--------|---------|--------|--------|-----------|
| Unión        Fenosa Gas SA   |   | 108     |   | 138     |   | 50.00  |      |   | 116     |   | 126     |   | 50.00  |      |
| Trans Austria Gasleitung GmbH     |   | 84      |   | 22      |   | 89.00  |      |   | 98      |   | 67      |   | 89.00  |      |
| United Gas        Derivatives Co  |   | 24      |   | 40      |   | 24.55  |  (*) |   | 47      |   | 44      |   | 24.55  |  (*) |
| Eni BTC Ltd                       |   | 35      |   |    |   | 100.00 |      |   | 37      |   | 35      |   | 100.00 |      |
| Blue        Stream Pipeline Co BV |   | 33      |   |    |   | 50.00  |      |   | 36      |   |    |   | 50.00  |      |
| Other investments                 |   | 293     |   | 120     |   |   |      |   | 236     |   | 153     |   |   |      |
|                              |   | **693** |   | **384** |   |   |      |   | **717** |   | **480** |   |   |      |
|                              |   |         |   |         |   |        |           |   |         |   |         |   |        |           |

|   |   |                       |
|--------|--------|----------------------------|
| (*)    |   | Equity ratio        33.33. |

Share of losses of equity-accounted investments of euro 149million primarily related to CARDÓN IV SA (euro 40 million) andSuper Octanos CA (euro 36 million).

Other changes of euro 163 million included: (i)reclassification to assets held for sale of the carrying amountsrelating Trans Austria Gasleitung GmbH (euro 203 million),Transitgas AG (euro 40 million) and Trans Europa NaturgasPipeline Gesellschaft mbH & Co KG (euro 8 million). Moreinformation is included in Note 31 – Assets held for saleand liabilities directly associated with assets held for sale;(ii) the exclusion from joint ventures and the inclusion in thescope of consolidation following the acquisition of thecontrolling interest of Altergaz SA (euro 67 million); and (iii)as an increase the exclusion from the scope of consolidation andthe inclusion in equity-accounted investments of GreenStream BV(euro 149 million) following the sale of 25% of its sharecapital.

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The following table sets out the net carrying amount relatingto equity-accounted investments:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Net carrying amount |   | Eni’s interest % |   | Net carrying amount |   | Eni’s interest % |
|--------|--------|---------------------|--------|-----------------------|--------|---------------------|--------|-----------------------|
|   |   |                     |   |                       |   |                     |   |                       |

| Investments in unconsolidated entities        controlled by Eni: |   |      |   |   |      |   |      |   |   |      |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|-----------|--------|--------|-----------|
| - Eni BTC        Ltd                                             |   | 93        |   | 100.00 |      |   | 104       |   | 100.00 |      |
| - Eni BBI Ltd                                                    |   | 3         |   | 100.00 |      |   | 28        |   | 100.00 |      |
| - other        investments (1)                                   |   | 121       |   |   |      |   | 124       |   |   |      |
|                                                             |   | **217**   |   |   |      |   | **256**   |   |   |      |
| Joint        ventures:                                           |   |      |   |   |      |   |      |   |   |      |
| - Unión Fenosa Gas SA                                       |   | 473       |   | 50.00  |      |   | 468       |   | 50.00  |      |
| - Artic        Russia BV                                         |   | 918       |   | 60.00  |      |   | 445       |   | 60.00  |      |
| - Blue Stream Pipeline Co BV                                     |   | 371       |   | 50.00  |      |   | 435       |   | 50.00  |      |
| - EnBW Eni        Verwaltungsgesellschaft mbH                    |   | 284       |   | 50.00  |      |   | 285       |   | 50.00  |      |
| - Azienda Energia e Servizi Torino SpA                           |   | 170       |   | 49.00  |      |   | 172       |   | 49.00  |      |
| - Eteria        Parohis Aeriou Thessalonikis AE                  |   | 161       |   | 49.00  |      |   | 160       |   | 49.00  |      |
| - Toscana Energia SpA                                            |   | 143       |   | 49.38  |      |   | 155       |   | 48.13  |      |
| -        GreenStream BV                                          |   |      |   |   |      |   | 147       |   | 50.00  |      |
| - Raffineria di Milazzo ScpA                                     |   | 128       |   | 50.00  |      |   | 128       |   | 50.00  |      |
| - Unimar        Llc                                              |   | 72        |   | 50.00  |      |   | 74        |   | 50.00  |      |
| - Supermetanol CA                                                |   | 80        |   | 34.51  |      |   | 66        |   | 34.51  |      |
| - Eteria        Parohis Aeriou Thessalias AE                     |   | 43        |   | 49.00  |      |   | 43        |   | 49.00  |      |
| - Starstroi Llc                                                  |   | 31        |   | 50.00  |      |   | 19        |   | 50.00  |      |
| - Trans        Austria Gasleitung GmbH                           |   | 170       |   | 89.00  |      |   |      |   |   |      |
| - Super Octanos CA                                               |   | 66        |   | 49.00  |      |   |      |   |   |      |
| -        Transitgas AG                                           |   | 33        |   | 46.00  |      |   |      |   |   |      |
| - Altergaz SA                                                    |   | 28        |   | 41.62  |      |   |      |   |   |      |
| - other        investments (1)                                   |   | 156       |   |   |      |   | 138       |   |   |      |
|                                                             |   | **3,327** |   |   |      |   | **2,735** |   |   |      |
| Associates:                                                      |   |      |   |   |      |   |      |   |   |      |
| - Galp Energia SGPS SA                                           |   | 914       |   | 33.34  |      |   | 1,005     |   | 33.34  |      |
| - Angola        LNG Ltd                                          |   | 612       |   | 13.60  |      |   | 841       |   | 13.60  |      |
| - PetroSucre SA                                                  |   | 176       |   | 26.00  |      |   | 198       |   | 26.00  |      |
| - Ceska        Rafinerska AS                                     |   | 184       |   | 32.44  |      |   | 189       |   | 32.44  |      |
| - United Gas Derivatives Co                                      |   | 84        |   | 24.55  |  (2) |   | 94        |   | 24.55  |  (2) |
| -        Fertilizantes Nitrogenados de Oriente CEC               |   | 68        |   | 20.00  |      |   | 68        |   | 20.00  |      |
| - ACAM Gas SpA                                                   |   | 47        |   | 49.00  |      |   | 48        |   | 49.00  |      |
| - Termica        Milazzo Srl                                     |   | 23        |   | 40.00  |      |   | 40        |   | 40.00  |      |
| - Distribuidora de Gas del Centro SA                             |   | 29        |   | 31.35  |      |   | 32        |   | 31.35  |      |
| - Gaz de        Bordeaux SAS                                     |   | 13        |   | 17.00  |      |   | 27        |   | 34.00  |      |
| - other investments (1)                                          |   | 134       |   |   |      |   | 135       |   |   |      |
|                                                             |   | **2,284** |   |   |      |   | **2,677** |   |   |      |
|                                                             |   | **5,828** |   |   |      |   | **5,668** |   |   |      |
|                                                             |   |           |   |        |           |   |           |   |        |           |

|    |    |                                                                            |
|--------------|--------------|--------------------------------------------------------------------------------------|
| (1)          |    | Each        individual amount included herein did not exceed euro 25        million. |
| (2)          |    | Equity ratio        33.33.                                                           |

Carrying amounts of investments in unconsolidated entities,including entities controlled by Eni, joint ventures andassociates, comprised differences between the purchase price ofrelevant shareholdings and the corresponding Eni’s share inthe net equity of each entities amounting to euro 511 million, ofwhich euro 347 million referred to goodwill. Such differencesprimarily related to Unión Fenosa Gas SA (euro 195 million ofgoodwill), EnBW - Eni Verwaltungsgesellschaft mbH (euro 181million, of which euro 18 million of goodwill) and Galp EnergiaSGPS SA (euro 106 million of goodwill).

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The fair value of listed investments was as follows:

|         |         | **Shares** |         | **Ownership**        (%) |         | **Price        per share**        (euro) |         | **Fair        value**        (euro million) |
|--------------|--------------|------------|--------------|--------------------------|--------------|------------------------------------------|--------------|---------------------------------------------|
|    |    |            |    |                          |    |                                          |    |                                             |

| Galp Energia SGPS SA |   | 276,472,161 |   | 33.34 |   | 14.34 |   | **3,965** |
|----------------------|--------|-------------|--------|-------|--------|-------|--------|-----------|
|                 |   |             |   |       |   |       |   |           |

The table below sets out the provisions forlosses included in the provisions for contingencies of euro 124million (euro 170 million at December 31, 2009), primarilyrelated to the following equity-accounted investments:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Industria Siciliana Acido Fosforico - ISAF - SpA        (under liquidation) |   | 64      |   | 59      |
|-----------------------------------------------------------------------------|--------|---------|--------|---------|
| Southern        Gas Constructors Ltd                                        |   | 13      |   | 31      |
| Charville - Consultores e Serviços Lda                                 |   | 21      |   | 12      |
| Other        investments                                                    |   | 72      |   | 22      |
|                                                                        |   | **170** |   | **124** |
|                                                                        |   |         |   |         |

**Other investments**Other investments were as follows:

| (euro        million) |   | **Net value at the beginning of the year** |   | **Acquisition and subscriptions** |   | **Currency translation differences** |   | **Other changes** |   | **Net value at the end of the year** |   | **Gross value at the end of the year** |   | **Accumulated impairment charges** |
|-----------------------|--------|--------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|--------|-------------------|--------|--------------------------------------|--------|----------------------------------------|--------|------------------------------------|
|                  |   |                                            |   |                                   |   |                                      |   |                   |   |                                      |   |                                        |   |                                    |

| **Dec. 31, 2009**                                               |   |    |   |   |   |   |   |   |    |   |   |    |   |    |   |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|---------|--------|--------|
| Investments        in unconsolidated entities controlled by Eni |   | 30      |   |   |   | (1     | )      |   | 15      |   |   | 44      |   | 55      |   | 11     |
| Associates                                                      |   | 4       |   |   |   |   |   |   | 4       |   |   | 8       |   | 8       |   |   |
| Other        investments                                        |   | 376     |   | 4      |   | (7     | )      |   | (9      | )      |   | 364     |   | 371     |   | 7      |
|                                                            |   | **410** |   | **4**  |   | **(8** | **)**  |   | **10**  |   |   | **416** |   | **434** |   | **18** |
| **Dec.        31, 2010**                                        |   |    |   |   |   |   |   |   |    |   |   |    |   |    |   |   |
| Investments in unconsolidated entities        controlled by Eni |   | 44      |   |   |   | 2      |   |   | (17     | )      |   | 29      |   | 29      |   |   |
| Associates                                                      |   | 8       |   |   |   | 1      |   |   | 1       |   |   | 10      |   | 18      |   | 8      |
| Other investments                                               |   | 364     |   | 4      |   | 16     |   |   | (1      | )      |   | 383     |   | 390     |   | 7      |
|                                                            |   | **416** |   | **4**  |   | **19** |   |   | **(17** | **)**  |   | **422** |   | **437** |   | **15** |
|                                                            |   |    |   |   |   |   |   |   |    |   |   |    |   |    |   |   |

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

Investments in unconsolidated entities controlled by Eni andassociates are stated at cost net of impairment losses. Otherinvestments, for which fair value cannot be reliably determined,were recognized at cost and adjusted for impairment losses.

The net carrying amount of other investments of euro 422million (euro 416 million at December 31, 2009) was related tothe following entities:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Net carrying amount |   | Eni’s interest % |   | Net carrying amount |   | Eni’s interest % |
|--------|--------|---------------------|--------|-----------------------|--------|---------------------|--------|-----------------------|
|   |   |                     |   |                       |   |                     |   |                       |

| Investments in unconsolidated entities        controlled by Eni (*) |   | **44**  |   |   |   | **29**  |   |   |
|---------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Associates                                                          |   | **8**   |   |   |   | **10**  |   |   |
| Other investments:                                                  |   |    |   |   |   |    |   |   |
| -        Interconnector (UK) Ltd                                    |   | 134     |   | 16.06  |   | 136     |   | 16.07  |
| - Nigeria LNG Ltd                                                   |   | 82      |   | 10.40  |   | 89      |   | 10.40  |
| - Darwin        LNG Pty Ltd                                         |   | 78      |   | 10.99  |   | 79      |   | 10.99  |
| - other (*)                                                         |   | 70      |   |   |   | 79      |   |   |
|                                                                |   | **364** |   |   |   | **383** |   |   |
|                                                                |   | **416** |   |   |   | **422** |   |   |
|                                                                |   |         |   |        |   |         |   |        |

|    |    |                                                                            |
|--------------|--------------|--------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein did not exceed euro 25        million. |

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Provisions for losses related to otherinvestments, included within the provisions for contingencies,amounted to euro 76 million (euro 41 million at December 31,2009) and were primarily in relation to the following entities:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Eni BB Ltd                                                      |   |   |   | 28     |
|-----------------------------------------------------------------|--------|--------|--------|--------|
| Burren        Energy Shipping & Transportation (Samara) Ltd |   | 25     |   | 25     |
| Caspian Pipeline Consortium R - Closed Joint        Stock Co    |   | 15     |   | 19     |
| Other        investments                                        |   | 1      |   | 4      |
|                                                            |   | **41** |   | **76** |
|                                                            |   |        |   |        |

**Other information about investments**The following table summarizes key financial data ofunconsolidated entities controlled by Eni, joint ventures andassociates prepared in accordance with accounting policiesadopted in the preparation of Eni’s Consolidated FinancialStatements and reflecting Eni’s interest in such entities:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Unconsolidated entities controlled         by Eni |   | Joint ventures |   | Associates |   | Unconsolidated entities controlled         by Eni |   | Joint ventures |   | Associates |
|--------|--------|---------------------------------------------------|--------|----------------|--------|------------|--------|---------------------------------------------------|--------|----------------|--------|------------|
|   |   |                                                   |   |                |   |            |   |                                                   |   |                |   |            |

| Total assets              |   | 2,215 |   |   | 6,981 |   | 4,218 |   | 2,383 |   |   | 5,711 |   | 5,087 |
|---------------------------|--------|-------|--------|--------|-------|--------|-------|--------|-------|--------|--------|-------|--------|-------|
| Total        liabilities  |   | 2,081 |   |   | 3,721 |   | 1,929 |   | 2,193 |   |   | 3,022 |   | 2,410 |
| Net sales from operations |   | 65    |   |   | 3,936 |   | 5,718 |   | 113   |   |   | 3,497 |   | 5,134 |
| Operating        profit   |   | (48   | )      |   | 564   |   | 141   |   | (9    | )      |   | 434   |   | 323   |
| Net profit                |   | (9    | )      |   | 474   |   | 101   |   | 32    |   |   | 252   |   | 225   |
|                      |   |       |   |   |       |   |       |   |       |   |   |       |   |       |

The total assets and liabilities ofunconsolidated controlled entities of euro 2,383 million and euro2,193 million, respectively (euro 2,215 million and euro 2,081million at December 31, 2009) pertained to entities acting assole-operator in the management of oil and gas contracts for euro2,172 million and euro 2,054 million (euro 1,873 million and euro1,860 million at December 31, 2009). The residual amountpertained to not significant entities. More information isincluded in Note 1 – Basis of presentation.

 

**18 Other financial assets******Other financing receivables were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Receivables for financing operating activities |   | 1,112     |   | 1,488     |
|------------------------------------------------|--------|-----------|--------|-----------|
| Securities        held for operating purposes  |   | 36        |   | 35        |
|                                           |   | **1,148** |   | **1,523** |
|                                           |   |           |   |           |

Receivables for financing operating activities are presentednet of the allowance for impairment losses of euro 32 million(euro 29 million at December 31, 2009).

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Operating financing receivables of euro 1,488 million (euro1,112 million at December 31, 2009) primarily pertained to loansmade by the Exploration & Production segment (euro 716million), Gas & Power segment (euro 559 million) and Refining& Marketing segment (euro 96 million) to certainequity-accounted or cost-accounted entities which executedcapital projects on behalf of Eni’s Group companies.Financing receivables due from unconsolidated subsidiaries, jointventures and associates amounted to euro 656 million. Receivablesfor financial leasing amounted to euro 78 million (euro 97million at December 31, 2009) and pertained to the disposal ofthe Belgian gas network by Finpipe GIE. The following table showsprincipal receivable by maturity date, which was obtained bysumming future lease payment receivables discounted at theeffective interest rate, interests and the nominal value offuture lease receivables:

| (euro        million) |   | **Maturity range** |   |
|-----------------------|--------|--------------------|--------|
|                  |   |                    |   |

|    |    | Within 12 months |    | Between one         and five years |    | Total |
|--------------|--------------|------------------|--------------|------------------------------------|--------------|-------|
|         |         |                  |         |                                    |         |       |

| Principal receivable                        |   | 19 |   | 78 |   | 97  |
|---------------------------------------------|--------|----|--------|----|--------|-----|
| Interests                                   |   | 6  |   | 10 |   | 16  |
| Undiscounted value of future lease payments |   | 25 |   | 88 |   | 113 |
|                                        |   |    |   |    |   |     |

Receivables with a maturity date within one year is shown incurrent assets in the item trade receivables for operatingpurposes - current portion of long-term receivables in the Note 9– Trade and other receivables.

Receivables for financing operating activities in currenciesother than euro amounted to euro 1,128 million (euro 716 millionat December 31, 2009).

Receivables for financing operating activities due beyond fiveyears amounted to euro 823 million (euro 460 million at December31, 2009).

Securities of euro 35 million (euro 36 million at December 31,2009), designated as held-to-maturity investments, are listedsecurities, issued by the Italian Government (euro 20 million)and by foreign governments (euro 15 million).

Securities with a maturity beyond five years amounted to euro21 million.

Fair value of receivables for financing operating activitiesamounted to euro 1,534 million. Securities did not differsignificantly from their carrying amount. The fair value offinancing receivables has been determined based on the presentvalue of expected future cash flows discounted at rates rangingfrom 0.8% to 4.1% (1.0% and 4.5% at December 31, 2009). The fairvalue of securities was derived from quoted market prices.

Receivables with related parties are described in Note 42– Transactions with related parties.

**19 Deferred tax assets**Deferred tax assets are stated net of amounts of deferred taxliabilities that can be offset for euro 3,421 million (euro 3,764million at December 31, 2009).

| (euro        million) |   | **Value at         Dec. 31, 2009** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2010** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

|   |   | **3,558** |   | 1,612 |   | (1,066 | ) |   | 224 |   | 536 |   | **4,864** |
|--------|--------|-----------|--------|-------|--------|--------|---|--------|-----|--------|-----|--------|-----------|
|   |   |           |   |       |   |        |   |   |     |   |     |   |           |

Deferred tax assets are described in Note 29 – Deferredtax liabilities.

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**20 Other non-current receivables**The following table provides an analysis of othernon-current receivables:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Tax receivables from:                                       |   |      |   |      |
|-------------------------------------------------------------|--------|-----------|--------|-----------|
| - Italian        tax authorities                            |   |      |   |      |
|    . income tax                              |   | 18        |   | 14        |
|    .        interest on tax credits          |   | 55        |   | 65        |
|                                                        |   | **73**    |   | **79**    |
| - foreign        tax authorities                            |   | 39        |   | 106       |
|                                                        |   | **112**   |   | **185**   |
| Other        receivables:                                   |   |      |   |      |
| - in relation to disposals                                  |   | 710       |   | 800       |
| - other        non-current receivables                      |   | 215       |   | 224       |
|                                                        |   | **925**   |   | **1,024** |
| Fair value        of non-hedging derivatives                |   | 339       |   | 420       |
| Fair value of cash flow hedge derivative        instruments |   | 129       |   | 102       |
| Other        asset                                          |   | 433       |   | 1,624     |
|                                                        |   | **1,938** |   | **3,355** |
|                                                        |   |           |   |           |

Other receivables amounting to euro 800 million related to thedivestment of certain assets which occurred in prior periods,including: (i) a receivable of euro 474 million recognized in2008 upon the agreement signed with the Republic of Venezuelawhereby Eni would receive cash compensation for the expropriatedDación oilfield to be collected in seven annual installmentswith accrual of interests. Following an agreement achieved,future installments can be paid in kind through equivalentcollections of hydrocarbons. The 2009 installment of euro 71million ($104 million) was collected in kind. The Companyachieved new agreements for future installments that will be paidin kind through equivalent collections of hydrocarbons during2011; and (ii) a receivable of euro 313 million related to thedivestment of the interest of 1.71% in the Kashagan project tothe local partner KazMunaiGas on the basis of the agreementsdefined with the international partners of the North Caspian SeaPSA and the Kashagan government, which are effective startingfrom January 1, 2008. The reimbursement of the receivable isprovided for in three annual installments starting from the dateof the production beginning.

The fair value of derivative contracts which do not meet thecriteria to be classified as hedges under IFRS was as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro        million) |    | Fair value |    | Purchase        commitments |    | Sale        commitments |    | Fair value |    | Purchase        commitments |    | Sale        commitments |
|-----------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|
|                  |         |            |         |                             |         |                         |         |            |         |                             |         |                         |

| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |      |   |    |   |      |   |      |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|
| Interest        Currency Swap                       |   | 112     |   | 458       |   | 197       |   | 171     |   | 714       |   | 95        |
| Currency swap                                       |   | 7       |   | 333       |   | 33        |   | 11      |   | 83        |   | 99        |
| Other                                               |   |    |   |      |   |      |   |    |   |      |   |      |
|                                                |   | **119** |   | **791**   |   | **230**   |   | **182** |   | **797**   |   | **194**   |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |      |   |    |   |      |   |      |
| Interest rate swap                                  |   | 46      |   | 677       |   | 563       |   | 83      |   | 691       |   | 3,615     |
|                                                |   | **46**  |   | **677**   |   | **563**   |   | **83**  |   | **691**   |   | **3,615** |
| **Non-hedging derivatives on commodities**          |   |    |   |      |   |      |   |    |   |      |   |      |
| Over the        counter                             |   | 172     |   | 540       |   | 659       |   | 134     |   | 1,578     |   | 119       |
| Future                                              |   | 2       |   | 37        |   |      |   |    |   |      |   |      |
| Other                                               |   |    |   |      |   |      |   | 21      |   |      |   | 54        |
|                                                |   | **174** |   | **577**   |   | **659**   |   | **155** |   | **1,578** |   | **173**   |
|                                                |   | **339** |   | **2,045** |   | **1,452** |   | **420** |   | **3,066** |   | **3,982** |
|                                                |   |         |   |           |   |           |   |         |   |           |   |           |

Fair value of the derivative contracts is determined usingmarket quotations provided by primary info-provider, or in theabsence of market information, appropriate valuation methodsgenerally accepted in the marketplace.

Fair values of non-hedging derivatives of euro 420 million(euro 339 million at December 31, 2009) essentially consisted ofderivative contracts that do not meet the formal criteria to bedesignated as hedges under IFRS because 

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they were entered into in order to manage the net businessexposures in foreign currency exchange rates, interest rates andcommodity prices. Therefore, such derivatives were not related tospecific trade or financing transactions.

Fair value of the cash flow hedge derivatives of euro 102million (euro 129 million at December 31, 2009) referred to theGas & Power segment. Further information on cash flow hedgederivatives is given in Note 13 – Other current assets. Fairvalue related to the contracts expiring beyond 2011 is given inNote 30 – Other non-current liabilities; fair value relatedto the contracts expiring in 2011 is indicated in Note 13 –Other assets and in Note 25 – Other current liabilities. Theeffects of the evaluation at fair value of cash flow hedgederivatives are given in Note 32 – Shareholders’ equityand in Note 36 – Operating expenses.

Nominal value of cash flow hedge derivatives for purchase andsale commitments was euro 775 million and euro 145 million,respectively.

Information on the hedged risks and the hedging policies isgiven in Note 34 – Guarantees, commitments – Riskfactors.

Other asset of euro 1,624 million (euro 433 million atDecember 31, 2009) included prepayments amounting to euro 1,436million that were made to gas suppliers upon triggering thetake-or-pay clause provided by the relevant long-termarrangement. In accordance to those arrangements, the Company iscontractually required to off-take minimum annual quantities ofgas, or in case of failure is held to pay the whole price or afraction for the uncollected volumes up to the minimum annualquantity. The Company is entitled to collect the pre-paid volumesin future years alongside the contract execution and for itsentire duration or a shorter term as the case may be. Thecarrying amounts of those deferred costs, which are substantiallyequivalent to a receivable in-kind, are stated at the purchasecost or the net realizable value, whichever is lower. Prior-yearsimpairment losses are reversed up to the purchase cost, whenevermarket conditions indicate that impairment no longer exits or mayhave decreased. In future years, management plans to recover theprepaid volumes by regaining market share and expanding its salesvolumes in the European gas market leveraging on strengtheningthe Company’s market leadership and consolidating itscustomer base in the Italian market through effective marketingactions in both the retail market and the industrial andthermoelectric sector. Those action plans coupled withperspectives of steady long-term demand growth until 2020 willenable the Company to absorb volumes pre-paid during the marketdownturn. The industrial and financial forecasts for the nextfour-year plan of the gas business and beyond took intoconsideration management’s assumptions to renegotiate bettereconomic terms within the Company’s long-term gas purchasecontracts, so as to restore the competitiveness of theCompany’s cost position in the current depressed scenariofor the gas sector. The renegotiation of revised contractualterms, including any price revisions and contractual flexibility,is established by such contractual clauses whereby parties areheld to bring the contract back to the economic equilibrium incase of significant changes in the market environment, like theones that have occurred since the second half 2008. In the courseof 2010, Eni has finalized a number of important contractualrenegotiations by obtaining improved economic conditions forsupplies and wider contractual flexibility with a benefit to itscommercial programs. A number of renegotiations have commenced orare due to commence in the near future involving all theCompany’s main suppliers of gas based on long-termcontracts. Should the outcome of those renegotiations fall shortof management’s expectations and absent a solid recovery infundamentals of the gas sector, management believes that futureresults of operations and cash flows of the Company’s gasbusiness will be negatively affected.

**Current liabilities****21 Short-term debt******Short-term debt was as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Banks                        |   | 683       |   | 1,950     |
|------------------------------|--------|-----------|--------|-----------|
| Commercial        papers     |   | 2,718     |   | 4,244     |
| Other financial institutions |   | 144       |   | 321       |
|                         |   | **3,545** |   | **6,515** |
|                         |   |           |   |           |

Short-term debt increased by euro 2,970 million primarily dueto the balance of repayments and new proceeds (euro 2,646million) and currency translation differences (euro 326 million).Commercial papers of euro 4,244 

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million (euro 2,718 million at December 31, 2009) were mainlyissued by the financial companies Eni Coordination Center SA(euro 2,655 million) and Eni Finance USA Inc (euro 1,589million).

Short-term debt per currency is shown in the table below:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Euro               |   | 1,143     |   | 2,919     |
|--------------------|--------|-----------|--------|-----------|
| U.S.        dollar |   | 2,321     |   | 3,403     |
| Other currencies   |   | 81        |   | 193       |
|               |   | **3,545** |   | **6,515** |
|               |   |           |   |           |

In 2010, the weighted average interest rate on short-term debtwas 0.7% (0.8% in 2009).

At December 31, 2010 Eni had undrawn committed and uncommittedborrowing facilities amounting to euro 2,498 million and euro7,860 million, respectively (euro 2,241 million and euro 9,533million at December 31, 2009). Those facilities bore interestrates reflecting prevailing conditions on the marketplace.Charges for unutilized facilities were immaterial.

**22 Trade and other payables**Trade and other payables were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Trade payables                           |   | 10,078     |   | 13,111     |
|------------------------------------------|--------|------------|--------|------------|
| Advances                                 |   | 3,230      |   | 3,139      |
| Other payables:                          |   |       |   |       |
| - related        to capital expenditures |   | 1,541      |   | 1,856      |
| - others                                 |   | 4,325      |   | 4,469      |
|                                     |   | **5,866**  |   | **6,325**  |
|                                     |   | **19,174** |   | **22,575** |
|                                     |   |            |   |            |

The increase of euro 3,033 million in trade payables wasprimarily related to the Refining & Marketing segment (euro1,398 million), the Gas & Power segment (euro 1,072 million)and the Exploration & Production segment (euro 372 million).

Advances of euro 3,139 million (euro 3,230 million at December31, 2009) pertained to prepayments on contract work in progressfor euro 1,539 million, advances on contract work in progress foreuro 1,042 million (euro 1,469 million and euro 1,121 million atDecember 31, 2009, respectively) and other advances for euro 558million (euro 640 million at December 31, 2009). Advances oncontract work in progress were in respect of the Engineering& Construction segment. Other advances included advancesamounting to euro 251 million due to gas customers who off-tooklower quantities of gas than the contractual minimum quantity forthe year (the contractual year or the calendar one as the casemay be) as provided by the relevant long-term sale arrangement,thus triggering the take-or-pay clause.

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Other payables were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Payables due to:                                                                 |   |      |   |      |
|----------------------------------------------------------------------------------|--------|-----------|--------|-----------|
| - joint        venture operators in exploration and production        activities |   | 2,305     |   | 2,382     |
| - suppliers in relation to investing activities                                  |   | 809       |   | 1,224     |
| -        non-financial government entities                                       |   | 661       |   | 628       |
| - employees                                                                      |   | 451       |   | 571       |
| - social        security entities                                                |   | 292       |   | 261       |
|                                                                             |   | **4,518** |   | **5,066** |
| Other        payables                                                            |   | 1,348     |   | 1,259     |
|                                                                             |   | **5,866** |   | **6,325** |
|                                                                             |   |           |   |           |

Other payables of euro 1,259 million (euro 1,348 million atDecember 31, 2009) included payables due to gas suppliers foreuro 214 million (euro 282 million at December 31, 2009)associated to the take-or-pay obligations. In the calendar yearor thermal year ending December 31, 2010, the Company was unableto off-take the minimum annual quantities of gas provided by therelevant purchase agreements thus triggering the take-or-payclause. Further information is provided in Note 20 – Othernon-current assets.

Payables with related parties are described in Note 42 –Transactions with related parties.

The fair value of trade and other payables did not differsignificantly from their carrying amounts considering theshort-term maturity of trade payables.

**23 Income taxes payable**Income taxes payable were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Italian subsidiaries        |   | 363       |   | 300       |
|-----------------------------|--------|-----------|--------|-----------|
| Foreign        subsidiaries |   | 928       |   | 1,215     |
|                        |   | **1,291** |   | **1,515** |
|                        |   |           |   |           |

Income taxes payable by Italian subsidiaries were affected bya positive effect of the fair value valuation of cash flowhedging derivatives (euro 87 million). Further information isprovided in Note 25 – Other current liabilities.

**24 Other taxes payable**Other taxes payable were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Excise and customs duties     |   | 832       |   | 930       |
|-------------------------------|--------|-----------|--------|-----------|
| Other        taxes and duties |   | 599       |   | 729       |
|                          |   | **1,431** |   | **1,659** |
|                          |   |           |   |           |

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**25 Other current liabilities******Other current liabilities were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 691       |   | 656       |
|--------------------------------------------------|--------|-----------|--------|-----------|
| Fair value        of cash flow hedge derivatives |   | 680       |   | 475       |
| Other liabilities                                |   | 485       |   | 489       |
|                                             |   | **1,856** |   | **1,620** |
|                                             |   |           |   |           |

Fair value of non-hedging derivative contractswas as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro        million) |    | Fair value |    | Purchase        commitments |    | Sale        commitments |    | Fair value |    | Purchase        commitments |    | Sale        commitments |
|-----------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|--------------|------------|--------------|-----------------------------|--------------|-------------------------|
|                  |         |            |         |                             |         |                         |         |            |         |                             |         |                         |

| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |      |   |    |   |      |   |      |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|
| Currency        swap                                |   | 113     |   | 3,044     |   | 2,487     |   | 162     |   | 4,776     |   | 1,582     |
| Interest currency swap                              |   | 8       |   | 113       |   |      |   | 18      |   | 116       |   |      |
| Other                                               |   | 135     |   | 107       |   | 684       |   | 1       |   | 141       |   | 29        |
|                                                |   | **256** |   | **3,264** |   | **3,171** |   | **181** |   | **5,033** |   | **1,611** |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |      |   |    |   |      |   |      |
| Interest rate swap                                  |   | 15      |   |      |   | 816       |   | 11      |   | 25        |   | 1,504     |
|                                                |   | **15**  |   |      |   | **816**   |   | **11**  |   | **25**    |   | **1,504** |
| **Non-hedging derivatives on commodities**          |   |    |   |      |   |      |   |    |   |      |   |      |
| Over the        counter                             |   | 415     |   | 1,244     |   | 549       |   | 354     |   | 430       |   | 2,277     |
| Future                                              |   | 2       |   |      |   | 54        |   | 10      |   |      |   | 161       |
| Other                                               |   | 3       |   | 2         |   |      |   | 100     |   |      |   | 442       |
|                                                |   | **420** |   | **1,246** |   | **603**   |   | **464** |   | **430**   |   | **2,880** |
|                                                |   | **691** |   | **4,510** |   | **4,590** |   | **656** |   | **5,488** |   | **5,995** |
|                                                |   |         |   |           |   |           |   |         |   |           |   |           |

Fair value of derivative contracts was determined by usingmarket quotations given by primary info-providers, or, absentmarket information, on the basis of valuation models generallyaccepted in the marketplace.

Fair values of non-hedging derivatives of euro 656 million(euro 691 million at December 31, 2009) mainly pertained toderivative contracts that did not meet the formal criteria to bedesignated as hedges under IFRS because they were entered into inorder to manage the net business exposures in foreign currencyexchange rates, interest rates and commodity prices. Therefore,such derivatives were not related to specific trade or financingtransactions.

The fair value of cash flow hedges amounted to euro 475million (euro 680 million at December 31, 2009) and pertained tothe Gas & Power segment for euro 244 million and theExploration & Production segment for euro 231 million (euro311 million and euro 369 million at December 31, 2009,respectively). Fair value pertaining to the Gas & Powersegment pertained to derivatives that were designated to hedgesurpluses or deficits of gas to achieve a proper balance in thegas portfolio and hedge the exchange rate and commodity riskexposure as described in Note 13 – Other current assets.Fair value pertaining to the Exploration & Production segmentpertained to future sale agreements of proved oil reserves due in2011. Those derivatives were entered into to hedge exposure tovariability in future cash flows deriving from the sale in the2008-2011 period of approximately 2% of Eni’s provedreserves as of December 31, 2006, corresponding to 125.7 mmBBL,decreasing to 9 mmBBL as of December 31, 2010 due to transactionssettled. Fair value of contracts expiring by 2010 is given inNote 13 – Other current assets; fair value of contractsexpiring beyond 2010 is given in Note 30 – Other non-currentliabilities and in Note 20 – Other non-current assets. Theeffects of the evaluation at fair value of cash flow hedgederivatives are given in the Note 32 – Shareholders’equity and in the Note 36 – Operating expenses.

The nominal value of cash flow hedge derivatives referred topurchase and sale commitments for euro 1,805 million and euro 849million, respectively (euro 1,882 million and euro 272 million atDecember 31, 2009, respectively).

Information on the hedged risks and the hedging policies isgiven in Note 34 – Guarantees, commitments and risks –Risk factors.

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**Non-current liabilities****26 Long-term debt and current maturitiesof long-term debt**Long-term debt included the current portionmaturing during the year following the balance sheet date(current maturity). The table below analyzes debt by year offorecasted repayment:

| (euro million) |   | **At December 31,** |   |   |   | **Long-term maturity** |
|----------------|--------|---------------------|--------|--------|--------|------------------------|
|           |   |                     |   |   |   |                        |

| Type of debt instrument |   | Maturity range |   | 2009 |   | 2010 |   | Current maturity 2011 |   | 2012 |   | 2013 |   | 2014 |   | 2015 |   | After |   | Total |
|-------------------------|--------|----------------|--------|------|--------|------|--------|-----------------------|--------|------|--------|------|--------|------|--------|------|--------|-------|--------|-------|
|                    |   |                |   |      |   |      |   |                       |   |      |   |      |   |      |   |      |   |       |   |       |

| Banks                        |   | **2011-2029** |   | 9,056      |   | 7,224      |   | 499     |   | 3,460     |   | 824       |   | 623       |   | 550       |   | 1,268     |   | 6,725      |
|------------------------------|--------|---------------|--------|------------|--------|------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|------------|
| Ordinary        bonds        |   | **2011-2040** |   | 11,687     |   | 13,572     |   | 410     |   | 46        |   | 1,603     |   | 1,333     |   | 2,212     |   | 7,968     |   | 13,162     |
| Other financial institutions |   | **2011-2021** |   | 512        |   | 472        |   | 54      |   | 77        |   | 58        |   | 53        |   | 53        |   | 177       |   | 418        |
|                         |   |          |   | **21,255** |   | **21,268** |   | **963** |   | **3,583** |   | **2,485** |   | **2,009** |   | **2,815** |   | **9,413** |   | **20,305** |
|                         |   |               |   |            |   |            |   |         |   |           |   |           |   |           |   |           |   |           |   |            |

Long-term debt, including the current portion of long-termdebt, of euro 21,268 million (euro 21,255 million at December 31,2009) increased by euro 13 million. Changes included net paymentsfor euro 374 million and, as increase, currency translationdifferences arose from the translation of financial statementsdenominated in currencies other than euro and translationdifferences arising on debt taken on by euro-reportingsubsidiaries denominated in foreign currency which are translatedinto euros at year-end exchange rates of euro 172 million.

Debt from banks of euro 7,224 million related to committedborrowing facilities for euro 1,812 million.

Debt from other financial institutions of euro 472 million(euro 512 million at December 31, 2009) included euro 17 millionof finance lease transactions (euro 24 million at December 31,2009).

Eni entered into long-term borrowing facilities with theEuropean Investment Bank which were subject to the maintenance ofcertain performance indicators based on Eni’s consolidatedfinancial statements or the maintenance of a minimum level ofcredit rating. As of the balance sheet date, Eni was incompliance with those covenants. According to the agreements,should the Company fail to comply with maintenance of a minimumcredit rating, new guarantees would be provided to be agreed uponwith the European Investment Bank. At December 31, 2009 and 2010,the amount of short and long-term debt subject to restrictivecovenants was euro 1,508 million and euro 1,685 million,respectively. A possible non-compliance with those covenantswould be immaterial to the Company’s ability to finance itsoperations. Eni is in compliance with the covenants contained inits financing arrangements. During 2010, Saipem repaid financialdebt which was subject to certain performance indicators (euro 75million).

Bonds of euro 13,572 million consisted of bonds issued withinthe Euro Medium Term Notes Program for a total of euro 10,678million and other bonds for a total of euro 2,894 million.

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The following table analyses bonds per issuingentity, maturity date, interest rate and currency as at December31, 2010:

|   |   | **Amount** |   | **Discount on bond issue and accrued        expense** |   | **Total** |   | **Currency** |   | **Maturity** |   | **% rate** |
|--------|--------|------------|--------|-------------------------------------------------------|--------|-----------|--------|--------------|--------|--------------|--------|------------|
|   |   |            |   |                                                       |   |           |   |              |   |              |   |            |

| (euro        million) |   |   |   |   |   |   |   |   |   | from |   | to |   | from |   | to |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|----|--------|------|--------|----|
|                  |   |   |   |   |   |   |   |   |   |      |   |    |   |      |   |    |

| **Issuing entity**                  |   |       |   |    |   |   |       |   |   |   |   |   |   |   |   |   |     |
|-------------------------------------|--------|------------|--------|---------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|
| *Euro        Medium Term Notes:*    |   |       |   |    |   |   |       |   |   |   |   |   |   |   |   |   |     |
| - Eni SpA                           |   | 1,500      |   | 60      |   |   | 1,560      |   | EUR    |   |   |   | 2016   |   |   |   | 5.000    |
| - Eni SpA                           |   | 1,500      |   | 45      |   |   | 1,545      |   | EUR    |   |   |   | 2013   |   |   |   | 4.625    |
| - Eni SpA                           |   | 1,500      |   | 8       |   |   | 1,508      |   | EUR    |   |   |   | 2019   |   |   |   | 4.125    |
| - Eni SpA                           |   | 1,250      |   | 67      |   |   | 1,317      |   | EUR    |   |   |   | 2014   |   |   |   | 5.875    |
| - Eni SpA                           |   | 1,250      |   | (3      | )      |   | 1,247      |   | EUR    |   |   |   | 2017   |   |   |   | 4.750    |
| - Eni SpA                           |   | 1,000      |   | 17      |   |   | 1,017      |   | EUR    |   |   |   | 2020   |   |   |   | 4.000    |
| - Eni SpA                           |   | 1,000      |   | (3      | )      |   | 997        |   | EUR    |   |   |   | 2018   |   |   |   | 3.500    |
| - Eni        Coordination Center SA |   | 523        |   | 9       |   |   | 532        |   | GBP    |   | 2011   |   | 2019   |   | 5.000  |   | 6.125    |
| - Eni Coordination Center SA        |   | 423        |   | 3       |   |   | 426        |   | YEN    |   | 2012   |   | 2037   |   | 1.150  |   | 2.810    |
| - Eni        Coordination Center SA |   | 250        |   | 8       |   |   | 258        |   | EUR    |   | 2017   |   | 2028   |   | 3.750  |   | 5.600    |
| - Eni Coordination Center SA        |   | 191        |   | 5       |   |   | 196        |   | USD    |   | 2013   |   | 2015   |   | 4.450  |   | 4.800    |
| - Eni        Coordination Center SA |   | 41         |   |    |   |   | 41         |   | EUR    |   | 2011   |   | 2015   |   |   |   | variable |
| - Eni Coordination Center SA        |   | 34         |   |    |   |   | 34         |   | USD    |   |   |   | 2013   |   |   |   | variable |
|                                |   | **10,462** |   | **216** |   |   | **10,678** |   |   |   |   |   |   |   |   |   |     |
| *Other bonds:*                      |   |       |   |    |   |   |       |   |   |   |   |   |   |   |   |   |     |
| - Eni SpA                           |   | 1,000      |   | 8       |   |   | 1,008      |   | EUR    |   |   |   | 2015   |   |   |   | 4.000    |
| - Eni SpA                           |   | 1,000      |   | (11     | )      |   | 989        |   | EUR    |   |   |   | 2015   |   |   |   | variable |
| - Eni SpA                           |   | 337        |   |    |   |   | 337        |   | USD    |   |   |   | 2020   |   |   |   | 4.150    |
| - Eni SpA                           |   | 262        |   | 1       |   |   | 263        |   | USD    |   |   |   | 2040   |   |   |   | 5.700    |
| - Eni USA        Inc                |   | 299        |   | (3      | )      |   | 296        |   | USD    |   |   |   | 2027   |   |   |   | 7.300    |
| - Eni UK Holding Plc                |   | 1          |   |    |   |   | 1          |   | GBP    |   |   |   | 2013   |   |   |   | variable |
|                                |   | **2,899**  |   | **(5**  | **)**  |   | **2,894**  |   |   |   |   |   |   |   |   |   |     |
|                                |   | **13,361** |   | **211** |   |   | **13,572** |   |   |   |   |   |   |   |   |   |     |
|                                |   |            |   |         |        |   |            |   |        |   |        |   |        |   |        |   |          |

As at December 31, 2010 bonds maturing within 18 months (euro192 million) were issued by Eni Coordination Center SA. During2010, Eni SpA issued bonds for euro 2,614 million.

The following table shows the currency composition oflong-term debt and its current portion and the related weightedaverage interest rates on total borrowings.

|   |   | **Dec. 31, 2009******(euro million) |   | **Average rate**        (%) |   | **Dec. 31, 2010******(euro million) |   | **Average rate**        (%) |
|--------|--------|-------------------------------------|--------|-----------------------------|--------|-------------------------------------|--------|-----------------------------|
|   |   |                                     |   |                             |   |                                     |   |                             |

| Euro                |   | 19,345     |   | 3.9    |   | 18,895     |   | 3.5    |
|---------------------|--------|------------|--------|--------|--------|------------|--------|--------|
| U.S.        dollar  |   | 779        |   | 3.9    |   | 1,415      |   | 5.7    |
| British pound       |   | 742        |   | 5.2    |   | 527        |   | 5.5    |
| Japanese        yen |   | 348        |   | 2.0    |   | 426        |   | 2.0    |
| Other currencies    |   | 41         |   | 3.0    |   | 5          |   | 6.8    |
|                |   | **21,255** |   |   |   | **21,268** |   |   |
|                |   |            |   |        |   |            |   |        |

At December 31, 2010 Eni had undrawn committed long-termborrowing facilities of euro 4,901 million (euro 2,850 million atDecember 31, 2009). Those facilities bore interest ratesreflecting prevailing conditions on the marketplace. Charges forunutilized facilities were immaterial.

Fair value of long-term debt, including the current portion oflong-term debt amounted to euro 22,607 million (euro 22,320million at December 31, 2009) and consisted of the following:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Ordinary bonds               |   | 12,618     |   | 14,790     |
|------------------------------|--------|------------|--------|------------|
| Banks                        |   | 9,152      |   | 7,306      |
| Other financial institutions |   | 550        |   | 511        |
|                         |   | **22,320** |   | **22,607** |
|                         |   |            |   |            |

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Fair value was calculated by discounting the expected futurecash flows at rates ranging from 0.8% to 4.1% (1.0% and 4.5% atDecember 31, 2009).

At December 31, 2010 Eni did not pledge restricted deposits ascollateral against its borrowings.

 

**Information on net borrowings**In assessing its capital structure, Eni uses net borrowings,which is a non-GAAP financial measure. Eni calculates netborrowings as total finance debt (short-term and long-term debt)derived from its Consolidated Financial Statements prepared inaccordance with IFRS as endorsed by IASB less: cash, cashequivalents and certain highly liquid investments not related tooperations including, among others, non-operating financingreceivables and securities not related to operations.Non-operating financing receivables consist mainly of depositswith banks and other financing institutions and deposits inescrow. Securities not related to operations consist primarily ofgovernment bonds and securities from financing institutions.These assets are generally intended to absorb temporary surplusesof cash as part of the Company’s ordinary management offinancing activities.

Management believes that net borrowings is a useful measure ofEni’s financial condition as it provides insight about thesoundness of Eni’s capital structure and the ways by whichEni’s operating assets are financed. In addition, managementutilizes the ratio of net borrowings to total shareholders’equity including non-controlling interest (leverage) to assessEni’s capital structure, to analyze whether the ratiobetween finance debt and shareholders’ equity is wellbalanced according to industry standards and to trackmanagement’s short-term and medium-term targets. Managementcontinuously monitors trends in net borrowings and trends inleverage in order to optimize the use of internally-generatedfunds versus funds from third parties. The measure calculated inaccordance with IFRS that is most directly comparable to netborrowings is total debt (short-term and long-term debt). Themost directly comparable measure, derived from IFRS reportedamounts, to calculate leverage is the ratio of total debt toshareholders’ equity (including non-controlling interest).Eni’s presentation and calculation of net borrowings andleverage may not be comparable to that of other companies.

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Current |   | Non-current |   | Total |   | Current |   | Non-current |   | Total |
|--------|--------|---------|--------|-------------|--------|-------|--------|---------|--------|-------------|--------|-------|
|   |   |         |   |             |   |       |   |         |   |             |   |       |

| A.     | Cash and cash equivalents                      |   | 1,608     |   |       |   | 1,608      |   | 1,549     |   |       |   | 1,549      |
|--------|------------------------------------------------|--------|-----------|--------|------------|--------|------------|--------|-----------|--------|------------|--------|------------|
| B.     | Available-for-sale        securities           |   | 64        |   |       |   | 64         |   | 109       |   |       |   | 109        |
| **C.** | **Liquidity (A+B)**                            |   | **1,672** |   |       |   | **1,672**  |   | **1,658** |   |       |   | **1,658**  |
| **D.** | **Financing        receivables**               |   | **73**    |   |       |   | **73**     |   | **6**     |   |       |   | **6**      |
| E.     | Short-term debt towards banks                  |   | 683       |   |       |   | 683        |   | 1,950     |   |       |   | 1,950      |
| F.     | Long-term        debt towards banks            |   | 2,028     |   | 7,028      |   | 9,056      |   | 499       |   | 6,725      |   | 7,224      |
| G.     | Bonds                                          |   | 1,111     |   | 10,576     |   | 11,687     |   | 410       |   | 13,162     |   | 13,572     |
| H.     | Short-term        debt towards related parties |   | 147       |   |       |   | 147        |   | 127       |   |       |   | 127        |
| I.     | Other short-term debt                          |   | 2,715     |   |       |   | 2,715      |   | 4,438     |   |       |   | 4,438      |
| L.     | Other        long-term debt                    |   | 52        |   | 460        |   | 512        |   | 54        |   | 418        |   | 472        |
| **M.** | **Total borrowings (E+F+G+H+I+L)**             |   | **6,736** |   | **18,064** |   | **24,800** |   | **7,478** |   | **20,305** |   | **27,783** |
| **N.** | **Net        borrowings (M-C-D)**              |   | **4,991** |   | **18,064** |   | **23,055** |   | **5,814** |   | **20,305** |   | **26,119** |
|   |                                           |   |           |   |            |   |            |   |           |   |            |   |            |

Available-for-sale securities of euro 109 million (euro 64million at December 31, 2009) were held for non-operatingpurposes. Not included in the calculation above wereheld-to-maturity and available-for-sale securities held foroperating purposes amounting to euro 308 million (euro 320million at December 31, 2009), of which euro 267 million (euro284 million at December 31, 2009) were held to provide coverageof technical reserves for Eni’s insurance company, EniInsurance Ltd.

Financing receivables of euro 6 million (euro 73 million atDecember 31, 2009) were held for non-operating purposes. Notincluded in the calculation above were financing receivables heldfor operating purposes amounting to euro 656 million (euro 452million at December 31, 2009), of which euro 470 million (euro245 million at December 31, 2009) were in respect of financinggranted to unconsolidated entities which executed capitalprojects and investments on behalf of Eni’s Group companiesand an euro 159 million cash deposit (euro 179 million atDecember 31, 2009) to provide coverage of Eni Insurance Ltdtechnical reserves.

 

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**27 Provisions for contingencies******Provisions for contingencies were as follows:

| (euro        million) |   | **Value at Dec. 31, 2009** |   | **Additions** |   | **Initial recognition and        changes in estimates** |   | **Accretion discount** |   | **Reversal of utilized        provisions** |   | **Reversal of unutilized        provisions** |   | **Other changes** |   | **Value at Dec. 31, 2010** |
|-----------------------|--------|----------------------------|--------|---------------|--------|---------------------------------------------------------|--------|------------------------|--------|--------------------------------------------|--------|----------------------------------------------|--------|-------------------|--------|----------------------------|
|                  |   |                            |   |               |   |                                                         |   |                        |   |                                            |   |                                              |   |                   |   |                            |

| Provision for site restoration, abandonment and        social projects                     |   | 4,828      |   |      |   | 558     |   | 238     |   | (175       | )      |   | (26      | )      |   | 318     |   |   | 5,741      |
|--------------------------------------------------------------------------------------------|--------|------------|--------|-----------|--------|---------|--------|---------|--------|------------|--------|--------|----------|--------|--------|---------|--------|--------|------------|
| Provision        for environmental risks                                                   |   | 1,936      |   | 1,376     |   |    |   | 10      |   | (203       | )      |   | (24      | )      |   | 9       |   |   | 3,104      |
| Provision for legal and other proceedings                                                  |   | 1,168      |   | 125       |   |    |   |    |   | (297       | )      |   | (310     | )      |   | 6       |   |   | 692        |
| Loss        adjustments and actuarial provisions for Eni’s        insurance companies |   | 514        |   | 32        |   |    |   |    |   | (149       | )      |   |     |   |   | 1       |   |   | 398        |
| Provision for taxes                                                                        |   | 296        |   | 100       |   |    |   |    |   | (45        | )      |   | (1       | )      |   | 7       |   |   | 357        |
| Provision        for the supply of goods                                                   |   | 353        |   | 135       |   |    |   | 2       |   | (106       | )      |   | (96      | )      |   |    |   |   | 288        |
| Provision for redundancy incentives                                                        |   | 23         |   | 184       |   |    |   |    |   | (4         | )      |   | (1       | )      |   |    |   |   | 202        |
| Provision        for losses on investments                                                 |   | 211        |   | 72        |   |    |   |    |   |       |   |   | (14      | )      |   | (69     | )      |   | 200        |
| Provision for onerous contracts                                                            |   | 90         |   | 70        |   |    |   |    |   | (58        | )      |   |     |   |   | 6       |   |   | 108        |
| Provision        for OIL insurance cover                                                   |   | 79         |   | 14        |   |    |   |    |   | (7         | )      |   | (9       | )      |   | 2       |   |   | 79         |
| Other (*)                                                                                  |   | 821        |   | 207       |   |    |   | 1       |   | (240       | )      |   | (108     | )      |   | (58     | )      |   | 623        |
|                                                                                       |   | **10,319** |   | **2,315** |   | **558** |   | **251** |   | **(1,284** | **)**  |   | **(589** | **)**  |   | **222** |   |   | **11,792** |
|                                                                                       |   |            |   |           |   |         |   |         |   |            |        |   |          |        |   |         |        |   |            |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

Provision for site restoration and abandonment and socialprojects amounted to euro 5,741 million of which euro 5,373million related to the discounted estimation of future costsrelating to decommissioning of oil and natural gas productionfacilities at the end of the producing lives of fields,well-plugging, abandonment and site restoration. The increase inthe provision for the year amounted to euro 558 million and wasprimarily due to changes of estimated expenditures and theinitial recognition in the estimates of future costs made byNigerian Agip Oil Co Ltd (euro 125 million) and Eni Petroleum CoInc (euro 117 million) and the recognition of social projects byEni North Africa BV (euro 287 million). Also an amount of euro238 million was recognized through profit and loss as accretioncharge for the period. The discount rates adopted ranged from2.1% to 8.9% (from 1.9% to 8.8% at December 31, 2009). Otherincreases of euro 318 million included currency translationdifferences (euro 190 million) and reclassification of theprovision held by Società Adriatica Idrocarburi SpA (euro 137million) from assets held for sale following the decision of theproposed buyer not to acquire the 100% stake. Managementestimates that main expenditures associated with site restorationand abandonment operations will be incurred over a 25-year periodstarting from 2018.

Provision for environmental risks of euro 3,104 millionprimarily related to the estimated future costs of environmentalcleaning-up and remediation in accordance with applicable lawsand regulations. Also the provision included the estimated costsof environmental cleaning-up and restoring areas owned or held inconcession by the Company, part of its industrial sites whichwere divested, shut-down or liquidated in previous reportingperiods. Those environmental provisions are recognized when anenvironmental project is approved by or filed with the relevantadministrative authorities or a constructive obligation hasarisen whereby the Company commits itself to perform certaincleaning-up and restoration projects and reliable cost estimationis available. Based on this latter assumption, the Companyrecorded an environmental charge amounting to euro 1,109 millionto account for its proposal for a global transaction with theItalian Ministry for the Environment, whereby the Company pledgedto execute certain environmental projects relating nine sites ofnational interest (Priolo, Napoli Orientale, Brindisi, PieveVergonte, Cengio, Crotone, Mantova, Porto Torres and Gela). Atthose sites, the Group companies have started, as guiltlessowners of a number of industrial areas, environmental restorationand clean up activities. The proposal also contemplates thesettlement of a number of pending proceedings relating to cleanup issues and environmental damage. More information about thatissue is reported in "Item 5 – Operating and FinancialReview and Prospects – Significant Transactions". AtDecember 31, 2010 provisions for environmental risks wereprimarily related to Syndial SpA (euro 2,465 million) and to theRefining & Marketing segment (euro 455 million).

Provision for legal and other proceedings of euro 692 millionprimarily included charges expected on failure to perform certaincontractual obligations and estimated future losses on pendinglitigation including legal, antitrust and administrative matters.These provisions are stated on the basis of Eni’s bestestimate of the expected probable liability and primarily relatedto the Gas & Power segment (euro 238 million) and Syndial SpA(euro 225 million). Reversal of utilized provisions of euro 297million included the payment related the settlement of the TSKJmatter with U.S. Authorities (euro 250 million). The matter isfully disclosed in Note 34 – Guarantees, commitments andrisks – Legal Proceedings. Reversal of unutilized provisionsof euro 310 million included the favorable outcome of 

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an antitrust proceeding of 2003 resulting in an amountsignificantly lower than the amount that was originally accruedon the base of a resolution by the Italian Antitrust Authority,who in a previous reporting period charged Eni withanti-competitive behavior for having allegedly refused thirdparty access to a pipeline for importing natural gas from Algeriato Italy (euro 270 million).

Loss adjustments and actuarial provisions for Eni’sinsurance companies of euro 398 million represented theliabilities towards third parties accrued for claims on insurancepolicies underwritten by Eni’s insurance company, EniInsurance Ltd. In relation to such liability, Eni recorded in theassets of the balance sheet receivables for euro 98 milliontowards insurance companies for reinsurance contracts.

Provision for taxes of euro 357 million primarily includedcharges for unsettled tax claims in connection with uncertainapplications of the tax regulation for foreign subsidiaries ofthe Exploration & Production segment (euro 240 million) andof the Engineering & Construction segment (euro 55 million).

Provision for the supply of goods in the amount of euro 288million include the estimated costs of the supply contracts ofEni SpA.

Provision for redundancy incentives of euro 202 millionprimarily referred to the charge to be borne by Eni as part of apersonnel mobility program in Italy for the period 2010-2011 incompliance with Law No. 223/1991.

Provision for losses on investments of euro 200 million wasmade with respect to losses from investments in entities incurredto date, where the losses exceeded the carrying amount of theinvestments.

Provision for onerous contracts of euro 108 million related tocontracts for which the termination or execution costs exceed therelevant benefits.

Provision for OIL insurance cover of euro 79 million includedmutual insurance provision related to future increase ofinsurance charges, as a result of accidents that occurred in pastperiods that will be paid in the next 5 years by Eni forparticipating in the mutual insurance of Oil Insurance Ltd.

**28 Provisions for employee benefits******Provisions for employee benefits were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| TFR                                                                                           |   | 445     |   | 423       |
|-----------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Foreign        pension plans                                                                  |   | 204     |   | 295       |
| Supplementary medical reserve for Eni managers        (FISDE) and other foreign medical plans |   | 107     |   | 108       |
| Other        benefits                                                                         |   | 188     |   | 206       |
|                                                                                          |   | **944** |   | **1,032** |
|                                                                                          |   |         |   |           |

Provisions for indemnities upon termination of employmentprimarily related to the provisions accrued by Italian companiesfor employee termination indemnities ("TFR"),determined using actuarial techniques and regulated by Article2120 of the Italian Civil Code.

The indemnity is paid upon retirement as a lump sum paymentthe amount of which corresponds to the total of the provisionsaccrued during the employees’ service period based onpayroll costs as revalued until retirement. Following the changesin regime, starting from January 1, 2007 the amount already thenaccrued and future benefits will be put in pension funds or thetreasury fund held by the Italian administration forpost-retirement benefits (INPS). For companies with less than 50employees, it will be possible to continue the scheme as inprevious years. Therefore, the allocation of future TFRprovisions to pension funds or the INPS treasury fund determinesthat these amounts will be classified as costs to providebenefits under a defined contribution plan. Past unpaid amountsaccrued before January 1, 2007 for post-retirement indemnitiesunder the Italian TFR regime continue to represent costs toprovide benefits under a defined benefit plan and must beassessed based on actuarial assumptions.

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Pension funds are defined benefit plans provided by foreignsubsidiaries located mainly in Nigeria and in Germany. Benefitsunder these plans consisted of payments based on seniority andthe salary paid in the last year of service, or alternatively,the average annual salary over a defined period prior toretirement.

Group companies provide healthcare benefits to retiredmanagers. Liability to these plans (FISDE and other foreignhealthcare plans) and the current cost are limited to thecontributions made by the company.

Other benefits primarily consisted of a deferred cashincentive plans, the long-term incentive plan and Jubilee awards.The provisions for the deferred cash incentive plans are assessedbased on the estimated remuneration related to the probability ofthe company reaching planned targets that will be paid tomanagers reaching individual performance goals. The long-termincentive plan replaces the previous stock option assignments andprovides for an incentive to be paid after a period of threeyears in an amount connected with the variation of a performanceindicator. Jubilee awards are benefits due following theattainment of a minimum period of service and, for the Italiancompanies, consist of an in-kind remuneration.

The value of employee benefits, estimated by applyingactuarial techniques, consisted of the following:

|   | **Foreign pension plans** |   |
|--------|---------------------------|--------|
|   |                           |   |

| (euro        million) |   | TFR |   | Gross liability |   | Plan assets |   | FISDE        and other foreign medical plans |   | Other benefits |   | Total |
|-----------------------|--------|-----|--------|-----------------|--------|-------------|--------|----------------------------------------------|--------|----------------|--------|-------|
|                  |   |     |   |                 |   |             |   |                                              |   |                |   |       |

| **2009**                                                                                    |   |    |   |   |      |   |   |     |   |   |    |   |   |    |   |   |      |   |
|---------------------------------------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|-----------|--------|
| **Current        value of benefit liabilities and plan assets at beginning        of year** |   | **443** |   |   | **802**   |   |   | **(453** | **)**  |   | **94**  |   |   | **168** |   |   | **1,054** |   |
| Current cost                                                                                |   |    |   |   | 27        |   |   |     |   |   | 2       |   |   | 45      |   |   | 74        |   |
| Interest        cost                                                                        |   | 26      |   |   | 22        |   |   |     |   |   | 6       |   |   | 6       |   |   | 60        |   |
| Amendments                                                                                  |   |    |   |   | 81        |   |   |     |   |   | 10      |   |   |    |   |   | 91        |   |
| Expected        return on plan assets                                                       |   |    |   |   |      |   |   | (16      | )      |   |    |   |   |    |   |   | (16       | )      |
| Employee contributions                                                                      |   |    |   |   | 1         |   |   | (42      | )      |   |    |   |   |    |   |   | (41       | )      |
| Actuarial        gains/losses                                                               |   | 18      |   |   | 301       |   |   | (16      | )      |   | 9       |   |   | 4       |   |   | 316       |   |
| Benefits paid                                                                               |   | (41     | )      |   | (45       | )      |   | 22       |   |   | (7      | )      |   | (39     | )      |   | (110      | )      |
| Curtailments        and settlements                                                         |   |    |   |   | (15       | )      |   | 14       |   |   |    |   |   |    |   |   | (1        | )      |
| Currency translation differences and other        changes                                   |   | 1       |   |   | (28       | )      |   | (9       | )      |   | 1       |   |   | 4       |   |   | (31       | )      |
| **Current        value of benefit liabilities and plan assets at end of        year**       |   | **447** |   |   | **1,146** |   |   | **(500** | **)**  |   | **115** |   |   | **188** |   |   | **1,396** |   |
| **2010**                                                                                    |   |    |   |   |      |   |   |     |   |   |    |   |   |    |   |   |      |   |
| **Current        value of benefit liabilities and plan assets at beginning        of year** |   | **447** |   |   | **1,146** |   |   | **(500** | **)**  |   | **115** |   |   | **188** |   |   | **1,396** |   |
| Current cost                                                                                |   |    |   |   | 42        |   |   |     |   |   | 2       |   |   | 50      |   |   | 94        |   |
| Interest        cost                                                                        |   | 22      |   |   | 36        |   |   |     |   |   | 6       |   |   | 6       |   |   | 70        |   |
| Amendments                                                                                  |   |    |   |   | 9         |   |   |     |   |   |    |   |   |    |   |   | 9         |   |
| Expected        return on plan assets                                                       |   |    |   |   |      |   |   | (20      | )      |   |    |   |   |    |   |   | (20       | )      |
| Employee contributions                                                                      |   |    |   |   | 1         |   |   | (30      | )      |   |    |   |   |    |   |   | (29       | )      |
| Actuarial        gains/losses                                                               |   | 8       |   |   | (22       | )      |   | (4       | )      |   | 4       |   |   | 6       |   |   | (8        | )      |
| Benefits paid                                                                               |   | (42     | )      |   | (28       | )      |   | 9        |   |   | (7      | )      |   | (45     | )      |   | (113      | )      |
| Curtailments        and settlements                                                         |   |    |   |   | (113      | )      |   | 115      |   |   |    |   |   |    |   |   | 2         |   |
| Currency translation differences and other        changes                                   |   | (2      | )      |   | 38        |   |   | (38      | )      |   |    |   |   | 1       |   |   | (1        | )      |
| **Current        value of benefit liabilities and plan assets at end of        year**       |   | **433** |   |   | **1,109** |   |   | **(468** | **)**  |   | **120** |   |   | **206** |   |   | **1,400** |   |
|                                                                                        |   |         |        |   |           |        |   |          |        |   |         |        |   |         |        |   |           |        |

Other benefits of euro 206 million (euro 188 million atDecember 31, 2009) primarily concerned the deferred monetaryincentive plan for euro 126 million (euro 119 million at December31, 2009), jubilee awards for euro 59 million (euro 52 million atDecember 31, 2009) and the long-term incentive plan for euro 2million.

Curtailments and settlements of foreign pension plansconcerned a sale to third parties of obligations related to thepension plan and the relevant plan assets of Eni Lasmo Plc foreuro 115 million with a net effect equal to zero.

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The reconciliation analysis of benefitobligations and plan assets was as follows:

|   |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|--------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|   |   |         |   |                           |   |                                           |   |                    |

| (euro        million) |   | Dec. 31, 2009 |   | Dec. 31, 2010 |   | Dec. 31, 2009 |   | Dec. 31, 2010 |   | Dec. 31, 2009 |   | Dec. 31, 2010 |   | Dec. 31, 2009 |   | Dec. 31, 2010 |
|-----------------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|
|                  |   |               |   |               |   |               |   |               |   |               |   |               |   |               |   |               |

| Present value of benefit obligations with plan        assets              |   |    |   |   |    |   |   | 935     |   |   | 874     |   |   |    |   |   |    |   |   |    |   |    |
|---------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|---------|
| Present        value of plan assets                                       |   |    |   |   |    |   |   | (500    | )      |   | (468    | )      |   |    |   |   |    |   |   |    |   |    |
| **Net present value of benefit obligations with        plan assets**      |   |    |   |   |    |   |   | **435** |   |   | **406** |   |   |    |   |   |    |   |   |    |   |    |
| **Present        value of benefit obligations without plan assets**       |   | **447** |   |   | **433** |   |   | **211** |   |   | **235** |   |   | **115** |   |   | **120** |   |   | **188** |   | **206** |
| Actuarial gains (losses) not recognized                                   |   | (2      | )      |   | (10     | )      |   | (442    | )      |   | (273    | )      |   | (6      | )      |   | (9      | )      |   |    |   |    |
| Past        service cost not recognized                                   |   |    |   |   |    |   |   |    |   |   | (73     | )      |   | (2      | )      |   | (3      | )      |   |    |   |    |
| **Net liabilities recognized in provisions for        employee benefits** |   | **445** |   |   | **423** |   |   | **204** |   |   | **295** |   |   | **107** |   |   | **108** |   |   | **188** |   | **206** |
|                                                                      |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |   |         |

The net liability for foreign employee pension plans of euro295 million (euro 204 million at December 31, 2009) included theliabilities related to joint ventures operating in explorationand production activities for euro 62 million and euro 121million at December 31, 2009 and 2010, respectively. A receivableof an amount equivalent to such liability was recorded.

Costs charged to the profit and loss account were as follows:

| (euro        million) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |   | **Total** |
|-----------------------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|--------|-----------|
|                  |   |         |   |                           |   |                                           |   |                    |   |           |

| **2009**                                        |   |   |   |   |   |   |   |   |   |   |   |    |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Current        cost                             |   |   |   | 27     |   |   | 2      |   | 45     |   |   | 74      |   |
| Interest cost                                   |   | 26     |   | 22     |   |   | 6      |   | 6      |   |   | 60      |   |
| Expected        return on plan assets           |   |   |   | (16    | )      |   |   |   |   |   |   | (16     | )      |
| Amortization of actuarial gains (losses)        |   |   |   | 10     |   |   | 7      |   | 4      |   |   | 21      |   |
| Effect of        curtailments and settlements   |   |   |   | 1      |   |   |   |   | (3     | )      |   | (2      | )      |
|                                            |   | **26** |   | **44** |   |   | **15** |   | **52** |   |   | **137** |   |
| **2010**                                        |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Current cost                                    |   |   |   | 42     |   |   | 2      |   | 50     |   |   | 94      |   |
| Interest        cost                            |   | 22     |   | 36     |   |   | 6      |   | 6      |   |   | 70      |   |
| Expected return on plan assets                  |   |   |   | (20    | )      |   |   |   |   |   |   | (20     | )      |
| Amortization        of actuarial gains (losses) |   |   |   | 8      |   |   |   |   | 7      |   |   | 15      |   |
| Effect of curtailments and settlements          |   |   |   | 5      |   |   |   |   |   |   |   | 5       |   |
|                                            |   | **22** |   | **71** |   |   | **8**  |   | **63** |   |   | **164** |   |

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

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The main actuarial assumptions used in the evaluation ofpost-retirement benefit obligations at year-end and in theestimate of costs expected for 2011 were as follows:

| (%)    |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|--------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|   |   |         |   |                           |   |                                           |   |                    |

| **2009**                                   |   |   |   |     |   |   |   |    |
|--------------------------------------------|--------|--------|--------|----------|--------|--------|--------|---------|
| Discount        rate                       |   | 5.0    |   | 2.7-11.0 |   | 5.0    |   | 2.0-5.0 |
| Expected return rate on plan assets        |   |   |   | 4.0-13.0 |   |   |   |    |
| Rate of        compensation increase       |   | 3.0    |   | 2.7-14.0 |   |   |   |    |
| Rate of price inflation                    |   | 2.0    |   | 0.9-10.0 |   | 2.0    |   | 2.0     |
| **2010**                                   |   |   |   |     |   |   |   |    |
| Discount rate                              |   | 4.8    |   | 2.7-14.0 |   | 4.8    |   | 1.8-4.8 |
| Expected        return rate on plan assets |   |   |   | 3.5-14.0 |   |   |   |    |
| Rate of compensation increase              |   | 3.0    |   | 2.0-14.0 |   |   |   |    |
| Rate of        price inflation             |   | 2.0    |   | 0.8-13.0 |   | 2.0    |   | 2.0     |
|                                       |   |        |   |          |   |        |   |         |

With regards to Italian plans, demographic tables prepared byRagioneria Generale dello Stato (RG48) were used. Expected returnrate by plan assets has been determined by reference to quotedprices expressed in regulated markets.

Plan assets consisted of the following:

| (%)    |   | **Plan assets** |   | **Expected return** |
|--------|--------|-----------------|--------|---------------------|
|   |   |                 |   |                     |

| Securities  |   | 13.0      |   | 6.4-7.4  |
|-------------|--------|-----------|--------|----------|
| Bonds       |   | 36.4      |   | 1.8-14.0 |
| Real estate |   | 2.0       |   | 6.4      |
| Other       |   | 48.6      |   | 0.5-14.0 |
| **Total**   |   | **100.0** |   |     |
|        |   |           |   |          |

The effective return of the plan assets amounted to euro 24million (nil at December 31, 2009).

With reference to healthcare plans, the effects deriving froma 1% change of the actuarial assumptions of medical costs were asfollows:

| (euro million) |   | **1% Increase** |   | **1% Decrease** |
|----------------|--------|-----------------|--------|-----------------|
|           |   |                 |   |                 |

| Impact on the current costs and interest costs |   | 1  |   | (1  | ) |
|------------------------------------------------|--------|----|--------|-----|---|
| Impact on        net benefit obligation        |   | 14 |   | (12 | ) |

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

The amount expected to be accrued to defined benefit plans for2011 amounted to euro 125 million.

The analysis of changes in the actuarial valuation of the netliability with respect to prior year deriving from thenon-correspondence of actuarial assumptions with actual valuesrecorded at year-end was as follows:

| (euro        million) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|-----------------------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|                  |   |         |   |                           |   |                                           |   |                    |

| **2009**                                |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Impact on        net benefit obligation |   | (7     | )      |   | 4      |   |   | 3      |   | 2      |
| Impact on plan assets                   |   |   |   |   | (16    | )      |   |   |   |   |
| **2010**                                |   |   |   |   |   |   |   |   |   |   |
| Impact on net benefit obligation        |   | (1     | )      |   | (31    | )      |   | 1      |   | 4      |
| Impact on        plan assets            |   |   |   |   | 3      |   |   |   |   |   |
|                                    |   |        |        |   |        |        |   |        |   |        |

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**29 Deferred taxliabilities******Deferred tax liabilities were recognized net ofoffsettable deferred tax assets for euro 3,421 million (euro3,764 million at December 31, 2009). 

| (euro        million) |   | **Value at         Dec. 31, 2009** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2010** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

|   |   | **4,907** |   | 691 |   | (717 | ) |   | 451 |   | 592 |   | **5,924** |
|--------|--------|-----------|--------|-----|--------|------|---|--------|-----|--------|-----|--------|-----------|
|   |   |           |   |     |   |      |   |   |     |   |     |   |           |

Deferred tax assets and liabilities consisted of thefollowing:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Deferred tax liabilities                            |   | 8,671     |   |   | 9,345     |   |
|-----------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Deferred        tax assets available for offset     |   | (3,764    | )      |   | (3,421    | )      |
|                                                |   | **4,907** |   |   | **5,924** |   |
| Deferred        tax assets not available for offset |   | (3,558    | )      |   | (4,864    | )      |
|                                                |   | **1,349** |   |   | **1,060** |   |
|                                                |   |           |        |   |           |        |

The most significant temporary differences giving rise to netdeferred tax liabilities were as follows:

| (euro        million) |   | **Value at         Dec. 31, 2009** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2010** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

| Deferred tax liabilities:                                                                                                    |   |       |   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|
| -        accelerated tax depreciation                                                                                        |   | 5,172      |   |   | 520        |   |   | (264      | )      |   | 310      |   |   | (40      | )      |   | 5,698      |   |
| - difference between the fair value and the        carrying amount of assets acquired following business        combinations |   | 1,174      |   |   | 9          |   |   | (59       | )      |   | 87       |   |   | (2       | )      |   | 1,209      |   |
| - site        restoration and abandonment (tangible assets)                                                                  |   | 549        |   |   | 4          |   |   | (91       | )      |   | 29       |   |   | (51      | )      |   | 440        |   |
| - capitalized interest expense                                                                                               |   | 159        |   |   | 1          |   |   | (11       | )      |   |     |   |   | (3       | )      |   | 146        |   |
| -        application of the weighted average cost method in        evaluation of inventories                                 |   | 61         |   |   | 16         |   |   | (1        | )      |   |     |   |   | 98       |   |   | 174        |   |
| - other                                                                                                                      |   | 1,556      |   |   | 141        |   |   | (291      | )      |   | 25       |   |   | 247      |   |   | 1,678      |   |
|                                                                                                                         |   | **8,671**  |   |   | **691**    |   |   | **(717**  | **)**  |   | **451**  |   |   | **249**  |   |   | **9,345**  |   |
| Deferred tax assets:                                                                                                         |   |       |   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |
| - site        restoration and abandonment (provisions for        contingencies)                                              |   | (1,485     | )      |   | (86        | )      |   | 32        |   |   | (59      | )      |   | 43       |   |   | (1,555     | )      |
| - accruals for impairment losses and provisions        for contingencies                                                     |   | (1,390     | )      |   | (630       | )      |   | 316       |   |   | (1       | )      |   | (12      | )      |   | (1,717     | )      |
| -        depreciation and amortization                                                                                       |   | (1,186     | )      |   | (355       | )      |   | 70        |   |   | (78      | )      |   | 49       |   |   | (1,500     | )      |
| - unrealized intercompany profits                                                                                            |   | (1,062     | )      |   | (21        | )      |   | 86        |   |   | (12      | )      |   | 101      |   |   | (908       | )      |
| - assets        revaluation as per Laws No. 342/2000 and No. 448/2001                                                        |   | (677       | )      |   |       |   |   | 38        |   |   |     |   |   | 2        |   |   | (637       | )      |
| - carry-forward tax losses                                                                                                   |   | (174       | )      |   | (169       | )      |   | 148       |   |   | (24      | )      |   | (19      | )      |   | (238       | )      |
| - other                                                                                                                      |   | (1,348     | )      |   | (351       | )      |   | 376       |   |   | (50      | )      |   | (357     | )      |   | (1,730     | )      |
|                                                                                                                         |   | **(7,322** | **)**  |   | **(1,612** | **)**  |   | **1,066** |   |   | **(224** | **)**  |   | **(193** | **)**  |   | **(8,285** | **)**  |
| **Net        deferred tax liabilities**                                                                                      |   | **1,349**  |   |   | **(921**   | **)**  |   | **349**   |   |   | **227**  |   |   | **56**   |   |   | **1,060**  |   |

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

Deferred tax assets are recognized for deductible temporarydifferences to the extent that is probable that sufficienttaxable profit will be available against which part or all of thedeductible temporary differences can be utilized.

Net deferred tax liabilities of euro 1,060 million includedthe recognition of the deferred tax effect against equity on thefair value evaluation of derivatives designated as cash flowhedge for euro 14 million. Further information on cash flow hedgederivatives is given in Note 25 – Other current liabilities.

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Italian taxation law allows the carry-forward of tax lossesover the five subsequent years. Losses suffered in the firstthree years of the company’s life can, however, be, for themost part, carried forward indefinitely. Foreign taxation lawsgenerally allow the carry-forward of tax losses over a periodlonger than the five subsequent years, and in many cases,indefinitely. The tax rate applied to determine the portion ofcarry-forwards tax losses to be utilized equaled to: (i) anaverage rate of 34.0%, for Italian companies that are notincluded in the tax consolidation; (ii) a rate of 6.5%, equal tothe additional IRES provided for energy companies that areincluded in the tax consolidation; and (iii) an average rate of30.9%, for foreign companies.

Carry-forward tax losses of euro 1,298 million can be used inthe following periods:

| (euro million) |   | **Italian        subsidiaries** |   | **Foreign        subsidiaries** |
|----------------|--------|---------------------------------|--------|---------------------------------|
|           |   |                                 |   |                                 |

| 2011               |   |    |   | 30        |
|--------------------|--------|---------|--------|-----------|
| 2012               |   | 2       |   |      |
| 2013               |   |    |   | 58        |
| 2014               |   | 90      |   |      |
| 2015               |   | 54      |   |      |
| Beyond        2015 |   |    |   | 78        |
| Without limit      |   | 6       |   | 980       |
|               |   | **152** |   | **1,146** |
|               |   |         |   |           |

Carry-forward tax losses for which is probable the offsettingagainst future taxable profit amounted to euro 837 million andwere in respect of Italian subsidiaries for euro 152 million andof foreign subsidiaries for euro 685 million. Deferred tax assetsrecognized on these losses amounted to euro 26 million and euro212 million, respectively.

**30 Other non-current liabilities**Other non-current liabilities were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 372       |   | 344       |
|--------------------------------------------------|--------|-----------|--------|-----------|
| Fair value        of cash flow hedge derivatives |   | 436       |   | 157       |
| Current income tax liabilities                   |   | 52        |   | 40        |
| Other        payables                            |   | 54        |   | 67        |
| Other liabilities                                |   | 1,566     |   | 1,586     |
|                                             |   | **2,480** |   | **2,194** |
|                                             |   |           |   |           |

Fair value of derivative contracts was determined by usingmarket quotations given by primary info-providers, or, in lack ofmarket information, on the basis of generally accepted methodsfor financial valuations.

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Fair value of non-hedging derivatives was as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro        million) |    | Fair value |    | Purchase commitments |    | Sale commitments |    | Fair value |    | Purchase commitments |    | Sale commitments |
|-----------------------|--------------|------------|--------------|----------------------|--------------|------------------|--------------|------------|--------------|----------------------|--------------|------------------|
|                  |         |            |         |                      |         |                  |         |            |         |                      |         |                  |

| **Non-hedging derivatives on exchange rate**      |   |    |   |      |   |      |   |    |   |    |   |      |
|---------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|-----------|
| Currency        swap                              |   | 10      |   | 296       |   | 94        |   | 1       |   | 48      |   | 17        |
| Interest currency swap                            |   | 23      |   | 394       |   |      |   | 16      |   | 228     |   | 117       |
|                                              |   | **33**  |   | **690**   |   | **94**    |   | **17**  |   | **276** |   | **134**   |
| **Non-hedging derivatives on interest rate**      |   |    |   |      |   |      |   |    |   |    |   |      |
| Interest        rate swap                         |   | 137     |   | 41        |   | 4,030     |   | 147     |   | 16      |   | 2,999     |
|                                              |   | **137** |   | **41**    |   | **4,030** |   | **147** |   | **16**  |   | **2,999** |
| **Non-hedging        derivatives on commodities** |   |    |   |      |   |      |   |    |   |    |   |      |
| Over the counter                                  |   | 199     |   | 850       |   | 219       |   | 155     |   | 521     |   | 541       |
| Future                                            |   | 1       |   | 12        |   |      |   |    |   |    |   |      |
| Other                                             |   | 2       |   |      |   | 9         |   | 25      |   |    |   | 72        |
|                                              |   | **202** |   | **862**   |   | **228**   |   | **180** |   | **521** |   | **613**   |
|                                              |   | **372** |   | **1,593** |   | **4,352** |   | **344** |   | **813** |   | **3,746** |
|                                              |   |         |   |           |   |           |   |         |   |         |   |           |

Fair value of non-hedging derivatives of euro 344 million(euro 372 million at December 31, 2009) essentially referred toderivative contracts that do not meet the formal criteria to bedesignated as hedges under IFRS because they were entered into inorder to manage the net business exposures in foreign currencyexchange rates, interest rates and commodity prices. Therefore,such derivatives were not related to specific trade or financingtransactions.

Fair value of cash flow hedge derivatives amounted to euro 157million (euro 436 million at December 31, 2009) pertained to theGas & Power segment (euro 275 million at December 31, 2009)and were designated to hedge surpluses or deficits of gas toachieve a proper balance in gas portfolio. Fair value ofcontracts expiring beyond 2011 is given in Note 20 – Othernon-current receivables; fair value of contracts expiring by 2011is given in Note 25 – Other current liabilities and in Note13 – Other current assets. The effects of the evaluation atthe fair value of cash flow hedge derivatives are given in Note32 – Shareholders’ equity and in Note 36 –Operating expenses.

The nominal value of these derivatives referred to purchaseand sale commitments for euro 383 million and euro 612 million,respectively (euro 1,544 million and euro 129 million at December31, 2009).

Information on the hedged risks and the hedging policies isshown in Note 34 – Guarantees, commitments and risks –Risk factors.

The group’s liability for current income taxes of euro 40million (euro 52 million at December 31, 2009) was due as specialtax (with a rate lower than the statutory tax rate), relating tothe option to increase the deductible tax bases of certaintangible and other assets to their carrying amounts as permittedby the 2008 Budget Law.

Other liabilities of euro 1,586 million (euro 1,566 million atDecember 31, 2009) included advances received by Suez followingthe long-term supplying of natural gas and electricity of euro1,353 million (euro 1,455 million at December 31, 2009).

**31 Assets held for sale and liabilitiesdirectly associated with assets held for sale******In 2010, non-current assets held for sale andliabilities directly associated with non-current assets held forsale of euro 517 million and euro 38 million pertained to the Gas& Power segment and related to: (i) Gas BrasilianoDistribuidora SA, a company that markets and distributes gas inan area of the São Paulo state, Brazil, for which Eni signed apreliminary agreement with an affiliate of Petrobras. Thecompletion of the transaction is subject to approval of therelevant Brazilian authorities; (ii) Eni’s interests in gastransport pipelines from North Europe and Russia – TransEuropa Naturgas Pipeline Gesellschaft mbH & Co KG, TransEuropa Naturgas Pipeline Verwaltungs GmbH, Transitgas AG andTrans Austria Gasleitung GmbH – as well as assets andliabilities essentially related to marketing activities of gastransportation capacity of the consolidated companies Eni GasTransport Deutschland SpA and Eni Gas Transport International SA.The divestment is part of the commitments presented by Eni to theEuropean Commission to settle an antitrust proceeding related toalleged anti-competitive behavior in the natural gas 

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market ascribed to Eni without the ascertainment of anyillicit behavior and consequently without imposition of any finesor sanctions. The Commission accepted Eni’s commitments asof September 29, 2010. The completion of the transactions isexpected in the first half of 2011.

In 2009, non-current assets held for sale and liabilitiesdirectly associated with non-current assets held for saleamounted to euro 542 million and euro 276 million, respectively,which mainly relate to the divestment of certain mineralproperties in Italy which were contributed in kind to two newentities Società Padana Energia SpA and Società AdriaticaIdrocarburi SpA, for the disposal of Gas Brasiliano DistribuidoraSA, a company operating in the distribution and marketing ofnatural gas in an area of São Paulo state in Brazil, and DistriRE SA, a company acquired following the acquisition of DistrigasNV.

Società Padana Energia SpA and Distri RE SA have been soldduring 2010. Società Adriatica Idrocarburi SpA has beenreclassified from assets held for sale following the decision ofthe proposed buyer not to acquire its 100% stake.

**32 Shareholders’ equity**

**Non-controlling interest******Profit attributable to non-controlling interest and thenon-controlling interest in consolidated subsidiaries related to:

| (euro million) |   | **Net profit** |   | **Shareholders’        equity** |
|----------------|--------|----------------|--------|--------------------------------------|
|           |   |                |   |                                      |

|   |   | 2009 |   | 2010 |   | Dec. 31, 2009 |   | Dec. 31, 2010 |
|--------|--------|------|--------|------|--------|---------------|--------|---------------|
|   |   |      |   |      |   |               |   |               |

| Saipem SpA                       |   | 567     |   | 503       |   | 2,005     |   | 2,406     |
|----------------------------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|
| Snam Rete        Gas SpA         |   | 369     |   | 537       |   | 1,568     |   | 1,705     |
| Hindustan Oil Exploration Co Ltd |   | 1       |   |      |   | 123       |   | 146       |
| Tigáz Zrt                   |   | 8       |   | 13        |   | 72        |   | 83        |
| Others                           |   | 5       |   | 12        |   | 210       |   | 182       |
|                             |   | **950** |   | **1,065** |   | **3,978** |   | **4,522** |
|                             |   |         |   |           |   |           |   |           |

**Eni shareholders’ equity**Eni’s net equity at December 31 was as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Share capital                                                                                          |   | 4,005      |   |   | 4,005      |   |
|--------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| Legal reserve                                                                                          |   | 959        |   |   | 959        |   |
| Reserve for treasury shares                                                                            |   | 6,757      |   |   | 6,756      |   |
| Reserve        related to the fair value of cash flow hedging        derivatives net of the tax effect |   | (439       | )      |   | (174       | )      |
| Reserve related to the fair value of        available-for-sale securities net of the tax effect        |   | 5          |   |   | (3         | )      |
| Other        reserves                                                                                  |   | 1,492      |   |   | 1,518      |   |
| Cumulative currency translation differences                                                            |   | (1,665     | )      |   | 539        |   |
| Treasury        shares                                                                                 |   | (6,757     | )      |   | (6,756     | )      |
| Retained earnings                                                                                      |   | 39,160     |   |   | 39,855     |   |
| Interim        dividend                                                                                |   | (1,811     | )      |   | (1,811     | )      |
| Net profit for the period                                                                              |   | 4,367      |   |   | 6,318      |   |
|                                                                                                   |   | **46,073** |   |   | **51,206** |   |
|                                                                                                   |   |            |        |   |            |        |

**Share capital**At December 31, 2010 the parent company’s issued sharecapital consisted of 4,005,358,876 shares (nominal value euro 1each) fully paid-up (the same amount as of December 31, 2009).

On April 29, 2010 Eni’s Shareholders’ Meetingdeclared a dividend distribution of euro 0.50 per share, with theexclusion of treasury shares held at the ex-dividend date, infull settlement of the 2009 dividend of euro 1.00 per 

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share, of which euro 0.50 per share paid as interim dividend.The balance was payable on May 27, 2010 to shareholders on theregister on May 24, 2010.

 

**Legal reserve**This reserve represents earnings restricted from the paymentof dividends pursuant to Article 2430 of the Italian Civil Code.The legal reserve has reached the maximum amount required by theItalian Law.

 

**Reserve for treasury shares**The reserve for treasury shares represents the reservedestined to purchase own shares in accordance with the decisionsof Eni’s Shareholders’ Meetings. The amount of euro6,756 million (euro 6,757 million at December 31, 2009) includedtreasury shares purchased.

 

**Reserve for available-for-sale securities and cashflow hedging derivatives, net of the related tax effect******The valuation at fair value of available-for-sale securitiesand cash flow hedging derivatives, net of the related tax effect,consisted of the following:

|   |   | **Available-for-sale securities** |   | **Cash flow hedge derivatives** |   | **Total** |
|--------|--------|-----------------------------------|--------|---------------------------------|--------|-----------|
|   |   |                                   |   |                                 |   |           |

| (euro        million) |   | Gross reserve |   | Deferred tax liabilities |   | Net reserve |   | Gross reserve |   | Deferred tax liabilities |   | Net reserve |   | Gross reserve |   | Deferred tax liabilities |   | Net reserve |
|-----------------------|--------|---------------|--------|--------------------------|--------|-------------|--------|---------------|--------|--------------------------|--------|-------------|--------|---------------|--------|--------------------------|--------|-------------|
|                  |   |               |   |                          |   |             |   |               |   |                          |   |             |   |               |   |                          |   |             |

| **Reserve as of December 31, 2008**              |   | **5**  |   |   | **(1**   | **)**  |   | **4**  |   |   | **(236** | **)**  |   | **75**  |   |   | **(161** | **)**  |   | **(231** | **)**  |   | **74**  |   |   | **(157** | **)**  |
|--------------------------------------------------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|----------|--------|--------|---------|--------|--------|----------|--------|--------|----------|--------|--------|---------|--------|--------|----------|--------|
| *Of        which: Eni Group*                     |   | *5*    |   |   | ***(1*** | *)*    |   | *4*    |   |   | *(128*   | *)*    |   | *38*    |   |   | *(90*    | *)*    |   | *(123*   | *)*    |   | *37*    |   |   | *(86*    | *)*    |
| Changes of the year 2009                         |   | 1      |   |   |     |   |   | **1**  |   |   | (636     | )      |   | 246     |   |   | **(390** | **)**  |   | (635     | )      |   | 246     |   |   | **(389** | **)**  |
| Foreign        currency translation differences  |   |   |   |   |     |   |   |   |   |   | 3        |   |   | (2      | )      |   | **1**    |   |   | 3        |   |   | (2      | )      |   | **1**    |   |
| Amount recognized in the profit and loss account |   |   |   |   |     |   |   |   |   |   | 155      |   |   | (44     | )      |   | **111**  |   |   | 155      |   |   | (44     | )      |   | **111**  |   |
| **Reserve        as of December 31, 2009**       |   | **6**  |   |   | **(1**   | **)**  |   | **5**  |   |   | **(714** | **)**  |   | **275** |   |   | **(439** | **)**  |   | **(708** | **)**  |   | **274** |   |   | **(434** | **)**  |
| Changes of the year 2010                         |   | (9     | )      |   | 1        |   |   | **(8** | )      |   | 47       |   |   | (33     | )      |   | **14**   |   |   | 38       |   |   | (32     | )      |   | **6**    |   |
| Foreign        currency translation differences  |   |   |   |   |     |   |   |   |   |   | (4       | )      |   | 2       |   |   | **(2**   | **)**  |   | (4       | )      |   | 2       |   |   | **(2**   | **)**  |
| Amount recognized in the profit and loss account |   |   |   |   |     |   |   |   |   |   | 396      |   |   | (143    | )      |   | **253**  |   |   | 396      |   |   | (143    | )      |   | **253**  |   |
| **Reserve        as of December 31, 2010**       |   | **(3** | **)**  |   |     |   |   | **(3** | **)**  |   | **(275** | **)**  |   | **101** |   |   | **(174** | )      |   | **(278** | **)**  |   | **101** |   |   | **(177** | **)**  |
|                                             |   |        |        |   |          |        |   |        |        |   |          |        |   |         |        |   |          |        |   |          |        |   |         |        |   |          |        |

 

**Other reserves**Other reserves amounted to euro 1,518 million (euro 1,492 millionat December 31, 2009) and included:

| • |   | a reserve of euro 1,142        million represented an increase in Eni’s        shareholders’ equity associated with a business        combination under common control which took place in        2009, whereby the parent company Eni SpA divested the        subsidiaries Italgas SpA and Stogit SpA to Snam Rete Gas        SpA with a corresponding decrease in the non-controlling        interest (euro 1,086 million at December 31, 2009); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | a reserve of euro 247        million related to the increase of Eni’s        shareholders’ equity as a control to non-controlling        interest following the sale by Eni SpA of Snamprogetti        SpA to Saipem Projects SpA, both merged in Saipem SpA        (same amount as of December 31, 2009);                                                                                                                                         |
| • |   | a reserve of euro 157        million deriving from Eni SpA’s equity (same amount        as of December 31, 2009);                                                                                                                                                                                                                                                                                                                                       |
| • |   | a negative reserve of euro        25 million for stock warrants of Altergaz SA owned by its        shareholder Eni G&P France BV;                                                                                                                                                                                                                                                                                                                        |
| • |   | a negative reserve of euro 3        million referred to the share of "Other        comprehensive income" on equity-accounted entities        (positive for euro 2 million at December 31, 2009).                                                                                                                                                                                                                                                   |

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**Cumulative foreign currency translation differences**The cumulative foreign currency translation differences arosefrom the translation of financial statements denominated incurrencies other than euro.

 

**Treasury shares**A total of 382,863,733 ordinary shares (382,952,240 at December31, 2009) with nominal value of euro 1 each, were held intreasury, for a total cost of euro 6,756 million (euro 6,757million at December 31, 2009). During the year 2010 the termestablished by Eni’s Shareholders’ Meetings for thepurchase has expired. 15,737,120 treasury shares (19,482,330 atDecember 31, 2009) at a cost of euro 328 million (euro 414million at December 31, 2009) were available for 2003-200518and 2006-2008 stock option plans.

The decrease of 3,745,210 shares consisted of the following:

|   |   | **Stock option** |
|--------|--------|------------------|
|   |   |                  |

| **Number of shares at December 31, 2009** |   | **19,482,330** |   |
|-------------------------------------------|--------|----------------|--------|
| Rights        exercised                   |   | (88,500        | )      |
| Rights cancelled                          |   | (3,656,710     | )      |
|                                      |   | **(3,745,210** | **)**  |
| **Number of shares at December 31, 2010** |   | **15,737,120** |   |
|                                      |   |                |        |

At December 31, 2010 options outstanding were 15,737,120shares. Options refer to the 2003 stock plan for 213,400 shareswith an exercise price of euro 13.743 per share, to the 2004stock plan for 671,600 shares with an exercise price of euro16.576 per share, to the 2005 stock plan for 3,281,500 shareswith an exercise price of euro 22.514 per share, to the 2006stock plan for 2,307,935 shares with weighted average exerciseprice of euro 23.121 per share, to the 2007 stock plan for2,431,560 shares with weighted average exercise price of euro27.451 per share and to the 2008 stock plan for 6,831,125 shareswith an exercise price of euro 22.540 per share.

Information about commitments related to stock option plans isincluded in Note 36 – Operating expenses.

 

**Interim dividend**Interim dividend for the year 2010 amounted of euro 1,811million corresponding to euro 0.50 per share, as decided by theBoard of Directors on September 9, 2010 in accordance withArticle 2433-bis, paragraph 5 of the Italian Civil Code; thedividend was paid on September 23, 2010.

 

**Distributable reserve**At December 31, 2010 Eni shareholders’ equity includeddistributable reserves of euro 46,200 million.

----

| (18) |    | During 2010,        the vesting period for the 2002 assignment expired. |
|------|--------------|-------------------------------------------------------------------------|

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**Reconciliation of net profit and shareholders’ equityof the parent company Eni SpA to consolidated net profit andshareholders’ equity**

|    |    | **Net profit** |    | **Shareholders’        equity** |
|--------------|--------------|----------------|--------------|--------------------------------------|
|    |    |                |    |                                      |

| (euro        million) |    | 2009 |    | 2010 |    | Dec. 31, 2009 |    | Dec. 31, 2010 |
|-----------------------|--------------|------|--------------|------|--------------|---------------|--------------|---------------|
|             |    |      |    |      |    |               |    |               |

| **As recorded in Eni SpA’s Financial        Statements**                                                                                                                           |   | **5,061** |   |   | **6,179** |   |   | **32,144** |   |   | **34,724** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
| Excess of        net equity in individual accounts of consolidated        subsidiaries over their corresponding carrying amounts in        the statutory accounts of the parent company |   | 158       |   |   | 1,297     |   |   | 17,464     |   |   | 20,122     |   |
| Consolidation adjustments:                                                                                                                                                              |   |      |   |   |      |   |   |       |   |   |       |   |
| -        difference between purchase cost and underlying carrying        amounts of net equity                                                                                          |   | (213      | )      |   | (574      | )      |   | 5,068      |   |   | 4,732      |   |
| - elimination of tax adjustments and compliance        with Group account policies                                                                                                      |   | (113      | )      |   | 389       |   |   | (1,062     | )      |   | (667       | )      |
| -        elimination of unrealized intercompany profits                                                                                                                                 |   | 117       |   |   | 14        |   |   | (4,582     | )      |   | (4,601     | )      |
| - deferred taxation                                                                                                                                                                     |   | 378       |   |   | 100       |   |   | 1,175      |   |   | 1,410      |   |
| - other        adjustments                                                                                                                                                              |   | (71       | )      |   | (22       | )      |   | (156       | )      |   | 8          |   |
|                                                                                                                                                                                    |   | **5,317** |   |   | **7,383** |   |   | **50,051** |   |   | **55,728** |   |
| Non-controlling        interest                                                                                                                                                         |   | (950      | )      |   | (1,065    | )      |   | (3,978     | )      |   | (4,522     | )      |
| **As recorded in Consolidated Financial        Statements**                                                                                                                             |   | **4,367** |   |   | **6,318** |   |   | **46,073** |   |   | **51,206** |   |
|                                                                                                                                                                                    |   |           |        |   |           |        |   |            |        |   |            |        |

 

**33 Other information**

**Main acquisitions**

*Altergaz SA*In December 2010, Eni increased its shareholding in AltergazSA, a company marketing natural gas in France to retail andmiddle market clients, as founding partners of the companyexercised a put option on a 15% stake. Eni took control of theentity. Allocation of the purchase cost amounting to euro 106million, to assets and liabilities was made on a preliminarybasis. The purchase cost included the price paid to the partnersexercising the put right for euro 39 million and the fair valueof stake already held by Eni before the change of controlamounting to euro 67 million.

*Eni Mineralölhandel GmbH*On August 1, 2010, Eni acquired in Austria the company EniMineralölhandel GmbH that operates, through its 100%controlledcompany Eni Marketing Austria GmbH, in downstream activitiesincluding a retail network of 135 service stations, wholesaleactivities (with 36 additional retail service stations owned bythird parties) as well as commercial assets in the aviationbusiness and related logistic and storage activities. Theallocation of the total cost of euro 113 million to assets andliabilities was closed as of the balance sheet date.

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The allocation of the purchase costs of the businesscombinations made during the 2010 year consisted of thefollowing: 

| (euro        million) |   | **Altergaz SA** |   | **Eni Mineralölhandel        GmbH** |
|-----------------------|--------|-----------------|--------|------------------------------------------|
|                  |   |                 |   |                                          |

|   |   | Carrying        value |   | Fair value |   | Carrying        value |   | Fair value |
|--------|--------|-----------------------|--------|------------|--------|-----------------------|--------|------------|
|   |   |                       |   |            |   |                       |   |            |

| Current assets                            |   | 308     |   |   | 308     |   |   | 81      |   | 81      |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|---------|
| Property,        plant and equipment      |   | 1       |   |   | 1       |   |   | 22      |   | 42      |
| Intangible assets                         |   | 4       |   |   | 4       |   |   |    |   |    |
| Goodwill                                  |   |    |   |   | 97      |   |   |    |   | 76      |
| Investments                               |   | 13      |   |   | 13      |   |   | 3       |   | 3       |
| Other        non-current assets           |   |    |   |   |    |   |   | 5       |   | 25      |
| **Assets acquired**                       |   | **326** |   |   | **423** |   |   | **111** |   | **227** |
| Current        liabilities                |   | 315     |   |   | 315     |   |   | 90      |   | 95      |
| Deferred tax liabilities                  |   | (7      | )      |   | (7      | )      |   | 5       |   | 5       |
| Provisions        for contingencies       |   | 2       |   |   | 2       |   |   | 3       |   | 4       |
| Other non-current liabilities             |   |    |   |   |    |   |   | 10      |   | 10      |
| **Liabilities        acquired**           |   | **310** |   |   | **310** |   |   | **108** |   | **114** |
| Non-controlling interest                  |   | 7       |   |   | 7       |   |   |    |   |    |
| **Eni’s        shareholders equity** |   | **9**   |   |   | **106** |   |   | **3**   |   | **113** |
|                                      |   |         |        |   |         |        |   |         |   |         |

Net sales from operations and the net loss forthe year 2010 and from the date of the acquisition to December31, 2010 consisted of the following:

| (euro        million) |   | **Altergaz SA** |   | **Eni Mineralölhandel        GmbH** |
|-----------------------|--------|-----------------|--------|------------------------------------------|
|                  |   |                 |   |                                          |

|   |   | 2010 |   | From the date of the        acquisition to December 31, 2010 |   | 2010 |   | From the date of the        acquisition to December 31, 2010 |
|--------|--------|------|--------|--------------------------------------------------------------|--------|------|--------|--------------------------------------------------------------|
|   |   |      |   |                                                              |   |      |   |                                                              |

| Net sales from operations |   | 561 |   |   |   |   |   | 398 |   |   | 163 |   |
|---------------------------|--------|-----|--------|--------|--------|--------|--------|-----|--------|--------|-----|--------|
| Net loss                  |   | (23 | )      |   |   |   |   | (46 | )      |   | (3  | )      |
|                      |   |     |        |   |        |        |   |     |        |   |     |        |

The amounts related to net sales and net lossrepresent the 100% share.

 

 

 

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**Supplemental cash flow information**

| (euro million) |   |    **** |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|------------------------|--------|----------|--------|----------|--------|----------|
|           |   |                   |   |          |   |          |   |          |

| **Effect of investment of companies included in        consolidationand businesses** |   |      |   |   |   |   |   |    |   |
|--------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|---------|--------|
| Current        assets                                                                |   | 1,938     |   |   | 7      |   |   | 409     |   |
| Non-current assets                                                                   |   | 7,442     |   |   | 47     |   |   | 316     |   |
| Net        borrowings (*)                                                            |   | 1,543     |   |   | 4      |   |   | 13      |   |
| Current and non-current liabilities                                                  |   | (3,598    | )      |   | (29    | )      |   | (457    | )      |
| **Net        effect of investments**                                                 |   | **7,325** |   |   | **29** |   |   | **281** |   |
| Non-controlling interest                                                             |   | (1,261    | )      |   |   |   |   | (7      | )      |
| Fair value        of investments held before the acquisition of control              |   | (601      | )      |   |   |   |   | (76     | )      |
| **Purchase price**                                                                   |   | **5,463** |   |   | **29** |   |   | **198** |   |
| less:                                                                                |   |      |   |   |   |   |   |    |   |
| *Cash and cash equivalents*                                                          |   | *(1,829*  | *)*    |   | *(4*   | *)*    |   | *(55*   | *)*    |
| **Cash        flow on investments**                                                  |   | **3,634** |   |   | **25** |   |   | **143** |   |
| **Effect of disposal of consolidated        subsidiaries and businesses**            |   |      |   |   |   |   |   |    |   |
| Current        assets                                                                |   | 277       |   |   |   |   |   | 82      |   |
| Non-current assets                                                                   |   | 299       |   |   |   |   |   | 855     |   |
| Net        borrowings                                                                |   | (118      | )      |   |   |   |   | (267    | )      |
| Current and non-current liabilities                                                  |   | (270      | )      |   |   |   |   | (302    | )      |
| **Net        effect of disposals**                                                   |   | **188**   |   |   |   |   |   | **368** |   |
| Fair value of share capital held after the sale        of control                    |   |      |   |   |   |   |   | (149    | )      |
| Gain on        disposal                                                              |   | 25        |   |   |   |   |   | 309     |   |
| Non-controlling interest                                                             |   | (1        | )      |   |   |   |   | (46     | )      |
| **Selling        price**                                                             |   | **212**   |   |   |   |   |   | **482** |   |
| less:                                                                                |   |      |   |   |   |   |   |    |   |
| *Cash        and cash equivalents*                                                   |   | *(63*     | *)*    |   |   |   |   | *(267*  | *)*    |
| **Cash flow on disposals**                                                           |   | **149**   |   |   |   |   |   | **215** |   |
|                                                                                 |   |           |        |   |        |        |   |         |        |

|    |    |                                                                                     |
|--------------|--------------|-----------------------------------------------------------------------------------------------|
| (*)          |    | For a        definition see paragraph "Information on net        borrowings" above. |

 

**34 Guarantees, commitmentsand risks********Guarantees**Guarantees were as follows:

|   |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (euro million) |   | Unsecured guarantees |   | Other        guarantees |   | Total |   | Unsecured guarantees |   | Other        guarantees |   | Total |
|----------------|--------|----------------------|--------|-------------------------|--------|-------|--------|----------------------|--------|-------------------------|--------|-------|
|           |   |                      |   |                         |   |       |   |                      |   |                         |   |       |

| Consolidated subsidiaries                        |   |      |   | 9,863      |   | 9,863      |   |      |   | 10,853     |   | 10,853     |
|--------------------------------------------------|--------|-----------|--------|------------|--------|------------|--------|-----------|--------|------------|--------|------------|
| Unconsolidated        entities controlled by Eni |   |      |   | 146        |   | 146        |   |      |   | 156        |   | 156        |
| Joint ventures and associates                    |   | 6,060     |   | 1,251      |   | 7,311      |   | 6,077     |   | 1,005      |   | 7,082      |
| Others                                           |   | 5         |   | 266        |   | 271        |   | 5         |   | 261        |   | 266        |
|                                             |   | **6,065** |   | **11,526** |   | **17,591** |   | **6,082** |   | **12,275** |   | **18,357** |
|                                             |   |           |   |            |   |            |   |           |   |            |   |            |

Other guarantees issued on behalf of consolidated subsidiariesof euro 10,853 million (euro 9,863 million at December 31, 2009)primarily consisted of: (i) guarantees given to third partiesrelating to bid bonds and performance bonds for euro 7,309million (euro 6,091 million at December 31, 2009), of which euro5,427 million related to the Engineering & Constructionsegment (euro 4,936 million at December 31, 2009); (ii) VATrecoverable from tax authorities for euro 1,076 million (euro1,171 million at December 31, 2009); and (iii) insurance risk foreuro 387 million reinsured by Eni (euro 253 million at December31, 2009). At December 31, 2010 the underlying commitment coveredby such guarantees was euro 10,718 million (euro 9,783 million atDecember 31, 2009).

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Other guarantees issued on behalf of unconsolidatedsubsidiaries of euro 156 million (euro 146 million at December31, 2009) consisted of letters of patronage and other guaranteesissued to commissioning entities relating to bid bonds andperformance bonds for euro 152 million (euro 141 million atDecember 31, 2009). At December 31, 2010, the underlyingcommitment covered by such guarantees was euro 81 million (euro64 million at December 31, 2009).

Unsecured guarantees and other guarantees issued on behalf ofjoint ventures and associates of euro 7,082 million (euro 7,311million at December 31, 2009) primarily concerned: (i) anunsecured guarantee of euro 6,054 million (euro 6,037 million atDecember 31, 2009) given by Eni SpA to Treno Alta Velocità - TAVSpA (now RFI - Rete Ferroviaria Italiana SpA) for the proper andtimely completion of a project relating to the Milan-Bolognatrain link by CEPAV (Consorzio Eni per l’Alta Velocità)Uno; consortium members, excluding unconsolidated entitiescontrolled by Eni, gave Eni liability of surety letters and bankguarantees amounting to 10% of their respective portion of thework; (ii) unsecured guarantees, letters of patronage and otherguarantees given to banks in relation to loans and lines ofcredit received for euro 792 million (euro 971 million atDecember 31, 2009), of which euro 648 million related to acontract released by Eni SpA on behalf of Blue Stream Pipeline CoBV (Eni 50%) to a consortium of international financialinstitutions (euro 692 million at December 31, 2009); and (iii)unsecured guarantees and other guarantees given to commissioningentities relating to bid bonds and performance bonds for euro 113million (euro 126 million at December 31, 2009). At December 31,2010, the underlying commitment covered by such guarantees waseuro 639 million (euro 814 million at December 31, 2009).

Unsecured and other guarantees given on behalf of thirdparties of euro 266 million (euro 271 million at December 31,2009) consisted primarily of: (i) guarantees issued on behalf ofGulf LNG Energy and Gulf LNG Pipeline and on behalf of Angola LNGSupply Service Llc (Eni 13.6%) as security against paymentcommitments of fees in connection with the re-gasificationactivity (euro 225 million). The expected commitment has beenvalued at euro 222 million (euro 206 million at December 31,2009) and it has included in the off-balance sheet commitments ofthe following paragraph "Liquidity risk"; and (ii)guarantees issued by Eni SpA to banks and other financialinstitutions in relation to loans and lines of credit for euro 24million on behalf of minor investments or companies sold (euro 23million at December 31, 2009).

At December 31, 2010 the underlying commitment covered by suchguarantees was euro 258 million (euro 266 million at December 31,2009).

 

**Commitments and risks**Commitments and risks were as follows:

| (euro million) |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Commitments |   | 16,668     |   | 17,226     |
|-------------|--------|------------|--------|------------|
| Risks       |   | 1,277      |   | 1,499      |
|        |   | **17,945** |   | **18,725** |
|        |   |            |   |            |

Other commitments of euro 17,226 million (euro 16,668 millionat December 31, 2009) were essentially related to: (i) parentcompany guarantees that were issued in connection with certaincontractual commitments for hydrocarbon exploration andproduction activities and quantified, on the basis of the capitalexpenditures to be incurred, to euro 10,654 million (euro 10,302million at December 31, 2009); (ii) a commitment entered into byEni USA Gas Marketing Llc on behalf of Angola LNG Supply Servicefor the acquisition of regasified gas at the Pascagoula plant(USA) that will come into force when the regasification servicestarts in a period included between 2011-2031. The expectedcommitment has been valued at euro 4,031 million and it hasincluded in the off-balance sheet commitments of the followingparagraph "Liquidity risk"; (iii) a commitment enteredinto by Eni USA Gas Marketing Llc on behalf of Gulf LNG Energyfor the acquisition of regasification capacity ofPascagoula’s terminal (6 BCM/y) over a twenty-year period(2011-2031). The expected commitment has been valued at euro1,239 million (euro 1,151 million at December 31, 2009) and ithas included in the off-balance sheet commitments of thefollowing paragraph "Liquidity risk"; (iv) a commitmententered into by Eni USA Gas Marketing Llc on behalf of CameronLlc for the acquisition of regasification capacity at the Cameronplant (USA) (6 BCM/y) over a twenty-year period (until 2029). Theexpected commitment has been valued at euro 1,018 million (euro990 million at December 31, 2009) and it has included in theoff-balance sheet commitments of the following paragraph"Liquidity risk"; (v) a memorandum of intent signedwith the Basilicata Region, whereby Eni has agreed to invest euro149 million in the future, also on account of Shell ItaliaE&P SpA, in connection with Eni’s development plan ofoil fields in Val d’Agri (euro 150 million at December 31,2009). The commitment has included in the off-balance sheetcommitments of the following paragraph "Liquidityrisk"; and (vi) a commitment entered into by Eni USA Gas 

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Marketing Llc for the contract of gas transportation from theCameron plant (USA) to the American network. The expectedcommitment has been valued at euro 113 million (euro 110 millionat December 31, 2009) and it has included in the off-balancesheet commitments of the following paragraph "Liquidityrisk".

Risks of euro 1,499 million (euro 1,277 million at December31, 2009) primarily concerned potential risks associated with thevalue of assets of third parties under the custody of Eni foreuro 1,202 million (euro 899 million at December 31, 2009) andcontractual assurances given to acquirers of certain investmentsand businesses of Eni for euro 297 million (euro 378 million atDecember 31, 2009).

 

**Non-quantifiable commitments**Under the convention signed on October 15, 1991 by Treno AltaVelocità - TAV SpA (now RFI - Rete Ferroviaria Italiana SpA) andCEPAV (Consorzio Eni per l’Alta Velocità) Due, Enicommitted to guarantee the execution of design and constructionof the works assigned to the CEPAV Consortium (to which it isparty) and guaranteed to TAV the correct and timely execution ofall obligations indicated in the convention in a subsequentintegration deed and in any further addendum or change orintegration to the same. The regulation of CEPAV Consortiumcontains the same obligations and guarantees contained in theCEPAV Uno Agreement.

Eni is liable for certain non-quantifiable risks related tocontractual assurances given to acquirers of certain ofEni’s assets, including businesses and investments, againstcertain contingent liabilities deriving from tax, social securitycontributions, environmental issues and other matters applicableto periods during which such assets were operated by Eni. Enibelieves such matters will not have a material adverse effect onEni’s results of operations and liquidity.

 

**Risk factors**

FOREWORDThe main risks that the Company is facing and actively monitoringand managing are the following: (i) the market risk deriving fromexposure to fluctuations in interest rates, foreign currencyexchange rates and commodity prices; (ii) the credit riskderiving from the possible default of a counterparty; and (iii)the liquidity risk deriving from the risk that suitable sourcesof funding for the Group’s operations may not be available.

Financial risks are managed in respect of guidelines definedby the parent company, targeting to align and coordinate Groupcompanies’ policies on financial risks ("Eni Guidelineson Management and Control of Financial Risks").

In 2010, driven by a deep change in its relative market riskprofile determined by structural changes in the market,Eni’s Gas & Power Division adopted new pricing and riskmanagement strategies for actively managing economic margins,that have been approved by the Board of Directors on June 15,2010. As a result of the implementation of these new activities,reviews of the principles included in the Guidelines are expectedin 2011.

*Market risk*Market risk is the possibility that changes in currencyexchange rates, interest rates or commodity prices will adverselyaffect the value of the Group’s financial assets,liabilities or expected future cash flows. The Company activelymanages market risk in accordance with a set of policies andguidelines that provide a centralized model of handling finance,treasury and risk management operations based on theCompany’s departments of operational finance: the parentcompany’s (Eni SpA) finance department, Eni CoordinationCenter, Eni Finance USA and Banque Eni which is subject tocertain bank regulatory restrictions preventing the Group’sexposure to concentrations of credit risk and Eni Trading &Shipping which executes certain activities relating to commodityderivatives. In particular, Eni SpA and Eni Coordination Centermanage subsidiaries’ financing requirements in and outsideItaly, respectively, covering funding requirements and usingavailable surpluses. All transactions concerning currencies andderivative financial contracts are managed by the parent companyas well as the activity of negotiating emission tradingcertificates. The commodity risk is managed by each business unitwith Eni Trading & Shipping executing the negotiation ofhedging derivatives. Eni uses derivative financial instruments(derivatives) in order to minimize exposure to market risksrelated to changes in exchange rates and interest rates and tomanage exposure to commodity prices fluctuations. Eni does notenter into derivative transactions on interest rates or exchangerates on a speculative basis.

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Commodity derivatives are entered into with the aim of:

| a) |   | *hedging* of certain        underlying commodity prices set in a contractual        arrangement with a third party. Hedging derivatives can        be entered also to hedge highly probable future        transactions;                                                                                                                                                                                                                          |
|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | effectively managing the        economic margin (*positioning*). This consists of        entering purchase/sale commodity contracts in both        commodity and financial markets aiming at altering the        risk profile associated with a portfolio of physical        assets of each business unit in order to improve margins        associated to those assets in case of favorable trends in        the commodity pricing environment; |
| c) |   | *arbitrage*. It        consists of entering purchase/sale commodity contracts in        both commodity and financial markets, targeting the        possibility of earning a profit (or reducing the        logistical costs associated to owned assets) leveraging        any price differences in the marketplace;                                                                                                                              |
| d) |   | *proprietary trading*.        It consists in entering purchase/sale commodity contracts        in both commodity and financial markets, targeting of        earning an uncertain profit, should certain expectations        fulfill about favorable trends in the commodity pricing        environment.                                                                                                                                          |

In addition, commodity derivatives may also be included inorigination activities. This activity takes place in wholesalemarkets and provides for structuring contracts by an originatorin order to meet the specific requirements of an internal orexternal counterparty. According to the management strategyadopted, origination services can be asset based, when theoriginator replicates the contract contents with profiles andcapacities of its own assets in the logic of natural hedging, ornot asset based, when price and volume risk profiles can bemanaged under a trading/positioning logic or a hedging logic thatis implemented on each leg of the contract.

The framework defined by Eni’s policies and guidelinesprescribes that measurement and control of market risk beperformed on the basis of maximum tolerable levels of riskexposure defined in terms of limits of stop loss, which expressesthe maximum tolerable amount of losses associated with a certainportfolio of assets over a pre-defined time horizon, or inaccordance with Value-at-Risk (VaR) techniques. Those techniquesmake a statistical assessment of the market risk associated withthe Group’s activity, i.e., potential gain or loss in fairvalues, due to changes in market conditions taking account of thecorrelation existing among changes in fair value of existinginstruments.

Eni’s finance departments define maximum tolerable levelsof risk exposure to changes in interest rates and foreigncurrency exchange rates in terms of Value at Risk, pooling Groupcompanies risk positions. Eni’s calculation and measurementtechniques for interest rate and foreign currency exchange raterisks are in accordance with established banking standards, asestablished by the Basel Committee for bank activitiessurveillance. Tolerable levels of risk are based on aconservative approach, considering the industrial nature of theCompany. Eni’s guidelines prescribe that Eni’s Groupcompanies minimize these kinds of market risks by transferringrisk exposure to the parent company’s finance department.

With regard to the commodity risk, Eni’s policies andguidelines define rules to manage this risk with the objective ofoptimization of core activities and the pursuing of presettargets of stabilizing industrial and commercial margins. Themaximum tolerable level of risk exposure is defined in terms ofValue at Risk and stop loss in connection with exposure derivingfrom commercial activities as well as exposure deriving fromproprietary trading executed by the subsidiary Eni Trading &Shipping. Internal mandates to manage the commodity risk providefor a mechanism of allocation of the Group maximum tolerable risklevel to each business units. In this framework, Eni Trading& Shipping, in addition to managing risk exposureassociated with its own commercial activity and proprietarytrading, pools Group companies requests for negotiating commodityderivatives, ensuring execution services to Group companies,while the strategic risk exposure to commodity pricesfluctuations – i.e. the impact on the Group’s businessresults deriving from changes in commodity prices – ismonitored in terms of Value at Risk , albeit not hedged in asystematic way. Accordingly, Eni evaluates the opportunity tomitigate its commodity risk exposure by entering into hedgingtransactions in view of certain acquisition deals of oil and gasreserves as part of the Group’s strategy to achieve itsgrowth targets or ordinary asset portfolio management. The Groupcontrols commodity risk with a maximum Value at Risk and stoploss limit awarded to each business unit. Hedging needs frombusiness units are pooled by Eni Trading & Shipping whichalso manages its own risk exposure.

The strategic risk is the economic risk which is intrinsic toeach business unit. This exposure to strategic risk is notmanaged through specific systematic activities due to a strategicdecision made by the Company, except for extraordinary businessor market conditions. Therefore, internal risk policies andguideline do not foresee any mandate to manage, or any maximumtolerable level of risk exposure. To date, exposure to thestrategic risk is associated with plans for commercialdevelopment of proved and unproved oil and gas reserves,long-term gas supply contracts for the portion not balanced byin-place or highly probable sale contracts, refining margins andminimum compulsory stock. Any hedging activity of the strategicrisk is the sole responsibility of Eni’s top management, dueto the extraordinary conditions that may lead to such decision.This kind of transaction is not subject to specific risk limitsfor its nature, but is however subject to monitoring andassessment activities.

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The three different market risks, for which management andcontrol have been summarized above, are described below.

*Exchange rate risk*Exchange rate risk derives from the fact that Eni’soperations are conducted in currencies other than the euro(mainly in the U.S. dollar). Revenues and expenses denominated inforeign currencies may be significantly affected by exchangerates fluctuations due to conversion differences on singletransactions arising from the time lag existing between executionand definition of relevant contractual terms (economic risk) andconversion of foreign currency-denominated trade and financingpayables and receivables (transactional risk). Exchange ratefluctuations affect the Group’s reported results and netequity as financial statements of subsidiaries denominated incurrencies other than the euro are translated from theirfunctional currency into euro. Generally, an appreciation of theU.S. dollar versus the euro has a positive impact on Eni’sresults of operations, and viceversa. Eni’s foreign exchangerisk management policy is to minimize economic and transactionalexposures arising from foreign currency movements. Eni does notundertake any hedging activity for risks deriving from thetranslation of foreign currency denominated profits or assets andliabilities of subsidiaries which prepare financial statements ina currency other than the euro, except for single transactions tobe evaluated on a case-by-case basis. Effective management ofexchange rate risk is performed within Eni’s central financedepartments which match opposite positions within Groupcompanies, hedging the Group net exposure through the use ofcertain derivatives, such as currency swaps, forwards andoptions. Such derivatives are evaluated at fair value on thebasis of market prices provided by specialized sources. Changesin fair value of those derivatives are normally recognizedthrough the profit and loss account as they do not meet theformal criteria to be recognized as hedges in accordance with IAS39. The Value-at-Risk techniques are based on variance/covariancesimulation models and are used to monitor the risk exposurearising from possible future changes in market values over a24-hour period within a 99% confidence level and a 20-day holdingperiod.

*Interest rate risk*Changes in interest rates affect the market value offinancial assets and liabilities of the company and the level offinance charges. Eni’s interest rate risk management policyis to minimize risk with the aim to achieve financial structureobjectives defined and approved in the management’s financeplans. Borrowing requirements of the Group’s companies arepooled by the Group’s central finance department in order tomanage net positions and the funding of portfolio developmentsconsistently with management’s plans while maintaining alevel of risk exposure within prescribed limits. Eni enters intointerest rate derivative transactions, in particular interestrate swaps, to effectively manage the balance between fixed andfloating rate debt. Such derivatives are evaluated at fair valueon the basis of market prices provided from specialized sources.Changes in fair value of those derivatives are normallyrecognized through the profit and loss account as they do notmeet the formal criteria to be accounted for under the hedgeaccounting method in accordance with IAS 39. Value at riskderiving from interest rate exposure is measured daily on thebasis of a variance/covariance model, within a 99% confidencelevel and a 20-day holding period.

*Commodity risk*Eni’s results of operations are affected by changes inthe prices of commodities. A decrease in oil and gas pricesgenerally has a negative impact on Eni’s results ofoperations and viceversa. Eni manages exposure to commodity pricerisk arising in normal trading and commercial activities in viewof achieving stable margins. In order to accomplish this, Eniuses derivatives traded on the organized markets of ICE and NYMEX(futures) and derivatives traded over the counter (swaps,forward, contracts for differences and options) with theunderlying commodities being crude oil, natural gas, refinedproducts or electricity. Such derivatives are evaluated at fairvalue on the basis of market prices provided from specializedsources or, absent market prices, on the basis of estimatesprovided by brokers or suitable evaluation techniques. Changes infair value of those derivatives are normally recognized throughthe profit and loss account as they do not meet the formalcriteria to be recognized as hedges in accordance with IAS 39.Value at risk deriving from commodity exposure is measured dailyon the basis of a historical simulation technique, within a 95%confidence level and a one-day holding period.

The following table shows amounts in terms of Value at Risk ,recorded in 2010 (compared with 2009) relating to interest rateand exchange rate risks in the first section, and commodity riskin the second section. Value-at-Risk values are stated in U.S.dollars, the currency most widely used in oil products markets.The relevant increase reported by the Gas & Power Divisionderives from the circumstance that in the second half of 2010,Value at Risk has been calculated according to new assumptions onnon contracted exposures (based on benchmark indices related toprices in European hubs) consistently with the new pricing andrisk management model of the Gas & Power Division approved byEni’s Board of Directors.

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*(Exchange and Value at Risk -parametric method variance/covariance; holding period: 20 days;confidence level: 99%)*

|   |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

| (euro        million) |   | High |   | Low |   | Average |   | At year end |   | High |   | Low |   | Average |   | At year end |
|-----------------------|--------|------|--------|-----|--------|---------|--------|-------------|--------|------|--------|-----|--------|---------|--------|-------------|
|                  |   |      |   |     |   |         |   |             |   |      |   |     |   |         |   |             |

| Interest rate (1)    |   | 6.85 |   | 1.65 |   | 3.35 |   | 1.98 |   | 2.82 |   | 1.09 |   | 1.55 |   | 1.60 |
|----------------------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|
| Exchange        rate |   | 1.22 |   | 0.07 |   | 0.35 |   | 0.31 |   | 0.99 |   | 0.13 |   | 0.50 |   | 0.51 |
|                 |   |      |   |      |   |      |   |      |   |      |   |      |   |      |   |      |

|    |    |                                                                                                                                                   |
|--------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | Value at Risk        deriving from interest rate exposure includes the new        finance branch Eni Finance USA Inc operation, since        February 2010. |

*(Value at Risk - historicsimulation method; holding period: 1 day; confidence level: 95%)*

|   |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

| (U.S.$        million) |   | High |   | Low |   | Average |   | At year end |   | High |   | Low |   | Average |   | At year end |
|------------------------|--------|------|--------|-----|--------|---------|--------|-------------|--------|------|--------|-----|--------|---------|--------|-------------|
|                   |   |      |   |     |   |         |   |             |   |      |   |     |   |         |   |             |

| Area oil, products              |   | 37.51 |   | 4.74  |   | 17.65 |   | 6.64  |   | 46.08  |   | 4.40  |   | 23.53 |   | 10.49 |
|---------------------------------|--------|-------|--------|-------|--------|-------|--------|-------|--------|--------|--------|-------|--------|-------|--------|-------|
| Area Gas        & Power (2) |   | 51.62 |   | 28.01 |   | 40.97 |   | 38.26 |   | 101.62 |   | 40.06 |   | 61.76 |   | 43.30 |
|                            |   |       |   |       |   |       |   |       |   |        |   |       |   |       |   |       |

|    |    |                                                                                                                         |
|--------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
| (2)          |    | Amounts        relating to the Gas & Power business also include        Tigáz contribution, since the beginning of 2010. |

*Credit risk*Credit risk is the potential exposure of the Group to lossesin case counterparties fail to perform or pay amounts due. TheGroup manages differently credit risk depending on whether creditrisk arises from exposure to financial counterparties or tocustomers relating to outstanding receivables. Individualbusiness units and Eni’s corporate financial units and EniAdfin are responsible for managing credit risk arising in thenormal course of the business. The Group has established formalcredit systems and processes to ensure that before trading with anew counterpart can start, its creditworthiness is assessed. Alsocredit litigation and receivable collection activities areassessed. Eni’s corporate units define directions andmethods for quantifying and controlling customer’sreliability. With regard to risk arising from financialcounterparties, Eni has established guidelines prior to enteringinto cash management and derivative contracts to assess thecounterparty’s financial soundness and rating in view ofoptimizing the risk profile of financial activities whilepursuing operational targets. Maximum limits of risk exposure areset in terms of maximum amounts of credit exposures forcategories of counterparties as defined by the Company’sBoard of Directors taking into accounts the credit ratingsprovided by primary credit rating agencies on the marketplace.Credit risk arising from financial counterparties is managed bythe Group central finance departments, including Eni’ssubsidiary Eni Trading & Shipping which specifically engagesin commodity derivatives transactions and by Group companies andDivision, only in the case of physical transactions withfinancial counterparties consistently with the Group centralizedfinance model. Eligible financial counterparties are closelymonitored to check exposures against limits assigned to eachcounterparty on a daily basis. Exceptional market conditions haveforced the Group to adopt contingency plans and under certaincircumstances to suspend eligibility to be a Group financialcounterparty. Actions implemented also have been intended tolimit concentrations of credit risk by maximizing counterpartydiversification and turnover. Counterparties have also beenselected on more stringent criteria particularly in transactionson derivatives instruments and with maturity longer than athree-month period. As of December 31, 2010, Eni had nosignificant concentration of credit risk.

*Liquidity risk*Liquidity risk is the risk that suitable sources of fundingfor the Group may not be available, or the Group is unable tosell its assets on the marketplace as to be unable to meetshort-term finance requirements and to settle obligations. Such asituation would negatively impact Group results as it wouldresult in the Company incurring higher borrowing expenses to meetits obligations or under the worst of conditions the inability ofthe Company to continue as a going concern. As part of itsfinancial planning process, Eni manages the liquidity risk bytargeting such a capital structure as to allow the Company tomaintain a level of liquidity adequate to the Group’s needsoptimizing the opportunity cost of maintaining liquidity reservesalso achieving an efficient balance in terms of maturity andcomposition of finance debt. The Group capital structure is setaccording to the Company’s industrial targets and within thelimits established by the Company’s Board of Directors whoare responsible for prescribing the maximum ratio of debt tototal equity and minimum ratio of medium and long-term debt tototal debt as well as fixed rate medium and long-term debt tototal medium and long-term debt. In spite of ongoing tough creditmarket conditions resulting in higher spreads to borrowers, theCompany has succeeded in maintaining access to a wide range offunding at competitive rates through the capital markets andbanks. The actions implemented as part of Eni’s financialplanning have enabled the Group to maintain access to the creditmarket particularly via the issue of commercial paper which isalso targeted to increase the flexibility of funding facilities.In particular in 2010, Eni 

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issued bonds addressed to institutional investors on the euromarket (two emissions for euro 1 billion each) and toprofessional investors on the dollar market for $800 million. Theabove mentioned actions were aimed at ensuring availability ofsuitable sources of funding to fulfill short-term commitments anddue obligations while also preserving the necessary financialflexibility to support the Group’s development plans. Indoing so, the Group has pursued an efficient balance of financedebt in terms of maturity and composition leveraging on thestructure of its lines of credit, particularly the committedones. At present, the Group believes it has access to sufficientfunding and has also both committed and uncommitted borrowingfacilities to meet currently foreseeable borrowing requirements.

At December 31, 2010, Eni maintained short-term committed anduncommitted unused borrowing facilities of euro 10,358 million,of which euro 2,498 million were committed, and long-termcommitted unused borrowing facilities of euro 4,901 million.These facilities were under interest rates that reflected marketconditions. Fees charged for unused facilities were notsignificant. Eni has in place a program for the issuance of EuroMedium Term Notes up to euro 15 billion, of which about euro 10.4million were drawn as of December 31, 2010.

The Group has debt ratings of A+ and A-1 respectively for long(outlook stable) and short-term debt assigned by Standard &Poor’s and Aa3 and P-1 (outlook stable) assigned byMoody’s.

 

**Finance debt repayments including expected payments forinterest charges**The tables below summarize the Group main contractualobligations for finance debt repayments, including expectedpayments for interest charges.

| **Dec.        31, 2009** |    | **Maturity year** |
|--------------------------|--------------|-------------------|
| (euro        million)    |         |                   |

|         |    | 2010 |    | 2011 |    | 2012 |    | 2013 |    | 2014 |    | 2015 and thereafter |    | Total |
|--------------|--------------|------|--------------|------|--------------|------|--------------|------|--------------|------|--------------|---------------------|--------------|-------|
|    |         |      |    |      |    |      |    |      |    |      |    |                     |    |       |

| Non-current debt                     |   | 3,191     |   | 1,342     |   | 3,660     |   | 1,967     |   | 2,487     |   | 8,608     |   | **21,255** |
|--------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|------------|
| Current        financial liabilities |   | 3,545     |   |      |   |      |   |      |   |      |   |      |   | **3,545**  |
| Fair value of derivative instruments |   | 1,371     |   | 517       |   | 133       |   | 46        |   | 14        |   | 98        |   | **2,179**  |
|                                 |   | **8,107** |   | **1,859** |   | **3,793** |   | **2,013** |   | **2,501** |   | **8,706** |   | **26,979** |
| Interest on finance debt             |   | 654       |   | 570       |   | 545       |   | 510       |   | 426       |   | 1,159     |   | **3,864**  |
| Guarantees        to banks           |   | 377       |   |      |   |      |   |      |   |      |   |      |   | **377**    |
|                                 |   |           |   |           |   |           |   |           |   |           |   |           |   |            |

 

| **Dec.        31, 2010** |    | **Maturity year** |
|--------------------------|--------------|-------------------|
| (euro        million)    |         |                   |

|         |    | 2011 |    | 2012 |    | 2013 |    | 2014 |    | 2015 |    | 2016 and thereafter |    | Total |
|--------------|--------------|------|--------------|------|--------------|------|--------------|------|--------------|------|--------------|---------------------|--------------|-------|
|    |         |      |    |      |    |      |    |      |    |      |    |                     |    |       |

| Non-current debt                     |   | 963       |   | 3,583     |   | 2,485     |   | 2,009     |   | 2,815     |   | 9,413     |   | **21,268** |
|--------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|------------|
| Current        financial liabilities |   | 6,515     |   |      |   |      |   |      |   |      |   |      |   | **6,515**  |
| Fair value of derivative instruments |   | 1,131     |   | 276       |   | 74        |   | 18        |   | 48        |   | 85        |   | **1,632**  |
|                                 |   | **8,609** |   | **3,859** |   | **2,559** |   | **2,027** |   | **2,863** |   | **9,498** |   | **29,415** |
| Interest on finance debt             |   | 720       |   | 712       |   | 654       |   | 563       |   | 460       |   | 1,726     |   | **4,835**  |
| Guarantees        to banks           |   | 339       |   |      |   |      |   |      |   |      |   |      |   | **339**    |
|                                 |   |           |   |           |   |           |   |           |   |           |   |           |   |            |

 

**Trade and other payables**The tables below summarize the Group trade and other payablesby maturity.

| **Dec.        31, 2009** |    | **Maturity year** |
|--------------------------|--------------|-------------------|
| (euro        million)    |    |                   |

|         |    | 2010 |    | 2011-2014 |    | 2015 and thereafter |    | Total |
|--------------|--------------|------|--------------|-----------|--------------|---------------------|--------------|-------|
|    |    |      |    |           |    |                     |    |       |

| Trade payables                  |   | 10,078     |   |   |   |   |   | **10,078** |
|---------------------------------|--------|------------|--------|--------|--------|--------|--------|------------|
| Advances,        other payables |   | 9,096      |   | 31     |   | 23     |   | **9,150**  |
|                            |   | **19,174** |   | **31** |   | **23** |   | **19,228** |
|                            |   |            |   |        |   |        |   |            |

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| **Dec.        31, 2010** |    | **Maturity year** |
|--------------------------|--------------|-------------------|
| (euro        million)    |    |                   |

|         |    | 2011 |    | 2012-2015 |    | 2016 and thereafter |    | Total |
|--------------|--------------|------|--------------|-----------|--------------|---------------------|--------------|-------|
|    |    |      |    |           |    |                     |    |       |

| Trade payables                  |   | 13,111     |   |   |   |   |   | **13,111** |
|---------------------------------|--------|------------|--------|--------|--------|--------|--------|------------|
| Advances,        other payables |   | 9,464      |   | 29     |   | 38     |   | **9,531**  |
|                            |   | **22,575** |   | **29** |   | **38** |   | **22,642** |
|                            |   |            |   |        |   |        |   |            |

 

**Expected payments by period under contractual obligationsand commercial commitments**In addition to finance debt and trade payables presented inthe financial statements, the Group has in place a number ofcontractual obligations arising in the normal course of thebusiness. To meet these commitments, the Group will have to makepayments to third parties. The Company’s main obligationsare take-or-pay clauses in contracts of the Gas & Powersegment, whereby the Company obligations consist of off-takingminimum quantities of product or service or paying thecorresponding cash amount that entitles the Company to off-takethe product in future years. Future obligations in connectionwith these contracts were calculated by applying the forecastedprices of energy or services included in the four-year businessplan approved by the Company’s Board of Directors.

The table below summarizes the Group principal contractualobligations as of the balance sheet date, shown on anundiscounted basis.

| (euro        million) |   | **Maturity year** |
|-----------------------|--------|-------------------|
|                  |   |                   |

|   |   | 2011 |    | 2012 |    | 2013 |    | 2014 |    | 2015 |    | 2016 and thereafter |    | Total |
|--------|--------|------|--------------|------|--------------|------|--------------|------|--------------|------|--------------|---------------------|--------------|-------|
|   |   |      |         |      |         |      |         |      |         |      |         |                     |         |       |

| **Operating lease obligations**(a)                                                   |   | **1,023**  |   | **863**    |   | **587**    |   | **517**    |   | **311**    |   | **752**     |   | **4,053**   |
|--------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|-------------|--------|-------------|
| **Decommissioning        liabilities**(b)                                            |   | **44**     |   | **60**     |   | **116**    |   | **362**    |   | **146**    |   | **11,998**  |   | **12,726**  |
| **Environmental liabilities**(c)                                                     |   | **338**    |   | **307**    |   | **261**    |   | **263**    |   | **184**    |   | **661**     |   | **2,014**   |
| **Purchase        obligations** (d)                                                  |   | **16,891** |   | **15,425** |   | **15,896** |   | **15,970** |   | **15,734** |   | **179,998** |   | **259,914** |
| Gas                                                                                  |   |       |   |       |   |       |   |       |   |       |   |        |   |        |
| - Natural        gas to be purchased in connection with take-or-pay        contracts |   | 15,708     |   | 14,403     |   | 14,961     |   | 15,004     |   | 14,788     |   | 172,025     |   | **246,889** |
| - Natural gas to be transported in connection        with ship-or-pay contracts      |   | 794        |   | 708        |   | 646        |   | 668        |   | 655        |   | 4,892       |   | **8,363**   |
| Other        take-or-pay and ship-or-pay obligations                                 |   | 169        |   | 160        |   | 165        |   | 175        |   | 168        |   | 1,142       |   | **1,979**   |
| Other purchase obligations (e)                                                       |   | 220        |   | 154        |   | 124        |   | 123        |   | 123        |   | 1,939       |   | **2,683**   |
| **Other        obligations**                                                         |   | **4**      |   | **4**      |   | **4**      |   | **4**      |   | **4**      |   | **129**     |   | **149**     |
| - Memorandum of intent relating Val d’Agri                                      |   | 4          |   | 4          |   | 4          |   | 4          |   | 4          |   | 129         |   | **149**     |
|                                                                                 |   | **18,300** |   | **16,659** |   | **16,864** |   | **17,116** |   | **16,379** |   | **193,538** |   | **278,856** |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | Operating        leases primarily regarded assets for drilling activities,        time charter and long-term rentals of vessels, lands,        service stations and office buildings. Such leases did        not include renewal options. There are no significant        restrictions provided by these operating leases which        limit the ability of the Company to pay dividend, use        assets or to take on new borrowings. |
| (b)          |    | Represents        the estimated future costs for the decommissioning of oil        and natural gas production facilities at the end of the        producing lives of fields, well-plugging, abandonment and        site restoration.                                                                                                                                                                                                     |
| (c)          |    | Environmental        liabilities do not include the environmental charge        amounting to euro 1,109 million for the proposal to the        Italian Ministry for the Environment to enter into a        global transaction related to nine sites of national        interest because the dates of payment are not reasonably        estimable.                                                                                        |
| (d)          |    | Represents        any agreement to purchase goods or services that is        enforceable and legally binding and that specifies all        significant terms.                                                                                                                                                                                                                                                                            |
| (e)          |    | Mainly refers        to arrangements to purchase capacity entitlements at        certain re-gasification facilities in the U.S. (euro        2,479 million).                                                                                                                                                                                                                                                                             |

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**Capital expenditure commitments**In the next four years Eni plans to make capital expendituresof euro 53 billion. The table below summarizes Eni’s capitalexpenditure commitments for property, plant and equipment andcapital projects at December 31, 2010. Capital expenditures areconsidered to be committed when the project has received theappropriate level of internal management approval. Such costs areincluded in the amounts shown.

|   |   | **Maturity year** |
|--------|--------|-------------------|
|   |   |                   |

| (euro        million) |   | 2011 |    | 2012 |    | 2013 |    | 2014 |   | 2015 and thereafter |   | Total |
|-----------------------|--------|------|--------------|------|--------------|------|--------------|------|--------|---------------------|--------|-------|
|                  |   |      |         |      |         |      |         |      |   |                     |   |       |

| Committed on major projects                                          |   | 5,443      |   | 5,606      |   | 2,867     |   | 3,304     |   | 8,396      |   | **25,616** |
|----------------------------------------------------------------------|--------|------------|--------|------------|--------|-----------|--------|-----------|--------|------------|--------|------------|
| Other        committed projects                                      |   | 7,210      |   | 4,700      |   | 4,253     |   | 2,802     |   | 6,017      |   | **24,982** |
|                                                                 |   | **12,653** |   | **10,306** |   | **7,120** |   | **6,106** |   | **14,413** |   | **50,598** |
| *- of        which: environmental expenditures on MATTM transaction* |   | *207*      |   | *184*      |   | *125*     |   | *36*      |   | *50*       |   | ***602***  |
|                                                                 |   |            |   |            |   |           |   |           |   |            |   |            |

 

**Other information about financial instruments**The carrying amount of financial instruments and relevanteconomic effect as of and for the years ended December 31, 2009and 2010 consisted of the following:

|   |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

|   |   | Finance income (expense)         recognized in |   | Finance income (expense)         recognized in |
|--------|--------|------------------------------------------------|--------|------------------------------------------------|
|   |   |                                                |   |                                                |

| (euro        million) |   | Carrying amount |   | Profit and loss account |   | Equity |   | Carrying amount |   | Profit and loss account |   | Equity |
|-----------------------|--------|-----------------|--------|-------------------------|--------|--------|--------|-----------------|--------|-------------------------|--------|--------|
|                  |   |                 |   |                         |   |        |   |                 |   |                         |   |        |

| **Held-for-trading financial instruments**                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Non-hedging        derivatives (a)                                                        |   | (26    | )      |   | 45     |   |   |   |   |   | 46     |   | (13    | )      |   |   |   |
| **Held-to-maturity financial instruments**                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities        (b)                                                                     |   | 36     |   |   | 1      |   |   |   |   |   | 35     |   | 1      |   |   |   |   |
| **Available-for-sale financial instruments**                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities        (b)                                                                     |   | 348    |   |   | 13     |   |   | 1      |   |   | 382    |   | 9      |   |   | (9     | )      |
| **Receivables and payables and other        assets/liabilities valued at amortized cost** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade and        receivables and other (c)                                                |   | 20,748 |   |   | (361   | )      |   |   |   |   | 23,998 |   | (110   | )      |   |   |   |
| Financing receivables (b)                                                                 |   | 1,637  |   |   | 72     |   |   |   |   |   | 2,150  |   | 84     |   |   |   |   |
| Trade        payables and other (d)                                                       |   | 19,228 |   |   | (48    | )      |   |   |   |   | 22,642 |   | 26     |   |   |   |   |
| Financing payables (b)                                                                    |   | 24,800 |   |   | (508   | )      |   |   |   |   | 27,783 |   | (535   | )      |   |   |   |
| **Assets        at fair value through profit or loss (fair value option)**                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments (b)                                                                           |   |   |   |   | 163    |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net        liabilities for hedging derivatives**(e)                                     |   | 751    |   |   | 161    |   |   | (636   | )      |   | 320    |   | (402   | )      |   | 47     |   |
|                                                                                      |   |        |        |   |        |        |   |        |        |   |        |   |        |        |   |        |        |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | In the profit        and loss account, incomes were recognized within        "Other operating income (loss)" for euro 118        million (expenses for euro 49 million at December 31,        2009) and expenses within "Finance income        (expense)" for euro 131 million (expenses for euro 4        million at December 31, 2009).                                                                                                                                                                                                                                                                                                                                                                                                           |
| (b)    | i      | Income or        expense were recognized in the profit and loss account        within "Finance income (expense)".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (c)    |   | In the profit        and loss account, essentially impairments were recognized        within "Purchase, services and other" for euro        128 million (expenses for euro 427 million at December        31, 2009) (net impairments) while positive exchange        differences arising from accounts denominated in foreign        currency and translated into euro at year-end were        recognized within "Finance income (expense)"        for euro 18 million (incomes for euro 66 million at        December 31, 2009) (translation differences arising from        euro-reporting subsidiaries denominated in foreign        currency which are translated into euro at year-end        exchange rates and valuation at amortized cost). |
| (d)    |   | The effects        were recognized in the profit and loss account within        "Finance income (expense)" (translation        differences arising from euro-reporting subsidiaries        denominated in foreign currency which are translated into        euro at year-end exchange rates).                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (e)    |   | Income or        expense were recognized in the profit and loss account        within "Net sales from operations" and        "Purchase, services and other" for euro 414        million of expenses (incomes for euro 155 million at        December 31, 2009) within "Finance income        (expense)" for euro 13 million of incomes (incomes        for euro 6 million at December 31, 2009) (time value        component).                                                                                                                                                                                                                                                                                                            |

 

**Fair value of financial instruments**Following the classification of financial assets andliabilities, measured at fair value in the balance sheet, isprovided according to the fair value hierarchy defined on thebasis of the relevance of the inputs used in the measurementprocess. In particular, on the basis of the features of theinputs used in making the measurements, the fair value hierarchyshall have the following levels:

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| a) |   | Level 1: quoted prices        (unadjusted) in active markets for identical financial        assets or liabilities;                                                                                                                                                  |
|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | Level 2: measurements based        on the basis of inputs, other than quoted prices above,        which, for assets and liabilities that have to be        measured, can be observable directly (e.g. prices) or        indirectly (e.g. deriving from prices); and |
| c) |   | Level 3: inputs not based on        observable market data.                                                                                                                                                                                                         |

Financial instruments measured at fair value in the balancesheet as of at December 31, 2010 were classified as follows: (i)level 1, "Other financial assets held for trading oravailable for sale" and "Non-hedging derivatives -Future"; and (ii) level 2, derivative instruments differentfrom "Future" included in "Other currentassets", "Other non-current assets", "Othercurrent liabilities" and "Other non-currentliabilities". During 2010 no transfers were done between thedifferent hierarchy levels of fair value.

The table below summarizes the amount of financial instrumentsvalued at fair value:

| (euro million) |   |   |   | **Note** |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|----------------|--------|--------|--------|----------|--------|-------------------|--------|-------------------|
|           |   |   |   |          |   |                   |   |                   |

| **Current assets**                               |   |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Other        financial assets available for sale |   | (8     | )      |   | 348    |   | 382    |
| Non-hedging derivatives - Future                 |   | (13    | )      |   | 10     |   | 33     |
| Other        non-hedging derivatives             |   | (13    | )      |   | 688    |   | 593    |
| Cash flow hedge derivatives                      |   | (13    | )      |   | 236    |   | 210    |
| **Non-current        assets**                    |   |   |   |   |   |   |   |
| Non-hedging derivatives - Future                 |   | (20    | )      |   | 2      |   |   |
| Other        non-hedging derivatives             |   | (20    | )      |   | 337    |   | 420    |
| Cash flow hedge derivatives                      |   | (20    | )      |   | 129    |   | 102    |
| **Current        liabilities**                   |   |   |   |   |   |   |   |
| Non-hedging derivatives - Future                 |   | (25    | )      |   | 2      |   | 10     |
| Other        non-hedging derivatives             |   | (25    | )      |   | 689    |   | 646    |
| Cash flow hedge derivatives                      |   | (25    | )      |   | 680    |   | 475    |
| **Non-current        liabilities**               |   |   |   |   |   |   |   |
| Non-hedging derivatives - Future                 |   | (30    | )      |   | 1      |   |   |
| Other        non-hedging derivatives             |   | (30    | )      |   | 371    |   | 344    |
| Cash flow hedge derivatives                      |   | (30    | )      |   | 436    |   | 157    |
|                                             |   |        |        |   |        |   |        |

 

**Legal Proceedings******Eni is a party to a number of civil actions andadministrative arbitral and other judicial proceedings arising inthe ordinary course of business. Based on information availableto date, and taking into account the existing risk provisions,Eni believes that the foregoing will not have an adverse effecton Eni’s Consolidated Financial Statements. The following isa description of the most significant proceedings currentlypending. Unless otherwise indicated below, no provisions havebeen made for these legal proceedings as Eni believes thatnegative outcomes are not probable or because the amount of theprovision cannot be estimated reliably.

 

**1. Environment**

**1.1 Criminal proceedings**

**ENI SPA(i) Subsidence.** The Court of Rovigo conducted investigationsconcerning a subsidence phenomenon allegedly caused byhydrocarbon exploration and extraction activities in the Ravennaand North Adriatic area both on land and in the sea. Eniappointed an independent and interdisciplinary scientificcommission, composed of prominent and highly qualifiedinternational experts of subsidence caused by hydrocarbonexploration and extraction activities, with the aim of verifyingthe magnitude and effects and any actions appropriate to reduceor to neutralize any subsidence phenomenon in the area. Thiscommission produced a study which excludes the possibility of anyrisk to human health or damage to the environment. The study alsostates that worldwide there are no instances of accidents of harmto public safety caused by subsidence induced by hydrocarbonproduction. It also shows that Eni employs the most advancedtechniques for monitoring, measuring and controlling the soil.This proceeding is in the first level hearing stage. The VenetoRegion, other local bodies and two private entities have beenacting as plaintiffs. Eni was admitted as a defendant. At the endof the renewed preliminary investigations the Court of Ravennarequested the 

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closing of the proceeding. A number of plaintiffs have beenappealed against this decision. The hearing for the review of theappeal against the dismissal request was held on November 11,2010. Basing on this hearing, the Judge for the PreliminaryHearings retained the decision. On February 14, 2011 the Judgefor the Preliminary Hearings decided to accept the request ofdismissal of the proceeding for all the defendants issued by thePublic Prosecutor. The Judge also decided in favor of releasingthe hydrocarbon fields and their restitution to the entitledentities.

**(ii) Alleged damage – Prosecuting body: PublicProsecutor of Gela.**In 2002, the Public Prosecutor of Gelacommenced a criminal investigation to ascertain alleged damagecaused by emissions of the Gela plant, owned by Polimeri EuropaSpA, Syndial SpA (formerly EniChem SpA) and Raffineria di GelaSpA. The Judge for the Preliminary Hearings dismissed theaccusation of adulteration of food products, while the proceedingfor the other allegations regarding pollution and environmentaldamage remains underway. The trial ended in acquittal with regardto the general manager and officer pro tempore of the refinery.The sentence of the Gela Tribunal stated that the charges werelacking factual basis. A number of farmers of Gela area, who havebeen acting as plaintiffs in the first level hearing stage, filedan appeal against the acquittal sentence in the civil action. Inthe first hearing on December 17, 2009, the Public Prosecutorasked for the dismissal of the appeal confirming the motivationsof the acquittal sentence in the first degree proceeding. TheCourt of Rome postponed the proceeding to the hearing of February25, 2010. In February 25, 2010 the Court confirmed the acquittalsentence with a ruling filed on April 29, 2010.

**(iii) Alleged negligent fire in the refinery of Gela.**InJune 2002, in connection with a fire at the refinery of Gela, acriminal investigation began concerning alleged negligent fire,environmental crimes and crimes against natural beauty. Firstdegree proceedings ended with an acquittal sentence. In November2007, the Public Prosecutors of Gela and of Caltanissetta filedan appeal against this decision. In the first hearing the Courtre-opened the examining phase, arranging a collegial appraiser.On December 10, 2009 the appraisers appointed by the Court filedtheir report. On January 21, 2010, the Court of Caltanissettaannounced an acquittal sentence for all the defendants.

**(iv) Investigation of the quality of groundwater in thearea of the refinery of Gela.** In 2002, the Public Prosecutorof Gela commenced a criminal investigation concerning therefinery of Gela to ascertain the quality of groundwater in thearea of the refinery. Eni is charged with having breachedenvironmental rules concerning the pollution of water and soiland of illegal disposal of liquid and solid waste materials. Thepreliminary hearing phase was closed for one employee who wouldstand trial, while the preliminary hearing phase is ongoing forother defendants. During the hearings the Judge admitted asplaintiffs three environmental associations. The proceeding wassubsequently assigned to a different Judge and was disposed atthe renewal of the debate phase. During the debate phases,indictment and defense witnesses were examined. Subsequently, thefirst technical appraiser of the defense was examined. On May 14,2010, following the examination, the Court of Gela issued asentence whereby on one side criminal accusation against theabove mentioned employee was dismissed as a result of the statuteof limitations, on the other side the defendant was condemned tothe payment of legal costs and compensation to the plaintiffs.The amount of the compensation will be determined by a resolutionof a Civil Court. The sentence was filed on June 3, 2010. TheCompany has filed an appeal with the Second Degree Court ofCaltanissetta. In the first hearing the proceeding was postponeddue to a lack of notification.

**(v) Alleged negligent fire (Priolo).** The PublicProsecutor of Siracusa commenced an investigation regardingcertain Eni managers who were previously in charge of conductingoperations at the Priolo refinery (Eni divested this asset in2002) to ascertain whether they acted with negligence inconnection with a fire that occurred at the Priolo plants onApril 30 and May 1-2, 2006. After preliminary investigations thePublic Prosecutor requested the opening of a proceeding againstthe mentioned managers for negligent behavior. The first hearing,in which the parties could present themselves as plaintiffs, wasscheduled for February 26, 2010. On February 5, 2010, the Courtof Siracusa, following the exception of inadmissibility issued bythe defendants, admitted as sole plaintiff the Ministry for theEnvironment, excluding all the other counterparts, including theCouncil of Ministers. The proceeding continues with theexamination of three witnesses of the Public Prosecutor. In thehearing on February 26, 2010, the Judge accepted all theevidences filed by the counterparts. In the hearing of April 14,2010 the Public Prosecutor commenced the review of the texts thatcontinued in a number of subsequent hearings.

**(vi) Groundwater at the Priolo site – Prosecutingbody: Public Prosecutor of Siracusa.** The Public Prosecutor ofSiracusa (Sicily) has started an investigation in order toascertain the level of contamination of the groundwater at thePriolo site. The Company has been notified that a number of itsexecutive officers are being investigated who were in charge atthe time of the events subject to probe, including chiefexecutive officers and plant general managers of theCompany’s subsidiaries AgipPetroli SpA (now merged into theparent company Eni SpA in the Refining & Marketing division),Syndial and Polimeri Europa. Probes on technical issues requiredby the Prosecutor were finalized on October 15, 2009. On February25, 2010, the technical survey was filed. According to thesurvey, the ground and the groundwater at the Priolo site shouldbe considered polluted according to Law Decree No. 152/2006. Thiscontamination was caused by a spill-over made in the period priorto 2001 and not subsequent to

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2005; the equipment still operating on the site representsanother source of risk, in particular those owned by ISAB Srl(ERG). According to the findings of this report the defense ofSyndial, Polimeri Europa and Eni SpA (Refining & Marketingdivision) will file a defensive memorandum to request thedismissal of the proceeding. The Public Prosecutor requested thedismissal of the proceeding. The decision of the Judge on thedismissal on the proceeding is still pending.

**(vii) Fatal accident Truck Center Molfetta –Prosecuting body: Public Prosecutor of Trani.** On March 3,2008 in the Municipality of Molfetta a fatal accident occurredthat caused the death of four workers assigned to the cleaning ofa tank car owned by the company FS Logistica, part of the ItalianRailways Group. The tank was used for the transportation ofliquid sulfur produced by Eni in the Refinery of Taranto anddestined to the client company Nuova Solmine. Consequently acriminal action commenced against certain employees of FSLogistica and of its broker "La Cinque Biotrans" and,under the provisions of Legislative Decree No. 231/2001, againstthe two above mentioned companies and the company responsible forthe clean up of the tank car - Truck Center. On October 26, 2009the First Degree Court concluded that both the above mentionedpersons and the three companies were guilty. Additionally, thedocumentation related to the trial was forwarded to the PublicProsecutor of Trani in order to ascertain the eventualresponsibilities of Eni and Nuova Solmine employees in relationto the fatal accident and also to the Public Prosecutors ofTaranto and Grosseto (competent for Nuova Solmine) in order toascertain eventual irregularities in the procedures of handlingand transporting liquid sulfur. Following the sentence, thePublic Prosecutor of Trani commenced an investigation against anumber of employees of Nuova Solmine and an employee ofEni’s Refining & Marketing division, responsible formarketing liquefied sulfur. On April 14, 2010, the Judge for thePreliminary Hearings notified the Eni’s employee a requestof extension of the preliminary investigations. On May 11, 2010,Eni SpA, eight employees of the company and a former employeewere notified of the closing of the investigation intomanslaughter, grievous bodily harm and illegal disposal of wastematerials. A number of defendants filed defensive memoranda. ThePublic Prosecutor has removed three defendants and transmittedevidence to the Judge for the Preliminary investigationsrequesting to dismiss the proceeding. The Judge for thePreliminary Investigation accepted the above mentioned request.The Judge postponed the preliminary hearing for the positions notdismissed to February 23, 2011. In this hearing, the Judgescheduled the hearing for the eventual admittance as plaintiffsof the Puglia Region, the Municipality of Molfetta and a relativeof one of the victims for April 19, 2011. On that occasion, thecounterparts shall state the kind of procedure that they intendto adopt.

**(viii) Seizure of areas located in the Municipalities ofCassano allo Jonio and Cerchiara di Calabria – Prosecutingbody: Public Prosecutor of Castrovillari.** On June 11, 2010the Company received a notification of a judicial measure for thepreventive seizure of areas located in the Municipalities ofCassano allo Jonio and Cerchiara di Calabria, following a priorseizure of other areas in the same municipalities notifiedthrough a judicial measure in February 2010. The above mentioneddecisions were the result of an investigation commenced after thedamage of the HDPE covering the zinc ferrites generated in theindustrial site of Pertusola Sud and, based on the Court’sconclusions, illegally stored in the Municipalities of Cassanoallo Jonio and Cerchiara di Calabria. The impounded areas arethose where the above mentioned waste was stored. The proceedingis in the phase of the preliminary hearings. The circumstancesobject of investigation are the same considered in the criminalaction concluded in 2008 with an acquittal sentence for one ofthe defendants while the Judge dismissed the accusation for allthe other defendants as a result of the statute of limitations.In this case the accusation is of omitted clean up. Syndial SpAgave the availability for the removal of the waste materials, therelated operations are still pending.

 

**SYNDIAL SPA(ix) Porto Torres – Prosecuting body: Public Prosecutor ofSassari.**In March 2009, the Public Prosecutor of Sassari(Sardinia) resolved to commence a criminal trial against a numberof executive officers and managing directors of companiesengaging in petrochemicals operations at the site of PortoTorres, including the manager responsible for plant operations ofthe Company’s fully-owned subsidiary Syndial. The chargeinvolves environmental damage and poisoning of water and crops.In the preliminary hearing on July 17, 2009, the Province ofSassari, the Association Anpana (animal preservation) and thecompany Fratelli Polese Snc situated in the industrial site havebeen acting as plaintiffs. None of these parties claimed theidentification of the civil responsible and the damagequantification that will be asked in a second step. The legaldefense of Syndial requested further time for the recognition ofthe proceeding plaintiffs and the verification of their right toinstitute proceedings. The defense of Syndial filed a number ofexceptions on the admissibility in acting as plaintiffs of thecounterpart; the Judge addressed the question in a hearing inFebruary 2010. In this hearing the Judge, based on the exceptionsissued by Syndial on the lack of connection between the action asplaintiff and the charge, excluded all the counterparts that havebeen acting as plaintiff with regard to the serious pathologiesrelated to the existence of poisoning agents in the marine faunaof the industrial port of Porto Torres; the Judge admitted asplaintiffs the Municipality of Sassari, the EnvironmentalAssociation Anpana and the company Fratelli Polese Snc. The Judgealso requested that Syndial SpA, Polimeri Europa SpA, IneosVinyls and Sasol Italy SpA stand trial. The proceeding continuesfor the constitution as defendants of the said part. In thehearing of October 18, 2010, then postponed to 

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November 6, 2010, the legal defense filed the exception oflack of territorial competence of the Judges of the Court ofSassari as part potentially injured by the alleged crime. In thehearing of January 31, 2011, the Judge for the PreliminaryHearings rejected the above mentioned exceptions. Syndial defensesubmitted further preliminary issues related to the invalidity ofthe notice of conclusion of preliminary investigation. In asubsequent hearing, the Judge rejected all the exceptions on theinvalidity of the notice of conclusion of preliminaryinvestigation. In the following hearing held on February 15,2011, Syndial issued a further exception on the inadmissibilityof the use of investigation acts filed by the Public Ministerafter the deadline.

 

**1.2 Civil and administrative proceeding**

**SYNDIAL SPA (FORMER ENICHEM SPA)(i) Alleged pollution caused by the activity of the Mantovaplant.**In 1992, the Ministry for the Environment summonedEniChem SpA (now Syndial SpA) and Edison SpA before the Court ofBrescia. The Ministry requested, primarily, environmentalremediation for the alleged pollution caused by the activity ofthe Mantova plant from 1976 until 1990, and provisionally, incase there was no possibility to remediate, the payment ofenvironmental damages. Edison agreed on a settlement with theMinistry whereby Edison quantified compensation for environmentaldamage freeing from any obligation Syndial, which purchased theplant in 1989. Negotiations between the parts for thequantification of the environmental damage (relating only to1990) are underway; the judgment has been postponed a number oftimes until the next hearing that has been scheduled for October13, 2011. The Board of State Lawyers is confident on the positiveclosing of the transaction before this date, depending on thetime necessary to the Ministry for completing its evaluation.

**(ii) Summon before the Court of Venice for environmentaldamages allegedly caused to the lagoon of Venice by the PortoMarghera plants.**On December 2002, EniChem SpA (now SyndialSpA), jointly with Ambiente SpA (now merged into Syndial SpA) andEuropean Vinyls Corporation Italia SpA (EVC Italia, then IneosVinyls SpA, actually Vinyls Italia SpA) was summoned before theCourt of Venice by the Province of Venice. The province requestedcompensation for environmental damages that initially were notquantified, allegedly caused to the lagoon of Venice by the PortoMarghera plants, which were already the subject of two previouscriminal proceedings against employees and managers of thedefendants. EVC Italia and the actual company, Vinyls Italia,presented an action to be indemnified by Eni’s Groupcompanies in case the alleged pollution is proved. The Provinceof Venice, in the preliminary stage of the proceeding, filedclaims amounting to euro 287 million. Syndial submitted itswritten reply evidencing that the above mentioned damagequantification has been made lacking of probations for the damageand based on evidence that allowed the Court of First and SecondInstance to disclaim EniChem of any responsibility throughdefinitive sentence. In the hearing on October 16, 2009,scheduled to review the technical appraisal, the Court declaredthe interruption of the proceeding because Vinyls Italia hadundergone a reorganization procedure. The proceeding has beensuspended until April 22, 2010 when the Province of Venicepursuant to Article 303 of the Italian Penal Code restarted theproceeding. The subsequent hearing for the resume of theproceeding took place on September 24, 2010. In that hearing theJudge decided to reschedule the hearing that will review theposition of Vinyls Italia and the consultants appraisals filed bythe parties. As the Judge resolved not to hear the consultantsagain, the hearing has been postponed to September 2011 to reviewthe findings.

**(iii) Claim of environmental damages, allegedly caused byindustrial activities in the area of Crotone – Prosecutingbodies: the Council of Ministers, the Ministry for theEnvironment, the Delegated Commissioner for EnvironmentalEmergency in the Calabria Region and the Calabria Region.**TheCouncil of Ministers, the Ministry for the Environment, theDelegated Commissioner for Environmental Emergency in theCalabria Region and the Calabria Region requested Syndial toappear before the Court of Milan to face charges of causingenvironmental damage caused by the operations of Pertusola SudSpA (merged in EniChem, now Syndial) in the Crotone site. Thisfirst degree proceeding was generated in January 2008 by theunification of two different actions, the first brought byCalabria Region in October 2004, the second one by the Council ofMinisters, the Ministry for the Environment and the DelegatedCommissioner for Environmental Emergency in the Calabria Regioncommenced in February 2006. The Calabria Region is claimingcompensation amounting to euro 129 million for the siteenvironmental remediation and clean up on the basis of the costestimation provided in the remediation plan submitted by theDelegated Commissioner, plus additional compensation amounting toa preliminary estimate of euro 800 million relating toenvironmental damage, estimated increases in the regional healthexpenditures and damage to the public image to be fairlydetermined during the civil proceeding. The Council of Ministers,the Ministry for the Environment and the Delegated Commissioneris claiming compensation amounting to euro 129 million for thesite environmental remediation and clean up (this request isanalogous to that of the Calabria Region) and eventualcompensation for other environmental damage to be fairlydetermined during the civil proceeding. In February 2007 theMinistry for the Environment filed with the Court an independentappraiser’s report issued by APAT that estimated arefundable environmental damage amounting to euro 1,920 million,including the remediation and clean up expenditures, increased byeuro 1,620 million from the original amount of euro 129 

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million, and an estimation of environmental damage and otherdamage items amounting approximately to euro 300 million. Theamounts estimated by the independent appraiser, added to theclaim of the Calabria Region, generate a total of euro 2,720million of potential compensation. In May and September 2007Syndial presented its own technical advice that, based on whatthe Company believes to be well-founded circumstances, vigorouslyobject the independent appraiser’s findings filed by theMinistry for the Environment on site contamination, theresponsibility of Syndial in the contamination of the site, thecriteria of estimate remediation costs, which according to theCompany are erroneous, arbitrary and technically inadequate. OnOctober 7, 2009 an independent appraiser report was filed thatreviewed the environmental status of the site and estimated theremediation costs while the estimate of both the health damagecaused by the pollution and the environmental damage would beissued in a further independent appraiser report. The findings ofthe independent appraisers are substantially in line with theissues expressed by Syndial on the measures for the environmentalremediation and clean up, based on a risk analysis aimed todefine effective and specific actions. The clean up project,approved to a great extent by the Ministry for the Environmentand the Calabria Region, has been considered substantiallyadequate. The independent appraisers affirmed the necessity ofclean up measures that were not planned by Syndial on one of theexternal areas (the so-called archaeological area) and consideredbeing unnecessary the dredging of sea sediments. The estimatedclean up costs are in line with the estimate made by Syndial. Theindependent appraiser report is less favorable to Syndial becauseit identifies as source of the contamination the production slagmanagement, even recent. The independent appraiser reportevaluated that the production technology was a BAT (BestAvailable Technology), instead the slag treatment could beperformed in a more respectful way for the environment and theproducts (the so-called Cubilot) lacked the physic-chemicalcharacteristic of stability that would avoided the emission ofpolluting agents in the soil. As regards the quantification ofthe environmental damage different by the remediation, theindependent report APAT provided by the Ministry for theEnvironment quantified the damage for the lack of fruition of thesite basing on the remediation costs that were significantlyreduced by the independent appraiser report. In case the Judgeresolves on the responsibility of Syndial in the contamination ofthe site based on the conclusions of the independent appraiserreport, the Company could be liable, for the environmental damagedifferent from the goods fruition (damage to the community,increases in the regional health expenditures), at least in partand as far as the damage is actually probed. On November 14,2009, Syndial filed its objections to the independent appraiserreport, sharing the conceptual model adopted by the independentappraiser report but demonstrating that the site contaminationshould be charged mainly to past management of the pollution slagon part of other operators that operated the site until the’70s. On November 11, 2009 the Calabria Region filed itsobjection to the independent appraiser report affirming that theenvironmental damage to the surrounding areas of the site has notbeen assessed by the independent appraisers. The hearing for thereview of the independent appraiser report and of the partsobjections, assigned to another Judge, took place on April 13,2010. During the hearing the Calabria Region required the reviseof the independent appraiser report. The Judge rejected therequest. As regards the ascertainment of the existence of aresidual environmental damage not remedied by the clean upactivities, the Board State of lawyers on behalf of the Ministryfor the Environment requested an evaluation of the impact of thenew regulation on the above mentioned damage. Syndial filed adocument explaining the modification of the environmental damageregulation. The Judge scheduled the deadline for the filing ofthe counterparts’ objections to such document for September16, 2010, and September 30, 2010 for the submission of Syndialreply. The findings related to the modification of theEnvironmental Damage regulation introduced by the Article 5-bisof the Law Decree No. 135/2009 submitted by all the parties willbe discussed in the next hearing scheduled for November 17, 2010.On September 15, 2010, the Calabria Region submitted a memorandumobjecting to the documents filed by Syndial in the hearing ofApril 13, 2010. In September 30, 2010 Syndial filed a memorandumon the impact of the new Italian regulation about theenvironmental damage as per Law Decree No. 135/2009 on theproceeding. As a result of the discussions occurred between theparties, in the hearing held November 17, 2010 the Judge tookunder advisement the decision. With the act of December 21, 2010,the Judge deemed the acquired elements sufficient for the closingof the proceeding. The hearing for the final decision has beenpostponed to November 16, 2011 for the filing of the outcome.However, discussions have been going on in order to arrange for apossible transaction of all environmental claims pending on thismatter. In 2008 Eni’s subsidiary Syndial took charge ofperforming certain clean up activities and on December 5, 2008presented a global project to clean up and remediate allinterested areas. As for the approval procedure of the abovementioned project all interested parties approved the removal ofthe dump from the seafront to another area, the construction ofan hydraulic barrier and of the related treatment plant of thegroundwater (providing that if the subsequent monitoring woulddemonstrate the efficiency of the plant, Eni’s subsidiarywould build up a physical barrier in the seafront) and thestart-up of the first lot of activities on the soil through insitu technologies on condition that all the waste present in theareas, recognized after a specific inspection. Initially, theenvironmental provision made by Syndial in its financialstatements amounted to euro 103 million based on the costestimation of the original clean up project, as the Eni’ssubsidiary believes to have no responsibility for theenvironmental damage considering the limited period during whichit conducted industrial activities in the site and the DelegatedCommissioner responsibility for not having properly managed thesite clean up activities. In the Annual Report 2008, Eniincreased the environmental provision by euro 154 millionbringing the total amount of the environmental provision relatedto the clean up project to euro 257 million. The provisiondoesn’t cover the entire amount of clean up project expenses(euro 300 million) considering the circumstance that it 

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has been only partially approved. The environmental provisionmade by the company is progressively employed in the execution ofthe clean up activities. It must be noted that in 2003 theDelegated Commissioner for Environmental Emergency, CalabriaRegion and Province of Crotone presented a first claim for thepayment of damages. With a decision in May 2007, the Court ofMilan declared the invalidity of the power of proxy conferred tothe Delegated Commissioner to act on behalf of the CalabriaRegion with the notice served to Syndial SpA and decided theliquidation of expenses born by the defendant. The appeal againstthat decision is pending. Syndial, the Province of Crotone andCouncil of Ministers filed their pleadings and subsequently thefinal statements of the case as well as memorandum of objections.On January 20, 2011 the Appeal Court of Milan sentenced (Sentence143/2011), fully accepting Syndial objections, the rejections ofthe claims made by the Council of Ministers, Ministry for theEnvironment, Delegated Commissioner for Calabria Region andProvince of Crotone. The Appeal Court confirmed the invalidity ofthe entire proceeding accepting also an objection issued bySyndial on the inadmissibility of the request of fractionatedamage that is already under examination by another Judge. TheAppeal Court condemned the counterparts to reimburse the legalexpenses sustained by Syndial.The claims made in this first instance were substantiallyabsorbed in the above mentioned two proceedings.

**(iv) Summon for alleged environmental damage caused by DDTpollution in the Lake Maggiore – Prosecuting body: Ministryfor the Environment.**With a temporarily executive decisiondated July 3, 2008 the District Court of Turin sentenced thesubsidiary Syndial SpA (former EniChem) to compensate forenvironmental damages that were allegedly caused when EniChemmanaged an industrial plant at Pieve Vergonte during the1990-1996 period. Specifically, the Court sentenced Syndial topay the Italian Ministry for the Environment compensationamounting to euro 1,833.5 million, plus legal interests thataccrue from the filing of the decision. Syndial and Enitechnical-legal consultants have considered the decision and theamount of the compensation to be without factual and legal basisand have concluded that a negative outcome of this proceeding isunlikely. Particularly, Eni and its subsidiary deem the amount ofthe environmental damage to be absolutely ill-founded as thesentence has been considered to lack sufficient elements tosupport such a material amount of the liability charged to Eniand its subsidiary with respect to the volume of pollutantsascertained by the Italian Environmental Minister. On occasion ofthe 2008 consolidated financial statements, management confirmedits stance of making no loss provision for this proceeding on thebasis of the above mentioned technical legal advice, in concertwith external consultants on accounting principles. In July 2009,Eni’s subsidiary Syndial filed an appeal against the abovementioned sentence, also requesting suspension of the sentenceeffectiveness. The Ministry for the Environment, in the appealfiled, requested to the Second Instance Court to adjust the firstdegree sentence condemning Syndial to the payment of euro 1,900million or alternatively euro 1,300 million in addition to theamount assessed by the First Degree Court. In the hearing onDecember 11, 2009, the Second Instance Court considering themodification of Environmental Damage regulation introduced by theArticle 5-bis of the Law Decree No. 135/2009 and following arequest of the Board of State lawyers decided the postponement toMay 28, 2010, pending the Decree of the Ministry for theEnvironment related to the determination of the quantificationcriteria for the monetary compensation of the environmentaldamage pursuant to the above mentioned Article 5-bis of the LawDecree No. 135/2009. The Board of State lawyers committed itselfto not examine the sentence until the next hearing.In the hearing of May 28, 2010, Syndial requested a furtherpostponement still pending the above mentioned Decree of theMinistry for the Environment. The Board of State lawyers agreedto the request, justifying he postponement with the negotiationin place between the parties for the global solution of theproceeding, committing itself to not examine the sentence untilthe next hearing.The Judge decided the postponement to October 29, 2010. In thishearing the Judge, since parties were still negotiating anenvironmental transaction, postponed the hearing to January 29,2011. That hearing has been rescheduled to September 30, 2011 asdiscussions are ongoing.Another administrative proceeding is ongoing regarding aministerial decree enacted by the Italian Ministry for theEnvironment. The decree provides that Syndial executes thefollowing tasks: (i) the upgrading of a hydraulic barrier toprotect the site; and (ii) the design of a project for theenvironmental remediation of Lake Maggiore. The AdministrativeCourt of Piemonte rejected Syndial’s opposition against theoutlined environmental measures requested by the Ministry for theEnvironment. However, the Court judged the prescriptions of theMinistry regarding the remediation of the site to be plainfindings of an environmental enquiry to ascertain the state ofthe lake. Syndial has filed an appeal against the decision of theCourt before an upper degree body, also requesting suspension ofthe effectiveness of the decision. The appeal has been put onhold considering that a plan to ascertain the environmentalstatus of the site has been approved by all interested parties,including the Ministry and local municipalities pursuant to thestatement on April 28, 2009, which included certainrecommendations. Syndial appealed against this statement and therelated ministerial decree of approval in order to avoid the caseto give implicit consent to the request (appealed by the Company)of the Minister that claimed that Syndial is obliged to executethe clean up. On the contrary, Syndial has agreed on the scope ofthe plan to ascertain the environmental status of the site, as ithas been actually implementing it. Syndial also presented a cleanup project for the groundwater and the soil, that hasn’tbeen approved, as the above mentioned prescriptions that havebeen prescribed are the object of the Company opposition in theabove mentioned proceeding. In case Syndial should be foundguilty, it would incur remediation and clean up expenses,actually not quantifiable, that would be offset against any 

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compensation for the environmental damage that Eni’ssubsidiary is condemned to pay with regard to civil proceedingpending before the Second Instance Court of Turin.

**(v) Action commenced by the Municipality of Carrara for theremediation and reestablishment of previous environmentalconditions at the Avenza site and payment of environmentaldamage.**The Municipality of Carrara commenced an actionbefore the Court of Genova requesting Syndial SpA to remediateand restore previous environmental conditions at the Avenza siteand the payment of unavoidable environmental damage (amounting toeuro 139 million), further damages of various types (e.g. damageto the natural beauty of this site) amounting to euro 80 millionas well as damages relating to loss of profit and propertyamounting to approximately euro 16 million. This request isrelated to an accident that occurred in 1984, as a consequence ofwhich EniChem Agricoltura SpA (later merged into Syndial SpA), atthe time owner of the site, carried out safety and remediationworks. The Ministry for the Environment joined the action andrequested environmental damage payment – from a minimum ofeuro 53.5 million to a maximum of euro 93.3 million – to bebroken down among the various companies that ran the plant in thepast. Syndial summoned Rumianca SpA, Sir Finanziaria SpA andSogemo SpA, who ran the plant in previous years, in order to beguaranteed. A report produced by an independent expert charged bythe Judge was filed with the Court. The findings of this reportquantify the residual environmental damage at euro 15 million.With a sentence of March 2008, the Court of Genova rejected allclaims made by the Municipality of Carrara and the Ministry forthe Environment. Both plaintiffs filed an appeal against thisdecision in June 2008 confirming the requests issued in the firstjudgment. Syndial filed in the appeal hearing, disputing theplaintiffs’ claims. The proceeding is underway without anyfurther investigation. The hearing has been postponed to July2010 for the filing of the pleadings. In this hearing the partiesfiled their pleadings and the Judge postponed the hearing for thefinal decision to October 6, 2011.

**(vi) Ministry for the Environment – Augusta harbor.**The Italian Ministry for the Environment with variousadministrative acts prescribed companies running plants in thepetrochemical site of Priolo to perform safety and environmentalremediation works in the Augusta harbor. Companies involvedinclude Eni subsidiaries Polimeri Europa, Syndial and EniR&M. Pollution has been detected in this area primarily dueto a high mercury concentration which is allegedly attributed tothe industrial activity of the Priolo petrochemical site. Theabove mentioned companies opposed said administrative actions,objecting in particular to the way in which remediation workshave been designed and information on concentration of pollutantshas been gathered. The Regional Administrative Court of Cataniawith the Sentence No. 1254/2007 annulled the said decisions. TheMinistry and the Municipalities of Augusta and Melilli filed aclaim for the revocation of the decision and requested thesuspension of sentence effectiveness with the AdministrativeCouncil of the Sicily Region which accepted the claim. Therecommendations which the Council’s decision related, havebeen restated by the Ministry for the Environment with furtheradministrative resolutions that have been appealed by the Enicompanies. Again the Regional Administrative Court of Cataniareiterated its decision to suspend the effectiveness of theMinistry’s acts. In January 2008 the Regional Court ofCatania accepted further claims on this matter. In June 2008 theMinistry for the Environment and the Municipalities of Melilliand Augusta filed an appeal against the decision of the RegionalCourt of Catania with the Administrative Council of the Sicilyregion, without a resolution of the issue of suspending theeffectiveness of the Regional Court’s decisions. The hearingfor the examination of both appeal pending with theAdministrative Council of the Sicily Region that has beenoriginally scheduled on December 11, 2008, has been postponedsine die due to preliminary issues pending with the Court ofJustice of the European Community. In April 2008, the Enicompanies challenged certain administrative acts of December 20,2007 related to the execution of further clean up and remediationworks of sediments in the Augusta harbor. In this proceeding theRegional Court of Catania has ordered an independent appraiserreport, issued on February 20, 2009, that resulted favorable tothe objections of the objecting companies. The proceeding ispending. In May 2008, the Eni companies also challenged with theRegional Court of Catania, requesting the suspension ofadministrative act effectiveness, certain decisions of anAdministrative Body on March 6, 2008 (and other subsequentdecisions). Those decisions were intended to enlarge the scope ofthe already approved project of environmental remediation andclean up of the groundwater trough works of physic limitation andthe new criteria used by the Administration Body in therestitution of the areas to their legitimate use. With regard tothis last proceeding, basing on a request of the appealingcompanies, the Regional Court of Catania requested the decisionof the Court of Justice of EU to decide on the correctapplication of the community principle, that represent the basisfor the all appeals’ decision particularly the principles ofthe liability associated with the environmental damage, theproportionality in bearing the expenditures associated withenvironmental remediation and clean up, as well as a criteria ofreasonableness and diligent execution in remedying anenvironmental damage. On March 9, 2010, the European Court gave asentence that basically represented a favorable outcome forEni’s subsidiaries involved in the matter. Specifically, theEuropean Court confirmed the community principle of the liabilityassociated with the environmental damage, whereby central to itscorrect interpretation is the relation between cause and effectand the identification of the entity that is actually liable forpolluting. In the hearing of October 21, 2010, the Court upheldthe appeals filed by the counterparts while the filing of theCourt’s decisions is still pending.It must be noted that the Public Prosecutor of Siracusa commenceda criminal action against an unknown party in order to verify theeffective contamination of the Augusta harbor and the connectedrisks on the execution on the 

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clean up project proposed by the Ministry. The technicalassessment disposed by the Public Prosecutor generated thefollowing outcomes: (a) no public health risk in the Augustaharbor; (b) absence of any involvement on part of Eni companiesin the contamination; and (c) drainages dangerousness. Based onthose findings, the Public Prosecutor decided to dismiss theproceeding.

 

**ENI SPA(vii) Reorganization procedure of the airlines companies VolareGroup, Volare Airlines and Air Europe – Prosecuting body:Delegated Commissioner.** In March 2009 Eni and its subsidiarySofid (now Eni Adfin) were notified of a bankruptcy clawback aspart of a reorganization procedure filed by the airlinescompanies Volare Group, Volare Airlines and Air Europe whichcommenced under the provisions of Ministry of ProductionActivities, on November 30, 2004. The request regarded theoverride of all the payments made by those entities to Eni andEni Adfin, as Eni agent for the receivables collection, in theyear previous to the insolvency declaration from November 30,2003 to November 29, 2004, for a total estimated amount of euro46 million plus interest. Eni and Eni Adfin were admitted asdefendants and the trial has been postponed. Eni accrued a riskprovision with respect to this proceeding.

 

**2. Other judicial or arbitration proceedings**

**SYNDIAL SPA (FORMER ENICHEM SPA)(i) Serfactoring: disposal of receivables.** In 1991,Agrifactoring SpA commenced proceedings against Serfactoring SpA.The claim relates to an amount receivable of euro 182 million forfertilizer sales (plus interest and compensation for inflation),originally owed by Federconsorzi to EniChem Agricoltura SpA andTerni Industrie Chimiche SpA (both merged into Syndial). Suchreceivables were transferred by Agricoltura and Terni IndustrieChimiche to Serfactoring, which appointed Agrifactoring as itsagent to collect payments. Agrifactoring guaranteed to pay theamount of such receivables to Serfactoring, regardless of whetheror not it received payment on the due date. Following payment byAgrifactoring to Serfactoring, Agrifactoring was placed inliquidation and the liquidator of Agrifactoring commencedproceedings in 1991 against Serfactoring to recover such payments(equal to euro 182 million) made to Serfactoring based on theclaim that the foregoing guarantee became invalid whenFederconsorzi was itself placed in liquidation, claiming for thereimbursement of the amount paid to Serfactoring and notliquidated to Agrifactoring by Federconsorzi. Syndial andSerfactoring filed counterclaims against Agrifactoring (inliquidation) for damages amounting to euro 97 million relating toacts carried out by Agrifactoring SpA as agent. The amount ofthese counterclaims was subsequently reduced to euro 46 millionfollowing partial payment of the original receivables by theliquidator of Federconsorzi and various setoffs. Theseproceedings, which were unitized, were decided with a partialjudgment, deposited on February 24, 2004; the request ofAgrifactoring – that was reduced by an independentaccounting consultant to the amount of euro 42.3 million –was rejected and the company was ordered to pay the sum requestedby Serfactoring and Syndial to be determined following thedecision. Agrifactoring appealed this decision and in June 2008,the trial was decided with a partial judgment that, reforming theprevious judgment of the Court of Rome, granted the requests ofAgrifactoring and ordering Serfactoring to reimburseAgrifactoring the sum paid by the latter to the former and notrefunded by Federconsorzi. The Court resolved to charge anindependent accounting consultant with quantifying the totalamount paid by Agrifactoring to Serfactoring and the amount paidby Federconsorzi to Agrifactoring in order to determine the sumto be reimbursed to Agrifactoring.On September 28, 2010, the independent accounting consultantfiled the determination of the charge pertaining to Serfactoringamounting to euro 48.98 million, net of the payment made byFederconsorzi to Agrifactoring. Syndial and Serfactoringsubmitted a written reply objecting to this conclusion. In thehearing of October 28, 2010, Eni’s companies requested theindependent accounting consultant clarify the criteria ofdetermination of the above mentioned charge. The Court approvedthe request and rescheduled the hearing to February 24, 2011,ordering the independent accounting consultant to submit awritten report. In that hearing the consultants filed theirreports and the hearing for the filing of the pleadings has beenscheduled for April 28, 2011.Serfactoring and Syndial (as precautionary measure, since theyhave already filed a preliminary appeal) appealed the abovementioned partial sentence of 2008 of the Second Instance Courtof Rome with an upper degree Court. Agrifactoring in turn filedcounterclaim, requesting the declaration of inadmissibility orthe rejection of the appeal. Eni accrued a provision with respectto this proceeding.

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**SAIPEM SPA(ii) CEPAV Uno and CEPAV Due.**Saipem holds interests in theCEPAV Uno (50.36%) and CEPAV Due (52%) consortia that in 1991signed two contracts with TAV SpA (now RFI - Rete FerroviariaItaliana SpA) for the construction of two railway tracks for highspeed/high capacity trains from Milan to Bologna (underconstruction) and from Milan to Verona (in the design phase).With regard to the project for the construction of the line fromMilan to Bologna, an Addendum to the contract between CEPAV Unoand TAV was signed on June 27, 2003, redefining certain terms andconditions of the contract. Subsequently, the CEPAV UnoConsortium requested a time extension for the completion of worksand a claim amounting to euro 800 million then increased to euro1,770 million. CEPAV Uno and TAV failed to solve this disputeamicably. CEPAV Uno opened an arbitration procedure as providedfor under terms of the contract on April 27, 2006.The preliminary investigation of the arbitration procedure isstill pending. On July 30, 2010, the independent consultantsfiled their finding that resulted partially favorable to theCompany and in the subsequent hearings the counterparts filedtheir motion on preliminary issues and the related objections. Inthe next hearing of March 20, 2011, the independent consultantswould fill further reports on the above mentioned issue.The deadline for the submission of the arbitration determinationhas been scheduled for December 27, 2011.On March 23, 2009, the Arbitration Committee determined the TAVright to extend the assessment made by the independent accountingconsultant to the subcontractors appointed by the Consortium, thecontractors, or assignees. Basing on the alleged invalidity ofArbitration Committee determination, on April 8, 2010, theConsortium notified to the counterparts the appeal to thisdecision requesting its suspension before the Appeal Court ofRome.With regard to the project for the construction of a high-speedrailway from Milan to Verona, in December 2004, CEPAV Duepresented the final project, prepared in accordance with Law No.443/2001 on the basis of the preliminary project approved by anItalian governmental Authority (CIPE). As concerns thearbitration procedure, commenced on December 28, 2000, requestedby CEPAV Due against TAV for the recognition of costs incurred bythe Consortium in the ten-year period from 1991 through 2000 plusdamages suffered, in January 2007, the Arbitration Committeedetermined the Consortium’s right to recover the costsincurred in connection with the design activities performed. Thetechnical independent survey to assess the amount of compensationwas submitted on October 19, 2009. The trial ended on February23, 2010, with the resolution of the arbitration that requiredTAV to pay to CEPAV Due Consortium an amount of euro 44,176,787plus legal interest and compensation for inflation accrued fromthe submission of the arbitration until the date of effectivedamage payment; the Court also required TAV to pay euro 1,115,000plus interest and compensation for inflation accrued from October30, 2000 until the date of effective damage payment. TAV filedwith the Second Instance Court of Rome an appeal against thepartial arbitration committee’s determination of January2007. In February 2007, the Consortium CEPAV Due notified to TAVa second request of arbitration following the Decree No. 7 ofDecember 31, 2007, that revoked the concessions awarded to TAVresulting in the annulment of arrangements signed between TAV andthe Consortium to build the high-speed railway section from Milanto Verona. The European Court of Justice was requested to rule onthis matter. Subsequently, Law No. 133/2008 reestablished theconcessions awarded to TAV resulting in the continuation of thearrangements between the Consortium CEPAV Due and a new entity incharge of managing the Italian railway system. The secondarbitration proceeding continued in order to determinate thedamages suffered by the Consortium even in the period prior tothe revocation of the concession. An independent appraiser hasbeen appointed in order to assess those damages. The arbitrationproceeding is suspended, since the negotiations between theparties in order to sign the integration to the existingagreement and to settle the arbitration already closed and thepending one are underway. The deadline for the submission of thearbitration determination was for December 31, 2010.

 

**3. Antitrust, EU Proceedings, Actions of the Authority forElectricity and Gas and of Other Regulatory Authorities**

**3.1 Antitrust**

**ENI SPA(i) Abuse of dominant position of Snam alleged by the ItalianAntitrust Authority.** In March 1999, the Italian AntitrustAuthority concluded its investigation started in 1997 and: (i)found that Snam SpA (merged in Eni SpA in 2002) abused itsdominant position in the market for the transportation andprimary distribution of natural gas relating to thetransportation and distribution tariffs applied to third partiesand the access of third parties to infrastructure; (ii) finedSnam for euro 2 million; and (iii) ordered a review of thepractices relating to such abuses. Snam believes it has compliedwith existing legislation and appealed the decision with theRegional Administrative Court of Lazio requesting its suspension.On May 26, 1999, stating that these decisions are against Law No.9/1991 and the European Directive No. 1998/30/EC, this Courtgranted the suspension of the decision. The Authority did 

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not appeal this decision. The decision on the merit of thisdispute is still pending before the same Administrative Court.

**(ii) European Commission’s investigations on playersactive in the natural gas sector.** In the context of itsinitiatives aimed at verifying the level of competition in thenatural gas sector within the European Union, on March 2009, Enireceived a statement of objections by the European Commissionrelating to a proceeding under Article 82 EC and Article 54 ofthe EEA Agreement and concerning an alleged unjustified refusalto grant access to the TAG (Austria), TENP/Transitgas(Germany/Switzerland) pipelines, connected with the Italian gastransport system. On February 4, 2010, Eni, reaffirming thelegitimacy of its activity, filed with the European Commission anumber of structural remedies with a view to resolving theproceeding without the ascertainment of the illicit behavior andconsequently without sanctions. Eni has committed to dispose ofits interests in the German TENP, in the Swiss Transitgas and inthe Austrian TAG gas pipelines. Given the strategic importance ofthe Austrian TAG pipeline, which transports gas from Russia toItaly, Eni has negotiated a solution with the Commission whichcalls for the transfer of its stake to an entity controlled bythe Italian State. On September 29, 2010, the European Commissionissued a decision whereby it resolved to accept Eni’scommitments and made them mandatory. The Commission acknowledgedthat its intervention was unwarranted and closed the proceeding.Eni is currently adopting all procedures to execute thosecommitments in accordance with such time schedule and criteriawhich have been agreed upon with the Commission (a nonconfidential version of the final agreements is available at theCompany web sitehttp://www.eni.com/it_IT/azienda/attività-strategie/gas-power/trasporto-gas/trasporto.shtml).

**(iii) Trans Tunisian Pipeline Co Ltd (TTPC).**In April2006, Eni filed a claim before the Regional Administrative Courtof Lazio against the decision of the Italian Antitrust Authorityof February 15, 2006, stating that Eni’s behavior pertainingto implementations of plans for the upgrading of the TTPCpipeline for importing natural gas from Algeria represented anabuse of dominant position under Article 82 of the EuropeanTreaty and fined Eni. The initial fine amounted to euro 390million and was reduced to euro 290 million in consideration ofEni’s commitment to perform actions favoring competitionincluding the upgrade of the gasline. Eni accrued a provisionwith respect to this proceeding. With a decision filed onNovember 29, 2006, the Regional Administrative Court of Laziopartially accepted Eni’s claim, annulling such part of theAuthority’s decision where the fine was quantified. Pendingthis development, the payment of the fine has been voluntarilysuspended. In 2007, the Regional Administrative Court of Lazioaccepted in part Eni’s claim and cancelled thequantification of the fine based on the AntitrustAuthority’s inadequate evaluation of the circumstancespresented by Eni. Eni filed an appeal with the Council of State,as did the Antitrust Authority and TTPC.On May 27, 2010, the Italian Antitrust Authority notified Eni thestart of a proceeding aimed at reappraising the criteria thatwere applied in the initial determination of the fine amountingto euro 290 million, in accordance with a resolution of theRegional Administrative Court of Lazio made on February 15, 2006.On December 20, 2010, the Council of State sentenced (SentenceNo. 9306) to reform the original resolution of the ItalianAntirust Authority of February 2006 as regards the quantificationof the fine reducing it to euro 20,405,000. On January 4, 2011Eni paid the reduced amount, since the procedure of the ItalianAntitrust Authority to reappraise the amount of the fine wasoverruled by the decision of the Council of State on the sameissue.

**(iv) Italian Antitrust Authority’s inquiry in thedistribution and selling of gas in the retail sector.**On May7, 2009, the Italian Antitrust Authority, based on complaintssent by the company Sorgenia, started a preliminary investigationagainst various operators engaging in the gas retail market inItaly by means of integrated operations in both gas distributionvia local low-pressure network and gas marketing to retailcustomers in urban areas, among them the Company and itsfully-owned subsidiary Italgas. The investigation targets analleged abuse of dominant position in the gas retail market inItaly associated with commercial practices intended to make itdifficult for retail customers consuming less than 200,000 CM/yto change the supplier. According to the Italian AntitrustAuthority, these commercial practices would enable sellingcompanies that belong to integrated group companies to preservetheir market shares in the areas operated by group’sdistributors. On March 24, 2010, the Antitrust Authoritypublished on its website the commitments of Italgas and otherdistribution companies involved in this inquiry, as foreseen byArticle 14-ter of the Law No. 287/1990. These commitments wereintended to remedy the alleged anti-competitive practices chargedby the Authority, starting the market test phase. On September 8,2010, the Italian Antirust Authority sentenced (Sentence No.21530) to accept and make mandatory the remedies issued byItalgas. The proceeding was resolved without the ascertainment ofthe illicit behavior and without any fine to Eni and Italgas.

**(v) Italian Antitrust Authority’s inquiry in theselling of bitumen.**On May 27, 2010, the Italian AntitrustAuthority started a preliminary investigation against Eni andother eight companies engaging in marketing bitumen for road bymeans of an agreement intended to hamper competition in thissector in Italy, in breach of Article 101 of Treaty on theFunctioning of the European Union. The investigation is in thepreliminary phase. The deadline for the finalization of thepreliminary investigation has been scheduled for November 25,2011.

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**ENI SPA, POLIMERI EUROPA SPA AND SYNDIAL SPA(vi) Inquiries in relation to alleged anti-competitive agreementsin the area of elastomers – Prosecuting Body: EuropeanCommission.** In December 2002, inquiries were commencedconcerning alleged anti-competitive agreements in the field ofelastomers. The most important inquiry referred to BR and ESBRelastomers which was finalized on November 29, 2006, when theCommission fined Eni and its subsidiary Polimeri Europa for anamount of euro 272.25 million. Eni and its subsidiary filedclaims against this decision before the European Court of FirstInstance in February 2007. The hearings took place in October2009 and the filing of the Court’s decisions is stillpending. Pending the outcome, Polimeri Europa presented a bankguarantee for euro 200 million and paid the residual amount ofthe fine. In August 2007, with respect to the above mentioneddecision of the European Commission, Eni submitted a request fora negative ascertainment with the Court of Milan aimed at provingthe non-existence of alleged damages suffered by tire BR/SBRmanufacturers. The Court of Milan declared the appealinadmissible appealing against a sentence of the District Courtof Milan. The sentence for the appeal is still pending. Eniaccrued a risk provision with respect to this proceeding.

 

**3.2 Regulation**

**(i) Distribuidora de Gas Cuyana SA.** Formalinvestigation of the agency entrusted with the regulations forthe natural gas market in Argentina. Enargas started a formalinvestigation on some operators, among them Distribuidora de GasCuyana SA, a company controlled by Eni. Enargas stated that thecompany improperly applied conversion factors to volumes ofnatural gas invoiced to customers and requested the company toapply the conversion factors imposed by local regulations fromthe date of the default notification (March 31, 2004) withoutprejudice to any damage payment and fines that may be decidedafter closing the investigation. In April 2004, the company fileda defensive memorandum. On April 28, 2006, the company formallyrequested the acquisition of documents from Enargas in order tohave access to the documents on which the allegations are based.

**(ii) Preliminary investigation of the Authority forElectricity and Gas on the application of the regulation on theissue of the transparency of invoices.**On September 25, 2009the Authority for Electricity and Gas sentenced (Sentence VIS93/2009) to commence a preliminary investigation against 5marketing companies in the electricity sector, including Eni, toascertain the eventual violation of the regulation on the issueof the transparency of the invoices (Resolutions 152/2006,156/2007 and 272/2007) and to eventually impose administrativemonetary penalties.On May 5, 2010, the Authority communicated to the Company theresults of the preliminary investigation: the Authority believesthat the alleged violations have been committed and are stillongoing as of the date of the communication. In addition theAuthority reaffirmed the need to issue an instruction to theCompany to execute certain remedial actions as announced at thecommencement of the investigation. Eni replied to the Authoritythat prior to the beginning of the preliminary investigation, inJuly 2009, the Company modified the layout of its invoices, whichthe Company believes to be fully compliant with transparencyobligations set by the current regulation (providing also furtherinformation for an higher level of transparency for the client).The Company also believes that its invoice lay-out largelyanticipates the new regulation on the issue of harmonization ofinvoices (Resolution 202/2009). Eni accrued a provision withrespect to this proceeding even if the company considers to havedemonstrated to have substantially complied with the applicableregulation. On October 11, 2010, the Authority for Electricityand Gas imposed (Sentence VIS 110/2010) a fine amounting to euro350,000 of which: (i) euro 200,000 related to residentialcustomers; and (ii) euro 150,000 related to non-residentialcustomers connected in low voltage. Eni paid the sanction andfiled a claim before the Regional Administrative Court againstthe sentence in order to defend its rights and interests.

**(iii) Preliminary investigation of the Authority forElectricity and Gas on the billing of the tariff balance to finalgas clients and periodicity of the billing.** On May 25, 2010,the Authority for Electricity and Gas sentenced (Resolution VIS36/2010) to commence a preliminary investigation against Eni inorder to: (i) fine the Company for the alleged infringement ofthe Resolution 229/2001 (regulating the contractual conditions ofgas sale to final clients through the network of local gaslines), Resolution 42/1999 (referred to the invoicestransparency), Resolution 126/2004 (related to the code ofcommercial behavior for the gas sale) and the Integrated Text onthe regulation of the quality of marketing services ofelectricity and gas (Resolution ARG/com 164/2008); and(ii) adoption of decisions aimed at break up behaviorsprejudicial to clients rights. The resolution that sentenced thecommencement of the proceeding includes also a number ofinjunctions as well as requests for information and documentsthat Eni provided to the Authority. Eni filed a claim before theRegional Administrative Court of Lombardia against the ResolutionVIS 36/2010.On November 10, 2010, the Authority for Electricity and Gascommunicated to Eni the conclusions of the preliminaryinvestigation confirming the alleged violations and subsequentlyauthorizing the start of a proceeding. 

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In the final hearing of the Authority authorized the Companyto file a defensive memorandum and subsequently filed a claimbefore the Regional Administrative Court against the conclusionof the preliminary investigations. Eni accrued a risk provisionwith respect to this proceeding even if the company considers itsmotivations to be well grounded in the appeal proposed againstthe Authority for Electricity and Gas.

 

**4. Court Inquiries**

**(i) EniPower.** In June 2004, the Milan Public Prosecutorcommenced inquiries into contracts awarded by Eni’ssubsidiary EniPower and on supplies from other companies toEniPower. These inquiries were widely covered by the media. Itemerged that illicit payments were made by EniPower suppliers toa manager of EniPower who was immediately dismissed. The Courtpresented EniPower (commissioning entity) and Snamprogetti (nowSaipem SpA) (contractor of engineering and procurement services)with notices of process in accordance with existing lawsregulating the administrative responsibility of companies(Legislative Decree No. 231/2001). In its meeting of August 10,2004, Eni’s Board of Directors examined the aforementionedsituation and Eni’s CEO approved the creation of a taskforce in charge of verifying the compliance with Group proceduresregarding the terms and conditions for the signing of supplycontracts by EniPower and Snamprogetti and the subsequentexecution of works. The Board also advised divisions anddepartments of Eni to cooperate fully in every respect with theCourt. From the inquiries performed, no default in theorganization emerged, nor deficiency in internal control systems.External experts have performed inquiries with regard to certainspecific aspects. In accordance with its transparency andfirmness guidelines, Eni took the necessary steps in acting asplaintiff in the expected legal action in order to recover anydamage that could have been caused to Eni by the illicit behaviorof its suppliers and of their and Eni employees. In the meantime,preliminary investigations have found that both EniPower andSnamprogetti are not to be considered defendants in accordancewith existing laws regulating the administrative responsibilityof companies (Legislative Decree No. 231/2001). In August 2007,Eni was notified that the Public Prosecutor requested thedismissal of EniPower SpA and Snamprogetti SpA, while theproceeding continues against former employees of these companiesand employees and managers of the suppliers under the provisionsof Legislative Decree No. 231/2001. Eni SpA, EniPower andSnamprogetti presented themselves as plaintiffs in thepreliminary hearing. In the preliminary hearing related to themain proceeding on April 27, 2009, the Judge for the PreliminaryHearings requested all the parties that have not requested theplea-bargain to stand in trial, excluding certain defendants as aresult of the statute of limitations. During the hearing on March2, 2010, the Court confirmed the admission as plaintiffs of EniSpA, EniPower SpA and Saipem SpA against the inquired partiesunder the provisions of Legislative Decree No. 231/2001. Furthercompanies involved were identified as defendants. The proceedingcontinues with the examination of the witnesses.

**(ii) Trading.**An investigation is pending regarding twoformer Eni managers who were allegedly bribed by third parties infavor to the closing of certain transactions with two oil producttrading companies. Within such investigation, on March 10, 2005,the Public Prosecutor of Rome notified Eni of two judicialmeasures for the seizure of documentation concerning Eni’stransactions with the said companies. Eni is acting as plaintiffin this proceeding. The Judge for the Preliminary Hearingsrejected most of the dismissal requests issued by the PublicProsecutor. Basing on the decision of the Judge for thePreliminary Hearings, the Public Prosecutor of Rome notified Eni,as injured part, the summon against two former managers of thecompany charged of aggravated fraud related to the relevantpatrimonial damage caused to the injured part through the abuseof working relations and activities. The first hearing, scheduledfor January 27, 2010, was postponed to March 30, 2010.In the hearing of March 30, 2010 Eni was admitted as plaintiffagainst all the defendants. Subsequently the legal defense of oneof the former managers opted for the "non-conditioned"plea-bargain. The Judge removed this position from the mainproceeding postponing the related hearing to the same date of theprincipal one. In the hearing of June 23, 2010 related to theposition of a former manager of Eni, the Public Prosecutor, madea request of acquittal coherently with the previous request ofdismissal of that defendant. Eni legal defense asked theconviction of the defendant. After the debate, in the hearing ofJuly 13, 2010, the Court acquitted that defendant. The Courtwould file the grounds of the judgment within the next 90 days.In the same date the main proceeding for the definition of thepreliminary investigation requests was postponed to the hearingof February 9, 2011, and subsequently to May 24, 2011.

**(iii) TSKJ Consortium Investigations by U.S., Italian, andOther Authorities.** Snamprogetti Netherlands BV has a 25%participation in the TSKJ Consortium companies. The remainingparticipations are held in equal shares of 25% by KBR, Technip,and JGC. Beginning in 1994 the TSKJ Consortium was involved inthe construction of natural gas liquefaction facilities at BonnyIsland in Nigeria. Snamprogetti SpA, the holding company ofSnamprogetti Netherlands BV, was a wholly owned subsidiary of Eniuntil February 2006, when an agreement was entered into for thesale of Snamprogetti to Saipem SpA and Snamprogetti was mergedinto Saipem 

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as of October 1, 2008. Eni holds a 43% participation inSaipem. In connection with the sale of Snamprogetti to Saipem,Eni agreed to indemnify Saipem for a variety of matters,including potential losses and charges resulting from theinvestigations into the TSKJ matter referred to below, even inrelation to Snamprogetti subsidiaries. The U.S. Securities andExchange Commission (SEC), the U.S. Department of Justice (DoJ),and other authorities, including the Public Prosecutor’soffice of Milan, have made investigations about alleged improperpayments made by the TSKJ Consortium to certain Nigerian publicofficials.

***The proceedings in the U.S.:*** in 2010 asettlement of the proceeding was entered into with the U.S.Authorities investigating the matter (the U.S. DoJ and the U.S.SEC) following long and complex discussions which commenced in2009. In July 2010, Snamprogetti Netherlands BV entered into adeferred prosecution agreement with the DoJ. Pursuant to theagreement, the DoJ filed charges against Snamprogetti NetherlandsBV including a count of conspiracy and violating certainprovisions of the U.S. Foreign Corrupt Practices Act.Snamprogetti Netherlands BV agreed to pay a criminal penalty of$240 million.If it satisfies the terms of the agreement, the charges againstSnamprogetti Netherlands BV will be dismissed. Eni and Saipemagreed to guarantee the obligations of Snamprogetti NetherlandsBV towards the DoJ, considering the contractual obligationsassumed by Eni to indemnify Saipem as a part of the divestment ofSnamprogetti. In July 2010, Eni and Snamprogetti Netherlands BValso entered into a consent order with the SEC, in which theyconsent to the filing of a complaint and the entry of a finaljudgment that alleges that Eni and Snamprogetti violated certainsections of the Securities Exchange Act of 1934. Under theconsent order, Eni and Snamprogetti jointly agreed to paydisgorgement to the SEC in the amount of $125 million. Eni paidthe agreed amounts in July 2010. Eni, Saipem, and Snamprogetticooperated with the U.S. authorities’ investigations. In theagreements, the SEC and DoJ did not require the implementation ofany independent compliance monitor. Since the conduct at issue,Eni, Saipem, and Snamprogetti Netherlands BV have madesubstantial enhancements to their anti-corruption complianceprograms, which monitor Eni and its subsidiaries’ compliancesystems. Eni and its subsidiaries are committed to continuousimprovements to their internal compliance program and policies.

***The proceedings in Nigeria:*** basing on the actioncommenced by the Nigerian Authorities, on December 10, 2010Snamprogetti Netherlands BV agreed on a settlement with theFederal Government of Nigeria in order to resolve theinvestigation made on the activities of Snamprogetti NetherlandsBV as member of the TSKJ Consortium. The Federal Government ofNigeria had previously commenced a legal action against the TSKJConsortium and the four consortium companies, includingSnamprogetti Netherlands BV. The company reached an agreemententailing the payment of a criminal fine amounting to $30 millionand the reimbursement of $2.5 million for the legal expendituresof the Federal Government of Nigeria, thus concluding the legalproceeding. The Federal Government of Nigeria renounced toprosecute any criminal and civil action, in any jurisdiction,against Snamprogetti, the parent companies and the subsidiaries.In the agreement the Nigerian Authorities recognized that thealleged behaviors ended on June 15, 2004.

***The proceedings in Italy:*** beginning in 2004, theTSKJ matter has prompted investigations by the PublicProsecutor’s office of Milan against unknown persons. SinceMarch 10, 2009, the Company has received requests of exhibitionof documents from the Public Prosecutor’s office of Milan.The events under investigation cover the period since 1994 andalso concern the period of time subsequent to the June 8, 2001enactment of Italian Legislative Decree No. 231 concerning theliability of legal entities. A violation of Legislative DecreeJune 8, 2001, No. 231, can result in the confiscation of criminalprofits in addition to administrative penalties. During thepreliminary investigations, the preventive attachment of suchprofits and other precautionary measures are possible. On July31, 2009, a decree issued by the Judge for the PreliminaryInvestigation at the Court of Milan was served on Saipem SpA (aslegal entity incorporating Snamprogetti SpA). The decree set forSeptember 22, 2009, a hearing in Court in relation to aproceeding ex Legislative Decree No. 231 of June 8, 2001 wherebythe Public Prosecutor of Milan is investigating Eni SpA andSaipem SpA for liability of legal entities arising from offencesinvolving international corruption charged to two former managersof Snamprogetti SpA. The Public Prosecutor of Milan requested EniSpA and Saipem SpA to be debarred from activities involving– directly or indirectly – any agreement with theNigerian National Petroleum Corp and its subsidiaries. The abovementioned hearing allowed Eni and Saipem to their own defensesbefore any decision was made on the requested disqualification.The events referred to the request of precautionary measures ofthe Public Prosecutor of Milan cover TSKJ Consortium practicesduring the period from 1995 to 2004. In this regard, the PublicProsecutor claims the inadequacy and violation of theorganizational, management and control Model adopted to preventthose offences charged to people subject to direction andsupervision. At the time of the events under investigation, theCompany had adopted a code of practice and internal procedureswith reference to the best practices at the time. Subsequently,such code and internal procedures have been improved aiming atthe continuous improvement of internal controls. Furthermore, onMarch 14, 2008 Eni approved a new Code of Ethics and a new Model231 reaffirming that the belief that one is acting in favor or tothe advantage of Eni can never, in any way, justify – noteven in part – any behaviors that conflict with theprinciples and contents of the Code.

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On November 17, 2009, the Judge for the PreliminaryInvestigation rejected the request of precautionary measures ofdisqualification filed by the Public Prosecutor of Milan againstEni and Saipem. The Public Prosecutor of Milan appealed thedecision of the Judge for the Preliminary Investigation.On February 9, 2010, the Judge of Re-examination dismissed asunfounded the appeal of the Public Prosecutor. In February 19,2010, the Public Prosecutor of Milan filed an appeal with theThird Instance Court, asking for the cancellation of the abovementioned decision of the Judge of Re-examination.In the hearing of September 30, 2010, the Third Instance Courtexamined the appeal of the Public Prosecutor of Milan against theJudge of Re-examination decision of rejection of precautionarymeasures of disqualification. In this hearing the above mentionedCourt accepted the claim of the Public Prosecutor and cancelledthe decision of the Judge of Re-examination. The Court decidedthat the request of precautionary measures be admissibleaccording to Law Decree No. 231/2001 even in the case ofinternational corruption.On January 24, 2011, Eni was notified the schedule of the hearingbefore the Re-examination Court of Milan for the debate on therequest of precautionary measures issued by the Public Prosecutorof Milan basing on the decision of September 30, 2010 of theThird Instance Court.On February 18, 2011, the Public Prosecutor of Milan, withrespect to the guarantee payment amounting to euro 24,530,580,even in the interest of Saipem SpA, renounced to contest thedecision of rejection of precautionary measures ofdisqualification for Eni SpA and Saipem SpA issued by the Judgefor the Preliminary Hearings. In the hearing of February 22,2011, the Re-Examination Court, taking note of the abovementioned renounce, declared inadmissible the appeal of thePublic Prosecutor of Milan and closed the proceeding related tothe request of precautionary measures of disqualification for EniSpA and Saipem SpA.On November 3, 2010, the defense of Saipem was notified theconclusion of the investigations relating to the proceedingpending before the Court of Milan through a deed by which theCourt evidenced the alleged violations made by the five formerSnamprogetti SpA (now Saipem SpA) and Saipem SpA being the parentcompany of Snamprogetti. The deed does not involve the Eni Groupparent company Eni SpA. The charged crimes involve allegedcorruptive events that have occurred in Nigeria after July 31,2004. It is also stated the aggravating circumstance thatSnamprogetti SpA reported a relevant profit (estimated atapproximately $65 million). On December 3, 2010, the defense ofSaipem was notified the opening of a proceeding with the firsthearing scheduled for December 20, 2010. This first hearing thattook place before the Judge for the Preliminary investigation ofthe Court of Milan was dedicated to the exposition of themotivations of the Public Prosecutor while the defenses exposedtheir point on January 12, 2011. At the end of this hearing thePublic Prosecutor requested to replicate to defense motivations.In the hearing of January 26, 2011, the Public Prosecutorrequested five former workers of Snamprogetti SpA (now Saipem)and Saipem SpA (as legal entity incorporating Snamprogetti) tostand trial.It must be noted that the Board of Directors of Eni and Saipem in2009 and 2010, respectively, approved new guidelines andanti-corruption policies regulating Eni and Saipem management ofthe business. The guidelines integrated anti-corruption policiesof the Company, aligning them to the international bestpractices, optimizing the compliance system and granting thehighest respect of Eni, Saipem and their workers of the Code ofEthics, 231 Model and national and international anti-corruptionpolicies.

**(iv) Gas metering.**On May 28, 2007, a seizure order (inrespect to certain documentation) was served upon Eni and otherGroup companies as part of a proceeding brought by the PublicProsecutor at the Court of Milan. The order was also served uponfive top managers of the Group companies in addition to thirdparty companies and their top managers. The investigation allegesbehavior which breaches Italian criminal law, starting from 2003,regarding the use of instruments for measuring gas, the relatedpayments of excise duties and the billing of clients as well asrelations with the Supervisory Authorities. The allegationregards, inter alia, the offense contemplated by LegislativeDecree of June 8, 2001, No. 231, which establishes the liabilityof the legal entity for crimes committed by its employee in theinterests of such legal entity, or to its advantage. Accordingly,notice of the commencement of investigations was served upon EniGroup companies (Eni, Snam Rete Gas and Italgas) as well as thirdparty companies. On November 26, 2009, a notice of conclusion ofthe preliminary investigation was served to Eni’s Groupcompanies whereby 12 Eni employees, also including formeremployees, are under investigation. The exceptions filed in thenotice include: (i) violations pertaining to recognition andpayment of the excise on natural gas amounting to euro 20.2billion; (ii) violations or failure in submitting the annualstatement of gas consumption and/or in the annual declarations tobe filed with the Duty Authority or the Authority for Electricityand Gas; and (iii) a related obstacle which has been allegedlyposed to the monitoring functions performed by the Authority forElectricity and Gas. On February 22, 2011, 12 Eni employees, alsoincluding former employees were notified the schedule of thepreliminary hearing as part of the proceeding for which thenotice of conclusion of the preliminary investigation was servedon November 26, 2009. On February 23, 2010, Eni, Snam Rete Gasand Italgas received a notification requesting the collection ofdocuments related to procedures of constitution, definition,update and implementation of Model 231 in the period from 2003 to2008. On May 18, 2010, the Public Prosecutor of Milan requestedthe closing of the proceeding relating to a number of defendants,including a top manager for which the Public Prosecutor found noevidence supporting the indictment in an eventual proceeding. Therequest has been preceded by an act of removal of the archivedjudicial position from the main proceeding. As a result of afurther dismissal of judicial position from the main proceeding,the Public Prosecutor of Milan notified to nine employees andformer employees of Eni (in particular belonging to the Gas &Power division) the conclusion of the 

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investigation related to the crime under the provisions ofArticle 40 (violations pertaining to recognition and payment ofthe excise on mineral oils) of Legislative Decree No. 504 ofOctober 26, 1995. The companies were not notified the ending ofthe investigation because it excludes any charge of involving theadministrative responsibility regulated by the Legislative Decree231 of 2001. The deed also disputed certain violations pertainingto subtraction of taxable amounts and missed payments of excisetaxes on natural gas amounting to euro 0.47 billion and euro 1.3billion, respectively.The preliminary hearing that actually does not involve legalentities has been scheduled for May 12, 2011.

**(v) Agip KCO NV.** In November 2007, the PublicProsecutor of Kazakhstan informed Agip KCO of the start of aninquiry for an alleged fraud in the award of a contract to theOverseas International Constructors GmbH in 2005. On April 2010,the above mentioned body has proposed an agreement on the matterthat the counterparts are still evaluating. The Eni subsidiary iscurrently waiting for a measure from the judicial authority todismiss the matter.

**(vi) Kazakhstan.** On October 1, 2009, the PublicProsecutor of Milan requested a number of documents pursuant toArticle 248 of the Penal Code. Through this decision, part of acriminal proceeding against unknown parties, Eni SpA wasrequested to transmit – in relation to the allegedinternational corruption, embezzling pillage, and other crimes– audit reports and other documentation related to anomaliesand critical issues on the management of the Karachaganak plantand the Kashagan project. The crime of "internationalcorruption" mentioned in the said request of transmission ofdocuments is sanctioned, in addition to the Italian criminalcode, by Legislative Decree June 8, 2001, No. 231, whichestablishes the administrative responsibility of companies forcrimes committed by their employees on their behalf. Enicommenced the collection of the documentation in order to rapidlyfulfill the requests of the Public Prosecutor. The company hasdeposited in different phases the documents collected. TheCompany continues to fully collaborate with the Public Prosecutorproviding also further documentation when available. On November29, 2010, the Tributary Police of Milan requested to interviewcertain Eni managers in the field of the evolution on themanagement of contract assigned to Agip KCO to NCC and OICconsortia. Subsequently the Tributary Police convened twomanagers in order to interview them about the investigationcommenced by the Public Prosecutor of Milan.

**(vii) Algeria.** On February 4, 2011, Eni received by thePublic Prosecutor of Milan a notification requesting thecollection of documents pursuant to Article 248 of the PenalCode. Through this decision, in relation to the crime of allegedinternational corruption, Eni SpA was requested to transmit: (i)the Saipem/Sonatrach contract signed on June 2009 related to therealization of the GK3 gas pipeline; and (ii) theGALSI/Saipem/Technip contract signed in July 2009 related to theengineering of the ground section of the gas pipeline. Thenotification has been forwarded to Saipem SpA since this matteris in its area of responsibility. The crime of internationalcorruption regards, inter alia, the offense contemplated byLegislative Decree of June 8, 2001, No. 231. Eni commenced thecollection of the documentation in order to rapidly fulfill therequests of the Public Prosecutor. The company has deposited indifferent phases the documents collected. The Company continuesto fully collaborate with the Public Prosecutor providing alsofurther documentation when available.

 

**5. Tax Proceedings**

**ITALY**

**ENI SPA(i) Dispute for the omitted payment of the municipal tax relatedto oil platforms located in territorial waters in the AdriaticSea.**With a formal assessment presented by the Municipalityof Pineto (Teramo) in December 1999, Eni SpA has been accused ofnot having paid a municipal tax on real estate for the periodfrom 1993 to 1998 on four oil platforms located in the AdriaticSea which constitute municipal waters in front of the coast ofPineto. Eni was requested to pay a total of approximately euro 17million including interest and a fine. Eni filed a claim againstthis request stating that the sea where the platforms are locatedis not part of the municipal territory and the tax application asrequested by the municipality lacked objective fundamentals. Theclaim has been accepted in the first two degrees of judgment atthe Provincial and Regional Tax Commissions. However, the Courtoverturned both judgments, declaring that a municipality canconsider requesting a tax on real estate in the sea facing itsterritory and with the decision of February 2005 sent theproceeding to another section of the Regional Tax Commission inorder to judge on the matters of the proceeding. This commissioncharged an independent consultant with assessing all theaccounting/technical aspects of the matter. The independentconsultant confirmed that Eni’s offshore installations lackany ground to be subject to the municipal tax that was claimed bythe local Municipality. Those findings were accepted by theRegional Tax Commission with a ruling made on January 19, 2009,and filed on December 14, 2009. On January 25, 2011, theMunicipality notified to Eni an appeal to the Third 

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Instance Court for the cancellation of the above mentionedsentence. Also on December 28, 2005, also the Municipality ofPineto presented similar claims relating to the same Eniplatforms for the years 1999 to 2004. The total amount requestedwas euro 24 million including interest and penalties. Eni filed aclaim against this claim which was accepted by the First DegreeJudge with a decision of December 4, 2007. Similar formalassessments related to Eni oil and gas offshore platforms werepresented by the Municipalities of Falconara Marittima,Tortoreto, Pedaso, and also from 2009 the Gela Municipality. Thetotal amounts of those claims were approximately euro 7.5million. The company filed appeal against all those claims.

 

**ENI SPA and ENIADFIN SPA(ii) Assessments for Padana Assicurazioni tax returns.**InNovember and December 2010, the Italian Tax Authorities issued anassessment for Padana Assicurazioni tax returns for the year 2005and a pre-assessment for years 2006 and 2007. The Tax Authoritieshave denied certain cost deductions and assessed a greater valuefor the going concern transferred to Eni Insurance Ltd in 2007.The total claim amounted to euro 148.5 million for taxes,penalties and interests. According to the guarantee issued in2008, related to the sale of Padana Assicurazioni shares toHelvetia SV AG, this additional tax burden is to be charged tothe seller companies: Eni SpA for 26.75% and its subsidiary EniAdfin SpA for 73.25%. Based on those assessments, a riskprovision has been accrued in the consolidated financialstatements.

 

**OUTSIDE ITALY(iii) Claims concerning unpaid taxes and relevant payment ofinterest and penalties.**In July 2004, relevant KazakhAuthorities informed Agip Karachaganak BV and KarachaganakPetroleum Operating BV, shareholder and operator of theKarachaganak contract, respectively, on the final outcome of 2000to 2003 tax audits. Both companies counterclaimed against theassessment and a preliminary agreement was reached on November18, 2004. Final assessments have now been issued by the KazakhAuthorities, and payment has been made. The final amount assessedand paid was $39 million net to Eni; this figure included taxesand interest. The companies continue to dispute the assessmentsand reserve the right to engage in International Arbitrationproceedings with the Kazakh Authorities.In October 2009, Kazakh Tax Authorities conducted a complex taxaudit of Agip Karachaganak BV Branch and Karachaganak PetroleumOperating BV Branch, for the period 2004-2007. In December 2009,the tax authorities issued Tax Audit Act and relevantNotification for the year 2004 but so far nothing has beenfinalized for the later years. The 2004 audit resulted in anassessment of $21.6 million relating to CIT and WHT ($0.3million). These amounts are disputed and appeals have beensubmitted to the Higher Level Tax Authority. In March and October2010, Kazakh Tax Authorities started the complex tax auditsrespectively for the year 2008 and 2009. On December 23, 2010,Agip Karachaganak BV Branch and Karachaganak Petroleum OperatingBV Branch received Tax Audit Acts for the year 2005. The taxesassessed as reflected in 2005 Tax Audit Acts equal to US$ 207.4million including penalties and administrative fines relating toCIT (US$ 205.9 million) and Withholding Tax and other taxes (US$1.5 million). All taxes assessed and penalties as well asadministrative fines are subject to further appeal process athigher tax authority level in compliance with deadlinesestablished in the tax and administrative legislation.There is also a dispute in relation to certain unresolved itemsof expenditure incurred by the operating company KarachaganakPetroleum Operating BV which has led to the Kazakh Authoritiesmaking certain claims against the company on the base of auditsperformed relating to prior years 2003-2006.In February 2011, Kazakh Authorities notified a claim also inrelation to the 2007 cost recovery.Parties are negotiating in order to settle the dispute.

**(iv) Tax proceeding Eni Angola Production BV.** In thefirst months of 2009 the Ministry of the Finance of Angola,following a fiscal audit commenced at the end of 2007, filed anotice of tax assessment for fiscal years 2002 to 2007 in whichit objected to the deductibility of amortization chargesrecognized on assets in progress related to the payment of thePetroleum Income Tax that was made by Eni Angola Production BV asco-operator of Cabinda concession. The company filed an appealagainst this decision with the Provincial Court of Luanda for allthe years of the claim. The Court of First Instance declared thatit lacked competence in judging the matter. The judgment is stillpending before the Supreme Court. Eni accrued a provision withrespect to this proceeding.

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**Assets under concession arrangements**Eni operates under concession arrangements mainly in theExploration & Production segment and in some activities ofthe Gas & Power segment and the Refining & Marketingsegment. In the Exploration & Production segment contractualclauses governing mineral concessions, licenses and explorationpermits regulate the access of Eni to hydrocarbon reserves. Suchclauses can differ in each country. In particular, mineralconcessions, licenses and permits are granted by the legal ownersand, generally, entered into with government entities, State oilcompanies and, in some legal contexts, private owners. As acompensation for mineral concessions, Eni pays royalties andtaxes in accordance with local tax legislation. Eni sustains allthe operation risks and costs related to the exploration anddevelopment activities and it is entitled to the productionsrealized. In Production Sharing Agreement and in buy-backcontracts, realized productions are defined on the basis ofcontractual agreements drawn up with State oil companies whichhold the concessions. Such contractual agreements regulate therecovery of costs incurred for the exploration, development andoperating activities (cost oil) and give entitlement to the ownportion of the realized productions (profit oil). With referenceto natural gas storage in Italy, the activity is conducted on thebasis of concessions with a duration that does not exceed twentyyears and it is granted by the Ministry of Productive Activitiesto persons that are consistent with legislation requirements andthat can demonstrate to be able to conduct a storage program thatmeets the public interest in accordance with the laws. In the Gas& Power segment the gas distribution activity is primarilyconducted on the basis of concessions granted by local publicentities, pending the decrees for the determination of minimumlimits of over-municipal areas. At the expiration date of theconcession, compensation is paid, defined by using criteria ofbusiness appraisal, to the outgoing operator following the saleof its own gas distribution network. Service tariffs fordistribution are defined on the basis of a method established bythe Authority for Electricity and Gas. The law provides the grantof distribution service exclusively by tender, with a maximumlength of 12 years. In the Refining & Marketing segmentseveral service stations and other auxiliary assets of thedistribution service are located in the motorway areas and theyare granted by the motorway concession operators following apublic tender for the sub-concession of the supplying of oilproducts distribution service and other auxiliary services. Suchassets are amortized over the length of the concession(generally, 5 years for Italy). In exchange of the grantingof the services described above, Eni provides to the motorwaycompanies fixed and variable royalties on the basis of quantitiessold. At the end of the concession period, all non-removableassets are transferred to the grantor of the concession.

 

**Environmental regulations**Risks associated with the footprint of Eni’s activitieson the environment, health and safety are described in "Item3 – Risk Factors". In the future, Eni will sustainsignificant expenses in relation to compliance withenvironmental, health and safety laws and regulations and forreclaiming, safety and remediation works of areas previously usedfor industrial production and dismantled sites. In particular,regarding the environmental risk, management does not currentlyexpect any material adverse effect upon Eni’s consolidatedfinancial statements, taking account of ongoing remedial actions,existing insurance policies and the environmental risk provisionaccrued in the consolidated financial statements. However,management believes that it is possible that Eni may incurmaterial losses and liabilities in future years in connectionwith environmental matters due to: (i) the possibility of as yetunknown contamination; (ii) the results of the ongoing surveysand the other possible effects of statements required by DecreeNo. 471/1999 of the Ministry for the Environment; (iii) newdevelopments in environmental regulation; (iv) the effect ofpossible technological changes relating to future remediation;and (v) the possibility of litigation and the difficulty ofdetermining Eni’s liability, if any, as against otherpotentially responsible parties with respect to such litigationand the possible insurance recoveries.

 

**Emission trading**Legislative Decree No. 216 of April 4, 2006 implemented theEmission Trading Directive No. 2003/87/EC concerning greenhousegas emissions and Directive No. 2004/101/EC concerning the use ofcarbon credits deriving from projects for the reduction ofemissions based on the flexible mechanisms devised by the KyotoProtocol. This European emission trading scheme has been in forcesince January 1, 2005, and on this matter, on November 27, 2008,the National Committee for Emissions Trading Scheme (Ministry forthe Environment-Mse) published the Resolution 20/2008 definingemission permits for the 2008-2012 period. Eni was assignedpermits corresponding to 126.4 million tonnes of carbon dioxide(of which, 25.8 in 2008, 25.8 in 2009, 25.3 in 2010, 25.0 in2011, 24.5 in 2012) and in addition to approximately 2.0 millionof permits expected to be assigned with respect to new plants inthe five-year period 2008-2012. Emission quotas of new plantsinclude only those physically assigned and recorded in theemissions registry. Emissions of carbon dioxide from Eni’splants were lower than permits assigned in 2010. Againstemissions of carbon dioxide amounted to approximately 25.5million tonnes, emission permits amounting to 25.9 million tonneswere assigned, determining a 0.4 million tonnes surplus. Inaddition to such surplus, a 0.3 million tonnes of permits (asincrease in the availability of Eni) are to be included followingthe contract of Virtual 

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Power Plan GDF Suez Energia Italia, primarily assigned tocover the emissions of the EniPower plants. For this reason, thetotal surplus amounted to about 0.7 million tonnes.

**35 Revenues**The following is a summary of the main components of"Revenues". For more information about changes inrevenues, see "Item 5 – Operating and Financial Reviewand Prospects".

Net sales from operations were as follows:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Net sales from operations                  |   | 107,777     |   | 83,519     |   |   | 98,864     |   |
|--------------------------------------------|--------|-------------|--------|------------|--------|--------|------------|--------|
| Change in        contract work in progress |   | 305         |   | (292       | )      |   | (341       | )      |
|                                       |   | **108,082** |   | **83,227** |   |   | **98,523** |   |
|                                       |   |             |   |            |        |   |            |        |

Net sales from operations were net of thefollowing items:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Excise taxes                                                                                |   | 13,142     |   | 12,122     |   | 11,785     |
|---------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|
| Exchanges        of oil sales (excluding excise taxes)                                      |   | 2,694      |   | 1,680      |   | 1,868      |
| Services billed to joint venture partners                                                   |   | 2,081      |   | 2,435      |   | 2,996      |
| Sales to        service station managers for sales billed to holders of        credit cards |   | 1,700      |   | 1,531      |   | 2,150      |
| Exchanges of other products                                                                 |   | 83         |   | 55         |   | 79         |
|                                                                                        |   | **19,700** |   | **17,823** |   | **18,878** |
|                                                                                        |   |            |   |            |   |            |

Net sales from operations of euro 98,864 million includedrevenues deriving from the construction and the development ofthe distribution network related to assets under concessionagreements (euro 357 million).

Net sales from operations by business segment and geographicarea of destination are presented in Note 41 – Informationby business segment and geographic financial information.

 

**Other income and revenues**Other income and revenues were as follows:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Gains from sale of assets                                                     |   | 48      |   | 306       |   | 266     |
|-------------------------------------------------------------------------------|--------|---------|--------|-----------|--------|---------|
| Lease and        rental income                                                |   | 98      |   | 100       |   | 84      |
| Compensation for damages                                                      |   | 15      |   | 54        |   | 47      |
| Contract        penalties and other trade revenues                            |   | 23      |   | 31        |   | 52      |
| Gains on price adjustments under        overlifting/underlifting transactions |   | 180     |   | 148       |   | 50      |
| Other        proceeds (*)                                                     |   | 364     |   | 479       |   | 457     |
|                                                                          |   | **728** |   | **1,118** |   | **956** |
|                                                                          |   |         |   |           |   |         |

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Gains from sale of assets of euro 266 millionrelated for euro 241 million to the Exploration & Productionsegment.

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**36 Operating expenses**The following is a summary of the main components of"Operating expenses". For more information aboutchanges in operating expenses see "Item 5 – Operatingand Financial Review and Prospects".

 

**Purchase, services and other**Purchase, services and other included the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Production costs - raw, ancillary and consumable        materials and goods                        |   | 58,662     |   |   | 40,311     |   |   | 48,261     |   |
|----------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Production        costs - services                                                                 |   | 13,355     |   |   | 13,520     |   |   | 15,400     |   |
| Operating leases and other                                                                         |   | 2,558      |   |   | 2,567      |   |   | 3,066      |   |
| Net        provisions for contingencies                                                            |   | 884        |   |   | 1,055      |   |   | 1,407      |   |
| Other expenses                                                                                     |   | 1,660      |   |   | 1,527      |   |   | 1,309      |   |
|                                                                                               |   | **77,119** |   |   | **58,980** |   |   | **69,443** |   |
| less:                                                                                              |   |       |   |   |       |   |   |       |   |
| -        capitalized direct costs associated with self-constructed        assets - tangible assets |   | (680       | )      |   | (576       | )      |   | (243       | )      |
| - capitalized direct costs associated with        self-constructed assets - intangible assets      |   | (89        | )      |   | (53        | )      |   | (65        | )      |
|                                                                                               |   | **76,350** |   |   | **58,351** |   |   | **69,135** |   |
|                                                                                               |   |            |        |   |            |        |   |            |        |

Production costs-services included brokerage fees related toEngineering & Construction segment for euro 26 million (euro155 million and euro 79 million in 2008 and 2009, respectively).

Costs incurred in connection with research and developmentactivity recognized in profit and loss amounted to euro 221million (euro 216 million and euro 207 million in 2008 and 2009,respectively) as they do not meet the requirements to becapitalized.

The item "Operating leases and other" includedoperating leases for euro 1,400 million (euro 957 million andeuro 1,220 million in 2008 and 2009, respectively) and royaltieson hydrocarbons extracted for euro 1,214 million (euro 871million and euro 641 million in 2008 and 2009, respectively).Future minimum lease payments expected to be paid undernon-cancelable operating leases were as follows:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| To be paid within 1 year     |   | 618       |   | 886       |   | 1,023     |
|------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Between 2        and 5 years |   | 2,585     |   | 2,335     |   | 2,278     |
| Beyond 5 years               |   | 1,084     |   | 1,034     |   | 752       |
|                         |   | **4,287** |   | **4,255** |   | **4,053** |
|                         |   |           |   |           |   |           |

Operating leases primarily concerned assets for drillingactivities, time charter and long-term rentals of vessels, lands,service stations and office buildings. Such leases did notinclude renewal options. There are no significant restrictionsprovided by these operating leases which limit the ability of Enito pay dividends, use assets or to take on new borrowings.

Increases in provisions for contingencies net of reversal ofunutilized provisions amounted to euro 1,407 million (euro 884million and euro 1,055 million in 2008 and 2009, respectively)and mainly regarded environmental risks for euro 1,352 million(euro 360 million and euro 258 million in 2008 and 2009,respectively) as a result of the filing of the proposal to theItalian Ministry for the Environment for a global transaction oncertain environmental issues. More information is included inNote 27 – Provisions for contingencies. Net reversal ofprovisions for legal proceedings amounted to euro 185 million(net provision of euro 55 million and euro 333 million in 2008and 2009, respectively) as a result of a favorable outcome of anantitrust proceeding. More information is included in Note 27– Provisions for contingencies.

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**Payroll and related costs**Payroll and related costs were as follows:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Wages and salaries                                                                                   |   | 3,204     |   |   | 3,330     |   |   | 3,565     |   |
|------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Social        security contributions                                                                 |   | 694       |   |   | 706       |   |   | 714       |   |
| Cost related to defined benefits plans and        defined contributions plans                        |   | 107       |   |   | 137       |   |   | 164       |   |
| Other        costs                                                                                   |   | 282       |   |   | 342       |   |   | 600       |   |
|                                                                                                 |   | **4,287** |   |   | **4,515** |   |   | **5,043** |   |
| less:                                                                                                |   |      |   |   |      |   |   |      |   |
| - capitalized direct costs associated with        self-constructed assets - tangible assets          |   | (235      | )      |   | (280      | )      |   | (209      | )      |
| -        capitalized direct costs associated with self-constructed        assets - intangible assets |   | (48       | )      |   | (54       | )      |   | (49       | )      |
|                                                                                                 |   | **4,004** |   |   | **4,181** |   |   | **4,785** |   |
|                                                                                                 |   |           |        |   |           |        |   |           |        |

**Average number of employees**The average number and break-down of employees by category ofEni’s subsidiaries were as follows:

| (number) |   | **2008** |   | **2009** |   | **2010** |
|----------|--------|----------|--------|----------|--------|----------|
|     |   |          |   |          |   |          |

| Senior managers        |   | 1,621      |   | 1,653      |   | 1,569      |
|------------------------|--------|------------|--------|------------|--------|------------|
| Junior        managers |   | 12,597     |   | 13,255     |   | 13,122     |
| Employees              |   | 36,766     |   | 37,207     |   | 37,589     |
| Workers                |   | 26,387     |   | 26,533     |   | 26,550     |
|                   |   | **77,371** |   | **78,648** |   | **78,830** |
|                   |   |            |   |            |   |            |

The average number of employees was calculated as the averagebetween the number of employees at the beginning and end of theperiod. The average number of senior managers included managersemployed and operating in foreign countries, whose position iscomparable to a senior manager status.

 

**Stock-based compensation**

*Stock option*In 2009, Eni suspended the incentive plan based on the stockoption assignment to managers of Eni and its subsidiaries asdefined in Article 2359 of the Italian Civil Code. The followingis the information about the residual plans of past periods.

At December 31, 2010, 15,737,120 options were outstanding forthe purchase of 15,737,120 Eni ordinary shares (nominal valueeuro 1 each). The break-down of outstanding options was thefollowing:

|   |   | **Rights outstanding         as of Dec. 31, 2010** |   | **Weighted-average strike price of the rights        outstanding as of Dec. 31, 2010******(euro) |
|--------|--------|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|
|   |   |                                                    |   |                                                                                                  |

| Stock option plan 2003        |   | 213,400        |   | 13.743 |
|-------------------------------|--------|----------------|--------|--------|
| Stock        option plan 2004 |   | 671,600        |   | 16.576 |
| Stock option plan 2005        |   | 3,281,500      |   | 22.514 |
| Stock        option plan 2006 |   | 2,307,935      |   | 23.121 |
| Stock option plan 2007        |   | 2,431,560      |   | 27.451 |
| Stock        option plan 2008 |   | 6,831,125      |   | 22.540 |
|                          |   | **15,737,120** |   |   |
|                          |   |                |   |        |

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At December 31, 2010, the residual life of the plans atDecember 2003, 2004, 2005, 2006, 2007 and 2008 was 7 months, 1year and 7 months, 2 years and 7 months, 1 year and 7 months, 2years and 7 months and 3 years and 7 months, respectively.

The 2006-2008 stock option plan provides that options can beexercised after three years from the assignment (vesting period).The strike price is calculated as the arithmetic average ofofficial prices registered on the Mercato Telematico Azionariooperated by Borsa Italiana SpA in the month preceding theassignment.

In 2010, changes of stock option plans consisted of thecarry-over of the previous plans. The following table summarizesthese changes:

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | Number         of shares |   | Average strike price (euro) |   | Market price (a) (euro) |   | Number         of shares |   | Average strike price (euro) |   | Market price (a) (euro) |   | Number         of shares |   | Average strike price (euro) |   | Market price (a) (euro) |
|--------|--------|--------------------------|--------|-----------------------------|--------|-------------------------|--------|--------------------------|--------|-----------------------------|--------|-------------------------|--------|--------------------------|--------|-----------------------------|--------|-------------------------|
|   |   |                          |   |                             |   |                         |   |                          |   |                             |   |                         |   |                          |   |                             |   |                         |

| **Rights outstanding as of January 1**         |   | **17,699,625** |   |   | **23.822** |   | **25.120** |   | **23,557,425** |   |   | **23.540** |   | **16.556** |   | **19,482,330** |   |   | **23.576** |   | **17.811** |
|------------------------------------------------|--------|----------------|--------|--------|------------|--------|------------|--------|----------------|--------|--------|------------|--------|------------|--------|----------------|--------|--------|------------|--------|------------|
| New rights        granted                      |   | 7,415,000      |   |   | 22.540     |   | 22.538     |   |           |   |   |       |   |       |   |           |   |   |       |   |       |
| Rights exercised in the period                 |   | (582,100       | )      |   | 17.054     |   | 24.328     |   | (2,000         | )      |   | 13.743     |   | 16.207     |   | (88,500        | )      |   | 14.941     |   | 16.048     |
| Rights        cancelled in the period          |   | (975,100       | )      |   | 24.931     |   | 19.942     |   | (4,073,095     | )      |   | 13.374     |   | 14.866     |   | (3,656,710     | )      |   | 26.242     |   | 16.918     |
| **Rights outstanding as of December 31**       |   | **23,557,425** |   |   | **23.540** |   | **16.556** |   | **19,482,330** |   |   | **23.576** |   | **17.811** |   | **15,737,120** |   |   | **23.005** |   | **16.398** |
| **of        which exercisable at December 31** |   | **5,184,250**  |   |   | **21.263** |   | **16.556** |   | **7,298,155**  |   |   | **21.843** |   | **17.811** |   | **8,896,125**  |   |   | **23.362** |   | **16.398** |
|                                           |   |                |        |   |            |   |            |   |                |        |   |            |   |            |   |                |        |   |            |   |            |

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | Market price        relating to new rights granted, rights exercised in the        period and rights cancelled in the period corresponds to        the average market value (arithmetic average of official        prices recorded on Mercato Telematico Azionario in the        month preceding: (i) the date of the Board of Directors        resolution regarding the stock option assignment; (ii)        the date on which the emission/transfer of the shares        granted were recorded in the grantee’s securities        account; and (iii) the date of the unilateral termination        of employment for rights cancelled), weighted with the        number of shares. Market price of stock at the beginning        and end of the year is the price recorded at December 31. |

The fair value of stock options granted during the years 2003,2004 and 2005 was euro 1.50, euro 2.01 and euro 3.33 per share,respectively. For 2006, 2007 and 2008 the weighted averageconsidering options granted was euro 2.89, euro 2.98 and euro2.60 per share, respectively.

The fair value was determined by applying the followingassumptions:

|   |   |   |   |   |   | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **2007** |   | **2008** |
|--------|--------|--------|--------|--------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |   |   |   |   |          |   |          |   |          |   |          |   |          |   |          |

| Risk-free interest rate        (%) |   | 3.2  |   | 3.2  |   | 2.5  |   | 4.0  |   | 4.7  |   | 4.9  |
|------------------------------------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|
| Expected        life (years)       |   | 8    |   | 8    |   | 8    |   | 6    |   | 6    |   | 6    |
| Expected volatility (%)            |   | 22.0 |   | 19.0 |   | 21.0 |   | 16.8 |   | 16.3 |   | 19.2 |
| Expected        dividends (%)      |   | 5.4  |   | 4.5  |   | 4.0  |   | 5.3  |   | 4.9  |   | 6.1  |
|                               |   |      |   |      |   |      |   |      |   |      |   |      |

Costs of the year related to stock option plans amounted toeuro 12 million (euro 25 million and euro 12 million in 2008 and2009, respectively).

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**Compensation of key management personnel**Compensation of persons responsible for key positions inplanning, direction and control functions of Eni Group, includingexecutive and non-executive officers, general managers andmanagers with strategic responsibility (key management personnel)in office at December 31 of each year amount to euro 25 million,euro 35 million and euro 33 million in 2008, 2009 and 2010,respectively, and consisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Wages and salaries              |   | 17     |   | 20     |   | 20     |
|---------------------------------|--------|--------|--------|--------|--------|--------|
| Post-employment        benefits |   | 1      |   | 1      |   | 1      |
| Other long-term benefits        |   | 3      |   | 10     |   | 10     |
| Stock        grant/option       |   | 4      |   | 4      |   | 2      |
|                            |   | **25** |   | **35** |   | **33** |
|                            |   |        |   |        |   |        |

 

**Compensation of Directors and Statutory Auditors**Compensation of Directors amounted to euro 6.4 million, euro9.9 million and euro 9.7 million for 2008, 2009 and 2010,respectively. Compensation of Statutory Auditors amounted to euro0.634 million, euro 0.475 million and euro 0.511 million in 2008,2009 and 2010, respectively.

Compensation included emoluments and all other similarpayments and social security compensations due for the functionof directors or statutory auditor assumed by Eni SpA or othercompanies included in the scope of consolidation, representing acost for Eni, even if not subjected to personal income tax.

 

**Other operating income (loss)**Other operating income (loss) related to the recognition tothe income statement of the effects related to the valuation atfair value of those derivatives on commodities which cannot berecognized according to the hedge accounting under IFRS as wellas of the derivatives entered by the Gas & Power segmentfollowing the new pricing model (see Note 34 – Guarantees,commitments and risks – Risk factors for furtherinformation) for an active managing of margins (euro 7 million).Net gain on commodity derivatives of euro 131 million (losses foreuro 124 million and incomes for euro 55 million in 2008 and2009, respectively) included euro 13 million related to theineffective portion of the negative change in the fair value ofcash flow hedging derivatives (time value component) entered intoby the Exploration & Production segment and the Gas &Power segment (a gain of euro 7 million and euro 6 million in the2008 and 2009, respectively).

 

**Depreciation, depletion, amortization and impairments**Depreciation, depletion, amortization and impairments chargesconsisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Depreciation, depletion and amortization:                          |   |      |   |   |      |   |   |      |   |
|--------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| - tangible        assets                                           |   | 5,994     |   |   | 6,658     |   |   | 7,141     |   |
| - intangible assets                                                |   | 2,436     |   |   | 2,110     |   |   | 1,744     |   |
|                                                               |   | **8,430** |   |   | **8,768** |   |   | **8,885** |   |
| Impairments:                                                       |   |      |   |   |      |   |   |      |   |
| - tangible        assets                                           |   | 1,343     |   |   | 990       |   |   | 257       |   |
| - intangible assets                                                |   | 53        |   |   | 62        |   |   | 441       |   |
|                                                               |   | **1,396** |   |   | **1,052** |   |   | **698**   |   |
| less:                                                              |   |      |   |   |      |   |   |      |   |
| - reversal        of impairments - tangible assets                 |   | (2        | )      |   | (1        | )      |   |      |   |
| - reversal of impairments - intangible assets                      |   | (1        | )      |   |      |   |   |      |   |
| -        capitalized direct costs associated with self-constructed |   |      |   |   |      |   |   |      |   |
| assets - tangible assets                                           |   | (6        | )      |   | (4        | )      |   | (2        | )      |
| -        capitalized direct costs associated with self-constructed |   |      |   |   |      |   |   |      |   |
| assets - intangible assets                                         |   | (2        | )      |   | (2        | )      |   | (2        | )      |
|                                                               |   | **9,815** |   |   | **9,813** |   |   | **9,579** |   |
|                                                               |   |           |        |   |           |        |   |           |        |

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**37 Finance income (expense)******Finance income (expense) consisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| **Finance income (expense)**                    |   |     |   |   |     |   |   |     |   |
|-------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Finance        income                           |   | 7,985    |   |   | 5,950    |   |   | 6,117    |   |
| Finance expense                                 |   | (8,198   | )      |   | (6,497   | )      |   | (6,713   | )      |
|                                            |   | **(213** | **)**  |   | **(547** | **)**  |   | **(596** | **)**  |
| Gain (loss) on derivative financial instruments |   | (427     | )      |   | (4       | )      |   | (131     | )      |
|                                            |   | **(640** | **)**  |   | **(551** | **)**  |   | **(727** | **)**  |
|                                            |   |          |        |   |          |        |   |          |        |

Net finance income (expense) consisted of thefollowing:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| **Finance income (expense) related to net        borrowings**                                                   |   |     |   |   |     |   |   |     |   |
|-----------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Interest        and other finance expense on ordinary bonds                                                     |   | (248     | )      |   | (423     | )      |   | (551     | )      |
| Interest due to banks and other financial        institutions                                                   |   | (745     | )      |   | (330     | )      |   | (215     | )      |
| Interest        from banks                                                                                      |   | 87       |   |   | 33       |   |   | 18       |   |
| Interest and other income on financing        receivables and securities held for non-operating        purposes |   | 82       |   |   | 47       |   |   | 21       |   |
|                                                                                                            |   | **(824** | **)**  |   | **(673** | **)**  |   | **(727** | **)**  |
| **Exchange differences**                                                                                        |   |     |   |   |     |   |   |     |   |
| Positive        exchange differences                                                                            |   | 7,339    |   |   | 5,572    |   |   | 5,897    |   |
| Negative exchange differences                                                                                   |   | (7,133   | )      |   | (5,678   | )      |   | (5,805   | )      |
|                                                                                                            |   | **206**  |   |   | **(106** | **)**  |   | **92**   |   |
| **Other finance income (expense)**                                                                              |   |     |   |   |     |   |   |     |   |
| Capitalized        finance expense                                                                              |   | 236      |   |   | 223      |   |   | 187      |   |
| Income from equity instruments                                                                                  |   | 241      |   |   | 163      |   |   |     |   |
| Interest        and other income on financing receivables and securities        held for operating purposes     |   | 62       |   |   | 39       |   |   | 73       |   |
| Interest on tax credits                                                                                         |   | 37       |   |   | 4        |   |   | 2        |   |
| Finance        expense due to passage of time (accretion discount) (a)                                          |   | (249     | )      |   | (218     | )      |   | (251     | )      |
| Other finance income                                                                                            |   | 78       |   |   | 21       |   |   | 28       |   |
|                                                                                                            |   | **405**  |   |   | **232**  |   |   | **39**   |   |
|                                                                                                            |   | **(213** | **)**  |   | **(547** | **)**  |   | **(596** | **)**  |
|                                                                                                            |   |          |        |   |          |        |   |          |        |

|    |    |                                                                                                                                         |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | The item        related to the increase in provisions for contingencies        that are shown at present value in non-current        liabilities. |

The fair value gain (loss) on derivativefinancial instruments consisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Derivatives on exchange rate        |   | (300     | )      |   | 40     |   |   | (111     | )      |
|-------------------------------------|--------|----------|--------|--------|--------|--------|--------|----------|--------|
| Derivatives        on interest rate |   | (127     | )      |   | (52    | )      |   | (39      | )      |
| Derivatives on commodities          |   |     |   |   | 8      |   |   | 19       |   |
|                                |   | **(427** | **)**  |   | **(4** | **)**  |   | **(131** | **)**  |
|                                |   |          |        |   |        |        |   |          |        |

Net loss from derivatives of euro 131 million (a net loss ofeuro 427 million and euro 4 million in 2008 and 2009,respectively) was primarily due to the recognition in the profitand loss account of the change in the fair value of thosederivatives which cannot be recognized according to the hedgeaccounting under IFRS as they were entered into for amounts equalto the net exposure to exchange rate risk and interest rate risk,and as such, they cannot be referred to specific trade orfinancing transactions. The lack of these formal requirements toqualify these derivatives as hedging instruments under IFRS alsoentailed the recognition in profit or loss of negative currencytranslation differences on assets and liabilities denominated incurrencies other than functional currency, as this effect cannotbe offset by changes in the fair value of the relatedinstruments.

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**38 Income (expense) from investments**

**Share of profit (loss) of equity-accounted investments**Share of profit (loss) of equity-accounted investmentsconsisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Share of profit of equity-accounted investments                         |   | 761     |   |   | 693     |   |   | 717     |   |
|-------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Share of        loss of equity-accounted investments                    |   | (105    | )      |   | (241    | )      |   | (149    | )      |
| Decreases (increases) in the provision for        losses on investments |   | (16     | )      |   | (59     | )      |   | (31     | )      |
|                                                                    |   | **640** |   |   | **393** |   |   | **537** |   |
|                                                                    |   |         |        |   |         |        |   |         |        |

More information is provided in Note 17 – Investments.

 

**Other gain (loss) from investments**Other gain (loss) from investments consisted of thefollowing:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Dividends                          |   | 510     |   |   | 164     |   |   | 264     |
|------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|
| Gains on        disposals          |   | 218     |   |   | 16      |   |   | 332     |
| Losses on disposals                |   | (1      | )      |   |    |   |   |    |
| Other        income (expense), net |   | 6       |   |   | (4      | )      |   | 23      |
|                               |   | **733** |   |   | **176** |   |   | **619** |
|                               |   |         |        |   |         |        |   |         |

Dividends of euro 264 million essentially related to NigeriaLNG Ltd (euro 188 million) and Saudi European PetrochemicalCompany "IBN ZAHR" (euro 41 million).

Gains on disposals for 2010 of euro 332 million essentiallyreferred to the divestment of the 100% interest in SocietàPadana Energia SpA (euro 169 million), a 25% stake in GreenStreamBV (euro 93 million) and the 100% interest in Distri RE SA (euro47 million). Gains on disposals for 2009 of euro 16 millionprimarily referred to a price revision related to the sale donein 2008 of Gaztransport et Technigaz SAS (euro 10 million). Gainson disposals for 2008 of euro 218 million primarily related tothe sale of Gaztransport et Technigaz SAS (euro 185 million),Agip España SA (euro 15 million) and Padana Assicurazioni SpA(euro 10 million).

**39 Income tax expense**Income tax expense consisted of the following:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Current taxes:                                                            |   |       |   |   |       |   |   |      |   |
|---------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
| - Italian        subsidiaries                                             |   | 1,916      |   |   | 1,724      |   |   | 1,315     |   |
| - foreign subsidiaries of the Exploration &        Production segment |   | 9,744      |   |   | 5,989      |   |   | 7,893     |   |
| - foreign        subsidiaries                                             |   | 426        |   |   | 483        |   |   | 521       |   |
|                                                                      |   | **12,086** |   |   | **8,196**  |   |   | **9,729** |   |
| Net        deferred taxes:                                                |   |       |   |   |       |   |   |      |   |
| - Italian subsidiaries                                                    |   | (1,603     | )      |   | (534       | )      |   | (474      | )      |
| - foreign        subsidiaries of the Exploration & Production segment |   | (827       | )      |   | (733       | )      |   | (97       | )      |
| - foreign subsidiaries                                                    |   | 36         |   |   | (173       | )      |   | (1        | )      |
|                                                                      |   | **(2,394** | **)**  |   | **(1,440** | **)**  |   | **(572**  | **)**  |
|                                                                      |   | **9,692**  |   |   | **6,756**  |   |   | **9,157** |   |
|                                                                      |   |            |        |   |            |        |   |           |        |

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Current income taxes of euro 1,315 million were in respect ofIres and substitute tax (euro 1,077 million) and Irap (euro 224million) for Italian subsidiaries and foreign taxes (euro 14million).

The effective tax rate was 55.4% (50.3% and 56.0% in 2008 and2009, respectively) compared with a statutory tax rate of 39.6%(38.2% and 40.1% in 2008 and 2009, respectively) and calculatedby applying a 34.0%19 tax rate (Ires) to profit beforeincome taxes and 3.9% tax rate (Irap) to the net value ofproduction as provided for by Italian laws.

The difference between the statutory and effective tax ratewas due to the following factors:

| (%)    |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Statutory tax rate**                                                                                                                               |   | **38.2** |   |   | **40.1** |   | **39.6** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|----------|
| Items        increasing (decreasing) statutory tax rate:                                                                                             |   |     |   |   |     |   |     |
| - higher foreign subsidiaries tax rate                                                                                                               |   | 15.2     |   |   | 13.3     |   | 15.0     |
| - impact        pursuant to Law Decree No. 112 of June 25, 2008, the        Budget Law 2008 and enactment of a renewed tax framework        in Libya |   | (3.8     | )      |   | 2.4      |   |     |
| - permanent differences and other adjustments                                                                                                        |   | 0.7      |   |   | 0.2      |   | 0.8      |
|                                                                                                                                                 |   | **12.1** |   |   | **15.9** |   | **15.8** |
|                                                                                                                                                 |   | **50.3** |   |   | **56.0** |   | **55.4** |
|                                                                                                                                                 |   |          |        |   |          |   |          |

The increase in the tax rate of foreign subsidiaries primarilyrelated to a 16.1 percentage points increase in the Exploration& Production segment (17.1% and 16.1% in 2008 and 2009,respectively).

The impact pursuant to Law Decree No. 112/2008, the Budget Law2008 and enactment of a renewed tax framework in Libya consistedof the following: in the 2009 (i) the equalization in Libya ofthe 2008 income taxes for euro 230 million following adjustmentsto the valorization criteria of revenues; (ii) a reduceddeductibility in Italy of the cost of goods sold following thereduction in the gas volumes of inventories for euro 64 million;in the 2008 (iii) the utilization of deferred tax liabilitiesrecognized on higher carrying amounts of year-end inventories ofoil, gas and refined products stated at the weighted-average costwith respect to their tax base according to the last-in-first-outmethod (LIFO) (euro 528 million). In fact, pursuant to the LawDecree No. 112/2008 (become Law No. 133/2008), energy companiesin Italy are required from 2008 to state inventories ofhydrocarbons at the weighted-average cost for tax purposes asopposed to the previous LIFO evaluation and to recognize aone-off tax calculated by applying a special tax with a 16% rateon the difference between the two amounts. Accordingly, profitand loss benefited from the difference between utilization ofdeferred tax liabilities accrued on hydrocarbons inventories andthe one-off tax (euro 229 million), for a total positive impactof euro 176 million, which consider previously applicablestatutory tax rate (Ires) of 33% instead of 27.5% of the previoustax regime. This one-off tax will be paid in three annualinstallments of same amount, due from 2009 onwards; (iv)application of the Italian Budget Law for 2008 that provide anincrease in limits whereby carrying amounts of assets andliabilities of consolidated subsidiaries can be recognized fortax purposes by paying a one-off tax calculated by applying aspecial rate of 6% (positive impact on profit and loss of euro370 million; euro 290 million net of the special tax); (v)enactment of a renewed tax framework in Libya regarding oilcompanies operating in accordance with production sharingschemes. Based on the new provisions, the tax base of theCompany’s Libyan oil properties has been reassessedresulting in the partial utilization of previously accrued taxliabilities of euro 173 million; and (vi) the impact of abovementioned Law Decree No. 112/2008 on energy companies calculatedby applying statutory tax rate (Ires) of 33% pursuant to the LawDecree No. 112/2008 instead of the previously applicablestatutory tax rate (Ires) of 27.5% (euro 94 million).

In 2010, permanent differences and other adjustments for 0.8percentage points included: (i) as increase, the supplementalIres pursuant to the Law No. 7 of February 6, 2009 (1.5percentage points) and, as decrease, an untaxed income related toa favorable outcome of an antitrust proceeding (0.6 percentagepoints). For further information see in Note 27 – Provisionsfor contingencies. In 2009 permanent differences and otheradjustments for 0.2 percentage points included: (ii) as increase,a charge amounting to euro 250 million related to the estimationof a fine for the TSKJ matter to the U.S. Authorities (forfurther information see Note 34 – Guarantees, commitmentsand risks); and (iii) as decrease, deferred tax assets accountedfollowing an adjustment of the fiscal value to the carryingamount of oil and gas properties related to a reorganization ofthe Italian activities by paying a special tax and the partialdeductibility of Irap of income taxes of previous years (euro 222million).

----

| (19) |    | Includes a        5.5% supplemental tax rate on taxable profit of energy        companies in Italy (whose primary activity is the        production and marketing of hydrocarbons and electricity        and with annual revenues in excess of euro 25 million)        effective from January 1, 2008 and a further 1% increase        effective from January 1, 2009, pursuant to the Law        Decree No. 112/2008 (converted in to Law No. 133/2008). |
|------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**40 Earnings per share**Basic earnings per ordinary share are calculated by dividing netprofit for the year attributable to Eni’s shareholders bythe weighted average number of ordinary shares issued andoutstanding during the year, excluding treasury shares.

The average number of ordinary shares used for the calculationof the basic earnings per share outstanding at December 31, 2008,2009 and 2010, was 3,638,835,896, 3,622,405,852 and3,622,454,738, respectively.

Diluted earnings per share is calculated by dividing netprofit for the year attributable to Eni’s shareholders bythe weighted average number of shares fully-diluted whichincludes issued and outstanding shares during the year, excludingtreasury shares and including the number of shares that could beissued potentially in connection with stock-based compensationplans. At December 31, 2008, 2009 and 2010 the number of sharesthat could be issued potentially are related to stock optionsplans.

The average number of shares fully diluted used in thecalculation of diluted earnings was 3,638,854,276, 3,622,438,937and 3,622,469,713 for the years ending December 31, 2008, 2009and 2010, respectively.

Reconciliation of the average number of shares used for thecalculation for both basic and diluted earning per share was asfollows:

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Average number of shares used for the        calculation of the basic earnings per share**   |   |             |   | **3,638,835,896** |   | **3,622,405,852** |   | **3,622,454,738** |
|------------------------------------------------------------------------------------------------|--------|------------------|--------|-------------------|--------|-------------------|--------|-------------------|
| Number of        potential shares following stock option plans                                 |   |             |   | 18,380            |   | 33,085            |   | 14,975            |
| **Average number of shares used for the        calculation of the diluted earnings per share** |   |             |   | **3,638,854,276** |   | **3,622,438,937** |   | **3,622,469,713** |
| **Eni’s        net profit**                                                               |   | (euro million)   |   | **8,825**         |   | **4,367**         |   | **6,318**         |
| **Basic earning per share**                                                                    |   | (euro per share) |   | **2.43**          |   | **1.21**          |   | **1.74**          |
| **Diluted        earning per share**                                                           |   | (euro per share) |   | **2.43**          |   | **1.21**          |   | **1.74**          |
|                                                                                           |   |             |   |                   |   |                   |   |                   |

 

 

 

 

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**41 Information by industry segment andgeographic financial information**

**Information by industry segment**

| (euro million) |   | **Exploration &        Production** |   | **Gas & Power** |   | **Refining & Marketing** |   | **Petrochemicals** |   | **Engineering &        Construction** |   | **Other activities** |   | **Corporate and financial        companies** |   | **Intra-Group profits** |   | **Total** |
|----------------|--------|-----------------------------------------|--------|---------------------|--------|------------------------------|--------|--------------------|--------|-------------------------------------------|--------|----------------------|--------|----------------------------------------------|--------|-------------------------|--------|-----------|
|           |   |                                         |   |                     |   |                              |   |                    |   |                                           |   |                      |   |                                              |   |                         |   |           |

| **2008**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
|---------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Net sales        from operations (a)                          |   | 33,042  |   |   | 37,062 |   |   | 45,017 |   |   | 6,303  |   |   | 9,176  |   |   | 185    |   |   | 1,331  |   |   | 75     |   |   |    |   |
| Less: intersegment sales                                      |   | (18,917 | )      |   | (873   | )      |   | (1,496 | )      |   | (398   | )      |   | (1,219 | )      |   | (29    | )      |   | (1,177 | )      |   |   |   |   |    |   |
| Net sales        to customers                                 |   | 14,125  |   |   | 36,189 |   |   | 43,521 |   |   | 5,905  |   |   | 7,957  |   |   | 156    |   |   | 154    |   |   | 75     |   |   | 108,082 |   |
| Operating profit                                              |   | 16,239  |   |   | 4,030  |   |   | (988   | )      |   | (845   | )      |   | 1,045  |   |   | (466   | )      |   | (623   | )      |   | 125    |   |   | 18,517  |   |
| Provisions        for contingencies                           |   | 154     |   |   | 238    |   |   | 190    |   |   | 2      |   |   | 36     |   |   | 219    |   |   | 45     |   |   |   |   |   | 884     |   |
| Depreciation, amortization and impairments                    |   | 7,488   |   |   | 798    |   |   | 729    |   |   | 395    |   |   | 335    |   |   | 8      |   |   | 76     |   |   | (14    | )      |   | 9,815   |   |
| Share of        profit (loss) of equity-accounted investments |   | 173     |   |   | 413    |   |   | 16     |   |   | (9     | )      |   | 43     |   |   | 4      |   |   |   |   |   |   |   |   | 640     |   |
| Identifiable assets (b)                                       |   | 40,815  |   |   | 33,151 |   |   | 11,081 |   |   | 2,629  |   |   | 10,630 |   |   | 362    |   |   | 789    |   |   | (641   | )      |   | 98,816  |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 17,857  |   |
| Equity-accounted investments                                  |   | 1,787   |   |   | 2,249  |   |   | 1,227  |   |   | 25     |   |   | 130    |   |   | 53     |   |   |   |   |   |   |   |   | 5,471   |   |
| Identifiable        liabilities (c)                           |   | 10,481  |   |   | 11,802 |   |   | 4,481  |   |   | 664    |   |   | 6,177  |   |   | 1,846  |   |   | 1,572  |   |   | (75    | )      |   | 36,948  |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 31,215  |   |
| Capital        expenditures                                   |   | 9,281   |   |   | 2,058  |   |   | 965    |   |   | 212    |   |   | 2,027  |   |   | 52     |   |   | 95     |   |   | (128   | )      |   | 14,562  |   |
| **2009**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Net sales        from operations (a)                          |   | 23,801  |   |   | 30,447 |   |   | 31,769 |   |   | 4,203  |   |   | 9,664  |   |   | 88     |   |   | 1,280  |   |   | (66    | )      |   |    |   |
| Less: intersegment sales                                      |   | (13,630 | )      |   | (635   | )      |   | (965   | )      |   | (238   | )      |   | (1,315 | )      |   | (24    | )      |   | (1,152 | )      |   |   |   |   |    |   |
| Net sales        to customers                                 |   | 10,171  |   |   | 29,812 |   |   | 30,804 |   |   | 3,965  |   |   | 8,349  |   |   | 64     |   |   | 128    |   |   | (66    | )      |   | 83,227  |   |
| Operating profit                                              |   | 9,120   |   |   | 3,687  |   |   | (102   | )      |   | (675   | )      |   | 881    |   |   | (436   | )      |   | (420   | )      |   |   |   |   | 12,055  |   |
| Provisions        for contingencies                           |   | (2      | )      |   | 277    |   |   | 154    |   |   | 1      |   |   | 311    |   |   | 172    |   |   | 142    |   |   |   |   |   | 1,055   |   |
| Depreciation, amortization and impairments                    |   | 7,365   |   |   | 981    |   |   | 754    |   |   | 204    |   |   | 435    |   |   | 8      |   |   | 83     |   |   | (17    | )      |   | 9,813   |   |
| Share of        profit (loss) of equity-accounted investments |   | 142     |   |   | 310    |   |   | (70    | )      |   |   |   |   | 50     |   |   | (39    | )      |   |   |   |   |   |   |   | 393     |   |
| Identifiable assets (b)                                       |   | 42,729  |   |   | 32,135 |   |   | 12,244 |   |   | 2,583  |   |   | 11,611 |   |   | 355    |   |   | 1,031  |   |   | (553   | )      |   | 102,135 |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 15,394  |   |
| Equity-accounted investments                                  |   | 1,989   |   |   | 2,044  |   |   | 1,494  |   |   | 37     |   |   | 213    |   |   | 51     |   |   |   |   |   |   |   |   | 5,828   |   |
| Identifiable        liabilities (c)                           |   | 10,918  |   |   | 9,161  |   |   | 4,684  |   |   | 742    |   |   | 5,967  |   |   | 1,868  |   |   | 1,461  |   |   | (8     | )      |   | 34,793  |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 32,685  |   |
| Capital        expenditures                                   |   | 9,486   |   |   | 1,686  |   |   | 635    |   |   | 145    |   |   | 1,630  |   |   | 44     |   |   | 57     |   |   | 12     |   |   | 13,695  |   |
| **2010**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Net sales        from operations (a)                          |   | 29,497  |   |   | 29,576 |   |   | 43,190 |   |   | 6,141  |   |   | 10,581 |   |   | 105    |   |   | 1,386  |   |   | 100    |   |   |    |   |
| Less: intersegment sales                                      |   | (16,550 | )      |   | (833   | )      |   | (1,345 | )      |   | (243   | )      |   | (1,802 | )      |   | (25    | )      |   | (1,255 | )      |   |   |   |   |    |   |
| Net sales        to customers                                 |   | 12,947  |   |   | 28,743 |   |   | 41,845 |   |   | 5,898  |   |   | 8,779  |   |   | 80     |   |   | 131    |   |   | 100    |   |   | 98,523  |   |
| Operating profit                                              |   | 13,866  |   |   | 2,896  |   |   | 149    |   |   | (86    | )      |   | 1,302  |   |   | (1,384 | )      |   | (361   | )      |   | (271   | )      |   | 16,111  |   |
| Provisions        for contingencies                           |   | 33      |   |   | (58    | )      |   | 199    |   |   | 2      |   |   | 35     |   |   | 1,146  |   |   | 50     |   |   |   |   |   | 1,407   |   |
| Depreciation, amortization and impairments                    |   | 7,051   |   |   | 1,399  |   |   | 409    |   |   | 135    |   |   | 516    |   |   | 10     |   |   | 79     |   |   | (20    | )      |   | 9,579   |   |
| Share of        profit (loss) of equity-accounted investments |   | 92      |   |   | 388    |   |   | 68     |   |   | 1      |   |   |   |   |   | (2     | )      |   | (10    | )      |   |   |   |   | 537     |   |
| Identifiable assets (b)                                       |   | 49,573  |   |   | 34,943 |   |   | 14,356 |   |   | 3,076  |   |   | 12,715 |   |   | 362    |   |   | 754    |   |   | (917   | )      |   | 114,862 |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 16,998  |   |
| Equity-accounted investments                                  |   | 1,974   |   |   | 2,370  |   |   | 1,058  |   |   | 30     |   |   | 174    |   |   | 54     |   |   | 8      |   |   |   |   |   | 5,668   |   |
| Identifiable        liabilities (c)                           |   | 12,330  |   |   | 10,048 |   |   | 6,197  |   |   | 874    |   |   | 5,760  |   |   | 2,898  |   |   | 1,307  |   |   | (101   | )      |   | 39,313  |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 36,819  |   |
| Capital        expenditures                                   |   | 9,690   |   |   | 1,685  |   |   | 711    |   |   | 251    |   |   | 1,552  |   |   | 22     |   |   | 109    |   |   | (150   | )      |   | 13,870  |   |
|                                                          |   |         |        |   |        |        |   |        |        |   |        |        |   |        |        |   |        |        |   |        |        |   |        |        |   |         |        |

|    |    |                                                                                       |
|--------------|--------------|-------------------------------------------------------------------------------------------------|
| (a)          |    | Before        elimination of intersegment sales.                                                |
| (b)          |    | Includes        assets directly associated with the generation of        operating profit.      |
| (c)          |    | Includes        liabilities directly associated with the generation of        operating profit. |

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Starting from 2010, environmental provisions incurred by EniSpA following the effect of inter-company guarantees given onbehalf of Syndial SpA are reported in the segment informationwithin "Other activities". Prior periods informationhas been restated accordingly.

Inter-segment revenues are conducted at an arm’s lengthbasis.

 

**Geographic financial information***Identifiable assets and investments by geographic area oforigin*

| (euro million) |   |   |   | **Italy** |   | **Other European Union** |   | **Rest of Europe** |   | **Americas** |   | **Asia** |   | **Africa** |   | **Other areas** |   | **Total** |
|----------------|--------|--------|--------|-----------|--------|--------------------------|--------|--------------------|--------|--------------|--------|----------|--------|------------|--------|-----------------|--------|-----------|
|           |   |   |   |           |   |                          |   |                    |   |              |   |          |   |            |   |                 |   |           |

| **2008**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|
| Identifiable        assets (a) |   | 40,432 |   | 15,071 |   | 3,561  |   | 6,224  |   | 10,563 |   | 22,044 |   | 921    |   | 98,816  |
| Capital expenditures           |   | 3,674  |   | 1,660  |   | 582    |   | 1,240  |   | 1,777  |   | 5,153  |   | 476    |   | 14,562  |
| **2009**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |
| Identifiable assets (a)        |   | 40,861 |   | 15,571 |   | 3,520  |   | 6,337  |   | 11,187 |   | 23,397 |   | 1,262  |   | 102,135 |
| Capital        expenditures    |   | 3,198  |   | 1,454  |   | 574    |   | 1,207  |   | 2,033  |   | 4,645  |   | 584    |   | 13,695  |
| **2010**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |
| Identifiable        assets (a) |   | 45,342 |   | 16,322 |   | 5,091  |   | 6,837  |   | 12,459 |   | 27,322 |   | 1,489  |   | 114,862 |
| Capital expenditures           |   | 3,044  |   | 1,710  |   | 724    |   | 1,156  |   | 1,941  |   | 5,083  |   | 212    |   | 13,870  |
|                           |   |        |   |        |   |        |   |        |   |        |   |        |   |        |   |         |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (a)          |    | Includes        assets directly related to the generation of operating        profit. |

*Sales from operations by geographic area of destination*

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Italy                       |   | 42,843      |   | 27,950     |   | 47,802     |
|-----------------------------|--------|-------------|--------|------------|--------|------------|
| Other        European Union |   | 29,341      |   | 24,331     |   | 21,125     |
| Rest of Europe              |   | 7,125       |   | 5,213      |   | 4,172      |
| Americas                    |   | 7,218       |   | 7,080      |   | 6,282      |
| Asia                        |   | 8,916       |   | 8,208      |   | 5,785      |
| Africa                      |   | 12,331      |   | 10,174     |   | 13,068     |
| Other areas                 |   | 308         |   | 271        |   | 289        |
|                        |   | **108,082** |   | **83,227** |   | **98,523** |
|                        |   |             |   |            |   |            |

**42 Transactions with related parties**In the ordinary course of its business Eni entersinto transactions regarding:

| a) |   | the exchange of goods,        provision of services and financing with joint ventures,        associates and non-consolidated subsidiaries;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | the exchange of goods and        provision of services with entities directly and        indirectly owned or controlled by the Government;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| c) |   | transactions with the Gruppo        Cosmi related to Eni through a member of the Board of        Directors related to certain acquisition of engineering,        construction and maintenance services. Relevant        transactions which were executed on an arm’s length        basis, consisted of costs amounting to approximately euro        13 million, euro 21 million and euro 23 million in 2008,        2009 and 2010, respectively. At December 31, 2010        receivables for euro 1 million and payables for euro 8        million were outstanding (euro 4 million and euro 9        million at December 31, 2009, respectively); and |
| d) |   | contributions to entities,        controlled by Eni with the aim to develop solidarity,        culture and research initiatives. In particular these        related to: (i) Eni Foundation established by Eni as a        non-profit entity with the aim of pursuing exclusively        solidarity initiatives in the fields of social        assistance, health, education, culture and environment as        well as research and development. In 2010, transactions        with Eni Foundation                                                                                                                                                           |

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|   | were not material; and (ii)        Enrico Mattei Foundation established by Eni with the aim        of enhancing, through studies, research and training        initiatives, knowledge in the fields of economics, energy        and environment, both at the national and international        level. Transactions with Enrico Mattei Foundation were        not material. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Transactions with related parties were conducted in theinterest of Eni companies and, with exception of those withentities with the aim to develop solidarity, culture and researchinitiatives, on an arm’s length basis.

Trade and other transactions with joint ventures, associatesand non-consolidated subsidiaries as well as with entitiesdirectly and indirectly owned or controlled by the Government inthe 2008, 2009 and 2010, respectively, consisted of thefollowing:

| (euro        million) |   | **Dec. 31, 2008** |   | **2008** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | Costs |   | Revenues |   |   |
|--------|-------|--------|----------|--------|--------|
|   |       |   |          |   |   |

| Name |    | Receivables and other assets |    | Payables and other liabilities |    | Guarantees |    | Goods |    | Services |    | Other |    | Goods |    | Services |    | Other |    | Other operating (expense) income |
|------|--------------|------------------------------|--------------|--------------------------------|--------------|------------|--------------|-------|--------------|----------|--------------|-------|--------------|-------|--------------|----------|--------------|-------|--------------|----------------------------------|
|      |         |                              |         |                                |         |            |         |       |         |          |         |       |         |       |         |          |         |       |         |                                  |

| **Joint ventures and associates**                             |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
|---------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|--------|--------|--------|
| Agiba        Petroleum Co                                     |   |      |   | 11        |   |      |   |      |   | 60        |   |    |   |      |   |      |   |   |   |   |
| Altergaz SA                                                   |   | 30        |   |      |   |      |   |      |   |      |   |    |   | 135       |   |      |   |   |   |   |
| ASG Scarl                                                     |   | 2         |   | 25        |   | 49        |   |      |   | 57        |   |    |   |      |   |      |   |   |   |   |
| Bayernoil Raffineriegesellschaft mbH                          |   | 3         |   | 4         |   | 1         |   | 6         |   | 62        |   |    |   | 4         |   |      |   |   |   |   |
| Bernhard        Rosa Inh. Ingeborg Plöchinger GmbH       |   | 5         |   |      |   |      |   |      |   |      |   |    |   | 98        |   |      |   |   |   |   |
| Blue Stream Pipeline Co BV                                    |   | 23        |   | 17        |   |      |   |      |   | 171       |   |    |   |      |   | 1         |   |   |   |   |
| Bronberger        & Kessler und Gilg & Schweiger GmbH |   | 12        |   |      |   |      |   |      |   |      |   |    |   | 175       |   |      |   |   |   |   |
| CEPAV (Consorzio Eni per l'Alta Velocità) Uno            |   | 95        |   | 37        |   | 6,001     |   |      |   | 17        |   | 3       |   |      |   | 397       |   |   |   |   |
| CEPAV        (Consorzio Eni per l'Alta Velocità) Due     |   | 4         |   | 1         |   | 64        |   |      |   | 1         |   |    |   |      |   | 1         |   |   |   |   |
| Eni Oil Co Ltd                                                |   | 9         |   | 28        |   |      |   |      |   | 660       |   |    |   |      |   | 6         |   |   |   |   |
| Fox Energy        SpA                                         |   | 37        |   |      |   |      |   | 2         |   |      |   |    |   | 329       |   | 1         |   |   |   |   |
| FPSO Mystras - Produção de Petròleo Lda        |   |      |   |      |   |      |   | 94        |   |      |   | 10      |   |      |   |      |   |   |   |   |
| Gasversorgung        Süddeutschland GmbH                 |   | 64        |   |      |   |      |   |      |   |      |   |    |   | 337       |   | 18        |   |   |   |   |
| Gruppo Distribuzione Petroli Srl                              |   | 20        |   |      |   |      |   |      |   |      |   |    |   | 111       |   |      |   |   |   |   |
| InAgip doo                                                    |   | 24        |   | 45        |   |      |   |      |   | 116       |   |    |   | 3         |   | 35        |   |   |   |   |
| Karachaganak Petroleum Operating BV                           |   | 72        |   | 207       |   |      |   | 874       |   | 380       |   | 25      |   |      |   | 12        |   |   |   |   |
| Mellitah        Oil & Gas BV                              |   | 10        |   | 121       |   |      |   |      |   | 329       |   |    |   | 2         |   | 4         |   |   |   |   |
| Petrobel Belayim Petroleum Co                                 |   |      |   | 77        |   |      |   |      |   | 181       |   |    |   |      |   |      |   |   |   |   |
| Raffineria        di Milazzo ScpA                             |   | 11        |   | 4         |   |      |   |      |   | 276       |   |    |   | 135       |   | 3         |   |   |   |   |
| Saipon Snc                                                    |   | 4         |   |      |   | 58        |   |      |   |      |   |    |   |      |   | 12        |   |   |   |   |
| Super        Octanos CA                                       |   |      |   | 24        |   |      |   | 286       |   |      |   |    |   |      |   |      |   |   |   |   |
| Supermetanol CA                                               |   |      |   | 5         |   |      |   | 90        |   |      |   |    |   |      |   |      |   |   |   |   |
| Trans        Austria Gasleitung GmbH                          |   | 8         |   | 78        |   |      |   | 60        |   | 153       |   |    |   |      |   | 64        |   |   |   |   |
| Transitgas AG                                                 |   |      |   | 5         |   |      |   |      |   | 1         |   | 64      |   |      |   |      |   |   |   |   |
| Unión        Fenosa Gas SA                               |   | 1         |   | 25        |   | 62        |   | 25        |   |      |   |    |   | 257       |   | 1         |   |   |   |   |
| Other (*)                                                     |   | 231       |   | 115       |   | 18        |   | 36        |   | 319       |   | 46      |   | 71        |   | 129       |   | 8      |   |   |
|                                                          |   | **665**   |   | **829**   |   | **6,253** |   | **1,473** |   | **2,783** |   | **148** |   | **1,657** |   | **684**   |   | **8**  |   |   |
| **Unconsolidated entities controlled by Eni**                 |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Agip        Kazakhstan North Caspian Operating Co NV          |   | 144       |   | 166       |   |      |   |      |   | 720       |   | 11      |   | 1         |   | 367       |   | 10     |   |   |
| Eni BTC Ltd                                                   |   |      |   |      |   | 146       |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Other (*)                                                     |   | 22        |   | 18        |   | 4         |   | 2         |   | 20        |   | 2       |   | 4         |   | 6         |   | 4      |   |   |
|                                                          |   | **166**   |   | **184**   |   | **150**   |   | **2**     |   | **740**   |   | **13**  |   | **5**     |   | **373**   |   | **14** |   |   |
|                                                          |   | **831**   |   | **1,013** |   | **6,403** |   | **1,475** |   | **3,523** |   | **161** |   | **1,662** |   | **1,057** |   | **22** |   |   |
| **Entities owned or controlled by the        Government**     |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Gruppo        Alitalia                                        |   | 4         |   |      |   |      |   |      |   |      |   |    |   | 417       |   | 2         |   |   |   |   |
| Gruppo Enel                                                   |   | 153       |   | 12        |   |      |   | 13        |   | 223       |   |    |   | 941       |   | 380       |   |   |   |   |
| Gruppo        Ferrovie dello Stato                            |   | 19        |   | 7         |   |      |   |      |   | 27        |   | 1       |   | 57        |   |      |   |   |   |   |
| GSE - Gestore Servizi Elettrici                               |   | 92        |   | 63        |   |      |   | 315       |   |      |   | 79      |   | 347       |   | 16        |   | 6      |   | 58     |
| Terna SpA                                                     |   | 33        |   | 35        |   |      |   | 14        |   | 128       |   |    |   | 12        |   | 83        |   | 10     |   |   |
| Other (*)                                                     |   | 28        |   | 72        |   |      |   | 33        |   | 88        |   | 5       |   | 72        |   | 2         |   | 1      |   |   |
|                                                          |   | **329**   |   | **189**   |   |      |   | **375**   |   | **466**   |   | **85**  |   | **1,846** |   | **483**   |   | **17** |   | **58** |
|                                                          |   | **1,160** |   | **1,202** |   | **6,403** |   | **1,850** |   | **3,989** |   | **246** |   | **3,508** |   | **1,540** |   | **39** |   | **58** |
|                                                               |   |           |   |           |   |           |   |           |   |           |   |         |   |           |   |           |   |        |   |        |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

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| (euro        million) |   | **Dec. 31, 2009** |   | **2009** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | Costs |   | Revenues |   |   |
|--------|-------|--------|----------|--------|--------|
|   |       |   |          |   |   |

| Name |    | Receivables and other assets |    | Payables and other liabilities |    | Guarantees |    | Goods |    | Services |    | Other |    | Goods |    | Services |    | Other |    | Other operating (expense) income |
|------|--------------|------------------------------|--------------|--------------------------------|--------------|------------|--------------|-------|--------------|----------|--------------|-------|--------------|-------|--------------|----------|--------------|-------|--------------|----------------------------------|
|      |         |                              |         |                                |         |            |         |       |         |          |         |       |         |       |         |          |         |       |         |                                  |

| **Joint ventures and associates**                             |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
|---------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|--------|--------|--------|
| Agiba        Petroleum Co                                     |   |      |   | 5         |   |      |   |      |   | 64        |   |    |   |      |   |      |   |   |   |   |
| Altergaz SA                                                   |   | 50        |   |      |   |      |   |      |   |      |   |    |   | 142       |   |      |   |   |   |   |
| ASG Scarl                                                     |   |      |   | 10        |   | 54        |   |      |   | 25        |   |    |   |      |   |      |   |   |   |   |
| Azienda Energia e Servizi Torino SpA                          |   | 1         |   | 30        |   |      |   |      |   | 62        |   |    |   |      |   | 1         |   |   |   |   |
| Bayernoil        Raffineriegesellschaft mbH                   |   |      |   | 31        |   | 1         |   | 15        |   | 77        |   |    |   | 2         |   |      |   |   |   |   |
| Blue Stream Pipeline Co BV                                    |   | 17        |   | 15        |   | 34        |   |      |   | 163       |   |    |   |      |   |      |   |   |   |   |
| Bronberger        & Kessler und Gilg & Schweiger GmbH |   | 16        |   |      |   |      |   |      |   |      |   |    |   | 95        |   |      |   |   |   |   |
| CEPAV (Consorzio Eni per l'Alta Velocità) Uno            |   | 38        |   | 12        |   | 6,037     |   |      |   | 5         |   |    |   |      |   | 84        |   |   |   |   |
| CEPAV        (Consorzio Eni per l'Alta Velocità) Due     |   | 6         |   | 1         |   | 76        |   |      |   | 1         |   |    |   |      |   | 2         |   |   |   |   |
| Fox Energy SpA                                                |   | 44        |   |      |   |      |   | 1         |   |      |   |    |   | 241       |   |      |   |   |   |   |
| Gasversorgung        Süddeutschland GmbH                 |   | 17        |   |      |   |      |   |      |   |      |   |    |   | 196       |   | 8         |   |   |   |   |
| Gruppo Distribuzione Petroli Srl                              |   | 15        |   |      |   |      |   |      |   |      |   |    |   | 71        |   |      |   |   |   |   |
| InAgip doo                                                    |   | 44        |   | 23        |   |      |   |      |   | 86        |   |    |   |      |   | 71        |   |   |   |   |
| Karachaganak Petroleum Operating BV                           |   | 61        |   | 196       |   |      |   | 588       |   | 344       |   | 27      |   | 9         |   | 10        |   |   |   |   |
| Kwanda        Suporto Logistico Lda                           |   | 72        |   |      |   |      |   |      |   |      |   |    |   |      |   | 20        |   |   |   |   |
| Mellitah Oil & Gas BV                                     |   | 30        |   | 190       |   |      |   |      |   | 306       |   |    |   | 2         |   | 31        |   |   |   |   |
| Petrobel        Belayim Petroleum Co                          |   | 4         |   | 12        |   |      |   |      |   | 205       |   |    |   |      |   | 4         |   | 2      |   |   |
| Raffineria di Milazzo ScpA                                    |   | 14        |   | 8         |   |      |   |      |   | 242       |   |    |   | 98        |   | 5         |   |   |   |   |
| Saipon Snc                                                    |   | 8         |   | 2         |   | 61        |   |      |   |      |   |    |   |      |   | 45        |   |   |   |   |
| Super Octanos CA                                              |   |      |   | 24        |   |      |   | 133       |   |      |   |    |   |      |   |      |   |   |   |   |
| Trans        Austria Gasleitung GmbH                          |   | 4         |   | 71        |   |      |   | 36        |   | 157       |   |    |   |      |   | 40        |   |   |   |   |
| Transitgas AG                                                 |   |      |   |      |   |      |   |      |   | 1         |   | 61      |   |      |   |      |   |   |   |   |
| Unión        Fenosa Gas SA                               |   | 8         |   |      |   | 62        |   | 12        |   |      |   |    |   | 53        |   |      |   | 1      |   |   |
| Other (*)                                                     |   | 143       |   | 58        |   | 15        |   | 62        |   | 188       |   | 41      |   | 117       |   | 125       |   | 10     |   |   |
|                                                          |   | **592**   |   | **688**   |   | **6,340** |   | **847**   |   | **1,926** |   | **129** |   | **1,026** |   | **446**   |   | **13** |   |   |
| **Unconsolidated entities controlled by Eni**                 |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Agip        Kazakhstan North Caspian Operating Co NV          |   | 194       |   | 224       |   |      |   | 1         |   | 914       |   | 7       |   | 15        |   | 466       |   | 7      |   |   |
| Eni BTC Ltd                                                   |   |      |   |      |   | 141       |   |      |   |      |   |    |   |      |   | 1         |   |   |   |   |
| Other (*)                                                     |   | 29        |   | 23        |   | 4         |   | 1         |   | 52        |   | 4       |   | 14        |   | 6         |   | 1      |   |   |
|                                                          |   | **223**   |   | **247**   |   | **145**   |   | **2**     |   | **966**   |   | **11**  |   | **29**    |   | **473**   |   | **8**  |   |   |
|                                                          |   | **815**   |   | **935**   |   | **6,485** |   | **849**   |   | **2,892** |   | **140** |   | **1,055** |   | **919**   |   | **21** |   |   |
| **Entities owned or controlled by the        Government**     |   |      |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Gruppo        Enel                                            |   | 96        |   | 32        |   |      |   | 9         |   | 286       |   | 77      |   | 342       |   | 428       |   | 1      |   |   |
| Gruppo Finmeccanica                                           |   | 33        |   | 37        |   |      |   | 16        |   | 56        |   |    |   | 21        |   | 7         |   |   |   |   |
| GSE -        Gestore Servizi Elettrici                        |   | 83        |   | 74        |   |      |   | 373       |   |      |   | 79      |   | 342       |   | 15        |   |   |   | 19     |
| Terna SpA                                                     |   | 7         |   | 37        |   |      |   | 52        |   | 52        |   | 19      |   | 7         |   | 86        |   | 4      |   | 25     |
| Other (*)                                                     |   | 78        |   | 71        |   |      |   | 1         |   | 71        |   | 6       |   | 62        |   | 16        |   |   |   |   |
|                                                          |   | **297**   |   | **251**   |   |      |   | **451**   |   | **465**   |   | **181** |   | **774**   |   | **552**   |   | **5**  |   | **44** |
|                                                          |   | **1,112** |   | **1,186** |   | **6,485** |   | **1,300** |   | **3,357** |   | **321** |   | **1,829** |   | **1,471** |   | **26** |   | **44** |

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

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

F-106

----

##### Table of Contents

| (euro        million) |   | **Dec. 31, 2010** |   | **2010** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | Costs |   | Revenues |   |   |
|--------|-------|--------|----------|--------|--------|
|   |       |   |          |   |   |

| Name |    | Receivables and other assets |    | Payables and other liabilities |    | Guarantees |    | Goods |    | Services |    | Other |    | Goods |    | Services |    | Other |    | Other operating (expense) income |
|------|--------------|------------------------------|--------------|--------------------------------|--------------|------------|--------------|-------|--------------|----------|--------------|-------|--------------|-------|--------------|----------|--------------|-------|--------------|----------------------------------|
|      |         |                              |         |                                |         |            |         |       |         |          |         |       |         |       |         |          |         |       |         |                                  |

| **Joint ventures and associates**                              |   |    |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
|----------------------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|--------|--------|--------|
| ACAM        Clienti SpA                                        |   | 14      |   | 2         |   |      |   | 1         |   | 5         |   |    |   | 56        |   |      |   |   |   |   |
| Agiba Petroleum Co                                             |   | 2       |   | 5         |   |      |   |      |   | 95        |   |    |   |      |   |      |   |   |   |   |
| Altergaz        SA                                             |   |    |   |      |   |      |   |      |   |      |   |    |   | 262       |   |      |   |   |   |   |
| Azienda Energia e Servizi Torino SpA                           |   | 1       |   | 65        |   |      |   |      |   | 78        |   |    |   |      |   | 1         |   |   |   |   |
| Bayernoil        Raffineriegesellschaft mbH                    |   |    |   | 32        |   | 1         |   | 19        |   | 51        |   |    |   | 2         |   |      |   |   |   |   |
| Bernhard Rosa Inh. Ingeborg Plöchinger GmbH               |   | 7       |   |      |   |      |   |      |   |      |   |    |   | 50        |   |      |   |   |   |   |
| Blue        Stream Pipeline Co BV                              |   | 13      |   | 14        |   | 37        |   |      |   | 152       |   |    |   |      |   | 2         |   |   |   |   |
| Bronberger & Kessler undGilg & Schweiger        GmbH   |   | 20      |   |      |   |      |   |      |   |      |   |    |   | 121       |   |      |   |   |   |   |
| CEPAV        (Consorzio Eni per l’Alta Velocità) Uno |   | 28      |   | 12        |   | 6,054     |   |      |   | 5         |   |    |   |      |   | 37        |   |   |   |   |
| CEPAV (Consorzio Eni per l’Alta Velocità)        Due |   | 6       |   | 3         |   | 76        |   |      |   | 3         |   |    |   |      |   | 6         |   |   |   |   |
| Gasversorgung        Süddeutschland GmbH                  |   | 3       |   |      |   |      |   |      |   |      |   |    |   | 62        |   |      |   |   |   |   |
| GreenStream BV                                                 |   | 4       |   | 13        |   |      |   |      |   | 95        |   |    |   | 1         |   | 2         |   |   |   |   |
| Karachaganak        Petroleum Operating BV                     |   | 39      |   | 253       |   |      |   | 821       |   | 346       |   | 28      |   | 8         |   | 7         |   |   |   |   |
| Kwanda Suporto Logistico Lda                                   |   | 51      |   | 1         |   |      |   |      |   |      |   |    |   |      |   | 17        |   |   |   |   |
| Mellitah        Oil & Gas BV                               |   | 30      |   | 137       |   |      |   |      |   | 225       |   |    |   |      |   | 33        |   |   |   |   |
| Petrobel Belayim Petroleum Co                                  |   | 8       |   | 34        |   |      |   |      |   | 714       |   |    |   |      |   | 3         |   | 2      |   |   |
| Raffineria        di Milazzo ScpA                              |   | 21      |   | 20        |   |      |   |      |   | 266       |   |    |   | 157       |   | 7         |   | 1      |   |   |
| Saipon Snc                                                     |   | 2       |   |      |   | 53        |   |      |   |      |   |    |   |      |   | 29        |   |   |   |   |
| Super        Octanos CA                                        |   |    |   | 23        |   |      |   | 58        |   |      |   |    |   | 2         |   |      |   |   |   |   |
| Supermetanol CA                                                |   |    |   | 13        |   |      |   | 57        |   |      |   |    |   |      |   |      |   | 1      |   |   |
| Trans        Austria Gasleitung GmbH                           |   | 8       |   | 69        |   |      |   | 32        |   | 149       |   |    |   | 1         |   | 37        |   |   |   |   |
| Transitgas AG                                                  |   |    |   | 8         |   |      |   |      |   | 70        |   |    |   |      |   |      |   |   |   |   |
| Unión        Fenosa Gas SA                                |   | 11      |   |      |   | 58        |   |      |   |      |   |    |   | 60        |   |      |   | 1      |   |   |
| Other (*)                                                      |   | 138     |   | 51        |   | 11        |   | 27        |   | 232       |   | 50      |   | 35        |   | 91        |   | 12     |   |   |
|                                                           |   | **406** |   | **755**   |   | **6,290** |   | **1,015** |   | **2,486** |   | **78**  |   | **817**   |   | **272**   |   | **17** |   |   |
| **Unconsolidated entities controlled by Eni**                  |   |    |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Agip        Kazakhstan North Caspian Operating Co NV           |   | 177     |   | 285       |   |      |   | 2         |   | 894       |   | 5       |   |      |   | 917       |   | 7      |   |   |
| Eni BTC Ltd                                                    |   |    |   |      |   | 152       |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Other        (*)                                               |   | 22      |   | 22        |   | 3         |   | 4         |   | 48        |   | 2       |   | 5         |   | 23        |   | 4      |   |   |
|                                                           |   | **199** |   | **307**   |   | **155**   |   | **6**     |   | **942**   |   | **7**   |   | **5**     |   | **940**   |   | **11** |   |   |
|                                                           |   | **605** |   | **1,062** |   | **6,445** |   | **1,021** |   | **3,428** |   | **85**  |   | **822**   |   | **1,212** |   | **28** |   |   |
| **Entities owned or controlled by the        Government**      |   |    |   |      |   |      |   |      |   |      |   |    |   |      |   |      |   |   |   |   |
| Gruppo        Enel                                             |   | 83      |   | 44        |   |      |   | 20        |   | 318       |   | 1       |   | 128       |   | 471       |   |   |   |   |
| Gruppo Finmeccanica                                            |   | 44      |   | 44        |   |      |   | 50        |   | 37        |   |    |   | 22        |   | 9         |   |   |   |   |
| GSE -        Gestore Servizi Elettrici                         |   | 94      |   | 104       |   |      |   | 466       |   |      |   | 81      |   | 462       |   | 16        |   |   |   | 3      |
| Terna SpA                                                      |   | 35      |   | 41        |   |      |   | 115       |   | 71        |   | 31      |   | 55        |   | 28        |   | 9      |   | 38     |
| Other        (*)                                               |   | 62      |   | 44        |   |      |   |      |   | 74        |   | 4       |   | 44        |   | 5         |   | 21     |   |   |
|                                                           |   | **318** |   | **277**   |   |      |   | **651**   |   | **500**   |   | **117** |   | **711**   |   | **529**   |   | **30** |   | **41** |
|                                                           |   | **923** |   | **1,339** |   | **6,445** |   | **1,672** |   | **3,928** |   | **202** |   | **1,533** |   | **1,741** |   | **58** |   | **41** |
|                                                                |   |         |   |           |   |           |   |           |   |           |   |         |   |           |   |           |   |        |   |        |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

Most significant transactions with jointventures, associates and non-consolidated subsidiaries concerned:

| • |   | sale of natural gas to ACAM        Clienti SpA, Altergaz SA and Gasversorgung        Süddeutschland GmbH;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | provisions        of specialized services in upstream activities and        Eni’s share of expenses incurred to develop oil        fields from Agiba Petroleum Co, Agip Kazakhstan North        Caspian Operating Co NV, Karachaganak Petroleum Operating        BV, Mellitah Oil & Gas BV, Petrobel Belayim Petroleum        Co and, only for Karachaganak Petroleum Operating BV,        purchase of oil products and to Agip Kazakhstan North        Caspian Operating Co NV, provisions of services by the        Engineering & Constuction segment; services charged        to Eni’s associates are invoiced on the basis of        incurred costs; |
| • |   | gas transportation and        distribution services in behalf of Azienda Energia e        Servizi Torino SpA;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | payments of refining        services to Bayernoil Raffineriegesellschaft mbH and        Raffineria di Milazzo ScpA in relation to incurred costs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | supply of oil products to        Bernhard Rosa Inh. Ingeborg Plöchinger GmbH, Bronberger        & Kessler und Gilg & Schweiger GmbH and        Raffineria di Milazzo ScpA on the basis of prices        referred to the quotations on international markets of        the main oil products, as they would be conducted on an        arm’s length basis;                                                                                                                                                                                                                                                                                                 |

F-107

----

##### Table of Contents

| • |   | acquisition of natural gas        transport services outside Italy from Blue Stream        Pipeline Co BV, GreenStream BV, Trans Austria Gasleitung        GmbH and Transitgas AG, the issuing of guarantees on        behalf of Blue Stream Pipeline Co BV and charges of fuel        gas, used as drive gas, to Trans Austria Gasleitung GmbH; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | transactions related to the        planning and the construction of the tracks for high        speed/high capacity trains from Milan to Bologna with        CEPAV (Consorzio Eni per l’Alta Velocità) Uno and        related guarantees;                                                                                               |
| • |   | guarantees issued on behalf        of CEPAV (Consorzio Eni per l’Alta Velocità) Due        and Saipon Snc in relation to contractual commitments        related to the execution of project planning and        realization;                                                                                                           |
| • |   | planning, construction and        technical assistance to Kwanda Suporto Logistico Lda;                                                                                                                                                                                                                                                          |
| • |   | acquisition of petrochemical        products from Super Octanos CA and Supermetanol CA on the        basis of prices referred to the quotations on        international markets of the main products;                                                                                                                                            |
| • |   | performance guarantees given        on behalf of Unión Fenosa Gas SA in relation to        contractual commitments related to the results of        operations and sales of LNG; and                                                                                                                                                        |
| • |   | guarantees issued in        relation to the construction of an oil pipeline on behalf        of Eni BTC Ltd.                                                                                                                                                                                                                                     |

Most significant transactions with entities owned orcontrolled by the Government concerned:

| • |   | sale and transportation        service of natural gas, the sale of fuel oil and the sale        and purchase of electricity and the acquisition of        electricity transmission service with Gruppo Enel;                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | a long-term contract for the        maintenance of new combined cycle power plants with        Gruppo Finmeccanica;                                                                                                                                                       |
| • |   | sale and purchase of        electricity, green certificates and the fair value of        derivative financial instruments included in prices of        electricity related to sale/purchase transactions with        GSE - Gestore Servizi Elettrici; and                 |
| • |   | sale and purchase of        electricity, the acquisition of domestic electricity        transmission service and the fair value of derivative        financial instruments included in prices of electricity        related to sale/purchase transactions with Terna SpA. |

Financing transactions with joint ventures, associates andnon-consolidated subsidiaries as well as with entities directlyand indirectly owned or controlled by the Government in the 2008,2009 and 2010, respectively, consisted of the following:

| (euro        million) |   | **Dec. 31, 2008** |   | **2008** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| Name |    | Receivables |    | Payables |    | Guarantees |    | Charges |    | Gains |
|------|--------------|-------------|--------------|----------|--------------|------------|--------------|---------|--------------|-------|
|      |         |             |         |          |         |            |         |         |         |       |

| **Joint ventures and associates**                    |   |    |   |    |   |    |   |   |   |   |
|------------------------------------------------------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|
| Bayernoil        Raffineriegesellschaft mbH          |   | 131     |   |    |   |    |   |   |   |   |
| Blue Stream Pipeline Co BV                           |   |    |   |    |   | 752     |   |   |   | 14     |
| PetroSucre        SA                                 |   | 153     |   |    |   |    |   |   |   |   |
| Raffineria di Milazzo ScpA                           |   |    |   |    |   | 70      |   |   |   |   |
| Trans        Austria Gasleitung GmbH                 |   | 186     |   |    |   |    |   |   |   | 7      |
| Transmediterranean Pipeline Co Ltd                   |   | 103     |   |    |   |    |   |   |   | 6      |
| Other        (*)                                     |   | 123     |   | 124     |   | 27      |   | 16     |   | 9      |
|                                                 |   | **696** |   | **124** |   | **849** |   | **16** |   | **36** |
| **Unconsolidated        entities controlled by Eni** |   |    |   |    |   |    |   |   |   |   |
| Other (*)                                            |   | 115     |   | 38      |   | 1       |   | 1      |   | 6      |
|                                                 |   | **115** |   | **38**  |   | **1**   |   | **1**  |   | **6**  |
|                                                 |   | **811** |   | **162** |   | **850** |   | **17** |   | **42** |
|                                                      |   |         |   |         |   |         |   |        |   |        |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

F-108

----

##### Table of Contents

| (euro        million) |   | **Dec. 31, 2009** |   | **2009** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| Name |    | Receivables |    | Payables |    | Guarantees |    | Charges |    | Gains |
|------|--------------|-------------|--------------|----------|--------------|------------|--------------|---------|--------------|-------|
|      |         |             |         |          |         |            |         |         |         |       |

| **Joint ventures and associates**                    |   |    |   |    |   |    |   |   |   |   |
|------------------------------------------------------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|
| Artic        Russia BV                               |   | 70      |   | 1       |   | 170     |   |   |   | 1      |
| Bayernoil Raffineriegesellschaft mbH                 |   | 133     |   |    |   |    |   |   |   |   |
| Blue        Stream Pipeline Co BV                    |   |    |   |    |   | 692     |   |   |   | 12     |
| Raffineria di Milazzo ScpA                           |   |    |   |    |   | 85      |   |   |   |   |
| Trans        Austria Gasleitung GmbH                 |   | 171     |   |    |   |    |   |   |   | 5      |
| Transmediterranean Pipeline Co Ltd                   |   | 149     |   |    |   |    |   |   |   | 3      |
| Other        (*)                                     |   | 125     |   | 112     |   | 24      |   | 2      |   | 3      |
|                                                 |   | **648** |   | **113** |   | **971** |   | **2**  |   | **24** |
| **Unconsolidated        entities controlled by Eni** |   |    |   |    |   |    |   |   |   |   |
| Other (*)                                            |   | 78      |   | 34      |   | 1       |   | 2      |   | 3      |
|                                                 |   | **78**  |   | **34**  |   | **1**   |   | **2**  |   | **3**  |
|                                                 |   | **726** |   | **147** |   | **972** |   | **4**  |   | **27** |
|                                                      |   |         |   |         |   |         |   |        |   |        |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

 

| (euro        million) |   | **Dec. 31, 2010** |   | **2010** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| Name |    | Receivables |    | Payables |    | Guarantees |    | Charges |    | Gains |
|------|--------------|-------------|--------------|----------|--------------|------------|--------------|---------|--------------|-------|
|      |         |             |         |          |         |            |         |         |         |       |

| **Joint ventures and associates**             |   |      |   |    |   |    |   |   |   |   |
|-----------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|--------|--------|--------|
| Artic        Russia BV                        |   | 104       |   | 3       |   |    |   |   |   | 1      |
| Bayernoil Raffineriegesellschaft mbH          |   | 119       |   |    |   |    |   |   |   |   |
| Blue        Stream Pipeline Co BV             |   |      |   | 8       |   | 648     |   |   |   | 9      |
| GreenStream BV                                |   | 459       |   | 2       |   |    |   |   |   | 19     |
| Raffineria        di Milazzo ScpA             |   |      |   |    |   | 120     |   |   |   |   |
| Trans Austria Gasleitung GmbH                 |   | 144       |   |    |   |    |   |   |   | 6      |
| Transmediterranean        Pipeline Co Ltd     |   | 141       |   |    |   |    |   |   |   | 5      |
| Other (*)                                     |   | 105       |   | 75      |   | 24      |   |   |   |   |
|                                          |   | **1,072** |   | **88**  |   | **792** |   |   |   | **40** |
| **Unconsolidated entities controlled by Eni** |   |      |   |    |   |    |   |   |   |   |
| Other (*)                                     |   | 53        |   | 39      |   | 1       |   |   |   | 1      |
|                                          |   | **53**    |   | **39**  |   | **1**   |   |   |   | **1**  |
|                                          |   | **1,125** |   | **127** |   | **793** |   |   |   | **41** |
|                                               |   |           |   |         |   |         |   |        |   |        |

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

Most significant transactions with jointventures, associates and non-consolidated subsidiaries concerned:

| • |   | bank debt guarantee issued        on behalf Blue Stream Pipeline Co BV and Raffineria di        Milazzo ScpA;                                                                                                                                                                                                            |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | financing loans and cash        deposit at Eni’s financial companies on behalf of        Artic Russia BV and a loan to Bayernoil        Raffineriegesellschaft mbH for expenditures in refining        plants; 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 Trans        Austria Gasleitung GmbH, GreenStream BV and        Transmediterranean Pipeline Co Ltd, respectively. |

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**Impact of transactions and positions with related partieson the balance sheet, profit and loss account and statement ofcash flows**The impact of transactions and positions with related partieson the balance sheet, profit and loss account and statement ofcash flows consisted of the following:

|   |   | **Dec. 31, 2008** |   | **Dec. 31, 2009** |   | **Dec. 31, 2010** |
|--------|--------|-------------------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |   |                   |

| (euro        million) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Trade and other receivables                                 |   | 22,222 |   | 1,539 |   | 6.93  |   | 20,348 |   | 1,355  |   | 6.66   |   | 23,636 |   | 1,356  |   | 5.74   |
|-------------------------------------------------------------|--------|--------|--------|-------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Other        current assets                                 |   | 1,870  |   | 59    |   | 3.16  |   | 1,307  |   | 9      |   | 0.69   |   | 1,350  |   | 9      |   | 0.67   |
| Other non-current financial assets                          |   | 1,134  |   | 356   |   | 31.39 |   | 1,148  |   | 438    |   | 38.15  |   | 1,523  |   | 668    |   | 43.86  |
| Other        non-current assets                             |   | 1,881  |   | 21    |   | 1.12  |   | 1,938  |   | 40     |   | 2.06   |   | 3,355  |   | 16     |   | 0.48   |
| Current financial liabilities                               |   | 6,359  |   | 153   |   | 2.41  |   | 3,545  |   | 147    |   | 4.15   |   | 6,515  |   | 127    |   | 1.95   |
| Trade and        other payables                             |   | 20,515 |   | 1,253 |   | 6.11  |   | 19,174 |   | 1,241  |   | 6.47   |   | 22,575 |   | 1,297  |   | 5.75   |
| Other liabilities                                           |   | 3,863  |   | 4     |   | 0.10  |   | 1,856  |   | 5      |   | 0.27   |   | 1,620  |   | 5      |   | 0.31   |
| Long-term        debt and current portion of long-term debt |   | 14,478 |   | 9     |   | 0.06  |   | 21,255 |   |   |   |   |   | 21,268 |   |   |   |   |
| Other non-current liabilities                               |   | 3,102  |   | 53    |   | 1.71  |   | 2,480  |   | 49     |   | 1.98   |   | 2,194  |   | 45     |   | 2.05   |
|                                                        |   |        |   |       |   |       |   |        |   |        |   |        |   |        |   |        |   |        |

The impact of transactions with related parties on the profitand loss account consisted of the following:

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| (euro        million) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Net sales from operations               |   | 108,082 |   |   | 5,048 |   |   | 4.67 |   | 83,227 |   |   | 3,300 |   |   | 3.97  |   | 98,523 |   |   | 3,274  |   | 3.32   |
|-----------------------------------------|--------|---------|--------|--------|-------|--------|--------|------|--------|--------|--------|--------|-------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|
| Other        income and revenues        |   | 728     |   |   | 39    |   |   | 5.36 |   | 1,118  |   |   | 26    |   |   | 2.33  |   | 956    |   |   | 58     |   | 6.07   |
| Purchases, services and other           |   | 76,350  |   |   | 6,298 |   |   | 8.25 |   | 58,351 |   |   | 4,999 |   |   | 8.57  |   | 69,135 |   |   | 5,825  |   | 8.43   |
| Other        operating income (expense) |   | (124    | )      |   | 58    |   |   | ..   |   | 55     |   |   | 44    |   |   | 80.00 |   | 131    |   |   | 41     |   | 31.30  |
| Financial income                        |   | 7,985   |   |   | 42    |   |   | 0.53 |   | 5,950  |   |   | 27    |   |   | 0.45  |   | 6,117  |   |   | 41     |   | 0.67   |
| Financial        expense                |   | (8,198  | )      |   | (17   | )      |   | 0.21 |   | (6,497 | )      |   | (4    | )      |   | 0.06  |   | (6,713 | )      |   |   |   |   |
|                                    |   |         |        |   |       |        |   |      |   |        |        |   |       |        |   |       |   |        |        |   |        |   |        |

Transactions with related parties concerned the ordinarycourse of Eni’s business and were mainly conducted at anarm’s length basis.

Main cash flows with related parties were as follows:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Revenues and other income                                        |   | 5,087      |   |   | 3,326      |   |   | 3,332      |   |
|------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Costs and        other expenses                                  |   | (6,298     | )      |   | (4,999     | )      |   | (5,825     | )      |
| Other operating income (loss)                                    |   | 58         |   |   | 44         |   |   | 41         |   |
| Net change        in trade and other receivables and liabilities |   | 351        |   |   | 34         |   |   | 182        |   |
| Dividends and net interests                                      |   | 740        |   |   | 407        |   |   | 521        |   |
| **Net        cash provided from operating activities**           |   | **(62**    | **)**  |   | **(1,188** | **)**  |   | **(1,749** | **)**  |
| Capital expenditures in tangible and intangible        assets    |   | (2,022     | )      |   | (1,364     | )      |   | (1,764     | )      |
| Change in        accounts payable in relation to investments     |   | 27         |   |   | 19         |   |   | 10         |   |
| Change in financial receivables                                  |   | 397        |   |   | 83         |   |   | 128        |   |
| **Net        cash used in investing activities**                 |   | **(1,598** | **)**  |   | **(1,262** | **)**  |   | **(1,626** | **)**  |
| Change in financial liabilities                                  |   | 14         |   |   | (14        | )      |   | (23        | )      |
| **Net        cash used in financing activities**                 |   | **14**     |   |   | **(14**    | **)**  |   | **(23**    | **)**  |
| **Total financial flows to related parties**                     |   | **(1,646** | **)**  |   | **(2,464** | **)**  |   | **(3,398** | **)**  |
|                                                             |   |            |        |   |            |        |   |            |        |

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The impact of cash flows with related parties consisted of thefollowing:

|   |   | **2008** |   | **2009** |   | **2010** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| (euro        million) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Cash provided from operating activities  |   | 21,801  |   |   | (62    | )      |   | ..   |   | 11,136  |   |   | (1,188 | ) |   | ..    |   | 14,694  |   |   | (1,749 | ) |   | ..    |
|------------------------------------------|--------|---------|--------|--------|--------|--------|--------|------|--------|---------|--------|--------|--------|---|--------|-------|--------|---------|--------|--------|--------|---|--------|-------|
| Cash used        in investing activities |   | (16,958 | )      |   | (1,598 | )      |   | 9.42 |   | (10,254 | )      |   | (1,262 | ) |   | 12.31 |   | (12,965 | )      |   | (1,626 | ) |   | 12.54 |
| Cash used in financing activities        |   | (5,025  | )      |   | 14     |   |   | ..   |   | (1,183  | )      |   | (14    | ) |   | 1.18  |   | (1,827  | )      |   | (23    | ) |   | 1.26  |
|                                     |   |         |        |   |        |        |   |      |   |         |        |   |        |   |   |       |   |         |        |   |        |   |   |       |

**43 Significant non-recurring events and operations**Non-recurring charge (income) consisted of thefollowing:

| (euro million) |   | **2008** |   | **2009** |   | **2010** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Transaction for the TSKJ matter                  |   |    |   |   | 250     |   | 24       |   |
|--------------------------------------------------|--------|---------|--------|--------|---------|--------|----------|--------|
| Fines        sanctioned by Antitrust Authorities |   | (21     | )      |   |    |   | (270     | )      |
|                                             |   | **(21** | **)**  |   | **250** |   | **(246** | **)**  |
|                                             |   |         |        |   |         |   |          |        |

A non-recurring gain amounting to euro 270 million related tothe favorable settlement of antitrust proceedings concerningalleged anti-competitive behavior attributed to Eni following analleged unjustified refusal to grant access to the importpipeline from Algeria in 2003. This resulted in a significantlylower fine imposed than the one sanctioned by the AntitrustAuthority in 2003. A charge of euro 24 million related to a fineof $30 million for the TSKJ matter following the agreement withthe Federal Government of Nigeria for the settling of the legalproceeding (see Note 34 – Guarantees, commitments and risks– Legal Proceedings).

**44 Positions or transactions deriving fromatypical and/or unusual operations**In 2008, 2009 and in 2010 no transactionsderiving from atypical and/or unusual operations were reported.

**45 Subsequent events**From February 22, 2011, liquids and natural gasproduction at a number of fields in Libya and supplies throughthe GreenStream pipeline have been halted as a result ongoingpolitical instability and conflict. Facilities have not sufferedany damage and such standstills do not affect Eni’s abilityto ensure natural gas supplies to its customers. Eni istechnically able to resume gas production at or near previouslevel once the situation stabilizes. The overall impact of thepolitical instability and conflict in Libya on Eni’s resultsof operations and cash flows will depend on how long suchinstability and conflict will last as well as on their finaloutcome, which management is currently unable to predict.Eni’s oil and natural gas production as of end of March2011, was flowing at a rate ranging from 70 to 75 KBOE/d downfrom the expected level of approximately 280 KBOE/d. Productionis continuing to decline. Current production mainly consists ofgas that is entirely delivered to local power generation plant.

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**Supplemental oil and gas information(unaudited)**The following information pursuant to "InternationalFinancial Reporting Standards" (IFRS) is presented inaccordance with FASB Extractive Activities - Oil & Gas (Topic932). Amounts related to minority interests are not significant.

*Capitalized costs*Capitalized costs represent the total expenditures for provedand unproved mineral interests and related support equipment andfacilities utilized in oil and gas exploration and productionactivities, together with related accumulated depreciation,depletion and amortization. Capitalized costs by geographicalarea consist of the following:

| (euro        million) |   | **Italy** |   | **Rest of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates** |
|-----------------------|--------|-----------|--------|--------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|-----------------------------------------|
|                  |   |           |   |                    |   |                  |   |                 |   |                |   |                  |   |             |   |                           |   |                                     |   |                                         |

| **December 31, 2009**                                       |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |       |   |   |      |   |   |        |   |   |      |   |
|-------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|-------------|--------|--------|-----------|--------|
| Proved        mineral interests                             |   | 10,079     |   |   | 9,472      |   |   | 11,122     |   |   | 14,011     |   |   | 1,723     |   |   | 4,566     |   |   | 5,750      |   |   | 1,338     |   |   | **58,061**  |   |   | 791       |   |
| Unproved mineral interests                                  |   | 33         |   |   | 305        |   |   | 580        |   |   | 1,854      |   |   | 36        |   |   | 1,518     |   |   | 2,144      |   |   | 38        |   |   | **6,508**   |   |   | 443       |   |
| Support        equipment and facilities                     |   | 273        |   |   | 31         |   |   | 1,287      |   |   | 585        |   |   | 57        |   |   | 17        |   |   | 45         |   |   | 4         |   |   | **2,299**   |   |   | 13        |   |
| Incomplete wells and other                                  |   | 1,028      |   |   | 329        |   |   | 1,228      |   |   | 934        |   |   | 3,481     |   |   | 316       |   |   | 600        |   |   | 14        |   |   | **7,930**   |   |   | 358       |   |
| **Gross        capitalized costs**                          |   | **11,413** |   |   | **10,137** |   |   | **14,217** |   |   | **17,384** |   |   | **5,297** |   |   | **6,417** |   |   | **8,539**  |   |   | **1,394** |   |   | **74,798**  |   |   | **1,605** |   |
| Accumulated depreciation, depletion and        amortization |   | (7,557     | )      |   | (6,824     | )      |   | (7,044     | )      |   | (8,424     | )      |   | (620      | )      |   | (3,679    | )      |   | (4,673     | )      |   | (379      | )      |   | **(39,200** | **)**  |   | (485      | )      |
| **Net        capitalized costs**(a) (b)                     |   | **3,856**  |   |   | **3,313**  |   |   | **7,173**  |   |   | **8,960**  |   |   | **4,677** |   |   | **2,738** |   |   | **3,866**  |   |   | **1,015** |   |   | **35,598**  |   |   | **1,120** |   |
| **December 31, 2010**                                       |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |       |   |   |      |   |   |        |   |   |      |   |
| Proved        mineral interests                             |   | 10,576     |   |   | 10,616     |   |   | 14,051     |   |   | 17,057     |   |   | 1,989     |   |   | 5,552     |   |   | 6,617      |   |   | 1,674     |   |   | **68,132**  |   |   | 927       |   |
| Unproved mineral interests                                  |   | 32         |   |   | 320        |   |   | 570        |   |   | 2,006      |   |   | 39        |   |   | 1,561     |   |   | 1,979      |   |   | 42        |   |   | **6,549**   |   |   | 469       |   |
| Support        equipment and facilities                     |   | 270        |   |   | 33         |   |   | 1,391      |   |   | 716        |   |   | 70        |   |   | 21        |   |   | 53         |   |   | 6         |   |   | **2,560**   |   |   | 16        |   |
| Incomplete wells and other                                  |   | 909        |   |   | 584        |   |   | 2,069      |   |   | 1,089      |   |   | 4,644     |   |   | 107       |   |   | 1,444      |   |   | 84        |   |   | **10,930**  |   |   | 668       |   |
| **Gross        capitalized costs**                          |   | **11,787** |   |   | **11,553** |   |   | **18,081** |   |   | **20,868** |   |   | **6,742** |   |   | **7,241** |   |   | **10,093** |   |   | **1,806** |   |   | **88,171**  |   |   | **2,080** |   |
| Accumulated depreciation, depletion and        amortization |   | (8,020     | )      |   | (7,771     | )      |   | (8,558     | )      |   | (11,067    | )      |   | (756      | )      |   | (4,699    | )      |   | (5,591     | )      |   | (522      | )      |   | **(46,984** | **)**  |   | (592      | )      |
| **Net        capitalized costs**(a) (b)                     |   | **3,767**  |   |   | **3,782**  |   |   | **9,523**  |   |   | **9,801**  |   |   | **5,986** |   |   | **2,542** |   |   | **4,502**  |   |   | **1,284** |   |   | **41,187**  |   |   | **1,488** |   |
|                                                        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |           |        |   |            |        |   |           |        |   |             |        |   |           |        |

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | The amounts        include net capitalized financial charges totaling euro        570 million in 2009 and euro 591 million in 2010.                                                                                                                                                                                                                                                                                                                                                                                                             |
| (b)          |    | The amounts        do not include costs associated with exploration        activities which are capitalized in order to reflect        their investment nature and amortized in full when        incurred. The "Successful Effort Method"        application would have led to an increase in net        capitalized costs of euro 3,690 million in 2009 and euro        3,410 million in 2010 for the consolidated companies and        of euro 76 million in 2009 and euro 76 million in 2010        for joint ventures affiliates. |

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*Costs incurred*Costs incurred represent amounts both capitalized andexpensed in connection with oil and gas producing activities.Costs incurred by geographical area consist of the following:

| (euro        million) |   | **Italy** |   | **Rest of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(1) |
|-----------------------|--------|-----------|--------|--------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                  |   |           |   |                    |   |                  |   |                 |   |                |   |                  |   |             |   |                           |   |                                     |   |                                            |

| **2008**                                |   |    |   |      |   |      |   |      |   |      |   |      |   |      |   |    |   |       |   |    |
|-----------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|------------|--------|---------|
| Proved        property acquisitions (b) |   |    |   |      |   | 626       |   | 413       |   |      |   | 256       |   |      |   |    |   | **1,295**  |   |    |
| Unproved property acquisitions (b)      |   |    |   | 33        |   | 384       |   | 655       |   |      |   | 647       |   |      |   |    |   | **1,719**  |   |    |
| Exploration        (b)                  |   | 135     |   | 227       |   | 403       |   | 600       |   | 16        |   | 345       |   | 440       |   | 48      |   | **2,214**  |   | 48      |
| Development (a) (b)                     |   | 644     |   | 957       |   | 1,388     |   | 1,884     |   | 1,023     |   | 598       |   | 748       |   | 325     |   | **7,567**  |   | 163     |
| **Total        costs incurred**         |   | **779** |   | **1,217** |   | **2,801** |   | **3,552** |   | **1,039** |   | **1,846** |   | **1,188** |   | **373** |   | **12,795** |   | **211** |
| **2009**                                |   |    |   |      |   |      |   |      |   |      |   |      |   |      |   |    |   |       |   |    |
| Proved        property acquisitions     |   |    |   |      |   | 298       |   | 27        |   |      |   | 11        |   | 131       |   |    |   | **467**    |   |    |
| Unproved property acquisitions          |   |    |   |      |   | 54        |   | 42        |   |      |   | 83        |   | 43        |   |    |   | **222**    |   |    |
| Exploration                             |   | 40      |   | 114       |   | 317       |   | 284       |   | 20        |   | 159       |   | 242       |   | 52      |   | **1,228**  |   | 41      |
| Development (a)                         |   | 742     |   | 727       |   | 1,401     |   | 2,121     |   | 1,086     |   | 423       |   | 858       |   | 462     |   | **7,820**  |   | 206     |
| **Total        costs incurred**         |   | **782** |   | **841**   |   | **2,070** |   | **2,474** |   | **1,106** |   | **676**   |   | **1,274** |   | **514** |   | **9,737**  |   | **247** |
| **2010**                                |   |    |   |      |   |      |   |      |   |      |   |      |   |      |   |    |   |       |   |    |
| Proved        property acquisitions     |   |    |   |      |   |      |   |      |   |      |   |      |   |      |   |    |   |       |   |    |
| Unproved property acquisition           |   |    |   |      |   |      |   |      |   |      |   |      |   |      |   |    |   |       |   |    |
| Exploration                             |   | 34      |   | 114       |   | 84        |   | 406       |   | 6         |   | 223       |   | 119       |   | 26      |   | **1,012**  |   | 45      |
| Development (a)                         |   | 579     |   | 890       |   | 2,674     |   | 1,909     |   | 1,031     |   | 359       |   | 1,309     |   | 160     |   | **8,911**  |   | 367     |
| **Total        costs incurred**         |   | **613** |   | **1,004** |   | **2,758** |   | **2,315** |   | **1,037** |   | **582**   |   | **1,428** |   | **186** |   | **9,923**  |   | **412** |
|                                    |   |         |   |           |   |           |   |           |   |           |   |           |   |           |   |         |   |            |   |         |

|    |    |                                                                                                                                                                                                                                                       |
|--------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | The amounts        of joint ventures and affiliates as at December 31, 2009        and 2010 includes 29.4% of the three Russian companies        former Yukos as a result of the Gazprom call option on        the 51% of the shares (2008 is reported at 60%). |
| (a)          |    | Includes the        abandonment costs of the assets for euro 628 million in        2008, euro 301 million in 2009 and euro 269 million in        2010.                                                                                                          |
| (b)          |    | Of which        business combination:                                                                                                                                                                                                                           |

| (euro        million) |   | **Italy** |   | **Rest of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates** |
|-----------------------|--------|-----------|--------|--------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|-----------------------------------------|
|                  |   |           |   |                    |   |                  |   |                 |   |                |   |                  |   |             |   |                           |   |                                     |   |                                         |

| **2008**                            |   |   |   |   |   |    |   |    |   |   |   |      |   |   |   |   |   |      |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|
| Proved        property acquisitions |   |   |   |   |   |    |   | 298     |   |   |   | 256       |   |   |   |   |   | **554**   |   |   |
| Unproved property acquisitions      |   |   |   | 33     |   | 384     |   | 560     |   |   |   | 647       |   |   |   |   |   | **1,624** |   |   |
| Exploration                         |   |   |   |   |   | 23      |   | 115     |   |   |   | 158       |   |   |   |   |   | **296**   |   |   |
| Development                         |   |   |   | 52     |   | 132     |   | 4       |   |   |   | 233       |   |   |   |   |   | **421**   |   |   |
| **Total**                           |   |   |   | **85** |   | **539** |   | **977** |   |   |   | **1,294** |   |   |   |   |   | **2,895** |   |   |
|                                |   |        |   |        |   |         |   |         |   |        |   |           |   |        |   |        |   |           |   |        |

*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 associatedwith such activities, including operating overheads. Theseamounts do not include any allocation of interest expense orgeneral corporate overhead and, therefore, are not necessarilyindicative of the contributions to consolidated net earnings ofEni. Related income taxes are computed by applying the localincome 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 productionis withheld and sold by its joint venture partners which arestate-owned entities, with proceeds being remitted to the statein satisfaction of Eni’s PSA related tax liabilities.Revenue and income taxes include such taxes owed by Eni but paidby state-owned entities out of Eni’s share of oil and gasproduction.

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Results of operations from oil and gas producing activities bygeographical area consist of the following:

| (euro        million) |   | **Italy** |   | **Rest of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(1) |
|-----------------------|--------|-----------|--------|--------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                  |   |           |   |                    |   |                  |   |                 |   |                |   |                  |   |             |   |                           |   |                                     |   |                                            |

| **2008**                                                         |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|--------|------------|--------|--------|---------|--------|
| **Revenues**                                                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
| Sales to consolidated entities                                   |   | 3,956     |   |   | 3,892     |   |   | 2,622     |   |   | 5,013     |   |   | 360       |   |   | 39        |   |   | 323       |   |   | 66       |   |   | **16,271** |   |   |    |   |
| Sales to        third parties                                    |   | 126       |   |   | 160       |   |   | 7,286     |   |   | 1,471     |   |   | 1,025     |   |   | 1,335     |   |   | 1,599     |   |   | 218      |   |   | **13,220** |   |   | **265** |   |
| **Total revenues**                                               |   | **4,082** |   |   | **4,052** |   |   | **9,908** |   |   | **6,484** |   |   | **1,385** |   |   | **1,374** |   |   | **1,922** |   |   | **284**  |   |   | **29,491** |   |   | **265** |   |
| Operations        costs                                          |   | (260      | )      |   | (521      | )      |   | (528      | )      |   | (609      | )      |   | (157      | )      |   | (68       | )      |   | (233      | )      |   | (35      | )      |   | **(2,411** | **)**  |   | **(34** | **)**  |
| Production taxes                                                 |   | (195      | )      |   |      |   |   | (32       | )      |   | (616      | )      |   |      |   |   | (35       | )      |   |      |   |   |     |   |   | **(878**   | **)**  |   | **(53** | **)**  |
| Exploration        expenses                                      |   | (135      | )      |   | (228      | )      |   | (406      | )      |   | (548      | )      |   | (16       | )      |   | (232      | )      |   | (435      | )      |   | (58      | )      |   | **(2,058** | **)**  |   | **(48** | **)**  |
| D.D. & A. and provision for abandonment        (a)           |   | (551      | )      |   | (829      | )      |   | (1,120    | )      |   | (1,115    | )      |   | (79       | )      |   | (823      | )      |   | (837      | )      |   | (35      | )      |   | **(5,389** | **)**  |   | **(84** | **)**  |
| Other        income (expenses)                                   |   | (420      | )      |   | (56       | )      |   | (934      | )      |   | (268      | )      |   | (270      | )      |   | (259      | )      |   | (6        | )      |   | (41      | )      |   | **(2,254** | **)**  |   | **(15** | **)**  |
| **Pretax income from producing activities**                      |   | **2,521** |   |   | **2,418** |   |   | **6,888** |   |   | **3,328** |   |   | **863**   |   |   | **(43**   | **)**  |   | **411**   |   |   | **115**  |   |   | **16,501** |   |   | **31**  |   |
| Income        taxes                                              |   | (924      | )      |   | (1,623    | )      |   | (4,170    | )      |   | (2,262    | )      |   | (302      | )      |   | (122      | )      |   | (214      | )      |   | (70      | )      |   | **(9,687** | **)**  |   | **(49** | **)**  |
| **Results of operations from E&P activities**        (b)     |   | **1,597** |   |   | **795**   |   |   | **2,718** |   |   | **1,066** |   |   | **561**   |   |   | **(165**  | **)**  |   | **197**   |   |   | **45**   |   |   | **6,814**  |   |   | **(18** | **)**  |
| **2009**                                                         |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
| **Revenues**                                                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
| Sales to        consolidated entities                            |   | 2,274     |   |   | 2,583     |   |   | 1,738     |   |   | 4,386     |   |   | 245       |   |   | 41        |   |   | 808       |   |   | 29       |   |   | **12,104** |   |   |    |   |
| Sales to third parties                                           |   |      |   |   | 540       |   |   | 5,037     |   |   | 586       |   |   | 739       |   |   | 1,208     |   |   | 639       |   |   | 181      |   |   | **8,930**  |   |   | **232** |   |
| **Total        revenues**                                        |   | **2,274** |   |   | **3,123** |   |   | **6,775** |   |   | **4,972** |   |   | **984**   |   |   | **1,249** |   |   | **1,447** |   |   | **210**  |   |   | **21,034** |   |   | **232** |   |
| Operations costs                                                 |   | (271      | )      |   | (517      | )      |   | (553      | )      |   | (749      | )      |   | (153      | )      |   | (78       | )      |   | (273      | )      |   | (41      | )      |   | **(2,635** | **)**  |   | **(34** | **)**  |
| Production        taxes                                          |   | (148      | )      |   |      |   |   | (20       | )      |   | (445      | )      |   |      |   |   | (34       | )      |   |      |   |   |     |   |   | **(647**   | **)**  |   | **(44** | **)**  |
| Exploration expenses                                             |   | (40       | )      |   | (114      | )      |   | (319      | )      |   | (451      | )      |   | (20       | )      |   | (204      | )      |   | (341      | )      |   | (62      | )      |   | **(1,551** | **)**  |   | **(41** | **)**  |
| D.D. &        A. and provision for abandonment (a)           |   | (463      | )      |   | (921      | )      |   | (956      | )      |   | (1,502    | )      |   | (78       | )      |   | (535      | )      |   | (1,108    | )      |   | (186     | )      |   | **(5,749** | **)**  |   | **(76** | **)**  |
| Other income (expenses)                                          |   | (125      | )      |   | (134      | )      |   | (471      | )      |   | (467      | )      |   | (186      | )      |   | (17       | )      |   | 170       |   |   | (47      | )      |   | **(1,277** | **)**  |   | **(41** | **)**  |
| **Pretax        income from producing activities**               |   | **1,227** |   |   | **1,437** |   |   | **4,456** |   |   | **1,358** |   |   | **547**   |   |   | **381**   |   |   | **(105**  | **)**  |   | **(126** | **)**  |   | **9,175**  |   |   | **(4**  | **)**  |
| Income taxes                                                     |   | (467      | )      |   | (833      | )      |   | (3,010    | )      |   | (1,042    | )      |   | (180      | )      |   | (67       | )      |   | (2        | )      |   | 23       |   |   | **(5,578** | **)**  |   | **(40** | **)**  |
| **Results        of operations from E&P activities**(b) (c)  |   | **760**   |   |   | **604**   |   |   | **1,446** |   |   | **316**   |   |   | **367**   |   |   | **314**   |   |   | **(107**  | **)**  |   | **(103** | **)**  |   | **3,597**  |   |   | **(44** | **)**  |
| **2010**                                                         |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
| **Revenues**                                                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |     |   |   |       |   |   |    |   |
| Sales to consolidated entities                                   |   | 2,725     |   |   | 3,006     |   |   | 2,094     |   |   | 5,314     |   |   | 324       |   |   | 34        |   |   | 1,139     |   |   | 69       |   |   | **14,705** |   |   |    |   |
| Sales to        third parties                                    |   |      |   |   | 263       |   |   | 6,604     |   |   | 1,696     |   |   | 890       |   |   | 1,429     |   |   | 562       |   |   | 289      |   |   | **11,733** |   |   | **356** |   |
| **Total revenues**                                               |   | **2,725** |   |   | **3,269** |   |   | **8,698** |   |   | **7,010** |   |   | **1,214** |   |   | **1,463** |   |   | **1,701** |   |   | **358**  |   |   | **26,438** |   |   | **356** |   |
| Operations        costs                                          |   | (278      | )      |   | (555      | )      |   | (593      | )      |   | (902      | )      |   | (184      | )      |   | (150      | )      |   | (292      | )      |   | (69      | )      |   | **(3,023** | **)**  |   | **(41** | **)**  |
| Production taxes                                                 |   | (184      | )      |   |      |   |   | (300      | )      |   | (700      | )      |   |      |   |   | (37       | )      |   |      |   |   |     |   |   | **(1,221** | **)**  |   | **(72** | **)**  |
| Exploration        expenses                                      |   | (35       | )      |   | (116      | )      |   | (85       | )      |   | (465      | )      |   | (6        | )      |   | (263      | )      |   | (204      | )      |   | (25      | )      |   | **(1,199** | **)**  |   | **(45** | **)**  |
| D.D. & A. and provision for abandonment        (a)           |   | (621      | )      |   | (615      | )      |   | (1,063    | )      |   | (1,739    | )      |   | (84       | )      |   | (696      | )      |   | (872      | )      |   | (84      | )      |   | **(5,774** | **)**  |   | **(72** | **)**  |
| Other        income (expenses)                                   |   | (560      | )      |   | 254       |   |   | (392      | )      |   | (219      | )      |   | (161      | )      |   | (138      | )      |   | (45       | )      |   | (25      | )      |   | **(1,286** | **)**  |   | **(59** | **)**  |
| **Pretax income from producing activities**                      |   | **1,047** |   |   | **2,237** |   |   | **6,265** |   |   | **2,985** |   |   | **779**   |   |   | **179**   |   |   | **288**   |   |   | **155**  |   |   | **13,935** |   |   | **67**  |   |
| Income        taxes                                              |   | (382      | )      |   | (1,296    | )      |   | (4,037    | )      |   | (1,962    | )      |   | (291      | )      |   | (119      | )      |   | (154      | )      |   | (36      | )      |   | **(8,277** | **)**  |   | **(66** | **)**  |
| **Results of operations from E&P activities**        (b) (c) |   | **665**   |   |   | **941**   |   |   | **2,228** |   |   | **1,023** |   |   | **488**   |   |   | **60**    |   |   | **134**   |   |   | **119**  |   |   | **5,658**  |   |   | **1**   |   |
|                                                             |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |   |          |        |   |            |        |   |         |        |

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | The amounts        of joint ventures and affiliates as at December 31, 2009        and 2010 includes 29.4% of the three Russian companies        former Yukos as a result of the Gazprom call option on        the 51% of the shares (2008 is reported at 60%).                                                                                                                                                                           |
| (a)          |    | Includes        asset impairments amounting to euro 770 million in 2008,        euro 576 million in 2009 and euro 123 million in 2010.                                                                                                                                                                                                                                                                                                    |
| (b)          |    | The        "Successful Effort Method" application would        have led to an increase of result of operations of euro        408 million in 2008, euro 320 million in 2009 and a        decrease of euro 385 million in 2010 for the consolidated        companies and any variation in 2008, an increase of euro        26 million in 2009 and a decrease of euro 5 million in        2010 for joint ventures and affiliates. |
| (c)          |    | Amounts of        2009 and 2010 do not include results of operation related        to the Italian gas storage activities, following        restructuring of Eni’s regulated gas businesses in        Italy now reported in Gas & Power segment.                                                                                                                                                                                  |

*Oil and natural gas reserves*Eni’s criteria concerning evaluation and classificationof proved developed and undeveloped reserves follow RegulationS-X 4-10 of the U.S. Securities and Exchange Commission and havebeen disclosed in accordance with FASB Extractive Activities -Oil & Gas (Topic 932).

Proved oil and gas reserves are those quantities of oil andgas, which, by analysis of geoscience and engineering data, canbe estimated with reasonable certainty to be economicallyproducible, from a given date forward, from known reservoirs, andunder existing economic conditions, operating methods, andgovernment regulations, prior to the time at which contractsproviding the right to operate expire, unless evidence indicatesthat 

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renewal is reasonably certain, regardless of whetherdeterministic or probabilistic methods are used for theestimation. The project to extract the hydrocarbons must havecommenced or the operator must be reasonably certain that it willcommence the project within a reasonable time.

Existing economic conditions include prices and costs at whicheconomic producibility from a reservoir is to be determined. Theprice20 shall be the average price during the 12-monthperiod prior to the ending date of the period covered by thereport, determined as an unweighted arithmetic average of thefirst-day-of-the-month price for each month within such period,unless prices are defined by contractual arrangements, excludingescalations based upon future conditions.

Net proved reserves exclude interests and royalties owned byothers.

Proved reserves are classified as either developed orundeveloped.

Developed oil and gas reserves are reserves that can beexpected to be recovered through existing wells with existingequipment and operating methods or in which the cost of therequired equipment is relatively minor compared to the cost of anew well.

Undeveloped oil and gas reserves are reserves of any categorythat are expected to be recovered from new wells on undrilledacreage, or from existing wells where a relatively majorexpenditure is required for recompletion.

Since 1991 Eni has requested qualified independent oilengineering companies to carry out an independent evaluation21of part of its proved reserves on a rotational basis. Thedescription of qualifications of the person primarily responsibleof the reserve audit is included in the third party audit report22.

In the preparation of their reports, independent evaluatorsrely, without independent verification, upon informationfurnished by Eni with respect to property interest, production,current cost of operation and development, sale agreements,prices and other factual information and data that were acceptedas represented by the independent evaluators. These data, equallyused by Eni in its internal process, include logs, directionalsurveys, core and PVT (Pressure Volume Temperature) analysis,maps, oil/gas/water production/injection data of wells, reservoirstudies technical analysis relevant to field performance,reservoir performance, long-term development plans, futurecapital and operating costs.

In order to calculate the economic value of Eni equityreserves, actual prices applicable to hydrocarbon sales, priceadjustments required by applicable contractual arrangements, andother pertinent information are provided.

In 2010 Ryder Scott Company and DeGolyer and MacNaughton22provided an independent evaluation of almost 28% of Eni’stotal proved reserves as of December 31, 201023confirming, as in previous years, the reasonableness ofEni’s internal evaluations.

In the three-year period from 2008 to 2010, 78% of Eni’stotal proved reserves were subject to independent evaluation.

As of December 31, 2010 the principal properties not subjectedto independent evaluation in the last three years areKarachaganak (Kazakhstan), Samburgskoye and Yaro-Yakhinskoye(Russia).

Eni operates under Production Sharing Agreements, PSAs, inseveral of the foreign jurisdictions where it has oil and gasexploration and production activities. Reserves of oil andnatural gas to which Eni is entitled under PSA arrangements areshown in accordance with Eni’s economic interest in thevolumes of oil and natural gas estimated to be recoverable infuture years. Such reserves include estimated quantitiesallocated to Eni for recovery of costs, income taxes owed by Enibut settled by its joint venture partners (which are state-ownedentities) out of Eni’s share of production and Eni’snet equity share after cost recovery.

Proved oil and gas reserves associated with PSAs represented54%, 57% and 55% of total proved reserves as of December 31,2008, 2009 and 2010, respectively, on an oil-equivalent basis.

Similar effects as PSAs apply to service and"buy-back" contracts; proved reserves associated withsuch contracts represented 2%, 2% and 3% of total proved reserveson an oil-equivalent basis as of December 31, 2008, 2009 and2010, respectively.

----

| (20) |  i  | Before 2009,        year-end liquids and natural gas prices were used in the        estimate of proved reserves.                   |
|------|---------------|------------------------------------------------------------------------------------------------------------------------------------|
| (21) |   i | From 1991 to        2002 DeGolyer and MacNaughton, from 2003 also Ryder        Scott.                                              |
| (22) |   i | The reports        of independent engineers are available on Eni website        eni.com, section Publications /Annual Report 2010. |
| (23) |   i | Including        reserves of joint ventures and affiliates.                                                                        |

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Oil and gas reserve quantities include: (i) oil and naturalgas quantities in excess of cost recovery which the company hasan obligation to purchase under certain PSAs with governments orauthorities, whereby the company serves as producer of reserves.Reserve volumes associated with oil and gas deriving from suchobligation represent 0.1%, 0.3% and 0.6% of total proved reservesas of December 31, 2008, 2009 and 2010, respectively, on anoil-equivalent basis; (ii) volumes of natural gas used for ownconsumption; (iii) the quantities of natural gas produced to feedthe Angola LNG plant; and (iv) volumes of natural gas held incertain Eni storage fields in Italy. Proved reserves attributableto these fields include: (a) the residual natural gas volumes ofthe reservoirs; and (b) natural gas volumes from other Eni fieldsinput into these reservoirs in subsequent periods. Provedreserves do not include volumes owned by or acquired from thirdparties. Gas withdrawn from storage is produced and therebyremoved from proved reserves when sold.

Numerous uncertainties are inherent in estimating quantitiesof proved reserves, in projecting future productions anddevelopment expenditures. The accuracy of any reserve estimate isa function of the quality of available data and engineering andgeological interpretation and evaluation. The results ofdrilling, testing and production after the date of the estimatemay require substantial upward or downward revisions. Inaddition, changes in oil and natural gas prices have an effect onthe quantities of Eni’s proved reserves since estimates ofreserves are based on prices and costs relevant to the date whensuch estimates are made. Consequently, the evaluation of reservescould also significantly differ from actual oil and natural gasvolumes that will be produced.

The following table presents yearly changes in estimatedproved reserves, developed and undeveloped, of crude oil(including condensate and natural gas liquids) and natural gas asof December 31, 2008, 2009 and 2010.

 

 

 

 

 

 

 

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*Crude oil (including condensate and natural gas liquids)*

| (mmBBL) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan**(1) |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |   | **Total consolidated subsidiaries and total        joint ventures and affiliates** |
|---------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|--------------------------------------------|--------|------------------------------------------------------------------------------------|

|                                   |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |        |        |   |             |        |   |         |        |   |             |        |
|----------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|-------------|--------|--------|---------|--------|--------|-------------|--------|
| **Reserves at December 31, 2007**      |   | **215** |   |   | **345** |   |   | **878** |   |   | **725** |   |   | **753** |   |   | **44**  |   |   | **138** |   |   | **29** |   |   | **3,127**   |   |   | **142** |   |   | **3,269**   |   |
| *of        which:*                     |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   |    |   |   |        |   |
| *developed*                            |   | *133*   |   |   | *299*   |   |   | *649*   |   |   | *511*   |   |   | *219*   |   |   | *35*    |   |   | *81*    |   |   | *26*   |   |   | ***1,953*** |   |   | *26*    |   |   | ***1,979*** |   |
| *undeveloped*                          |   | *82*    |   |   | *46*    |   |   | *229*   |   |   | *214*   |   |   | *534*   |   |   | *9*     |   |   | *57*    |   |   | *3*    |   |   | ***1,174*** |   |   | *116*   |   |   | ***1,290*** |   |
| Purchase of Minerals in Place          |   |    |   |   |    |   |   |    |   |   | 32      |   |   |    |   |   | 36      |   |   |    |   |   |   |   |   | **68**      |   |   |    |   |   | **68**      |   |
| Revisions        of Previous Estimates |   | (8      | )      |   | (30     | )      |   | 56      |   |   | 80      |   |   | 239     |   |   | 42      |   |   | 11      |   |   | 1      |   |   | **391**     |   |   | 4       |   |   | **395**     |   |
| Improved Recovery                      |   |    |   |   |    |   |   | 7       |   |   | 25      |   |   |    |   |   |    |   |   |    |   |   |   |   |   | **32**      |   |   | 1       |   |   | **33**      |   |
| Extensions        and Discoveries      |   | 4       |   |   | 13      |   |   | 4       |   |   | 26      |   |   |    |   |   | 2       |   |   | 3       |   |   |   |   |   | **52**      |   |   |    |   |   | **52**      |   |
| Production                             |   | (25     | )      |   | (51     | )      |   | (122    | )      |   | (105    | )      |   | (25     | )      |   | (18     | )      |   | (21     | )      |   | (4     | )      |   | **(371**    | **)**  |   | (5      | )      |   | **(376**    | **)**  |
| Sales of        Minerals in Place      |   |    |   |   |    |   |   |    |   |   |    |   |   | (56     | )      |   |    |   |   |    |   |   |   |   |   | **(56**     | **)**  |   |    |   |   | **(56**     | **)**  |
| **Reserves at December 31, 2008**      |   | **186** |   |   | **277** |   |   | **823** |   |   | **783** |   |   | **911** |   |   | **106** |   |   | **131** |   |   | **26** |   |   | **3,243**   |   |   | **142** |   |   | **3,385**   |   |
| *of        which:*                     |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   |    |   |   |        |   |
| *developed*                            |   | *111*   |   |   | *222*   |   |   | *613*   |   |   | *576*   |   |   | *298*   |   |   | *92*    |   |   | *74*    |   |   | *23*   |   |   | ***2,009*** |   |   | *33*    |   |   | ***2,042*** |   |
| *undeveloped*                          |   | *75*    |   |   | *55*    |   |   | *210*   |   |   | *207*   |   |   | *613*   |   |   | *14*    |   |   | *57*    |   |   | *3*    |   |   | ***1,234*** |   |   | *109*   |   |   | ***1,343*** |   |
| Purchase of Minerals in Place          |   |    |   |   |    |   |   |    |   |   | 2       |   |   |    |   |   |    |   |   |    |   |   |   |   |   | **2**       |   |   |    |   |   | **2**       |   |
| Revisions        of Previous Estimates |   | 57      |   |   | 40      |   |   | 129     |   |   | 78      |   |   | (36     | )      |   | (35     | )      |   | 36      |   |   | 1      |   |   | **270**     |   |   |    |   |   | **270**     |   |
| Improved Recovery                      |   |    |   |   | 8       |   |   | 10      |   |   | 15      |   |   |    |   |   |    |   |   |    |   |   |   |   |   | **33**      |   |   |    |   |   | **33**      |   |
| Extensions        and Discoveries      |   | 10      |   |   | 74      |   |   | 38      |   |   | 5       |   |   |    |   |   | 44      |   |   | 12      |   |   | 8      |   |   | **191**     |   |   | 1       |   |   | **192**     |   |
| Production                             |   | (20     | )      |   | (48     | )      |   | (105    | )      |   | (113    | )      |   | (26     | )      |   | (21     | )      |   | (26     | )      |   | (3     | )      |   | **(362**    | **)**  |   | (6      | )      |   | **(368**    | **)**  |
| Sales of        Minerals in Place      |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   | (51     | )      |   | **(51**     | **)**  |
| **Reserves at December 31, 2009**      |   | **233** |   |   | **351** |   |   | **895** |   |   | **770** |   |   | **849** |   |   | **94**  |   |   | **153** |   |   | **32** |   |   | **3,377**   |   |   | **86**  |   |   | **3,463**   |   |
| *of        which:*                     |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   |    |   |   |        |   |
| *developed*                            |   | *141*   |   |   | *218*   |   |   | *659*   |   |   | *544*   |   |   | *291*   |   |   | *45*    |   |   | *80*    |   |   | *23*   |   |   | ***2,001*** |   |   | *34*    |   |   | ***2,035*** |   |
| *undeveloped*                          |   | *92*    |   |   | *133*   |   |   | *236*   |   |   | *226*   |   |   | *558*   |   |   | *49*    |   |   | *73*    |   |   | *9*    |   |   | ***1,376*** |   |   | *52*    |   |   | ***1,428*** |   |
| Purchase of Minerals in Place          |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   |    |   |   |        |   |
| Revisions        of Previous Estimates |   | 38      |   |   | 17      |   |   | 178     |   |   | 75      |   |   | (37     | )      |   | 62      |   |   | 2       |   |   |   |   |   | **335**     |   |   |    |   |   | **335**     |   |
| Improved Recovery                      |   |    |   |   |    |   |   | 1       |   |   | 1       |   |   |    |   |   |    |   |   |    |   |   |   |   |   | **2**       |   |   | 12      |   |   | **14**      |   |
| Extensions        and Discoveries      |   |    |   |   | 25      |   |   | 13      |   |   | 22      |   |   |    |   |   |    |   |   | 1       |   |   |   |   |   | **61**      |   |   | 117     |   |   | **178**     |   |
| Production                             |   | (23     | )      |   | (44     | )      |   | (108    | )      |   | (116    | )      |   | (24     | )      |   | (17     | )      |   | (22     | )      |   | (3     | )      |   | **(357**    | **)**  |   | (7      | )      |   | **(364**    | **)**  |
| Sales of        Minerals in Place      |   |    |   |   |    |   |   | (1      | )      |   | (2      | )      |   |    |   |   |    |   |   |    |   |   |   |   |   | **(3**      | **)**  |   |    |   |   | **(3**      | **)**  |
| **Reserves at December 31, 2010**      |   | **248** |   |   | **349** |   |   | **978** |   |   | **750** |   |   | **788** |   |   | **139** |   |   | **134** |   |   | **29** |   |   | **3,415**   |   |   | **208** |   |   | **3,623**   |   |
| *of        which:*                     |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |        |   |   |    |   |   |        |   |
| *developed*                            |   | *183*   |   |   | *207*   |   |   | *656*   |   |   | *533*   |   |   | *251*   |   |   | *39*    |   |   | *62*    |   |   | *20*   |   |   | ***1,951*** |   |   | *52*    |   |   | ***2,003*** |   |
| *undeveloped*                          |   | *65*    |   |   | *142*   |   |   | *322*   |   |   | *217*   |   |   | *537*   |   |   | *100*   |   |   | *72*    |   |   | *9*    |   |   | ***1,464*** |   |   | *156*   |   |   | ***1,620*** |   |
|                                   |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |         |        |   |        |        |   |             |        |   |         |        |   |             |        |

|    |    |                                                                                                                                                                                                                                                                         |
|--------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | Eni’s        proved reserves of the Kashagan field are determined        based on Eni share of 16.81% (2007 is reported at        18.52%).                                                                                                                                   |
| (2)          |    | Joint        ventures and affiliates proved reserves as at December        31, 2009 and 2010 includes 29.4% of the three Russian        companies former Yukos as a result of the Gazprom call        option on the 51% of the shares (2007 and 2008 are        reported at 60%). |

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##### Table of Contents

*Natural gas*

| (BCF)  |   | **Italy**(a) |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan**(1) |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |   | **Total consolidated subsidiaries and total        joint ventures and affiliates** |
|--------|--------|--------------|--------|----------------------------|--------|------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|--------------------------------------------|--------|------------------------------------------------------------------------------------|
|   |   |              |   |                            |   |                  |   |                 |   |                   |   |                  |   |             |   |                           |   |                                     |   |                                            |   |                                                                                    |

| **Reserves at December 31, 2007**      |   | **3,057** |   |   | **1,675** |   |   | **5,751** |   |   | **2,122** |   |   | **1,770** |   |   | **880** |   |   | **696** |   |   | **598** |   |   | **16,549**   |   |   | **3,022** |   |   | **19,571**   |   |
|----------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------------|--------|--------|-----------|--------|--------|--------------|--------|
| *of        which:*                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| *developed*                            |   | *2,304*   |   |   | *1,364*   |   |   | *3,065*   |   |   | *1,469*   |   |   | *1,580*   |   |   | *530*   |   |   | *442*   |   |   | *213*   |   |   | ***10,967*** |   |   | *428*     |   |   | ***11,395*** |   |
| *undeveloped*                          |   | *753*     |   |   | *311*     |   |   | *2,686*   |   |   | *653*     |   |   | *190*     |   |   | *350*   |   |   | *254*   |   |   | *385*   |   |   | ***5,582***  |   |   | *2,594*   |   |   | ***8,176***  |   |
| Purchase of Minerals in Place          |   |      |   |   | 8         |   |   |      |   |   | 6         |   |   |      |   |   | 114     |   |   |    |   |   |    |   |   | **128**      |   |   |      |   |   | **128**      |   |
| Revisions        of Previous Estimates |   | 56        |   |   | (58       | )      |   | 1,163     |   |   | 45        |   |   | 772       |   |   | 52      |   |   | (13     | )      |   | 24      |   |   | **2,041**    |   |   | 6         |   |   | **2,047**    |   |
| Improved Recovery                      |   |      |   |   |      |   |   |      |   |   | 4         |   |   |      |   |   |    |   |   |    |   |   |    |   |   | **4**        |   |   |      |   |   | **4**        |   |
| Extensions        and Discoveries      |   | 5         |   |   | 25        |   |   | 38        |   |   | 2         |   |   |      |   |   | 11      |   |   | 31      |   |   |    |   |   | **112**      |   |   |      |   |   | **112**      |   |
| Production                             |   | (274      | )      |   | (229      | )      |   | (641      | )      |   | (95       | )      |   | (89       | )      |   | (146    | )      |   | (114    | )      |   | (16     | )      |   | **(1,604**   | **)**  |   | (13       | )      |   | **(1,617**   | **)**  |
| Sales of        Minerals in Place      |   |      |   |   |      |   |   |      |   |   |      |   |   | (16       | )      |   |    |   |   |    |   |   |    |   |   | **(16**      | **)**  |   |      |   |   | **(16**      | **)**  |
| **Reserves at December 31, 2008**      |   | **2,844** |   |   | **1,421** |   |   | **6,311** |   |   | **2,084** |   |   | **2,437** |   |   | **911** |   |   | **600** |   |   | **606** |   |   | **17,214**   |   |   | **3,015** |   |   | **20,229**   |   |
| *of        which:*                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| *developed*                            |   | *2,031*   |   |   | *1,122*   |   |   | *3,537*   |   |   | *1,443*   |   |   | *2,005*   |   |   | *439*   |   |   | *340*   |   |   | *221*   |   |   | ***11,138*** |   |   | *420*     |   |   | ***11,558*** |   |
| *undeveloped*                          |   | *813*     |   |   | *299*     |   |   | *2,774*   |   |   | *641*     |   |   | *432*     |   |   | *472*   |   |   | *260*   |   |   | *385*   |   |   | ***6,076***  |   |   | *2,595*   |   |   | ***8,671***  |   |
| Purchase of Minerals in Place          |   |      |   |   |      |   |   |      |   |   | 1         |   |   |      |   |   |    |   |   | 136     |   |   |    |   |   | **137**      |   |   |      |   |   | **137**      |   |
| Revisions        of Previous Estimates |   | 97        |   |   | 149       |   |   | (309      | )      |   | 142       |   |   | (204      | )      |   | 52      |   |   | 43      |   |   | (17     | )      |   | **(47**      | **)**  |   | 18        |   |   | **(29**      | **)**  |
| Improved Recovery                      |   |      |   |   | 25        |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   | **25**       |   |   |      |   |   | **25**       |   |
| Extensions        and Discoveries      |   | 1         |   |   | 26        |   |   | 479       |   |   |      |   |   |      |   |   | 2       |   |   | 7       |   |   | 4       |   |   | **519**      |   |   | 80        |   |   | **599**      |   |
| Production                             |   | (238      | )      |   | (239      | )      |   | (587      | )      |   | (100      | )      |   | (94       | )      |   | (151    | )      |   | (155    | )      |   | (18     | )      |   | **(1,582**   | **)**  |   | (14       | )      |   | **(1,596**   | **)**  |
| Sales of        Minerals in Place      |   |      |   |   | (2        | )      |   |      |   |   |      |   |   |      |   |   |    |   |   | (2      | )      |   |    |   |   | **(4**       | **)**  |   | (1,511    | )      |   | **(1,515**   | **)**  |
| **Reserves at December 31, 2009**      |   | **2,704** |   |   | **1,380** |   |   | **5,894** |   |   | **2,127** |   |   | **2,139** |   |   | **814** |   |   | **629** |   |   | **575** |   |   | **16,262**   |   |   | **1,588** |   |   | **17,850**   |   |
| *of        which:*                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| *developed*                            |   | *2,001*   |   |   | *1,231*   |   |   | *3,486*   |   |   | *1,463*   |   |   | *1,859*   |   |   | *539*   |   |   | *506*   |   |   | *565*   |   |   | ***11,650*** |   |   | *234*     |   |   | ***11,884*** |   |
| *undeveloped*                          |   | *703*     |   |   | *149*     |   |   | *2,408*   |   |   | *664*     |   |   | *280*     |   |   | *275*   |   |   | *123*   |   |   | *10*    |   |   | ***4,612***  |   |   | *1,354*   |   |   | ***5,966***  |   |
| Purchase of Minerals in Place          |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| Revisions        of Previous Estimates |   | 234       |   |   | 48        |   |   | 778       |   |   | 161       |   |   | (179      | )      |   | 211     |   |   | 41      |   |   | (18     | )      |   | **1,276**    |   |   | 51        |   |   | **1,327**    |   |
| Improved Recovery                      |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| Extensions        and Discoveries      |   |      |   |   | 177       |   |   | 146       |   |   |      |   |   |      |   |   | 4       |   |   | 5       |   |   | 22      |   |   | **354**      |   |   | 58        |   |   | **412**      |   |
| Production                             |   | (246      | )      |   | (204      | )      |   | (609      | )      |   | (161      | )      |   | (86       | )      |   | (158    | )      |   | (145    | )      |   | (35     | )      |   | **(1,644**   | **)**  |   | (13       | )      |   | **(1,657**   | **)**  |
| Sales of        Minerals in Place      |   | (48       | )      |   |      |   |   | (2        | )      |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   | **(50**      | **)**  |   |      |   |   | **(50**      | **)**  |
| **Reserves at December 31, 2010**      |   | **2,644** |   |   | **1,401** |   |   | **6,207** |   |   | **2,127** |   |   | **1,874** |   |   | **871** |   |   | **530** |   |   | **544** |   |   | **16,198**   |   |   | **1,684** |   |   | **17,882**   |   |
| *of        which:*                     |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |    |   |   |         |   |   |      |   |   |         |   |
| *developed*                            |   | *2,061*   |   |   | *1,103*   |   |   | *3,100*   |   |   | *1,550*   |   |   | *1,621*   |   |   | *560*   |   |   | *431*   |   |   | *539*   |   |   | ***10,965*** |   |   | *246*     |   |   | ***11,211*** |   |
| *undeveloped*                          |   | *583*     |   |   | *298*     |   |   | *3,107*   |   |   | *577*     |   |   | *253*     |   |   | *311*   |   |   | *99*    |   |   | *5*     |   |   | ***5,233***  |   |   | *1,438*   |   |   | ***6,671***  |   |
|                                   |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |   |         |        |   |         |        |   |         |        |   |              |        |   |           |        |   |              |        |

|    |    |                                                                                                                                                                                                                                                                        |
|--------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | Eni’s        proved reserves of the Kashagan field are determined        based on Eni share of 16.81% (2007 is reported at        18.52%).                                                                                                                                  |
| (2)          |    | Joint        ventures and affiliates proved reserves as of December        31, 2009 and 2010 include 29.4% of the three Russian        companies former Yukos as a result of the Gazprom call        option on the 51% of the shares (2007 and 2008 are        reported at 60%). |
| (a)          |    | Including,        approximately, 749, 746, 769 and 767 BCF of natural gas        held in storage at December 31, 2007, 2008, 2009 and        2010, respectively.                                                                                                                 |

*Standardized measure of discounted future net cash flows*Estimated future cash inflows represent the revenues that wouldbe received from production and are determined by applyingyear-end prices of oil and gas for the year ended December 31,2008 and the average prices during the years ended December 31,2009 and 2010 to estimated future production of proved reserves.Future price changes are considered only to the extent providedby contractual arrangements. Estimated future development andproduction costs are determined by estimating the expenditures tobe incurred in developing and producing the proved reserves atthe end of the year. Neither the effects of price and costescalations nor expected future changes in technology andoperating practices have been considered.

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##### Table of Contents

The standardized measure is calculated as the excess of futurecash inflows from proved reserves less future costs of producingand developing the reserves, future income taxes and a yearly 10%discount factor.

Future production costs include the estimated expendituresrelated to the production of proved reserves plus any productiontaxes without consideration of future inflation. Futuredevelopment costs include the estimated costs of drillingdevelopment wells and installation of production facilities, plusthe net costs associated with dismantlement and abandonment ofwells and facilities, under the assumption that year-end costscontinue without considering future inflation. Future incometaxes were calculated in accordance with the tax laws of thecountries in which Eni operates.

The standardized measure of discounted future net cash flows,related to the preceding proved oil and gas reserves, iscalculated in accordance with the requirements of FASB ExtractiveActivities - Oil & Gas (Topic 932). The standardized measuredoes not purport to reflect realizable values or fair marketvalue of Eni’s proved reserves. An estimate of fair valuewould also take into account, among other things, hydrocarbonresources other than proved reserves, anticipated changes infuture prices and costs and a discount factor representative ofthe risks inherent in the oil and gas exploration and productionactivity.

The standardized measure of discounted future net cash flowsby geographical area consists of the following: 

| (euro        million) |   | **Italy** |   | **Rest         of Europe** |   | **North Africa** |   | **West Africa** |   | **Kazakhstan** |   | **Rest of Asia** |   | **America** |   | **Australia and Oceania** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(1) |   | **Total consolidated subsidiaries and total        joint ventures and affiliates** |
|-----------------------|--------|-----------|--------|----------------------------|--------|------------------|--------|-----------------|--------|----------------|--------|------------------|--------|-------------|--------|---------------------------|--------|-------------------------------------|--------|--------------------------------------------|--------|------------------------------------------------------------------------------------|
|                  |   |           |   |                            |   |                  |   |                 |   |                |   |                  |   |             |   |                           |   |                                     |   |                                            |   |                                                                                    |

| **At December 31, 2008**                                                |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |      |   |   |        |   |   |      |   |   |        |   |
|-------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-------------|--------|--------|-----------|--------|--------|-------------|--------|
| Future        cash inflows                                              |   | 46,458     |   |   | 16,963     |   |   | 62,785     |   |   | 22,344     |   |   | 21,648     |   |   | 5,072     |   |   | 5,257     |   |   | 2,937     |   |   | **183,464** |   |   | 4,782     |   |   | **188,246** |   |
| Future production costs                                                 |   | (5,019     | )      |   | (3,467     | )      |   | (10,673    | )      |   | (6,715     | )      |   | (6,273     | )      |   | (707      | )      |   | (1,657    | )      |   | (405      | )      |   | **(34,916** | **)**  |   | (1,104    | )      |   | **(36,020** | **)**  |
| Future        development and abandonment costs                         |   | (6,805     | )      |   | (2,317     | )      |   | (6,153     | )      |   | (3,868     | )      |   | (4,842     | )      |   | (738      | )      |   | (1,022    | )      |   | (258      | )      |   | **(26,003** | **)**  |   | (1,845    | )      |   | **(27,848** | **)**  |
| **Future net inflow before income tax**                                 |   | **34,634** |   |   | **11,179** |   |   | **45,959** |   |   | **11,761** |   |   | **10,533** |   |   | **3,627** |   |   | **2,578** |   |   | **2,274** |   |   | **122,545** |   |   | **1,833** |   |   | **124,378** |   |
| Future        income tax                                                |   | (11,329    | )      |   | (7,697     | )      |   | (27,800    | )      |   | (5,599     | )      |   | (2,745     | )      |   | (768      | )      |   | (232      | )      |   | (861      | )      |   | **(57,031** | **)**  |   | (1,032    | )      |   | **(58,063** | **)**  |
| **Future net cash flows**                                               |   | **23,305** |   |   | **3,482**  |   |   | **18,159** |   |   | **6,162**  |   |   | **7,788**  |   |   | **2,859** |   |   | **2,346** |   |   | **1,413** |   |   | **65,514**  |   |   | **801**   |   |   | **66,315**  |   |
| 10%        discount factor                                              |   | (13,884    | )      |   | (1,042     | )      |   | (8,639     | )      |   | (2,155     | )      |   | (6,230     | )      |   | (672      | )      |   | (672      | )      |   | (768      | )      |   | **(34,062** | **)**  |   | (763      | )      |   | **(34,825** | **)**  |
| **Standardized measure of discounted future net        cash flows**     |   | **9,421**  |   |   | **2,440**  |   |   | **9,520**  |   |   | **4,007**  |   |   | **1,558**  |   |   | **2,187** |   |   | **1,674** |   |   | **645**   |   |   | **31,452**  |   |   | **38**    |   |   | **31,490**  |   |
| **At        December 31, 2009**                                         |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |      |   |   |        |   |   |      |   |   |        |   |
| Future cash inflows                                                     |   | 26,243     |   |   | 22,057     |   |   | 59,413     |   |   | 33,676     |   |   | 30,273     |   |   | 5,680     |   |   | 7,088     |   |   | 2,973     |   |   | **187,403** |   |   | 3,718     |   |   | **191,121** |   |
| Future        production costs                                          |   | (4,732     | )      |   | (6,215     | )      |   | (7,771     | )      |   | (9,737     | )      |   | (6,545     | )      |   | (1,427    | )      |   | (1,797    | )      |   | (529      | )      |   | **(38,753** | **)**  |   | (1,251    | )      |   | **(40,004** | **)**  |
| Future development and abandonment costs                                |   | (5,143     | )      |   | (5,375     | )      |   | (8,618     | )      |   | (5,134     | )      |   | (4,345     | )      |   | (1,409    | )      |   | (1,897    | )      |   | (214      | )      |   | **(32,135** | **)**  |   | (1,168    | )      |   | **(33,303** | **)**  |
| **Future        net inflow before income tax**                          |   | **16,368** |   |   | **10,467** |   |   | **43,024** |   |   | **18,805** |   |   | **19,383** |   |   | **2,844** |   |   | **3,394** |   |   | **2,230** |   |   | **116,515** |   |   | **1,299** |   |   | **117,814** |   |
| Future income tax                                                       |   | (5,263     | )      |   | (6,621     | )      |   | (24,230    | )      |   | (9,894     | )      |   | (4,827     | )      |   | (636      | )      |   | (694      | )      |   | (563      | )      |   | **(52,728** | **)**  |   | (432      | )      |   | **(53,160** | **)**  |
| **Future        net cash flows**                                        |   | **11,105** |   |   | **3,846**  |   |   | **18,794** |   |   | **8,911**  |   |   | **14,556** |   |   | **2,208** |   |   | **2,700** |   |   | **1,667** |   |   | **63,787**  |   |   | **867**   |   |   | **64,654**  |   |
| 10% discount factor                                                     |   | (5,868     | )      |   | (1,455     | )      |   | (9,160     | )      |   | (3,102     | )      |   | (10,249    | )      |   | (520      | )      |   | (1,162    | )      |   | (771      | )      |   | **(32,287** | **)**  |   | (610      | )      |   | **(32,897** | **)**  |
| **Standardized        measure of discounted future net cash flows** (a) |   | **5,237**  |   |   | **2,391**  |   |   | **9,634**  |   |   | **5,809**  |   |   | **4,307**  |   |   | **1,688** |   |   | **1,538** |   |   | **896**   |   |   | **31,500**  |   |   | **257**   |   |   | **31,757**  |   |
| **At December 31, 2010**                                                |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |      |   |   |        |   |   |      |   |   |        |   |
| Future        cash inflows                                              |   | 30,047     |   |   | 27,973     |   |   | 86,728     |   |   | 45,790     |   |   | 41,053     |   |   | 9,701     |   |   | 8,546     |   |   | 3,846     |   |   | **253,684** |   |   | 11,504    |   |   | **265,188** |   |
| Future production costs                                                 |   | (4,865     | )      |   | (7,201     | )      |   | (12,896    | )      |   | (13,605    | )      |   | (6,686     | )      |   | (3,201    | )      |   | (2,250    | )      |   | (611      | )      |   | **(51,315** | **)**  |   | (3,997    | )      |   | **(55,312** | **)**  |
| Future        development and abandonment costs                         |   | (4,499     | )      |   | (6,491     | )      |   | (8,827     | )      |   | (5,310     | )      |   | (5,192     | )      |   | (3,489    | )      |   | (1,713    | )      |   | (221      | )      |   | **(35,742** | **)**  |   | (2,230    | )      |   | **(37,972** | **)**  |
| **Future net inflow before income tax**                                 |   | **20,683** |   |   | **14,281** |   |   | **65,005** |   |   | **26,875** |   |   | **29,175** |   |   | **3,011** |   |   | **4,583** |   |   | **3,014** |   |   | **166,627** |   |   | **5,277** |   |   | **171,904** |   |
| Future        income tax                                                |   | (6,289     | )      |   | (9,562     | )      |   | (37,108    | )      |   | (14,468    | )      |   | (7,213     | )      |   | (872      | )      |   | (910      | )      |   | (805      | )      |   | **(77,227** | **)**  |   | (2,554    | )      |   | **(79,781** | **)**  |
| **Future net cash flows**                                               |   | **14,394** |   |   | **4,719**  |   |   | **27,897** |   |   | **12,407** |   |   | **21,962** |   |   | **2,139** |   |   | **3,673** |   |   | **2,209** |   |   | **89,400**  |   |   | **2,723** |   |   | **92,123**  |   |
| 10%        discount factor                                              |   | (7,224     | )      |   | (1,608     | )      |   | (13,117    | )      |   | (3,884     | )      |   | (14,829    | )      |   | (419      | )      |   | (1,392    | )      |   | (850      | )      |   | **(43,323** | **)**  |   | (1,640    | )      |   | **(44,963** | **)**  |
| **Standardized measure of discounted future net        cash flows** (a) |   | **7,170**  |   |   | **3,111**  |   |   | **14,780** |   |   | **8,523**  |   |   | **7,133**  |   |   | **1,720** |   |   | **2,281** |   |   | **1,359** |   |   | **46,077**  |   |   | **1,083** |   |   | **47,160**  |   |
|                                                                    |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |           |        |   |           |        |   |             |        |   |           |        |   |             |        |

|    |    |                                                                                                                                                                                                                                                                                               |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | The amounts        of joint ventures and affiliates as at December 31, 2009        and 2010 includes 29.4% of the three Russian companies        former Yukos as a result of the Gazprom call option on        the 51% of the shares (2008 is reported at 60%).                                         |
| (a)          |    | Amounts of        2009 and 2010 do not include standardized measure of        discounted future net cash flows related to the Italian        gas storage activities, following the restructuring of        Eni’s regulated gas businesses in Italy now reported        in Gas & Power segment. |

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*Changes in standardized measure of discounted future netcash flows*Changes in standardized measure of discounted future net cashflows for the years ended December 31, 2008, 2009 and 2010, areas follows:

| (euro        million) |   | **Total consolidated        subsidiaries** |   | **Total joint ventures and        affiliates** |   | **Total consolidated        subsidiaries and joint ventures and affiliates** |
|-----------------------|--------|--------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------------------------------------|
|                  |   |                                            |   |                                                |   |                                                                              |

| **Standardized measure of discounted future net        cash flows at December 31, 2007**               |   | **53,002**  |   |   | **891**   |   |   | **53,893**  |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|-----------|--------|--------|-------------|--------|
| Increase        (Decrease):                                                                            |   |        |   |   |      |   |   |        |   |
| - sales, net of production costs                                                                       |   | (26,202     | )      |   | (178      | )      |   | (26,380     | )      |
| - net        changes in sales and transfer prices, net of production        costs                      |   | (39,699     | )      |   | (1,254    | )      |   | (40,953     | )      |
| - extensions, discoveries and improved recovery,        net of future production and development costs |   | 1,110       |   |   | 10        |   |   | 1,120       |   |
| - changes        in estimated future development and abandonment costs                                 |   | (6,222      | )      |   | (129      | )      |   | (6,351      | )      |
| - development costs incurred during the period        that reduced future development costs            |   | 6,584       |   |   | 145       |   |   | 6,729       |   |
| -        revisions of quantity estimates                                                               |   | 5,835       |   |   | (61       | )      |   | 5,774       |   |
| - accretion of discount                                                                                |   | 10,538      |   |   | 201       |   |   | 10,739      |   |
| - net        change in income taxes                                                                    |   | 21,359      |   |   | 657       |   |   | 22,016      |   |
| - purchase of reserves in-place                                                                        |   | 476         |   |   |      |   |   | 476         |   |
| - sale of        reserves in-place                                                                     |   | 25          |   |   |      |   |   | 25          |   |
| - changes in production rates (timing) and other                                                       |   | 4,646       |   |   | (244      | )      |   | 4,402       |   |
| **Net        increase (decrease)**                                                                     |   | **(21,550** | **)**  |   | **(853**  | **)**  |   | **(22,403** | **)**  |
| **Standardized measure of discounted future net        cash flows at December 31, 2008**               |   | **31,452**  |   |   | **38**    |   |   | **31,490**  |   |
| Increase        (Decrease):                                                                            |   |        |   |   |      |   |   |        |   |
| - sales, net of production costs                                                                       |   | (17,752     | )      |   | (154      | )      |   | (17,906     | )      |
| - net        changes in sales and transfer prices, net of production        costs                      |   | 4,515       |   |   | 286       |   |   | 4,801       |   |
| - extensions, discoveries and improved recovery,        net of future production and development costs |   | 3,587       |   |   | 22        |   |   | 3,609       |   |
| - changes        in estimated future development and abandonment costs                                 |   | (9,915      | )      |   | (157      | )      |   | (10,072     | )      |
| - development costs incurred during the period        that reduced future development costs            |   | 7,401       |   |   | 208       |   |   | 7,609       |   |
| -        revisions of quantity estimates                                                               |   | 4,686       |   |   | (113      | )      |   | 4,573       |   |
| - accretion of discount                                                                                |   | 6,112       |   |   | 29        |   |   | 6,141       |   |
| - net        change in income taxes                                                                    |   | 674         |   |   | (67       | )      |   | 607         |   |
| - purchase of reserves in-place                                                                        |   | 161         |   |   |      |   |   | 161         |   |
| - sale of        reserves in-place                                                                     |   | (7          | )      |   | 81        |   |   | 74          |   |
| - changes in production rates (timing) and other                                                       |   | 586         |   |   | 84        |   |   | 670         |   |
| **Net        increase (decrease)**                                                                     |   | **48**      |   |   | **219**   |   |   | **267**     |   |
| **Standardized measure of discounted future net        cash flows at December 31, 2009**               |   | **31,500**  |   |   | **257**   |   |   | **31,757**  |   |
| Increase        (Decrease):                                                                            |   |        |   |   |      |   |   |        |   |
| - sales, net of production costs                                                                       |   | (22,194     | )      |   | (243      | )      |   | (22,437     | )      |
| - net        changes in sales and transfer prices, net of production        costs                      |   | 24,415      |   |   | 406       |   |   | 24,821      |   |
| - extensions, discoveries and improved recovery,        net of future production and development costs |   | 1,926       |   |   | 1,409     |   |   | 3,335       |   |
| - changes        in estimated future development and abandonment costs                                 |   | (6,464      | )      |   | (386      | )      |   | (6,850      | )      |
| - development costs incurred during the period        that reduced future development costs            |   | 8,520       |   |   | 368       |   |   | 8,888       |   |
| -        revisions of quantity estimates                                                               |   | 12,600      |   |   | 143       |   |   | 12,743      |   |
| - accretion of discount                                                                                |   | 6,519       |   |   | 53        |   |   | 6,572       |   |
| - net        change in income taxes                                                                    |   | (11,802     | )      |   | (1,115    | )      |   | (12,917     | )      |
| - purchase of reserves in-place                                                                        |   |        |   |   |      |   |   |        |   |
| - sale of        reserves in-place                                                                     |   | (177        | )      |   |      |   |   | (177        | )      |
| - changes in production rates (timing) and other                                                       |   | 1,234       |   |   | 191       |   |   | 1,425       |   |
| **Net        increase (decrease)**                                                                     |   | **14,577**  |   |   | **826**   |   |   | **15,403**  |   |
| **Standardized measure of discounted future net        cash flows at December 31, 2010**               |   | **46,077**  |   |   | **1,083** |   |   | **47,160**  |   |
|                                                                                                   |   |             |        |   |           |        |   |             |        |

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**SIGNATURES**

The registrant certifies that it meets all of the requirementsfor filing on Form 20-F and has duly caused this annual report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

Date: April 7, 2011

 

 

 

 

 

 

 

| Eni SpA                           |
|-----------------------------------|
|                              |
| /s/ANTONIO CRISTODORO             |
|                                   |
|                              |
| Antonio Cristodoro                |
| Title: Deputy Corporate Secretary |

 

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**EXHIBIT 1**

**Eni SpA By-laws**

> 
***Part I - Establishment - Name - Registered    Office and Duration of the Company***

| **ARTICLE 1** |
|---------------|
| 1.1           |   | "Eni S.p.A."        resulting from the transformation of Ente Nazionale        Idrocarburi, a public law agency, established by Law No.        136 of February 10, 1953 is regulated by these By-laws. |
| 1.2           |   | The Company name may be        written with an upper case or lower case initial. |
|          |   |   |
| **ARTICLE 2** |
| 2.1           |   | The registered head office        of the Company is located in Rome, Italy and the Company        has two branches in San Donato Milanese (MI). |
| 2.2           |   | Main representative offices,        affiliates and branches may be established and/or wound        up in Italy or abroad in compliance with the law. |
|          |   |   |
| **ARTICLE 3** |
| 3.1           |   | The Company is expected to        exist until December 31, 2100. Its duration may be        extended one or more times by resolution of the        shareholders’ meeting. |

> 
***Part II - Corporate Purpose***

| **ARTICLE        4** |
|----------------------|
| 4.1                  |   | The corporate purpose is the        direct and/or indirect management, by way of        shareholdings in companies, agencies or businesses, of        activities in the field of hydrocarbons and natural        gases, such as exploration and development of hydrocarbon        fields, construction and operation of pipelines for        transporting the same, processing, transformation,        storage, utilisation and trade of hydrocarbons and        natural vapours, all in respect of concessions provided        by law. |
|                 |   | The Company also has the        object of direct and/or indirect management, by way of        shareholdings in companies, agencies or businesses, of        activities in the fields of chemicals, nuclear fuels,        geothermy, renewable energy sources and energy in        general, 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        purpose of undertaking and managing the technical and        financial co-ordination of subsidiaries and affiliated        companies and the provision of financial assistance to        them. |
|                 |   | The Company may undertake        any transactions necessary or useful for the achievement        of the corporate purpose; by way of example, it may        initiate transactions involving real estate, moveable        goods, trade and commerce, industry, finance and banking        asset and liability transactions, and any action that is        in any way connected with the corporate purposes with the        exception of public fund raising and the performance of        investment services as regulated by Legislative Decree        No. 58 of February 24, 1998. |
|                 |   | The Company may take        shareholdings and interests in other companies or        businesses with similar, comparable or complementary        purposes 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 guarantees for its own and        others’ obligations, especially performance bonds. |

> 
***Part III - Capital - Shareholdings -    Bonds***

| **ARTICLE        5** |
|----------------------|
| 5.1                  |   | The Company capital is        4,005,358,876.00 (four billion five million three hundred        and fifty-eight thousand eight hundred and seventy-six)        euro, represented by 4,005,358,876 (four billion five        million three hundred and fifty-eight thousand eight        hundred and seventy-six) ordinary shares with a nominal        value of 1 (one) euro each. |
| 5.2                  |   | Shares may not be split up        and each share is entitled to one vote. |
| 5.3                  |   | The fact of being a        shareholder in itself constitutes approval of these        By-laws. |
|                 |   |   |
| **ARTICLE        6** |
| 6.1                  |   | Pursuant to Article 3 of        Decree-law No. 332 of May 31, 1994, converted with        amendments into Law No. 474 of July 30, 1994, noone, in        any capacity, may own Company shares that entail a        holding of more than 3 per cent. of voting share capital. |
|                 |   | Such maximum shareholding        limit is calculated by taking into account the aggregate        shareholding held by the controlling entity, either a        physical or legal person or Company; its directly or        indirectly controlled entities, as well as entities        controlled by the same controlling entity; affiliated        entities as well as people related to the second degree        by blood or marriage, as long as they are not legally        separated spouses. |

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|   |   | Control exists,        with reference also to entities other than companies, in        the cases envisaged by Article 2359, paragraphs 1 and 2        of the Civil Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Affiliation        exists in the case set forth in Article 2359, paragraph        3, of the Civil Code as well as between entities that        directly or indirectly, by way of subsidiaries, other        than those managing investment funds, are bound, even        with third parties, in agreements regarding the exercise        of voting rights or the transfer of shares or portions of        third companies or, in any event, in agreements or pacts        as per Article 122 of Legislative Decree No. 58 of        February 24, 1998 regarding third party companies if said        agreements or pacts concern at least 10 per cent. of the        voting capital, if they are listed companies, or 20 per        cent. if they are unlisted companies. |
|   |   | The        aforementioned shareholding limit (3 per cent.) is        calculated by taking into account shares held by any        fiduciary nominee or intermediary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   | Any voting        rights and any other non-financial rights attributable to        voting capital held or controlled in excess of the        maximum limit indicated in the foregoing, cannot be        exercised and the voting rights of each entity to whom        such limit on shareholding applies are reduced in        proportion, unless otherwise jointly provided in advance        by the parties involved. In the event that shares        exceeding this limit are voted, any shareholders’        resolution adopted pursuant to such a vote may be        challenged pursuant to Article 2377 of the Civil Code, if        the required majority had not been reached without the        votes exceeding the aforementioned maximum limit.           |
|   |   | Shares not        entitled to vote are included in the determination of the        quorum at shareholders’ meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 6.2    |   | Pursuant to        Article 2, paragraph 1 of Decree-law No. 332 of May 31,        1994, converted with amendments into Law No. 474 of July        30, 1994, as modified by Article 4, Paragraph 227, of Law        No. 350 of December 24, 2003 the Minister of Economy and        Finance retains the following special powers to be        exercised in agreement with the Minister of the Economic        Development and according to the criteria contained in        the Decree issued by the President of the Council of        Ministers on 10 June, 2004:                                                                                                                                                                                                        |
|   |   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | opposition with respect to        the acquisition of material shareholdings by entities        affected by the shareholding limit as set forth in        Article 3 of Decree-law No. 332 of May 31, 1994,        converted with amendments into Law No. 474 of July 30,        1994, by which – as per Decree issued by the        Minister of Treasury on October 16, 1995 – are meant        those representing at least 3 per cent. of share capital        with the right to vote at the ordinary shareholders’        meeting. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | The opposition is expressed        within ten days of the date of the notice to be filed by        the Board of Directors at the time request is made for        registration in the shareholders’ register if the        Minister considers that such an acquisition may prejudice        the vital interests of the Italian State. Until the        ten-day term is not lapsed, the voting rights and the        non-asset linked rights connected with the shares        representing a material shareholding may not be        exercised. If the opposition power is exercised, through        a duly motivated act in connection with the prejudice        that may be caused by the operation to the vital        interests of the Italian State, the transferee may not        exercise the voting rights and the other non-asset linked        rights connected with the shares representing a material        shareholding and must sell said shares within one year.        In case of failure to comply, the court, upon request of        the Minister of Economy and Finance, will order the sale        of the shares representing a material shareholding        according to the procedures set forth in Article 2359-ter        of the Civil Code. The act through which the opposition        power is exercised may be challenged by the transferee        before the Lazio Regional Administrative Court within        sixty days as of its issue; |
|   |   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | opposition to the        subscription of Shareholders’ pacts or agreements as        per Article 122 of Legislative Decree No. 58 of February        24, 1998, involving – as per the Decree issued by        the Minister of Treasury on October 16, 1995 – at        least 3 per cent. of the share capital with the right to        vote at ordinary shareholders’ meetings. In order to        allow the exercise of the above mentioned opposition        power, Consob notifies the Minister of Economy and        Finance of the relevant pacts or agreements notified to        it pursuant to the aforementioned Article 122 of        Legislative Decree No. 58 of February 24, 1998. The        opposition power must be exercised within ten days of the        date of the notice by Consob. Until the ten-day term has        elapsed, the voting right and the other non-asset linked        rights connected with the shares held by the shareholders        who have subscribed the above mentioned pacts or        agreements may not be exercised. If the opposition power        is exercised through the issue of an act that shall be        duly motivated in consideration of the prejudice that may        be caused by these pacts or agreements to the vital        interests of the Italian State, the shareholders pacts or        agreements shall be null and void. If in the        shareholders’ meetings the shareholders who signed        shareholders’ pacts or agreements should behave as        if those pacts or agreements disciplined by Article 122        of Legislative Decree No. 58 of February 24, 1998 were        still in effect, the resolutions approved with their        vote, if determining for the approval, may be challenged.        The act through which the opposition power is exercised        may be challenged by the shareholders who joined the        above mentioned pacts or agreements before the Lazio        Regional Administrative Court within sixty days; |
|   |   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | veto power, duly motivated        in relation to the effective prejudice to the interests        of the Italian State, with respect to resolutions to        dissolve the Company, to transfer the business, to merge,        to demerge, to transfer the Company’s registered        office abroad, to change the corporate purpose or to        amend the By-laws cancelling or modifying the powers        indicated in this Article. The act through which the veto        power is exercised may be challenged within sixty days of        its issue by the dissenting shareholders before the Lazio        Regional Administrative Court; |

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|   |   | d) |   | appointment of one Director        with no voting rights. Should such an appointed Director        cease to hold office, the Minister of Economy and Finance        in agreement with the Minister of Economic Development        will appoint a substitute. |
|--------|--------|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  |   |                                                                                                                                                                                                                                                             |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ARTICLE        7**  |
| 7.1                   |   | When shares are fully paid,        and if the law so allows, they may be issued to the        bearer. Bearer shares may be converted into registered        shares and vice-versa. Conversion operations are        performed at the shareholder’s expense. |
|                  |   |                                                                                                                                                                                                                                                             |
| **ARTICLE        8**  |
| 8.1                   |   | In the event, and for        whatever reason, that a share belongs to more than one        person, the rights relating to said share may not be        exercised by other than one person or by a proxy for all        co-owners.                                |
|                  |   |                                                                                                                                                                                                                                                             |
| **ARTICLE        9**  |
| 9.1                   |   | The shareholders’        meeting may resolve to increase the Company capital and        fix the terms, conditions and means thereof.                                                                                                                        |
| 9.2                   |   | The shareholders’        meeting may resolve to increase the Company capital by        issuing shares, including shares of different classes, to        be assigned for no consideration pursuant to Article 2349        of the Civil Code.                 |
|                  |   |                                                                                                                                                                                                                                                             |
| **ARTICLE        10** |
| 10.1                  |   | Payments on shares are        requested by the Board of Directors in one or more times.                                                                                                                                                                          |
| 10.2                  |   | Shareholders who are late in        payment are charged an interest calculated at the        official discount rate established by the Bank of Italy,        without prejudice to the provisions of Article 2344 of        the Civil Code.                       |
|                  |   |                                                                                                                                                                                                                                                             |
| **ARTICLE        11** |
| 11.1                  |   | The Company may issue bonds,        including convertible bonds and warrants, in compliance        with the law.                                                                                                                                                 |

> 
***Part IV - Shareholders’ meeting***

| **ARTICLE        12** |
|-----------------------|
| 12.1                  |   | Ordinary and extraordinary        shareholders’ meetings are usually held at the        Company registered office unless otherwise resolved by        the Board of Directors, provided however they are held in        Italy. |
| 12.2                  |   | An ordinary        shareholders’ meeting is called at least once a        year, within 180 days of the end of the Company financial        year, to approve the financial statements, since the        Company is required to draw up consolidated financial        statements. |
| 12.3                  |   | The Directors must call a        shareholders’ meeting without delay when it is        requested by shareholders representing at least one        twentieth of the share capital. Calling a        shareholders’ meeting upon request of shareholders        cannot be made for the matters upon which, according to        law, the shareholders’ meeting will resolve on the        basis of a proposal of the Directors or on the basis of a        project or report of the Board. The shareholders who        request a meeting to be called must prepare a report on        the proposals relating to the items to be discussed; the        Board of Directors shall make the report available to the        public, together with its own evaluations, if any, at the        Company’s registered office, on the Company Website        and in the other ways set forth in the Consob regulation,        at the time the notice calling the meeting is published. |
| 12.4                  |   | The Board of Directors shall        make a report on the items on the agenda available to the        public in the ways set out in the previous paragraph        within the period of time for publication of the notice        calling the shareholders’ meeting. |
|                  |   |   |
| **ARTICLE        13** |
| 13.1                  |   | A shareholders’ meeting        shall be called by notice published on the Company        Website, as well as in the ways specified by Consob in        its regulation, within the legal terms and in accordance        with current law. |
|                  |   | Shareholders who severally        or jointly represent at least one fortieth of the Company        share capital may ask for items to be added to the agenda        by submitting a request within ten days of the        publication of the notice calling the meeting, unless a        different term is provided by the law, indicating the        further proposed items in their request. Requests must be        submitted in writing. Additions to the agenda cannot be        made for the matters upon which, according to law, the        shareholders’ meeting will resolve on the basis of a        proposal of the Directors or on the basis of a project or        report of the Directors different from the report on the        items in the agenda. The Board of Directors gives notice        of the allowed additions to the agenda in the same ways        prescribed for the publication of the notice calling the        meeting at least fifteen days before the date set for the        shareholders’ meeting, unless a different term is        prescribed by law. Within the period of time prescribed        for submission of a request to add items to the agenda,        the requesting shareholders shall provide to the Board of        Directors a report on the matters they propose should be        debated. The Board of Directors makes the report        available to the public, together with its own        evaluations, if any, at the same time as the publication        of the notice of the additions to the agenda in the ways        set out in Article 12.3 of these By-laws. |
| 13.2                  |   | The legitimate attendance of        the shareholders’ meetings and the exercise of        voting rights is confirmed by a statement to the Company        from the authorized intermediary, in compliance with        intermediary accounting records, |

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|   |   | on behalf of the person with        the voting right. The statement shall be issued by the        intermediary on the basis of balances recorded at the end        of the seventh trading day prior to the date of the        shareholders’ meeting on first or single call.        Credit and debit records entered on accounts after this        deadline shall not be considered for the purpose of        legitimising the exercise of voting rights at the        shareholders’ meeting. The statement made by the        authorized intermediary must reach the Company by the end        of the third trading day prior to the date of the        shareholders’ meeting on first or single call, or        other deadline fixed by Consob regulation issued in        agreement with the Bank of Italy. It remains implicit        that the right to attend the meeting and vote shall be        legitimate if the statements are received by the Company        after the deadlines indicated above, provided they are        received before the opening of the shareholders’        meeting on single call. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ARTICLE        14** |
| 14.1                  |   | Those persons who are        entitled to vote may appoint a representative in the        shareholders’ meeting according to law, by means of        a written proxy or in electronic form when this is        provided for in specific regulations and in the ways set        forth therein. In this latter case, electronic        notification of the proxy may be carried out by using a        special section of the Company Website in the ways        indicated in the notice calling the meeting. In order to        simplify the casting of vote by proxy issued by        shareholders who are employees of the Company or of its        subsidiaries and members of shareholders associations        incorporated under and managed pursuant to current        legislation regulating proxies collection, notice boards        for communications and rooms to allow proxies collection        are made available to said associations according to        terms and conditions agreed from time to time by the        Company with the legal representatives of said        associations. |
| 14.2                  |   | The Chairman of the meeting        has to assure the regularity of proxies and, in general,        the right to attend the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 14.3                  |   | The right to vote may also        be exercised by mail according to the laws and        regulations in force concerning this matter. If envisaged        in the notice calling the meeting, those persons entitled        to vote may attend the shareholders’ meeting through        telecommunication equipment, and exercise their right to        vote by electronic means, in accordance with the law, the        regulatory provisions on this subject and with the        meeting Regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 14.4                  |   | The shareholders’        meetings are disciplined by the shareholders’        meeting Regulations approved by the ordinary        shareholders’ meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 14.5                  |   | The Company may designate a        subject for each shareholders’ meeting to whom the        shareholders may confer a proxy with voting instructions        on all or some of the proposals on the agenda in the ways        provided by the law and the regulatory provisions, by the        end of the second trading day preceding the date set for        the shareholders’ meeting on first or single call.        The proxy is not valid for proposals on which no voting        instructions have been provided.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **ARTICLE        15** |
| 15.1                  |   | The meeting is chaired by        the Chairman of the Board of Directors, or in the event        of his absence or impediment, by the Chief Executive        Officer; in their absence, the meeting shall elect its        own Chairman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 15.2                  |   | The Chairman of the meeting        is assisted by a Secretary, who need not be a        shareholder, to be designated by the shareholders        present, and may appoint one or more scrutineers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **ARTICLE        16** |
| 16.1                  |   | The ordinary        shareholders’ meeting decides on all the matters for        which it is legally entitled and authorises the business        transfer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 16.2                  |   | The ordinary and the        extraordinary shareholders’ meeting are normally        held after more than one call, as provided for in these        By-laws; their resolutions in first, second or third call        must be passed with the majorities requested by the law        in each case. The Board of Directors may, if it is deemed        necessary, determine that both the ordinary and the        extraordinary shareholders’ meeting shall be held        after a single call. In case of a single call the        majorities required by law in this case shall apply.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 16.3                  |   | The resolutions of the        shareholders’ meeting, passed in accordance with the        legal regulations and these By-laws, are binding on all        shareholders, including those not present or dissenting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 16.4                  |   | The minutes of ordinary        meetings must be signed by the Chairman and the        Secretary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 16.5                  |   | The minutes of extraordinary        meetings must be drawn up by a notary public.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

> 
***Part V - The Board of Directors***

| **ARTICLE        17** |
|-----------------------|
| 17.1                  |   | The Company is managed by a        Board of Directors consisting of no fewer than three and        no more than nine members. The shareholders’ meeting        determines the number within these limits. |
|                  |   | The Minister of Economy and        Finance in agreement with the Minister of the Economic        Development may appoint another member, with no voting        rights, pursuant to Article 6.2, letter d), of the        By-laws. |
| 17.2                  |   | The Directors are appointed        for a period of up to three financial years; this term        lapses on the date of the shareholders’ meeting        convened to approve the financial statements of the last        year of their office. They may be reappointed. |

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| 17.3   |   | The Board of Directors,        except for the member appointed pursuant to Article 6.2,        letter d) of these By-laws, is appointed by the        shareholders’ meeting on the basis of lists        presented by shareholders and by the Board of Directors;        in such lists the candidates must be listed in numerical        order.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The lists must be filed with        the Company’s registered office by the twenty-fifth        day before the date of the shareholders’ meeting on        first or single call, called to resolve on the        appointment of members of the Board of Directors, and        made available to the public in the ways set forth in the        law and in the Consob regulation at least twenty-one days        before the date set for the shareholders’ meeting on        first or single call. Each shareholder may, severally or        jointly, submit and vote on a single list. Controlling        subjects, controlled companies by them and those under        joint control cannot submit or participate in the        submission of other lists, nor can they vote on them,        even through intermediaries or trustees, controlled here        meaning those companies referred to in Article 93 of        legislative decree No. 58 of February 24, 1998. Each        candidate may stand on a single list, on penalty of        non-electability. Only those shareholders who, severally        or jointly, represent at least 1 per cent. of the share        capital or the different extent fixed by Consob with its        regulation shall have the right to submit lists.        Ownership of the minimum share needed to submit lists        shall be determined by having regard to the shares        registered to the shareholder on the day on which the        lists are filed with the Company. Related certification        may also be submitted after the filing, provided        submission is within the time limit fixed for the        publication of the lists by the Company. |
|   |   | At least one Director, if        there are no more than five Directors, or at least three        Directors if there are more than five, shall satisfy the        independence requirements set for the Board of Statutory        Auditors members of listed companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | The independent candidates        shall be expressly indicated in each list.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   | All candidates shall also        satisfy the integrity requirements set forth by the        applicable legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | Together with the filing of        each list, on penalty of inadmissibility, the curriculum        of each candidate, statements of each candidate to accept        his/her nomination and attest, in his/her own        responsibility, that causes for his/her ineligibility and        incompatibility are non existing and that he/she        satisfies the aforementioned integrity and, if any,        independence requirements, shall be filed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   | The appointed Directors        shall communicate to the Company if they have lost the        above mentioned independence and integrity requirements        and if situations of ineligibility or incompatibility        have arisen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | The Board of Directors        evaluates periodically the independence and the integrity        of its members and if situations of ineligibility or        incompatibility have arisen. If the integrity or        independence requirements declared and set forth by the        legislation in force are not satisfied or lapse for a        Director or if situations of ineligibility or        incompatibility have arisen, the Board of Directors shall        declare the Director’s disqualification and resolve        upon his/her substitution or shall invite him/her to        rectify the situation of incompatibility within the term        set by the Board itself, on penalty of his/her        disqualification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | Directors shall be elected        in the following manner:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|   |   | a)                                                                                                                                                                                                                                                                          |   | seven tenths of the        Directors 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 Directors will        be drawn out from the other candidate lists; said lists        shall not be linked in any way, neither indirectly, to        the shareholders who have submitted or voted the list        that has obtained the highest number of votes; to this        purpose the votes obtained by each candidate list will be        divided by one or two 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 order given in the lists themselves.        Quotients thus assigned to candidates of said lists will        be ordered in a decreasing numerical list. Those who        obtain the highest quotients will be elected. In the        event that more than one candidate obtains the same        quotient, the candidate elected will be the one of the        list that has not hitherto had a Director elected or that        has elected the least number of Directors. In the event        that none of the lists has yet elected a Director or that        all of them have elected the same number of Directors,        the candidate from all such lists who has obtained the        largest number of votes will be elected. In the event of        equal list votes and equal quotients, the entire        shareholders’ meeting will vote again and the        candidate elected will be the one who obtains a simple        majority of the votes; |
|   |   | c)                                                                                                                                                                                                                                                                          |   | if the minimum number of        independent Directors prescribed in these By-laws has not        been elected after the application of the procedure        described above, the quotient to be assigned to the        candidates in each list shall be calculated using the        system described at letter b); the independent candidates        not yet drawn from the lists pursuant to letters a) and        b) above, who have the highest quotients will be elected        in order to meet the provision of the By-laws on the        number of the independent Directors. The Directors so        appointed will replace the non-independent Directors to        whom the lowest quotients have been assigned. If the        number of independent candidates is lower than the        minimum fixed in these By-laws, the shareholders’        meeting shall resolve, with the majorities prescribed by        the law, to replace the non-independent candidates who        received the lowest quotients;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | d)                                                                                                                                                                                                                                                                          |   | to appoint Directors for any        reason not appointed pursuant to the aforementioned        procedure, the shareholders’ meeting shall resolve,        with the majorities prescribed by the law, in such a way        as to ensure that the composition of the Board of        Directors complies with the current legislation and the        By-laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | The vote by list        procedure shall apply only to the renewal of the entire        Board of Directors.                                                                                                                                                                  |
| 17.4   |   | The        shareholders’ meeting may, even during the        Board’s term of office, change the number of members        of the Board of Directors, always within the limits set        forth in the first paragraph of this Article, and make        the related |

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|   |   | appointments.        The mandates of Directors so elected will expire at the        same time as those of the Directors already serving. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

| 17.5                  |   | If during the term of office        one or more Directors should no longer hold office,        action will be taken in compliance with Article 2386 of        the Civil Code with exception of the Director appointed        pursuant to Article 6.2 letter d) of these By-laws. If a        majority of Directors should cease to hold office, the        whole Board will be considered to have resigned, and the        Board must promptly call a shareholders’ meeting to        appoint a new Board.                                                                                                                                                                                                                                                              |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 17.6                  |   | The Board may establish        Board Committees which have consulting and proposing        functions on specific subjects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        18** |
| 18.1                  |   | If the shareholders’        meeting has not appointed a Chairman, the Board will        elect one among its members. The Director appointed        pursuant to Article 6.2, letter d) of the By-laws cannot        be appointed as Chairman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 18.2                  |   | The Board, at the        Chairman’s proposal, shall appoint a Secretary, who        need not belong to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        19** |
| 19.1                  |   | The Board meets in the place        indicated in the meeting notice whenever the Chairman or,        in case of his absence or impediment, the Chief Executive        Officer deems necessary, or when written application has        been made by the majority of its members. The Board of        Directors may also be convened pursuant to Article 28.4        of these By-laws. The Board of Directors’ meetings        may be held by video or teleconference if each of the        participants in the meetings can be identified and if        each can follow and participate in the discussion of the        topics dealt with in real time. The Meeting is considered        duly held in the place where the Chairman and the        Secretary are present. |
| 19.2                  |   | Usually notice is given at        least five days in advance. In cases of urgency the        period of notice may be shorter. The Board of Directors        decides on how its meetings should be convened.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 19.3                  |   | The Board of Directors must        also be convened when so requested by at least two        Directors or by one if the Board consists of three        Director, to decide on a specific topic considered to be        of particular importance, pertaining to the management of        the Company, and said topic must be specified in the        request.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        20** |
| 20.1                  |   | The Chairman of the Board        or, in his absence, the oldest Director in attendance        shall chair the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        21** |
| 21.1                  |   | For a Board meeting to be        valid, a majority of serving Directors with voting rights        must be present.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 21.2                  |   | Resolutions shall be        approved by majority of votes of the Directors with        voting rights present; should votes be equal, the person        who chairs the meeting shall have a casting vote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        22** |
| 22.1                  |   | The resolutions of the Board        of Directors are entered in the minutes, which are        recorded in a book kept for that purpose pursuant to the        law, and said minutes are signed by the Chairman of the        meeting and by the Secretary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 22.2                  |   | Copies of the minutes are        bona fide if they are signed by the Chairman or the        person acting for him or her and countersigned by the        Secretary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ARTICLE        23** |
| 23.1                  |   | The Board of Directors is        invested with the fullest powers for the ordinary and        extraordinary management of the Company and, in        particular, has the power to perform all acts it deems        advisable for the implementation and achievement of the        corporate purpose, except for the acts that the law or        these By-laws reserve for the shareholders’ meeting.                                                                                                                                                                                                                                                                                                                                                                    |
| 23.2                  |   | The Board of Directors shall        deliberate on the following matters:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

| - |   | the merger and the        proportional demerger of companies in which the Company        owns shares or holdings representing at least 90 per        cent. of the share capital; |
|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| - |   | the establishment and        winding up of branches;                                                                                                                             |
| - |   | the amendment of the By-laws        to comply with legal provisions.                                                                                                             |

| 23.3                  |   | The Board of Directors and        the Chief Executive Officer shall promptly report to the        Board of Statutory Auditors at least every three months        and in any event at the time of the meetings of the Board        of Directors, on the activity carried out and on the most        significant economic, financial and capital transactions        carried out by the Company and the companies it controls;        in particular they shall report to the Board of Statutory        Auditors those transactions in which they have an        interest, on their own behalf or on behalf of third        parties.                                                                                                                                                                                                                                                                      |
|-----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ARTICLE        24** |
| 24.1                  |   | The Board of Directors        delegates its powers to one of its members with the        exception of the Director appointed pursuant to Article        6.2, letter d) of the By-laws, within the limits set        forth in Article 2381 of the Civil Code; the Board may in        addition delegate powers to the Chairman to identify and        promote integrated projects and international agreements        of strategic importance. The Board of Directors may at        any time withdraw the powers delegated hereon,        proceeding, in the case of revocation of the powers        delegated to the Chief Executive Officer, to appoint        another Chief Executive Officer at the same time. The        Board of Directors, upon the proposal of the Chairman and        in agreement with the Chief Executive Officer, may confer        powers for single acts or categories of |

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##### Table of Contents

|   |   | acts on other members of the        Board of Directors with the exception of the Director        appointed pursuant to Article 6.2, letter d) of these        By-laws. The Chairman and the Chief Executive Officer,        within the limits of the authority attributed to them,        may delegate and empower Company employees or third        parties to represent the Company for single acts or        specific categories of acts. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Further, upon proposal of        the Chief Executive Officer and in agreement with the        Chairman, the Board of Directors may also appoint one or        more General Managers and determine the powers to be        conferred on them, after they have been ascertained to        fulfil the integrity requirements prescribed by the law.        The Board of Directors shall periodically check the        integrity of the General Managers. Failure to satisfy        these requirements shall result in disqualification from        the position. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Upon proposal of the Chief        Executive Officer, in agreement with the Chairman and        with the favourable opinion of the Board of Statutory        Auditors, the Board of Directors appoints the Manager        responsible for the preparation of the financial        reporting documents.                                                                                                                                                                                                                                                         |
|   |   | The Manager responsible for        the preparation of the financial reporting documents must        be chosen from among those persons who, for at least        three years, have carried out:                                                                                                                                                                                                                                                                                                                                                                |

|   |   | a) |   | administration, control or        senior management activities in companies listed on        regulated stock exchanges in Italy or other European        Union countries or other OECD countries with a share        capital of no less than two million euro, or |
|--------|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | audit activities in the        companies indicated in letter a) above, or                                                                                                                                                                                         |
|   |   | c) |   | professional activities or        university teaching activities in the financial or        accounting sectors, or                                                                                                                                                |
|   |   | d) |   | senior management functions        in public or private bodies in the financial, accounting,        or control sectors.                                                                                                                                           |

|                  |   | The Board of Directors shall        monitor that the Manager responsible for the preparation        of the financial reporting documents has adequate powers        and means to execute his/her tasks and that the        administrative and accounting procedures are effectively        respected                       |
|-----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                                                                                                       |
| **ARTICLE        25** |
| 25.1                  |   | Legal representation towards        any judicial or administrative authority and towards        third parties, and the Company signature, is vested in        either the Chairman or the Chief Executive Officer.                                                                                                          |
|                  |   |                                                                                                                                                                                                                                                                                                                       |
| **ARTICLE        26** |
| 26.1                  |   | The Chairman and the members        of the Board of Directors are entitled to remuneration to        be determined by the ordinary shareholders’ meeting.        Said resolution, once taken, shall remain valid for        subsequent financial years until the shareholders’        meeting decides otherwise. |
|                  |   |                                                                                                                                                                                                                                                                                                                       |
| **ARTICLE        27** |
| 27.1                  |   | The Chairman:                                                                                                                                                                                                                                                                                                              |

| a) |   | represents the Company        pursuant to Article 25.1;                                                 |
|----|--------|---------------------------------------------------------------------------------------------------------|
| b) |   | chairs the        shareholders’ meeting pursuant to Article 15.1;                                  |
| c) |   | calls and chairs meetings of        the Board of Directors pursuant to Articles 19.1 and        20.1;   |
| d) |   | checks that Board        resolutions are implemented;                                                   |
| e) |   | exercises the powers        delegated to him by the Board of Directors pursuant to        Article 24.1. |

> 
***Part VI - Board of Statutory Auditors***

| **ARTICLE        28** |
|-----------------------|
| 28.1                  |   | The Board of Statutory        Auditors consists of five effective members and two        alternate members, chosen among persons who satisfy the        professional and integrity requirements set forth by the        Ministry of Justice Decree No. 162, of March 30, 2000. |
|                  |   | Pursuant to the        aforementioned decree, the subjects closely connected to        the business of the Company are: commercial law, business        economics and corporate finance. |
|                  |   | Similarly, the sectors        closely connected to those of interest of the Company are        the engineering and geological sectors. |
|                  |   | The Statutory Auditors may        be appointed members of administration and control bodies        in other companies within the limits set by Consob        regulation. |
| 28.2                  |   | The Board of Statutory        Auditors is appointed by the shareholders’ meeting        on the basis of lists presented by the shareholders; in        such lists the candidates are listed by progressive        number. |
|                  |   | The procedures set forth in        Article 17.3 and the provisions issued by Consob in its        regulation shall apply to the submission, filing and        publication of candidate lists. |
|                  |   | Lists shall be divided into        two sections: the first concerns those candidates for        appointment as effective Auditors and the second for the        candidates for appointment as alternate Auditors. At        least the first candidate in each section must be a        chartered accountant and have carried out audit        activities for no less than three years. |
|                  |   | Three effective Auditors and        one alternate Auditor will be drawn from the list that        obtains the majority of votes. The other two standing        Auditors and the other alternate Auditor will be        appointed pursuant to Article 17.3, letter b) of the        By-laws. The procedure described in said Article shall        apply separately to each section of the other lists. |

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|   |   | The shareholders’        meeting appoints the Chairman of the Board of Statutory        Auditors among the effective Auditors appointed according        to Article 17.3 letter b) of these By-laws.                                                                                                                                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The vote by list procedure        shall apply only in case of renewal of the entire Board        of Statutory Auditors.                                                                                                                                                                                                                                                                          |
|   |   | Should an effective Auditor        from the candidate list that received a majority of the        votes expressed by the shareholders be replaced, the        replacement shall be the alternate Auditor from the same        list; should an effective Auditor from the other        candidate lists be replaced, the replacement shall be the        Alternate Auditor from those other lists. |

| 28.3   |   | Retiring Auditors may be        re-elected.                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 28.4   |   | Subject to prior        communication to the Chairman of the Board of Directors,        the Board of Statutory Auditors may call        shareholders’ meetings and of the Board of        Directors. The power to call the Board of Directors may        be exercised individually by each member of the Board of        Statutory Auditors; at least two effective Auditors are        required to call shareholders’ meetings. |
|   |   | The Board of Statutory        Auditors’ meetings may be held by video or        teleconference if each of the participants in the        meetings can be identified and if each can follow and        participate in the discussion of the topics dealt with in        real time. The Meeting is considered duly held in the        place where the Chairman and the Secretary are present.                                           |

> 
***Part VII - Financial Statements and Profits***

| **ARTICLE        29** |
|-----------------------|
| 29.1                  |   | The Company financial year        ends on December 31 every year. |
| 29.2                  |   | At the end of each financial        year, the Board of Directors sees to the preparation of        the Company financial statements in compliance with the        law. |
| 29.3                  |   | The Board of Directors may        pay interim dividends to the shareholders during the        financial year. |
|                  |   |   |
| **ARTICLE        30** |
| 30.1                  |   | Dividends not collected        within five years of the day on which they become payable        will be prescribed in favour of the Company and allocated        to reserves. |

> 
***Part VIII - Winding Up and Liquidation of the    Company***

| **ARTICLE        31** |
|-----------------------|
| 31.1                  |   | In the event the Company is        wound up, the shareholders’ meeting will resolve the        manner of its liquidation, appoint one or more        liquidators and determine their powers and remuneration. |

> 
***Part IX - General Provisions***

| **ARTICLE        32** |
|-----------------------|
| 32.1                  |   | For matters not expressly        regulated by these By-laws, the norms of the Civil Code        and special laws on these matters shall apply. |
| 32.2                  |   | Pursuant to Article 3,        paragraph 2, of Decreelaw No. 332 of May 31, 1994,        converted with amendments into Law No. 474 of July 30,        1994, Article 6.1, subsection six, of these By-laws does        not apply to the shareholding owned by the Ministry of        Economy and Finance, public bodies or entities they        control. |
|                  |   |   |
| **ARTICLE        33** |
| 33.1                  |   | The Company retains all        assets and liabilities held by the public law agency Ente        Nazionale Idrocarburi before its transformation. |

 

 

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**EXHIBIT 8**

**List of Eni’ssubsidiaries for year 2010**

| Subsidiary |   | Country        of Incorporation |   | Eni’s        share of net profit (%) |
|------------|--------|---------------------------------|--------|-------------------------------------------|
|       |   |                            |   |                                      |

| EXPLORATION & PRODUCTION                                                |   |                   |   |   |
|-----------------------------------------------------------------------------|--------|------------------------|--------|--------|
|                                                                        |   |                   |   |   |
| Eni Angola SpA                                                              |   | Italy                  |   | 100.00 |
| Eni East Africa SpA                                                         |   | Italy                  |   | 100.00 |
| Eni Medio Oriente SpA                                                       |   | Italy                  |   | 100.00 |
| Eni Mediterranea Idrocarburi        SpA                                     |   | Italy                  |   | 100.00 |
| Eni Timor Leste SpA                                                         |   | Italy                  |   | 100.00 |
| Eni Zubair SpA                                                              |   | Italy                  |   | 100.00 |
| Ieoc SpA                                                                    |   | Italy                  |   | 100.00 |
| Società Adriatica        Idrocarburi SpA                               |   | Italy                  |   | 100.00 |
| Società Ionica Gas SpA                                                 |   | Italy                  |   | 100.00 |
| Società Oleodotti        Meridionali - SOM SpA                         |   | Italy                  |   | 70.00  |
| Società Petrolifera        Italiana SpA                                |   | Italy                  |   | 99.96  |
| Tecnomare - Società per lo        Sviluppo delle Tecnologie Marine SpA |   | Italy                  |   | 100.00 |
| Agip Caspian Sea BV                                                         |   | Netherlands            |   | 100.00 |
| Agip Energy and Natural        Resources (Nigeria) Ltd                      |   | Nigeria                |   | 100.00 |
| Agip Karachaganak BV                                                        |   | Netherlands            |   | 100.00 |
| Agip Oil Ecuador BV                                                         |   | Netherlands            |   | 100.00 |
| Burren Energy (Bermuda) Ltd                                                 |   | Bermuda                |   | 100.00 |
| Burren Energy Congo Ltd                                                     |   | British Virgin Islands |   | 100.00 |
| Burren Energy (Egypt) Ltd                                                   |   | UK                     |   | 100.00 |
| Burren Energy India Ltd                                                     |   | UK                     |   | 100.00 |
| Burren Energy Ltd                                                           |   | Cyprus                 |   | 100.00 |
| Burren Energy Plc                                                           |   | UK                     |   | 100.00 |
| Burren Energy (Services) Ltd                                                |   | UK                     |   | 100.00 |
| Burren Resources Petroleum        Ltd                                       |   | Bermuda                |   | 100.00 |
| Burren Shakti Ltd                                                           |   | Bermuda                |   | 100.00 |
| Eni AEP Ltd                                                                 |   | UK                     |   | 100.00 |
| Eni Algeria Exploration BV                                                  |   | Netherlands            |   | 100.00 |
| Eni Algeria Ltd Sàrl                                                   |   | Luxembourg             |   | 100.00 |
| Eni Algeria Production BV                                                   |   | Netherlands            |   | 100.00 |
| Eni Ambalat Ltd                                                             |   | UK                     |   | 100.00 |
| Eni America Ltd                                                             |   | USA                    |   | 100.00 |
| Eni Angola Exploration BV                                                   |   | Netherlands            |   | 100.00 |
| Eni Angola Production BV                                                    |   | Netherlands            |   | 100.00 |
| Eni Australia BV                                                            |   | Netherlands            |   | 100.00 |
| Eni Australia Ltd                                                           |   | UK                     |   | 100.00 |
| Eni BB Petroleum Inc                                                        |   | USA                    |   | 100.00 |
| Eni Bukat Ltd                                                               |   | UK                     |   | 100.00 |
| Eni Bulungan BV                                                             |   | Netherlands            |   | 100.00 |
| Eni Canada Holding Ltd                                                      |   | Canada                 |   | 100.00 |
| Eni CBM Ltd                                                                 |   | UK                     |   | 100.00 |
| Eni China BV                                                                |   | Netherlands            |   | 100.00 |
| Eni Congo Holding BV                                                        |   | Netherlands            |   | 100.00 |
| Eni Congo SA                                                                |   | Congo                  |   | 100.00 |
| Eni Croatia BV                                                              |   | Netherlands            |   | 100.00 |
| Eni Dación BV                                                          |   | Netherlands            |   | 100.00 |
| Eni Denmark BV                                                              |   | Netherlands            |   | 100.00 |
| Eni Elgin/Franklin Ltd                                                      |   | UK                     |   | 100.00 |
| Eni Energy Russia BV                                                        |   | Netherlands            |   | 100.00 |
| Eni Gabon SA                                                                |   | Gabon                  |   | 99.96  |
| Eni Ganal Ltd                                                               |   | UK                     |   | 100.00 |
| Eni Gas & Power LNG        Australia BV                                 |   | Netherlands            |   | 100.00 |
| Eni Ghana Exploration and        Production Ltd                             |   | Ghana                  |   | 100.00 |
| Eni Hewett Ltd                                                              |   | UK                     |   | 100.00 |

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##### Table of Contents

| Eni India Ltd                                  |   | UK                  |   | 100.00 |
|------------------------------------------------|--------|---------------------|--------|--------|
| Eni Indonesia Ltd                              |   | UK                  |   | 100.00 |
| Eni International NA NV        Sàrl       |   | Luxembourg          |   | 100.00 |
| Eni Investments Plc                            |   | UK                  |   | 100.00 |
| Eni Iran BV                                    |   | Netherlands         |   | 100.00 |
| Eni Iraq BV                                    |   | Netherlands         |   | 100.00 |
| Eni Ireland BV                                 |   | Netherlands         |   | 100.00 |
| Eni JPDA 03-13 Ltd                             |   | UK                  |   | 100.00 |
| Eni JPDA 06-105 Pty Ltd                        |   | Australia           |   | 100.00 |
| Eni Krueng Mane Ltd                            |   | UK                  |   | 100.00 |
| Eni Lasmo Plc                                  |   | UK                  |   | 100.00 |
| Eni LNS Ltd                                    |   | UK                  |   | 100.00 |
| Eni Mali BV                                    |   | Netherlands         |   | 100.00 |
| Eni Marketing Inc                              |   | USA                 |   | 100.00 |
| Eni MHH Ltd (in liquidation)                   |   | UK                  |   | 100.00 |
| Eni Middle East BV                             |   | Netherlands         |   | 100.00 |
| Eni Middle East Ltd                            |   | UK                  |   | 100.00 |
| Eni MOG Ltd (in liquidation)                   |   | UK                  |   | 100.00 |
| Eni Muara Bakau BV                             |   | Netherlands         |   | 100.00 |
| Eni Norge AS                                   |   | Norway              |   | 100.00 |
| Eni North Africa BV                            |   | Netherlands         |   | 100.00 |
| Eni Oil Algeria Ltd                            |   | UK                  |   | 100.00 |
| Eni Oil do Brasil SA                           |   | Brazil              |   | 100.00 |
| Eni Oil & Gas Inc                          |   | USA                 |   | 100.00 |
| Eni Oil Holdings BV                            |   | Netherlands         |   | 100.00 |
| Eni Pakistan Ltd                               |   | UK                  |   | 100.00 |
| Eni Pakistan (M) Ltd Sàrl                 |   | Luxembourg          |   | 100.00 |
| Eni Papalang Ltd                               |   | UK                  |   | 100.00 |
| Eni Petroleum Co Inc                           |   | USA                 |   | 100.00 |
| Eni Petroleum US Llc                           |   | USA                 |   | 100.00 |
| Eni Popodi Ltd                                 |   | UK                  |   | 100.00 |
| Eni Rapak Ltd                                  |   | UK                  |   | 100.00 |
| Eni Resources Ltd (in        liquidation)      |   | UK                  |   | 100.00 |
| Eni TNS Ltd                                    |   | UK                  |   | 100.00 |
| Eni Togo BV                                    |   | Netherlands         |   | 100.00 |
| Eni Transportation Ltd                         |   | UK                  |   | 100.00 |
| Eni Trinidad and Tobago Ltd                    |   | Trinidad and Tobago |   | 100.00 |
| Eni TTO Ltd (in liquidation)                   |   | UK                  |   | 100.00 |
| Eni Tunisia BEK BV                             |   | Netherlands         |   | 100.00 |
| Eni Tunisia BV                                 |   | Netherlands         |   | 100.00 |
| Eni UFL Ltd                                    |   | UK                  |   | 100.00 |
| Eni UHL Ltd                                    |   | UK                  |   | 100.00 |
| Eni UKCS Ltd                                   |   | UK                  |   | 100.00 |
| Eni UK Holding Plc                             |   | UK                  |   | 100.00 |
| Eni UK Ltd                                     |   | UK                  |   | 100.00 |
| Eni ULT Ltd                                    |   | UK                  |   | 100.00 |
| Eni ULX Ltd                                    |   | UK                  |   | 100.00 |
| Eni USA Gas Marketing Llc                      |   | USA                 |   | 100.00 |
| Eni USA Inc                                    |   | USA                 |   | 100.00 |
| Eni US Operating Co Inc                        |   | USA                 |   | 100.00 |
| Eni Venezuela BV                               |   | Netherlands         |   | 100.00 |
| Eni West Timor Ltd                             |   | UK                  |   | 100.00 |
| Eni Yemen Ltd                                  |   | UK                  |   | 100.00 |
| First Calgary Petroleums LP                    |   | USA                 |   | 100.00 |
| First Calgary Petroleums        Partner Co ULC |   | Canada              |   | 100.00 |
| Hindustan Oil Exploration Co        Ltd        |   | India               |   | 47.18  |
| Ieoc Exploration BV                            |   | Netherlands         |   | 100.00 |
| Ieoc Production BV                             |   | Netherlands         |   | 100.00 |
| Lasmo Sanga Sanga Ltd                          |   | Bermuda             |   | 100.00 |
| Minsk Energy Resources        Sp.Zo.o          |   | Poland              |   | 100.00 |
| Nigerian Agip Exploration        Ltd           |   | Nigeria             |   | 100.00 |
| Nigerian Agip Oil Co Ltd                       |   | Nigeria             |   | 100.00 |
| OOO ‘Eni Energhia’                   |   | Russia              |   | 100.00 |

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| GAS & POWER                                                                                                                                                  |   |            |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|
|                                                                                                                                                             |   |            |   |   |
| Acqua Campania SpA                                                                                                                                               |   | Italy           |   | 31.97  |
| Compagnia Napoletana di        Illuminazione e Scaldamento col Gas SpA                                                                                           |   | Italy           |   | 55.39  |
| Eni Gas & Power Belgium        SpA                                                                                                                           |   | Italy           |   | 100.00 |
| Eni Gas Transport        Deutschland SpA                                                                                                                         |   | Italy           |   | 100.00 |
| Eni Hellas SpA                                                                                                                                                   |   | Italy           |   | 100.00 |
| EniPower Mantova SpA                                                                                                                                             |   | Italy           |   | 86.50  |
| EniPower SpA                                                                                                                                                     |   | Italy           |   | 100.00 |
| GNL Italia SpA                                                                                                                                                   |   | Italy           |   | 55.56  |
| LNG Shipping SpA                                                                                                                                                 |   | Italy           |   | 100.00 |
| Snam Rete Gas SpA                                                                                                                                                |   | Italy           |   | 55.56  |
| Società EniPower Ferrara        Srl                                                                                                                         |   | Italy           |   | 51.00  |
| Società Italiana per il Gas        pA                                                                                                                       |   | Italy           |   | 55.56  |
| Stoccaggi Gas Italia SpA -        Stogit SpA                                                                                                                     |   | Italy           |   | 55.56  |
| Toscana Energia Clienti SpA                                                                                                                                      |   | Italy           |   | 100.00 |
| Travagliato Energia Srl                                                                                                                                          |   | Italy           |   | 100.00 |
| Adriaplin Podjetje za        distribucijo zemeljskega plina doo Ljubljana                                                                                        |   | Slovenia        |   | 51.00  |
| Altergaz SA                                                                                                                                                      |   | France          |   | 53.88  |
| Distribuidora de Gas Cuyana        SA                                                                                                                            |   | Argentina       |   | 45.60  |
| Distrigas LNG Shipping SA                                                                                                                                        |   | Belgium         |   | 100.00 |
| Distrigas NV                                                                                                                                                     |   | Belgium         |   | 100.00 |
| Eni Gas & Power Belgium        SA                                                                                                                            |   | Belgium         |   | 100.00 |
| Eni Gas & Power GmbH                                                                                                                                         |   | Germany         |   | 100.00 |
| Eni Gas Transport GmbH                                                                                                                                           |   | Germany         |   | 100.00 |
| Eni Gas Transport        International SA                                                                                                                        |   | Switzerland     |   | 100.00 |
| Eni G&P France BV                                                                                                                                            |   | Netherlands     |   | 100.00 |
| Eni G&P Trading BV                                                                                                                                           |   | Netherlands     |   | 100.00 |
| Finpipe GIE                                                                                                                                                      |   | Belgium         |   | 63.33  |
| Gas Brasiliano Distribuidora        SA                                                                                                                           |   | Brazil          |   | 100.00 |
| Inversora de Gas Cuyana SA                                                                                                                                       |   | Argentina       |   | 76.00  |
| Société de Service du        Gazoduc Transtunisien SA - Sergaz SA                                                                                      |   | Tunisia         |   | 66.67  |
| Société pour la        Construction du Gazoduc Transtunisien SA - Scogat SA                                                                            |   | Tunisia         |   | 100.00 |
| Tigáz-Dso Földgázelosztó        kft                                                                                                          |   | Hungary         |   | 50.08  |
| Tigáz Tiszántúli        Gázszolgáltató Zártkörûen Mûködõ        Részvénytársaság |   | Hungary         |   | 50.08  |
| Trans Tunisian Pipeline Co        Ltd                                                                                                                            |   | Channel Islands |   | 100.00 |
|                                                                                                                                                             |   |            |   |   |
|                                                                                                                                                             |   |            |   |   |
| REFINING & MARKETING                                                                                                                                         |   |            |   |   |
|                                                                                                                                                             |   |            |   |   |
| Costiero Gas Livorno SpA                                                                                                                                         |   | Italy           |   | 65.00  |
| Ecofuel SpA                                                                                                                                                      |   | Italy           |   | 100.00 |
| Eni Fuel Centrosud SpA        (former Fox Energy SpA)                                                                                                            |   | Italy           |   | 100.00 |
| Eni Fuel Nord SpA                                                                                                                                                |   | Italy           |   | 100.00 |
| Eni Rete oil&nonoil SpA                                                                                                                                      |   | Italy           |   | 100.00 |
| Eni Trading & Shipping        SpA                                                                                                                            |   | Italy           |   | 100.00 |
| Petrolig Srl                                                                                                                                                     |   | Italy           |   | 70.00  |
| Petroven Srl                                                                                                                                                     |   | Italy           |   | 68.00  |
| Raffineria di Gela SpA                                                                                                                                           |   | Italy           |   | 100.00 |
| Agip Lubricantes SA                                                                                                                                              |   | Argentina       |   | 100.00 |
| Agip Slovenija doo                                                                                                                                               |   | Slovenia        |   | 100.00 |
| Eni Austria GmbH (former        Agip Austria GmbH)                                                                                                               |   | Austria         |   | 100.00 |
| Eni Austria        Tankstellenbetrieb GmbH                                                                                                                       |   |            |   |   |
| (former Agip Austria        Tankstellenbetrieb GmbH)                                                                                                             |   | Austria         |   | 100.00 |
| Eni Benelux BV                                                                                                                                                   |   | Netherlands     |   | 100.00 |
| Eni Ceská Republika Sro        (former Agip Ceská Republika Sro)                                                                                       |   | Czech Republic  |   | 100.00 |
| Eni Deutschland GmbH (former        Agip Deutschland GmbH)                                                                                                       |   | Germany         |   | 100.00 |
| Eni Ecuador SA                                                                                                                                                   |   | Ecuador         |   | 100.00 |
| Eni France Sàrl                                                                                                                                             |   | France          |   | 100.00 |
| Eni Hungaria Zrt                                                                                                                                                 |   | Hungary         |   | 100.00 |
| Eni Iberia SLU                                                                                                                                                   |   | Spain           |   | 100.00 |
| Eni Marketing Austria GmbH                                                                                                                                       |   | Austria         |   | 100.00 |
| Eni Mineralölhandel GmbH                                                                                                                                    |   | Austria         |   | 100.00 |

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| Eni Oil Ceská Republika Sro                                                                        |   | Czech Republic |   | 100.00 |
|---------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|
| Eni Oil Slovensko Spol Sro                                                                              |   | Slovakia       |   | 100.00 |
| Eni Romania Srl (former Agip        Romania Srl)                                                        |   | Romania        |   | 100.00 |
| Eni Schmiertechnik GmbH        (former Agip Schmiertechnik GmbH)                                        |   | Germany        |   | 100.00 |
| Eni Slovensko Spol Sro                                                                                  |   | Slovakia       |   | 100.00 |
| Eni Suisse SA                                                                                           |   | Switzerland    |   | 100.00 |
| Eni Trading & Shipping        BV                                                                    |   | Netherlands    |   | 100.00 |
| Eni Trading & Shipping        Inc                                                                   |   | USA            |   | 100.00 |
| Eni USA R&M Co Inc        (former American Agip Co Inc)                                             |   | USA            |   | 100.00 |
| Esain SA                                                                                                |   | Ecuador        |   | 100.00 |
|                                                                                                    |   |           |   |   |
|                                                                                                    |   |           |   |   |
| PETROCHEMICALS                                                                                          |   |           |   |   |
|                                                                                                    |   |           |   |   |
| Polimeri Europa SpA                                                                                     |   | Italy          |   | 100.00 |
| Dunastyr Polisztirolgyártó        Zártkoruen Mukodo Részvénytársaság |   | Hungary        |   | 100.00 |
| Polimeri Europa Benelux SA                                                                              |   | Belgium        |   | 100.00 |
| Polimeri Europa France SAS                                                                              |   | France         |   | 100.00 |
| Polimeri Europa GmbH                                                                                    |   | Germany        |   | 100.00 |
| Polimeri Europa Ibérica SA                                                                         |   | Spain          |   | 100.00 |
| Polimeri Europa UK Ltd                                                                                  |   | UK             |   | 100.00 |
|                                                                                                    |   |           |   |   |
|                                                                                                    |   |           |   |   |
| ENGINEERING &        CONSTRUCTION                                                                   |   |           |   |   |
|                                                                                                    |   |           |   |   |
| Saipem Energy Services SpA                                                                              |   | Italy          |   | 43.29  |
| Saipem SpA                                                                                              |   | Italy          |   | 43.29  |
| Servizi Energia Italia SpA                                                                              |   | Italy          |   | 43.29  |
| SnamprogettiChiyoda SAS di        Saipem SpA                                                            |   | Italy          |   | 43.25  |
| Andromeda Consultoria        Tecnica e Representações Ltda                                    |   | Brazil         |   | 43.29  |
| Boscongo SA                                                                                             |   | Congo          |   | 43.29  |
| BOS Investment Ltd                                                                                      |   | UK             |   | 43.29  |
| BOS - UIE Ltd                                                                                           |   | UK             |   | 43.29  |
| Construction Saipem Canada        Inc                                                                   |   | Canada         |   | 43.29  |
| Ersai Caspian Contractor Llc                                                                            |   | Kazakhstan     |   | 21.65  |
| ERS - Equipment Rental &        Services BV                                                         |   | Netherlands    |   | 43.29  |
| Global Petroprojects        Services AG                                                                 |   | Switzerland    |   | 43.29  |
| Katran-K Llc                                                                                            |   | Russia         |   | 43.29  |
| Moss Maritime AS                                                                                        |   | Norway         |   | 43.29  |
| Moss Maritime Inc                                                                                       |   | USA            |   | 43.29  |
| Moss Offshore AS                                                                                        |   | Norway         |   | 43.29  |
| North Caspian Service Co                                                                                |   | Kazakhstan     |   | 43.29  |
| Petrex SA                                                                                               |   | Peru           |   | 43.29  |
| Petromar Lda                                                                                            |   | Angola         |   | 30.30  |
| PT Saipem Indonesia                                                                                     |   | Indonesia      |   | 43.29  |
| Saigut SA De Cv                                                                                         |   | Mexico         |   | 43.29  |
| Saimexicana SA De Cv                                                                                    |   | Mexico         |   | 43.29  |
| Saipem America Inc                                                                                      |   | USA            |   | 43.29  |
| Saipem Asia Sdn Bhd                                                                                     |   | Malaysia       |   | 43.29  |
| Saipem (Beijing) Technical        Services Co Ltd                                                       |   | China          |   | 43.29  |
| Saipem Contracting Algerie        SpA                                                                   |   | Algeria        |   | 43.29  |
| Saipem Contracting        Netherlands BV                                                                |   | Netherlands    |   | 43.29  |
| Saipem Contracting (Nigeria)        Ltd                                                                 |   | Nigeria        |   | 42.40  |
| Saipem do Brasil Serviçõs        de Petroleo Ltda                                             |   | Brazil         |   | 43.29  |
| Saipem Drilling Co Private        Ltd                                                                   |   | India          |   | 43.29  |
| Saipem India Projects Ltd                                                                               |   | India          |   | 43.29  |
| Saipem International BV                                                                                 |   | Netherlands    |   | 43.29  |
| Saipem Libya Limited        Liability Company - SA.LI.CO. Llc                                           |   | Libya          |   | 43.29  |
| Saipem Ltd                                                                                              |   | UK             |   | 43.29  |
| Saipem Luxembourg SA                                                                                    |   | Luxembourg     |   | 43.29  |
| Saipem (Malaysia) Sdn Bhd                                                                               |   | Malaysia       |   | 17.91  |
| Saipem Maritime Asset        Management Luxembourg Sàrl                                            |   | Luxembourg     |   | 43.29  |
| Saipem Mediteran Usluge doo                                                                             |   | Croatia        |   | 43.29  |

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| Saipem Misr for Petroleum        Services SAE                                                  |   | Egypt                |   | 43.29  |
|------------------------------------------------------------------------------------------------|--------|----------------------|--------|--------|
| Saipem (Nigeria) Ltd                                                                           |   | Nigeria              |   | 38.71  |
| Saipem Perfurações e        Construções Petrolíferas Unipessoal Lda   |   | Portugal             |   | 43.29  |
| Saipem (Portugal) Comércio        Marítimo. Sociedade Unipessoal Lda                 |   | Portugal             |   | 43.29  |
| Saipem (Portugal) - Gestão        de Participações SGPS Sociedade Unipessoal SA |   | Portugal             |   | 43.29  |
| Saipem SA                                                                                      |   | France               |   | 43.29  |
| Saipem Services México SA        De Cv                                                    |   | Mexico               |   | 43.29  |
| Saipem Services SA                                                                             |   | Belgium              |   | 43.29  |
| Saipem Singapore Pte Ltd                                                                       |   | Singapore            |   | 43.29  |
| Saipem UK Ltd                                                                                  |   | UK                   |   | 43.29  |
| Saipem Ukraine Llc                                                                             |   | Ukraine              |   | 43.29  |
| Sajer Iraq Co for Petroleum        Services Trading General Contracting & Transport Llc    |   | Irak                 |   | 25.97  |
| SAS Port de Tanger                                                                             |   | France               |   | 43.29  |
| Saudi Arabian Saipem Ltd                                                                       |   | Saudi Arabia         |   | 25.97  |
| Sigurd Rück AG                                                                            |   | Switzerland          |   | 43.29  |
| Snamprogetti Canada Inc                                                                        |   | Canada               |   | 43.29  |
| Snamprogetti Engineering BV                                                                    |   | Netherlands          |   | 43.29  |
| Snamprogetti Ltd                                                                               |   | UK                   |   | 43.29  |
| Snamprogetti Lummus Gas Ltd                                                                    |   | Malta                |   | 42.86  |
| Snamprogetti Netherlands BV                                                                    |   | Netherlands          |   | 43.29  |
| Snamprogetti Romania Srl                                                                       |   | Romania              |   | 43.29  |
| Snamprogetti Saudi Arabia Co        Ltd Llc                                                    |   | Saudi Arabia         |   | 43.29  |
| Société de Construction        d'Oleoducs Snc (in liquidation)                       |   | France               |   | 43.29  |
| Sofresid Engineering SA                                                                        |   | France               |   | 43.29  |
| Sofresid SA                                                                                    |   | France               |   | 43.29  |
| Sonsub AS                                                                                      |   | Norway               |   | 43.29  |
| Sonsub International Pty Ltd                                                                   |   | Australia            |   | 43.29  |
| Star Gulf FZ Co                                                                                |   | United Arab Emirates |   | 43.29  |
| Varisal - Serviços de        Consultadoria e Marketing Unipessoal Lda                     |   | Portugal             |   | 43.29  |
|                                                                                           |   |                 |   |   |
|                                                                                           |   |                 |   |   |
| OTHER ACTIVITIES                                                                               |   |                 |   |   |
|                                                                                           |   |                 |   |   |
| Ing. Luigi Conti Vecchi SpA                                                                    |   | Italy                |   | 100.00 |
| Syndial SpA - Attività        Diversificate                                               |   | Italy                |   | 100.00 |
|                                                                                           |   |                 |   |   |
|                                                                                           |   |                 |   |   |
| CORPORATE AND FINANCIAL        COMPANIES                                                       |   |                 |   |   |
|                                                                                           |   |                 |   |   |
| Agenzia Giornalistica Italia        SpA                                                        |   | Italy                |   | 100.00 |
| Eni Administration &        Financial Service SpA                                          |   | Italy                |   | 99.63  |
| Eni Corporate University SpA                                                                   |   | Italy                |   | 100.00 |
| EniServizi SpA                                                                                 |   | Italy                |   | 100.00 |
| Serfactoring SpA                                                                               |   | Italy                |   | 48.82  |
| Servizi Aerei SpA                                                                              |   | Italy                |   | 100.00 |
| Banque Eni SA                                                                                  |   | Belgium              |   | 100.00 |
| Eni Coordination Center SA                                                                     |   | Belgium              |   | 100.00 |
| Eni Finance USA Inc                                                                            |   | USA                  |   | 100.00 |
| Eni Insurance Ltd                                                                              |   | Ireland              |   | 100.00 |
| Eni International BV                                                                           |   | Netherlands          |   | 100.00 |
| Eni International Resources        Ltd                                                         |   | UK                   |   | 100.00 |

 

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**EXHIBIT 11**

**Code of Ethics**

Approved by the Board of Directors of Eni SpAon March 14, 2008The English text is a translation of the Italian official"Code of Ethics"For any conflict or discrepancies between the two texts theItalian text shall prevail

 

TABLE OF CONTENTS

Foreword

**I. GENERAL PRINCIPLES: SUSTAINABILITY AND CORPORATERESPONSIBILITY**

**II. BEHAVIOUR RULES AND RELATIONS WITH STAKEHOLDERS1. Ethics, transparency, fairness, professionalism2. Relations with shareholders and with the Market**2.1. Value for shareholders, efficiency, transparency2.2. Self-Regulatory Code2.3. Company information2.4. Privileged information2.5. Media**3. Relations with institutions, associations, localcommunities**3.1. Authorities and Public Institutions3.2. Political organizations and trade unions3.3. Development of local Communities3.4. Promotion of "non profit" activities**4. Relations with customers and suppliers**4.1. Customers and consumers4.2. Suppliers and external collaborators**5. Eni’s management, employees, collaborators**5.1. Development and protection of Human Resources5.2. Knowledge Management5.3. Corporate security5.4. Harassment or mobbing in the workplace5.5. Abuse of alcohol or drugs and no smoking

**III. TOOLS FOR IMPLEMENTING THE CODE OF ETHICS1. System of internal control**1.1. Conflicts of interest1.2. Transparency of accounting records**2. Health, safety, environment and public safety protection3. Research, innovation and intellectual property protection4. Confidentiality**4.1. Protection of business secret4.2. Protection of privacy4.3. Membership in associations, participation in initiatives,events or external meetings

**IV. CODE OF ETHICS SCOPE OF APPLICATION AND REFERENCESTRUCTURES1. Obligation to know the Code and to report any possibleviolation thereof2. Reference structures and supervision**2.1. Guarantor of the Code of Ethics2.2. Code Promotion Team**3. Code review4. Contractual value of the Code**

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**FOREWORD**

Eni1 is an internationally orientedindustrial group which, because of its size and the importance ofits activities, plays a significant role in the marketplace andin the economic development and welfare of the individuals whowork or collaborate with Eni and of the communities where it ispresent.

The complexity of the situations in which Enioperates, the challenges of sustainable development and the needto take into consideration the interests of all people having alegitimate interest in the corporate business("Stakeholders"), strengthen the importance to clearlydefine the values that Eni accepts, acknowledges and shares aswell as the responsibilities it assumes, contributing to a betterfuture for everybody.

For this reason the new Eni’s Code ofEthics ("Code" or "Code of Ethics") has beendevised.

Compliance with the Code by Eni’sdirectors, statutory auditors, management and employees as wellas by all those who operate in Italy and abroad for achievingEni’s objectives ("Eni’s People"), eachwithin their own functions and responsibilities, is of paramountimportance – also pursuant to legal and contractualprovisions governing the relationship with Eni – forEni’s efficiency, reliability and reputation, which are allcrucial factors for its success and for improving the socialsituation in which Eni operates.

Eni undertakes to promote knowledge of the Codeamong Eni’s People and the other Stakeholders, and to accepttheir constructive contribution to the Code’s principles andcontents. Eni undertakes to take into consideration anysuggestions and remarks of Stakeholders, with the objective ofconfirming or integrating the Code.

Eni carefully checks for compliance with theCode by providing suitable information, prevention and controltools and ensuring transparency in all transactions andbehaviours by taking corrective measures if and as required.

The Watch Structure of each Eni companyperforms the functions of guarantor of the Code of Ethics("Guarantor").

The Code is brought to the attention of everyperson or body having business relations with Eni.

 

 

 

----

| (1) |   | "Eni"        means Eni SpA and its direct and indirect subsidiaries,        in Italy and abroad. |
|-----|--------|------------------------------------------------------------------------------------------------------------|

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**I. GENERAL PRINCIPLES:SUSTAINABILITY AND CORPORATE RESPONSIBILITY**

Compliance with the law, regulations, statutoryprovisions, self-regulatory codes, ethical integrity andfairness, is a constant commitment and duty of all Eni’sPeople, and characterizes the conduct of Eni’s entireorganization.Eni’s business and corporate activities has to be carriedout in a transparent, honest and fair way, in good faith, and infull compliance with competition protection rules.Eni undertakes to maintain and strengthen a governance system inline with international best practice standards, able to dealwith the complex situations in which Eni operates, and with thechallenges to face for sustainable development.Systematic methods for involving Stakeholders are adopted,fostering dialogue on sustainability and corporateresponsibility.In conducting both its activities as an international company andthose with its partners, Eni stands up for the protection andpromotion of human rights – inalienable and fundamentalprerogatives of human beings and basis for the establishment ofsocieties founded on principles of equality, solidarity,repudiation of war, and for the protection of civil and politicalrights, of social, economic and cultural rights and the so-calledthird generation rights (selfdetermination right, right to peace,right to development and protection of the environment).Any form of discrimination, corruption, forced or child labor isrejected. Particular attention is paid to the acknowledgement andsafeguarding of the dignity, freedom and equality of humanbeings, to protection of labor and of the freedom of trade unionassociation, of health, safety, the environment and biodiversity,as well as the set of values and principles concerningtransparency, energy efficiency and sustainable development, inaccordance with International Institutions and Conventions.In this respect Eni operates within the reference framework ofthe United Nations Universal Declaration of Human Rights, theFundamental Conventions of the ILO – International LaborOrganization – and the OECD Guidelines on MultinationalEnterprises.All Eni’s People, without any distinction or exceptionwhatsoever, respect the principles and contents of the Code intheir actions and behaviours while performing their functions andaccording to their responsibilities, because compliance with theCode is fundamental for the quality of their working andprofessional performance. Relationships among Eni’s People,at all levels, must be characterized by honesty, fairness,cooperation, loyalty and mutual respect.The belief that one is acting in favor or to the advantage of Enican never, in any way, justify – not even in part – anybehaviours that conflict with the principles and contents of theCode.

 

**II. BEHAVIOUR RULES ANDRELATIONS WITH STAKEHOLDERS**

**1. ETHICS, TRANSPARENCY, FAIRNESS,PROFESSIONALISM**

In conducting its business, Eni is inspired byand complies with the principles of loyalty, fairness,transparency, efficiency and an open market, regardless of theimportance level of the transaction in question.Any action, transaction and negotiation performed and, generally,the conduct of Eni’s People in the performance of theirduties is inspired by the highest principles of fairness,completeness and transparency of information and legitimacy, bothin form and substance, as well as clarity and truthfulness of allaccounting documents, in compliance with the applicable laws inforce and internal regulations.All Eni’s activities have to be performed with the utmostcare and professional skill, with the duty to provide skills andexpertise adequate to the tasks assigned, and to act in a waycapable to protect Eni’s image and reputation. Corporateobjectives, as well as the proposal and implementation ofprojects, investments and actions, have to be aimed at improvingthe company’s assets, management, technological andinformation level in the long term, and at creating value andwelfare for all Stakeholders.Bribes, illegitimate favours, collusion, requests for personalbenefits for oneself or others, either directly or through thirdparties, are prohibited without any exception.It is prohibited to pay or offer, directly or indirectly, moneyand material benefits and other advantages of any kind to thirdparties, whether representatives of governments, public officersand public servants or private employees, in order to influenceor remunerate the actions of their office.Commercial courtesy, such as small gifts or forms of hospitality,is only allowed when its value is small and it does notcompromise the integrity and reputation of either party, andcannot be construed by an impartial observer as aimed atobtaining undue advantages. In any case, these expenses mustalways be authorized by the designated managers as per existinginternal rules, and be accompanied by appropriate documentation.It is forbidden to accept money from individuals or companiesthat have or intend to have business relations with Eni. Anyonewho receives proposals of gifts or special or hospitalitytreatment that cannot be considered as commercial courtesy ofsmall value, or requests therefore by third parties, shall rejectthem and immediately inform their superior, or the body theybelong to, as well as the Guarantor.Eni shall properly inform all third parties about the commitmentsand obligations provided for in the Code, require third partiesto respect the principles of the Code relevant to theiractivities and take proper internal actions and, if the matter iswithin its own competence, external actions in the event that anythird party should fail to comply with the Code.

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**2. RELATIONS WITH SHAREHOLDERS AND WITH THEMARKET**

**2.1. Value for shareholders, efficiency,transparency**The internal structure of Eni and the relations with theparties directly and indirectly taking part in its activities areorganized according to rules able to ensure managementreliability and a fair balance between the management’spowers and the interests of shareholders and of the otherStakeholders in general as well as transparency and markettraceability of management decisions and general corporate eventswhich may considerably influence the market value of thefinancial instruments issued.Within the framework of the initiatives aimed at maximizing thevalue for shareholders and at guaranteeing transparency of themanagement’s work, Eni defines, implements and progressivelyadjusts a coordinated and homogeneous set of behaviour rulesconcerning both its internal organizational structure andrelations with shareholders and third parties, in compliance withthe highest corporate governance standards at national andinternational level, based on the awareness that thecompany’s capacity to impose efficient and effectivefunctioning rules upon itself is a fundamental tool forstrengthening its reputation in terms of reliability andtransparency as well as Stakeholders’ trust.Eni deems it necessary that shareholders are enabled toparticipate in decisions which come within the limits of theircompetence and make informed choices. Therefore, Eni undertakesto ensure maximum transparency and timeliness of informationcommunicated to shareholders and to the market – by means ofthe corporate internet site, too – in compliance with thelaws and regulations applicable to listed companies. Moreover,Eni undertakes to keep in due consideration the legitimateremarks expressed by shareholders whenever they are entitled todo so.

**2.2. Self-Regulatory Code**The main corporate governance rules of Eni are contained inthe Self-Regulatory Code of Eni SpA, adopted in compliance withthe Code promoted by Borsa Italiana SpA, which is referred toherein as far as applicable.

**2.3. Company information**Eni ensures the correct management of company information, bymeans of suitable procedures for in-house management andcommunication to the outside.

**2.4. Privileged information**All Eni’s People are required, while performing thetasks entrusted to them, to properly manage privilegedinformation such as to know and comply with corporate proceduresreferring to market abuse. Insider trading and any behaviour thatmay promote insider trading are expressly forbidden. In any case,the purchase or sale of shares of Eni or of companies outside Enishall always be based on absolute and transparent fairness.

**2.5. Media**Eni undertakes to provide outside parties with true, prompt,transparent and accurate information.Relations with the media are exclusively dealt with by thedepartments and managers specifically appointed to do so;information to be supplied to media representatives, as well asthe undertaking to provide such information, have to be agreedupon beforehand by Eni’s People with the relevant EniCorporate structure.

**3. RELATIONS WITH INSTITUTIONS, ASSOCIATIONS,LOCAL COMMUNITIES**

Eni encourages dialogue with Institutions andwith organized associations of civil society in all the countrieswhere it operates.

**3.1. Authorities and Public Institutions**Eni, through its People, actively and fully cooperates withAuthorities.Eni’s People, as well as external collaborators whoseactions may somehow be referred to Eni, must have behaviourstowards the Public Administration characterized by fairness,transparency and traceability. These relations have to beexclusively dealt with by the departments and individualsspecifically appointed to do so, in compliance with approvedplans and corporate procedures.The departments of the subsidiaries concerned shall coordinatewith the relevant Eni Corporate structure for assessing thequality of the interventions to be carried out and for thesharing, implementing and monitoring of their actions.It is forbidden to make, induce or encourage false statements toAuthorities.

**3.2. Political organizations and tradeunions**Eni does not make any direct or indirect contributions inwhatever form to political parties, movements, committees,political organizations and trade unions, nor to theirrepresentatives and candidates, except those specificallycontemplated by applicable laws and regulations.

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**3.3. Development of local Communities**Eni is committed to actively contribute to promoting thequality of life, the socio-economic development of thecommunities where Eni operates and to the development of theirhuman resources and capabilities, while conducting its businessactivities according to standards that are compatible with faircommercial practices.Eni’s activities are carried out in the awareness of thesocial responsibility that Eni has towards all of itsStakeholders and in particular the local communities in which itoperates, in the belief that the capacity for dialogue andinteraction with civil society constitutes an important asset forthe company. Eni respects the cultural, economic and socialrights of the local communities in which it operates andundertakes to contribute, as far as possible, to their exercise,with particular reference to the right to adequate nutrition,drinking water, the highest achievable level of physical andmental health, decent dwellings, education, abstaining fromactions that may hinder or prevent the exercise of such rights.Eni promotes transparency of the information addressed to localcommunities, with particular reference to the topics that theyare most interested in. Forms of continuous and informedconsultancy are either promoted, through the relevant Enistructures, in order to take into due consideration thelegitimate expectations of local communities in conceiving andconducting corporate activities and in order to promote a properredistribution of the profits deriving from such activities.Eni, therefore, undertakes to promote the knowledge of itscorporate values and principles, at every level of itsorganization, also through adequate control procedures, and toprotect the rights of local communities, with particularreference to their culture, institutions, ties and life styles.Within the framework of their respective responsibilities,Eni’s People are required to participate in the definitionof single initiatives in compliance with Eni’s policies andintervention programs, to implement them according to criteria ofabsolute transparency and support them as an integral part ofEni’s objectives.

**3.4. Promotion of "non profit"activities**The philanthropic activity of Eni is in line with its visionand attention to sustainable development.Therefore, Eni undertakes to foster and support, as well as topromote among its People, its "non profit" activitieswhich demonstrate the company’s commitment to help meet theneeds of those communities where it operates.

**4. RELATIONS WITH CUSTOMERS AND SUPPLIERS**

**4.1 Customers and consumers**Eni pursues its business success on markets by offeringquality products and services under competitive conditions whilerespecting the rules protecting fair competition.Eni undertakes to respect the right of consumers not to receiveproducts harmful to their health and physical integrity and toget complete information on the products offered to them.Eni acknowledges that the esteem of those requesting products orservices is of primary importance for success in business.Business policies are aimed at ensuring the quality of goods andservices, safety and compliance with the precautionary principle.Therefore, Eni’s People shall:

| • |   | comply with        in-house procedures concerning the management of        relations with customers and consumers;                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | supply, with        efficiency and courtesy, within the limits set by the        contractual conditions, high-quality products meeting the        reasonable expectations and needs of customers and        consumers;         |
| • |   | supply        accurate and exhaustive information on products and        services and be truthful in advertisements or other kind        of communication, so that customers and consumers can        make informed decisions. |

**4.2. Suppliers and external collaborators**Eni undertakes to look for suppliers and externalcollaborators with suitable professionalism and committed tosharing the principles and contents of the Code and promotes theestablishment of long-lasting relations for the progressiveimprovement of performances while protecting and promoting theprinciples and contents of the Code.In relationships regarding tenders, procurement and, generally,the supply of goods and/or services and of externalcollaborations (including consultants, agents, etc.), Eni’sPeople shall:

| • |   | follow        internal procedures concerning selection and relations        with suppliers and external collaborators and abstain        from excluding any supplier meeting requirements from        bidding for Eni’s orders; adopt appropriate and        objective selection methods, based on established,        transparent criteria; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | secure the        cooperation of suppliers and external collaborators in        guaranteeing the continuous satisfaction of Eni’s        customers and consumers, to an extent adequate to that        legitimately expected by them, in terms of quality, costs        and delivery times; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | use as much        as possible, in compliance with the laws in force and the        criteria for legality of transactions with related        parties, products and services supplied by Eni companies        at arm’s length and market conditions;                                        |
| • |   | state in        contracts the Code acknowledgement and the obligation to        comply with the principles contained therein;                                                                                                                                                                    |
| • |   | comply with,        and demand compliance with, the conditions contained in        contracts;                                                                                                                                                                                                    |
| • |   | maintain a        frank and open dialogue with suppliers and external        collaborators in line with good commercial practice;        promptly inform superiors, and the Guarantor, about any        possible violations of the Code;                                                         |

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##### Table of Contents

| • |   | inform the        relevant Eni Corporate structure about any serious        problems that may arise with a particular supplier or        external collaborator, in order to evaluate possible        consequences for Eni. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The remuneration to be paid shall beexclusively proportionate to the services to be rendered anddescribed in the contract and payments shall not be allowed toany party different from the contract party nor in a thirdCountry different from the one of the parties or where thecontract has to be performed.

**5. ENI’S MANAGEMENT, EMPLOYEES, COLLABORATORS**

**5.1. Development and protection of HumanResources**People are basic components in the company’s life. Thededication and professionalism of management and employeesrepresent fundamental values and conditions for achievingEni’s objectives.Eni is committed to developing the abilities and skills ofmanagement and employees so that their energy and creativity canhave full expression for the fulfilment of their potential intheir working performance, such as to protect working conditionsas regards both mental and physical health and dignity. Unduepressure or discomfort is not allowed, while appropriate workingconditions promoting development of personality andprofessionalism are fostered.Eni undertakes to offer, in full compliance with applicable legaland contractual provisions, equal opportunities to all itsemployees, making sure that each of them receives a fairstatutory and wage treatment exclusively based on merit andexpertise, without discrimination of any kind. Competentdepartments shall:

| • |   | adopt in any        situation criteria of merit and ability (and anyhow        strictly professional) in all decisions concerning human        resources;                              |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | select, hire,        train, compensate and manage human resources without        discrimination of any kind;                                                                           |
| • |   | create a        working environment where personal characteristics or        beliefs do not give rise to discrimination and which        allows the serenity of all Eni’s People. |

Eni wishes that Eni’s People, at everylevel, cooperate in maintaining a climate of common respect for aperson’s dignity, honour and reputation. Eni shall do itsbest to prevent attitudes that can be considered as offensive,discriminatory or abusive. In this regard, any behaviours outsidethe working place which are particularly offensive to publicsensitivity are also deemed relevant.In any case, any behaviours constituting physical or moralviolence are forbidden without any exception.

**5.2. Knowledge Management**Eni promotes culture and the initiatives aimed atdisseminating knowledge within its structures, and at pointingout the values, principles, behaviours and contributions in termsof innovation of professional families in connection with thedevelopment of business activities and to the company’ssustainable growth.Eni undertakes to offer tools for interaction among the membersof professional families, working groups and communities ofpractice, as well as for coordination and access to know-how, andshall promote initiatives for the growth, dissemination andsystematization of knowledge relating to the core competences ofits structures and aimed at defining a reference frameworksuitable for guaranteeing operating consistency.All Eni’s People shall actively contribute to KnowledgeManagement as regards the activities that they are in charge of,in order to optimize the system for knowledge sharing anddistribution among individuals.

**5.3. Corporate security**Eni engages in the study, development and implementation ofstrategies, policies and operational plans aimed at preventingand overcoming any intentional or non-intentional behaviour whichmay cause direct or indirect damage to Eni’s People and/orto the tangible and intangible resources of the company.Preventive and defensive measures, aimed at minimizing the needfor an active response – always in proportion to the attack– to threats to people and assets, are favored.All Eni’s People shall actively contribute to maintaining anoptimal corporate security standard, abstaining from unlawful ordangerous behaviours, and reporting any possible activitiescarried out by third parties to the detriment of Eni’sassets or human resources to superiors or to the body they belongto, as well as to the relevant Eni Corporate structure.In any case requiring particular attention to personal safety, itis compulsory to strictly follow the indications in this regardsupplied by Eni, abstaining from behaviours which may endangerone’s own safety or the safety of others, promptly reportingany danger for one’s own safety, or the safety of thirdparties, to one’s superior.

**5.4. Harassment or mobbing in the workplace**Eni supports any initiatives aimed at implementing workingmethods for the achievement of a better organization.Eni demands that there shall be no harassment or mobbingbehaviours in personal working relationships either inside oroutside the company. Such behaviours are all forbidden, withoutexceptions, and are:

| • |   | the creation        of an intimidating, hostile, isolating or in any case        discriminatory environment for individual employees or        groups of employees;                     |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | unjustified        interference in the work performed by others;                                                                                                                        |
| • |   | the placing        of obstacles in the way of the work prospects and        expectations of others merely for reasons of personal        competitiveness or because of other employees. |

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Any form of violence or harassment, eithersexual harassment or harassment based on personal and culturaldiversity, is forbidden. Such harassment is for instance:

| • |   | subordinating        decisions on someone’s working life to the        acceptance of sexual attentions, or personal and cultural        diversity; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | obtaining        sexual attentions using the influence of one’s role;                                                                              |
| • |   | proposing        private interpersonal relations despite the        recipient’s explicit or reasonably clear distaste;                             |

| • |   | alluding to        disabilities and physical or psychic impairment, or to        forms of cultural, religious or sexual diversity. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

**5.5. Abuse of alcohol or drugs and nosmoking**All Eni’s People shall personally contribute topromoting and maintaining a climate of common respect in theworkplace; particular attention is paid to respect of thefeelings of others.Eni will therefore consider individuals who work under the effectof alcohol or drugs, or substances with similar effect, duringthe performance of their work activities and in the workplace, asbeing aware of the risk they cause. Chronic addiction to suchsubstances, when it affects work performance, shall be consideredsimilar to the above mentioned events in terms of contractualconsequences; Eni is committed to favour social action in thisfield as provided for by employment contracts.It is forbidden to:

| • |   | hold,        consume, offer or give for whatever reason, drugs or        substances with similar effect, at work and in the        workplace;                                                                                                                                                                                                                                                                                                           |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | smoke in the        workplace. Eni supports voluntary initiatives addressed        to People to help them quit smoking and, in identifying        possible smoking areas, shall take into particular        consideration the condition of those suffering physical        discomfort from exposure to smoke in the workplace shared        with smokers and requesting to be protected from        "passive smoking" in their place of work. |

 

**III. TOOLS FOR IMPLEMENTINGTHE CODE OF ETHICS**

**1. SYSTEM OF INTERNAL CONTROL**

Eni undertakes to promote and maintain anadequate system of internal control, i.e. all the necessary oruseful tools for addressing, managing and checking activities inthe company, aimed at ensuring compliance with corporate laws andprocedures, at protecting corporate assets, efficiently managingactivities and providing precise and complete accounting andfinancial information.The responsibility for implementing an effective system ofinternal control is shared at every level of Eni’sorganizational structure; therefore, all Eni’s People,according to their functions and responsibilities, shall defineand actively participate in the correct functioning of the systemof internal control.Eni promotes the dissemination, at every level of itsorganization, of policies and procedures characterized byawareness of the existence of controls and by an informed andvoluntary control oriented mentality; consequently, Eni’smanagement in the first place and all Eni’s People in anycase shall contribute to and participate in Eni’s system ofinternal control and, with a positive attitude, involve itscollaborators in this respect.Each employee shall be held responsible for the corporatetangible and intangible assets relevant to his/her job. Noemployee can make, or let others make, improper use of assets andequipment belonging to Eni.Any practices and attitudes linked to the perpetration or to theparticipation in the perpetration of frauds are forbidden withoutany exception.Control and supervisory bodies, Eni Internal Audit department andappointed auditing companies shall have full access to all data,documents and information necessary to perform their own relevantactivities.

**1.1. Conflicts of interest**Eni acknowledges and respects the right of its People to takepart in investments, business and other kinds of activities otherthan the activity performed in the interest of Eni, provided thatsuch activities are permitted by law and are compatible with theobligations assumed towards Eni. The Self-Regulatory Code of EniSpA governs any possible conflict of interest of directors andstatutory auditors of Eni SpA.Eni’s management and employees shall avoid and report anyconflicts of interest between personal and family economicactivities and their tasks within the company. In particular,everyone shall point out any specific situations and activitiesof economic or financial interest (owner or member) to them or,as far as they know, of economic or financial interest torelatives of theirs or relatives by marriage within the 2nddegree of kinship, or to persons actually living with them, alsoinvolving suppliers, customers, competitors, third parties, orthe relevant controlling companies or subsidiaries, and shallpoint whether they perform corporate administration or control ormanagement functions therein.Moreover, conflicts of interest are determined by the followingsituations:

| • |   | use of        one’s position in the company, or of information, or        of business opportunities acquired during one’s        work, to one’s undue benefit or to the undue benefit        of third parties; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | the        performing of any type of work for suppliers,        sub-suppliers and competitors by employees and/or their        relatives. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

In any case, Eni’s management andemployees shall avoid any situation and activity where a conflictwith the Company’s interests may arise, or which caninterfere with their ability to make impartial decisions in thebest interests of Eni and in full accordance with the principlesand contents of the Code, or in general with their ability tofully comply with their functions and responsibilities. Anysituation that may constitute or give rise to a conflict ofinterest shall be immediately reported to one’s superiorwithin management, or to the body one belongs to, and to theGuarantor. Furthermore, the party concerned shall abstain fromtaking part in the operational/decision-making process, and therelevant superior within management, or the relevant body, shall:

| • |   | identify the        operational solutions suitable for ensuring, in the        specific case, transparency and fairness of behaviours in        the performance of activities;   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | transmit to        the parties concerned – and for information to        one’s superior, as well as to the Guarantor –        the necessary written instructions; |
| • |   | file the        received and transmitted documentation.                                                                                                                          |

**1.2.Transparency of accounting records**Accounting transparency is grounded on the use of true,accurate and complete information which form the basis for theentries in the books of accounts. Each member of company bodies,of management or employee shall cooperate, within their own fieldof competence, in order to have operational events properly andtimely registered in the books of accounts.It is forbidden to behave in a way that may adversely affecttransparency and traceability of the information within financialstatements.For each transaction, the proper supporting evidence has to bemaintained in order to allow:

| • |   | easy and        punctual accounting entries;                                                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| • |   | identification        of different levels of responsibility, as well as of task        distribution and segregation;             |
| • |   | accurate        representation of the transaction so as to avoid the        probability of any material or interpretative error. |

Each record shall reflect exactly what is shownby the supporting evidence. All Eni’s People shall causethat the documentation can be easily traced and filed accordingto logical criteria.Eni’s People who become aware of any omissions, forgery,negligence in accounting or in the documents on which accountingis based, shall bring the facts to the attention of theirsuperior, or to the body they belong to, and to the Guarantor.

**2. HEALTH, SAFETY, ENVIRONMENT AND PUBLIC SAFETY PROTECTION**

Eni’s activities shall be carried out incompliance with applicable worker health and safety,environmental and public safety protection agreements,international standards and laws, regulations, administrativepractices and national policies of the Countries where itoperates.Eni actively contributes as appropriate to the promotion ofscientific and technological development aimed at protecting theenvironment and natural resources. The operative management ofsuch activities shall be carried out according to advancedcriteria for the protection of the environment and energyefficiency, with the aim of creating better working conditionsand protecting the health and safety of employees as well as theenvironment.Eni’s People shall, within their areas of responsibility,actively participate in the process of risk prevention as well asenvironmental, public safety and health protection forthemselves, their colleagues and third parties.

**3. RESEARCH, INNOVATION AND INTELLECTUAL PROPERTY PROTECTION**

Eni promotes research and innovation activitiesby management and employees, within their functions andresponsibilities. Any intellectual assets generated by suchactivities are an important and fundamental heritage of Eni.Research and innovation focus in particular on the promotion ofproducts, tools, processes and behaviours supporting energyefficiency, reduction of environmental impact, attention tohealth and safety of employees, of customers and of the localcommunities where Eni operates, and in general sustainability ofbusiness activities.Eni’s People shall actively contribute, within theirfunctions and responsibilities, to managing intellectual propertyin order to allow its development, protection and enhancement.

**4. CONFIDENTIALITY**

**4.1. Protection of business secret**Eni’s activities constantly require the acquisition,storing, processing, communication and dissemination ofinformation, documents and other data regarding negotiations,administrative proceedings, financial transactions, and know-how(contracts, deeds, reports, notes, studies, drawings, pictures,software, etc.) that may not be disclosed to the 

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outside pursuant to contractual agreements, orwhose inopportune or untimely disclosure may be detrimental tocorporate interest.Without prejudice to the transparency of the activities carriedout and to the information obligations imposed by the provisionsin force, Eni’s People shall ensure the confidentialityrequired by the circumstances for each piece of news they havegot to know of because of their working function.Any information, knowledge and data acquired or processed duringone’s work or because of one’s tasks at Eni, belong toEni and may not be used, communicated or disclosed withoutspecific authorization of one’s superior within managementin compliance with specific procedures.

**4.2. Protection of privacy**Eni is committed to protecting information concerning itsPeople and third parties, whether generated or obtained insideEni or in the conduct of Eni’s business, and to avoidingimproper use of any such information.Eni intends to guarantee that processing of personal data withinits structures respects fundamental rights and freedoms, as wellas the dignity of the parties concerned, as contemplated by thelegal provisions in force.Personal data must be processed in a lawful and fair way and, inany case, the data collected and stored is only that which isnecessary for certain, explicit and lawful purposes. Data shallbe stored for a period of time no longer than necessary for thepurposes of collection.Eni undertakes moreover to adopt suitable preventive safetymeasures for all databases storing and keeping personal data, inorder to avoid any risks of destruction and losses or ofunauthorized access or unallowed processing.Eni’s People shall:

| • |   | obtain and        process only data that are necessary and adequate to the        aims of their work and responsibilities;                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | obtain and        process such data only within specified procedures, and        store said data in a way that prevents unauthorized        parties from having access to it;                         |
| • |   | represent and        order data in a way ensuring that any party with access        authorization may easily get an outline thereof which is        as accurate, exhausting and truthful as possible; |

| • |   | disclose such        data pursuant to specific procedures or subject to the        express authorization by their superior and, in any case,        only after having checked that such data may be        disclosed, also making reference to absolute or relative        constraints concerning third parties bound to Eni by a        relation of whatever nature and, if applicable, after        having obtained their consent. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**4.3. Membership in associations,participation in initiatives, events or external meetings**Membership in associations, participation in initiatives,events or external meetings is supported by Eni if compatiblewith the working or professional activity provided. Membershipand participation considered as such are:

| • |   | membership in        associations, participation in conferences, workshops,        seminars, courses; |
|--------|--------|-------------------------------------------------------------------------------------------------------|
| • |   | drawing up of        articles, papers and publications in general;                                    |
| • |   | participation        in public events in general.                                                     |

In this regard, Eni’s management andemployees in charge of illustrating, or providing to the outsidedata or news concerning Eni’s objectives, aims, results andpoints of view, shall not only comply with corporate proceduresrelating to market abuse, but also obtain the necessaryauthorization from their superior within management for the linesof action to follow and the texts as well as reports drawn up,such as to agree on contents with the relevant Eni Corporatestructure.

 

**IV. CODE OF ETHICS SCOPE OFAPPLICATION AND REFERENCE STRUCTURES**

The principles and contents of the Code applyto Eni’s People and activities.Any listed subsidiaries and power & gas sector subsidiariessubject to unbundling shall receive the Code and adopt it,adjusting it – if necessary – to the characteristics oftheir company, consistently with their management independence.The representatives indicated by Eni in the company bodies ofpartially owned companies, in consortia and in joint venturesshall promote the principles and contents of the Code withintheir own respective areas of competence.Directors and management must be the first to give concrete formto the principles and contents of the Code, by assumingresponsibility for them both towards the inside and the outsideand by enhancing trust, cohesion and a sense of team-work, aswell as providing a behaviour model for their collaborators inorder to have them comply with the Code and make questions andsuggestions on specific provisions.To achieve full compliance with the Code, each of Eni’sPeople may even apply directly to the Guarantor.

**1. OBLIGATION TO KNOW THE CODE AND TO REPORT ANY POSSIBLEVIOLATION THEREOF**

Each of Eni’s People is expected to knowthe principles and contents of the Code as well as the referenceprocedures governing own functions and responsibilities.Each of Eni’s People shall:

| • |   | refrain from        all conduct contrary to such principles, contents and        procedures; |
|--------|--------|----------------------------------------------------------------------------------------------|

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| • |   | carefully        select, as long as within their field of competence,        their collaborators, and have them fully comply with the        Code;                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | require any        third parties having relations with Eni to confirm that        they know the Code;                                                                                                                                                                                                                                                                                                                                                                                      |
| • |   | immediately        report to their superiors or the body they belong to, and        to the Guarantor, any remarks of theirs or information        supplied by Stakeholders concerning a possible violation        or any request to violate the Code; reports of possible        violations shall be sent in compliance with conditions        provided for by the specific procedures established by        the Board of Statutory Auditors and by the Watch        Structure of Eni SpA; |
| • |   | cooperate        with the Guarantor and with the relevant departments        according to the applicable specific procedures in        ascertaining any violations;                                                                                                                                                                                                                                                                                                                        |
| • |   | adopt prompt        corrective measures whenever necessary, and in any case        prevent any type of retaliation.                                                                                                                                                                                                                                                                                                                                                                        |

Eni’s People are not allowed to conductpersonal investigations, nor to exchange information, except totheir superiors, or to the body that they belong to, and to theGuarantor. If, after notifying a supposed violation any ofEni’s People feels that he or she has been subject toretaliation, then he or she may directly apply to the Guarantor.

**2. REFERENCE STRUCTURES AND SUPERVISION**

Eni is committed to ensuring, even through theGuarantor’s appointment:

| • |   | the widest        dissemination of the principles and contents of the Code        among Eni’s People and the other Stakeholders,        providing any possible tools for understanding and        clarifying the interpretation and the implementation of        the Code, as well as for updating the Code as required to        meet evolving civil sensibility and relevant laws;                                  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the execution        of checks on any notice of violation of the Code        principles and contents or of reference procedures; an        objective evaluation of the facts and, if necessary, the        adoption of appropriate sanctions; that no one may suffer        any retaliation whatsoever for having provided        information regarding possible violations of the Code or        of reference procedures. |

**2.1. Guarantor of the Code of Ethics**The Code of Ethics is, among other things, a compulsorygeneral principle of the Organizational, Management and ControlModel adopted by Eni SpA according to the Italian provision onthe "administrative liability of legal entities derivingfrom offences" contained in Legislative Decree No. 231 ofJune 8, 2001.Eni SpA assigns the functions of Guarantor to the Watch Structureestablished pursuant to the above mentioned Model. Each direct orindirect subsidiary, in Italy and abroad, entrusts the functionof Guarantor to its own Watch Structure by formal deed of therelevant corporate body.The Guarantor is entrusted with the task of:

| • |   | promoting the        implementation of the Code and the issue of reference        procedures; reporting and proposing to the CEO of the        company the useful initiatives for a greater        dissemination and knowledge of the Code, also in order to        prevent any recurrences of violations;                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | promoting        specific communication and training programs for        Eni’s management and employees;                                                                                                                                                                                                                                                                                          |
| • |   | investigating        reports of any violation of the Code by initiating proper        inquiry procedures; taking action at the request of        Eni’s People in the event of receiving reports that        violations of the Code have not been properly dealt with        or in the event of being informed of any retaliation        against Eni’s people for having reported violations; |
| • |   | notifying        relevant structures of the results of investigations        relevant to the adoption of possible penalties; informing        the relevant line/area structures about the results of        investigations relevant to the adoption of the necessary        measures.                                                                                                                  |

Moreover, the Guarantor of Eni SpA submits tothe Internal Control Committee and to the Board of StatutoryAuditors as well as to the Chairman and to the Chief ExecutiveOfficer, which report about it to the Board of Directors, asix-monthly report on the implementation and possible need forupdating the Code.For the performance of its tasks, the Guarantor of Eni SpA availsitself of "Technical Secretariat of the Watch Structure 231of Eni SpA" that reports thereto and is supported by therelevant Structures of Eni SpA. The Technical Secretariat isresponsible for starting and maintaining an adequate reportingand communication flow to and from the Guarantors ofsubsidiaries.Each information flow is to be sent to the following emailaddress:organismo_di_vigilanza@eni.it

**2.2. Code Promotion Team**The Code is made available to Eni’s People in compliancewith applicable standards, and is also available on the internetand intranet sites of Eni SpA and of subsidiaries.In order to promote the knowledge and facilitate theimplementation of the Code, a Code Promotion Team reporting tothe Guarantor of Eni SpA has been established. The Team makesavailable within Eni all possible tools for understanding andclarifying the interpretation and the implementation of the Code.The members of the Team are chosen by the Chief Executive Officerof Eni SpA upon proposal of the Guarantor of Eni SpA.

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**3. CODE REVIEW**

The Code review is approved by the Board ofDirectors of Eni SpA, upon proposal of the Chief ExecutiveOfficer with the agreement of the Chairman, after hearing theopinion of the Board of Statutory Auditors.The proposal is made taking into consideration theStakeholders’ evaluation with reference to the principlesand contents of the Code, promoting active contribution andnotification of possible deficiencies by Stakeholders themselves.

**4. CONTRACTUAL VALUE OF THE CODE**

Respect of the Code’s rules is anessential part of the contractual obligations of all Eni’sPeople pursuant to and in accordance with applicable law.Any violation of the Code’s principles and contents may beconsidered as a violation of primary obligations under labourrelations or of the rules of discipline and can entail theconsequences provided for by law, including termination of thework contract and compensation for damages arising out of anyviolation.

 

 

 

 

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Certifications as separate documents filedas exhibits

**EXHIBIT 12.1**

**Certification**

 

I, Paolo Scaroni, certify that:

|   | 1. |   | I have reviewed this annual        report on Form 20-F of Eni SpA; |
|--------|----|--------|--------------------------------------------------------------------|

|   | 2. |   | Based on my knowledge, this        report does not contain any untrue statement of a        material fact or omit to state a material fact necessary        to make the statements made, in light of the        circumstances under which such statements were made, not        misleading with respect to the period covered by this        report; |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. |   | Based on my knowledge, the        financial statements, and other financial information        included in this report, fairly present in all material        respects the financial condition, results of operations        and cash flows of the company as of, and for, the periods        presented in this report; |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. |   | The company’s other        certifying officer and I are responsible for establishing        and maintaining disclosure controls and procedures (as        defined in Exchange Act Rules 13a-15(e) and 15d-15(e))        and internal control over financial reporting (as defined        in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the        company and have: |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | Designed such disclosure        controls and procedures, or caused such disclosure        controls and procedures to be designed under our        supervision, to ensure that material information relating        to the company, including its consolidated subsidiaries,        is made known to us by others within those entities,        particularly during the period in which this report is        being prepared; |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Designed such internal        control over financial reporting, or caused such internal        control over financial reporting to be designed under our        supervision, to provide reasonable assurance regarding        the reliability of financial reporting and the        preparation of financial statements for external purposes        in accordance with generally accepted accounting        principles; |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) |   | Evaluated the effectiveness        of the company’s disclosure controls and procedures        and presented in this report our conclusions about the        effectiveness of the disclosure controls and procedures,        as of the end of the period covered by this report based        on such evaluation; and |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) |   | Disclosed in this report any        change in the company’s internal control over        financial reporting that occurred during the period        covered by the annual report that has materially        affected, or is reasonably likely to materially affect,        the company’s internal control over financial        reporting; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. |   | The company’s other        certifying officer and I have disclosed, based on our        most recent evaluation of internal control over financial        reporting, to the company’s auditors and the audit        committee of the company’s board of directors (or        persons performing the equivalent functions): |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | All significant deficiencies        and material weaknesses in the design or operation of        internal control over financial reporting which are        reasonably likely to adversely affect the company’s        ability to record, process, summarize and report        financial information; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Any fraud, whether or not        material, that involves management or other employees who        have a significant role in the company’s internal        control over financial reporting. |
|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Date: April 7, 2011

| /s/PAOLO SCARONI                                    |
|-----------------------------------------------------|
|                                                     |
| Paolo Scaroni        Title: Chief Executive Officer |

 

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**EXHIBIT 12.2**

**Certification**

 

I, Alessandro Bernini, certify that:

|   | 1. |   | I have reviewed this annual        report on Form 20-F of Eni SpA; |
|--------|----|--------|--------------------------------------------------------------------|

|   | 2. |   | Based on my knowledge, this        report does not contain any untrue statement of a        material fact or omit to state a material fact necessary        to make the statements made, in light of the        circumstances under which such statements were made, not        misleading with respect to the period covered by this        report; |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. |   | Based on my knowledge, the        financial statements, and other financial information        included in this report, fairly present in all material        respects the financial condition, results of operations        and cash flows of the company as of, and for, the periods        presented in this report; |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. |   | The company’s other        certifying officer and I are responsible for establishing        and maintaining disclosure controls and procedures (as        defined in Exchange Act Rules 13a-15(e) and 15d-15(e))        and internal control over financial reporting (as defined        in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the        company and have: |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | Designed such disclosure        controls and procedures, or caused such disclosure        controls and procedures to be designed under our        supervision, to ensure that material information relating        to the company, including its consolidated subsidiaries,        is made known to us by others within those entities,        particularly during the period in which this report is        being prepared; |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Designed such internal        control over financial reporting, or caused such internal        control over financial reporting to be designed under our        supervision, to provide reasonable assurance regarding        the reliability of financial reporting and the        preparation of financial statements for external purposes        in accordance with generally accepted accounting        principles; |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) |   | Evaluated the effectiveness        of the company’s disclosure controls and procedures        and presented in this report our conclusions about the        effectiveness of the disclosure controls and procedures,        as of the end of the period covered by this report based        on such evaluation; and |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) |   | Disclosed in this report any        change in the company’s internal control over        financial reporting that occurred during the period        covered by the annual report that has materially        affected, or is reasonably likely to materially affect,        the company’s internal control over financial        reporting; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. |   | The company’s other        certifying officer and I have disclosed, based on our        most recent evaluation of internal control over financial        reporting, to the company’s auditors and the audit        committee of the company’s board of directors (or        persons performing the equivalent functions): |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | All significant deficiencies        and material weaknesses in the design or operation of        internal control over financial reporting which are        reasonably likely to adversely affect the company’s        ability to record, process, summarize and report        financial information; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Any fraud, whether or not        material, that involves management or other employees who        have a significant role in the company’s internal        control over financial reporting. |
|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Date: April 7, 2011

 

| /s/ALESSANDRO BERNINI                                    |
|----------------------------------------------------------|
|                                                          |
| Alessandro Bernini        Title: Chief Financial Officer |

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**EXHIBIT 13.1**

 

**Certification Pursuant to 18U.S.C. Section 1350**

 

For purposes of 18 U.S.C. Section 1350, the undersignedofficer of Eni SpA, a company incorporated under the laws ofItaly (the "Company"), hereby certifies, to suchofficer’s knowledge, that:

> 
(i) the Annual Report on Form 20-F of the Company for the    year ended December 31, 2010 (the "Report") fully    complies with the requirements of section 13(a) or 15(d) as    applicable, of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly    presents, in all material respects, the financial condition    and results of operations of the Company.

Date: April 7, 2011

 

| /s/PAOLO SCARONI                                    |
|-----------------------------------------------------|
|                                                     |
| Paolo Scaroni        Title: Chief Executive Officer |

 

The foregoing certification is not deemed filed for purpose ofSection 18 of the Exchange Act and not incorporated by referencewith any filing under the Securities Act.

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**EXHIBIT 13.2**

 

**Certification Pursuant to 18U.S.C. Section 1350**

 

For purposes of 18 U.S.C. Section 1350, the undersignedofficer of Eni SpA, a company incorporated under the laws ofItaly (the "Company"), hereby certifies, to suchofficer’s knowledge, that:

> 
(i) the Annual Report on Form 20-F of the Company for the    year ended December 31, 2010 (the "Report") fully    complies with the requirements of section 13(a) or 15(d) as    applicable, of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly    presents, in all material respects, the financial condition    and results of operations of the Company.

Date: April 7, 2011

 

| /s/ALESSANDRO BERNINI                                    |
|----------------------------------------------------------|
|                                                          |
| Alessandro Bernini        Title: Chief Financial Officer |

 

The foregoing certification is not deemed filed for purpose ofSection 18 of the Exchange Act and not incorporated by referencewith any filing under the Securities Act.

 

 

 

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**EXHIBIT 15.a(i)**

 

 

DEGOLYER AND MACNAUGHTON5001 SPRING VALLEY ROADSUITE 800 EASTDALLAS, TEXAS 75244

 

March 17, 2011

 

 

 

> 
Eni S.p.A.                E&P Division                Ms. Manuela Feudaroli                Vice President, Reserves                Via Emilia 1                20097 San Donato Milanese                Milano, Italy

 

Dear Ms. Feudaroli:

Pursuant to your request, we have conducted an                independent evaluation to serve as a reserves                audit of the net proved crude oil, condensate,                liquefied petroleum gas (LPG), and natural gas                reserves, as of December 31, 2010, of certain                properties in Africa, Italy, and Rest of Europe                owned by Eni S.p.A. (Eni). This evaluation was                completed on March 17, 2011. Eni has represented                that these properties account for 13 percent, on                a net equivalent barrel basis, of Eni’s net                proved reserves as of December 31, 2010, and that                Eni’s net proved reserves estimates have                been prepared in accordance with the reserves                definitions of Rules 4–10(a) (1)–(32)                of Regulation S–X of the Securities and                Exchange Commission (SEC) of the United States.                We have reviewed information provided to us by                Eni that it represents to be Eni’s estimates                of the net reserves, as of December 31, 2010, for                the same properties as those which we have                independently evaluated.

Reserves included herein are expressed as net                reserves as represented by Eni. Gross reserves                are defined as the total estimated petroleum to                be produced from these properties after December                31, 2010. Net reserves are defined as that                portion of the gross reserves attributable to the                interests owned by Eni after deducting interests                owned by others.

Estimates of oil, condensate, LPG, and natural                gas should be regarded only as estimates                that may change as further production history and                additional information become available. Not only                are such reserves estimates based on that

 

 

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| DEGOLYER AND        MACNAUGHTON | 2 |
|---------------------------------|---|

 

> 
 

information which is currently available, but                such estimates are also subject to the                uncertainties inherent in the application of                judgmental factors in interpreting such                information.

Data used in this audit were obtained from                reviews with Eni personnel, from Eni files, from                records on file with the appropriate regulatory                agencies, and from public sources. In the                preparation of this report we have relied,                without independent verification, upon such                information furnished by Eni with respect to                property interests, production from such                properties, current costs of operation and                development, current prices for production,                agreements relating to current and future                operations and sale of production, and various                other information and data that were accepted as                represented. A field examination of the                properties was not considered necessary for the                purposes of this report.

 

**Methodology and Procedures**

Estimates of reserves were prepared by the use                of appropriate geologic, petroleum engineering,                and evaluation principles and techniques that are                in accordance with practices generally recognized                by the petroleum industry as presented in the                publication of the Society of Petroleum Engineers                entitled "Standards Pertaining to the                Estimating and Auditing of Oil and Gas Reserves                Information (Revision as of February 19,                2007)." The method or combination of methods                used in the analysis of each reservoir was                tempered by experience with similar reservoirs,                stage of development, quality and completeness of                basic data, and production history.

When applicable, the volumetric method was                used to estimate the original oil in place (OOIP)                and the original gas in place (OGIP). Structure                and isopach maps were constructed to estimate                reservoir volume. Electrical logs, radioactivity                logs, core analyses, and other available data                were used to prepare these maps as well as to                estimate representative values for porosity and                water saturation. When adequate data were                available and when circumstances justified,                material balance and other engineering methods                were used to estimate OOIP or OGIP.

Estimates of ultimate recovery were obtained                after applying recovery factors to OOIP or OGIP.                These recovery factors were based on                consideration of the type of energy inherent in                the reservoirs, analyses of the petroleum, the                structural positions of the properties, and the                production histories. When applicable, material                balance

 

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| DEGOLYER AND        MACNAUGHTON | 3 |
|---------------------------------|---|

 

> 
 

and other engineering methods were used to                estimate recovery factors. An analysis of                reservoir performance, including production rate,                reservoir pressure, and gas-oil ratio behavior,                was used in the estimation of reserves.

For depletion-type reservoirs or those whose                performance disclosed a reliable decline in                producing-rate trends or other diagnostic                characteristics, reserves were estimated by the                application of appropriate decline curves or                other performance relationships. In the analyses                of production-decline curves, reserves were                estimated only to the limits of economic                production or to the limit of production licenses                as appropriate.

 

**Definition of Reserves**

Petroleum reserves included in this report are                classified as proved. Reserves classifications                used for our estimates of proved reserves are in                accordance with the reserves definitions of Rules                4–10(a) (1)–(32) of Regulation S–X                of the SEC. Eni has represented that its                estimates of proved reserves are in accordance                with the reserves definitions of Rules                4–10(a) (1)–(32) of Regulation S–X                of the SEC. Reserves are judged to be                economically producible in future years from                known reservoirs under existing economic and                operating conditions and assuming continuation of                current regulatory practices using known                production methods and equipment. In the analyses                of production-decline curves, reserves were                estimated only to the limit of economic rates of                production under existing economic and operating                conditions using prices and costs consistent with                the effective date of this report, including                consideration of changes in existing prices                provided only by contractual arrangements but not                including escalations based upon future                conditions. The petroleum reserves are classified                as follows:

*Proved oil and gas reserves* –                    Proved oil and gas reserves are those                    quantities of oil and gas, which, by analysis                    of geoscience and engineering data, can be                    estimated with reasonable certainty to be                    economically producible—from a given                    date forward, from known reservoirs, and                    under existing economic conditions, operating                    methods, and government                    regulations—prior to the time at which                    contracts providing the right to operate                    expire, unless evidence indicates that                    renewal is reasonably certain, regardless of                    whether deterministic or probabilistic                    methods are used for the estimation. The                    project to extract the hydrocarbons must have                    commenced or the

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> 
operator must be reasonably certain that                    it will commence the project within a                    reasonable time.

(i) The area of the reservoir                        considered as proved includes:

(A) The area identified by drilling                        and limited by fluid contacts, if any,                        and (B) Adjacent undrilled portions of                        the reservoir that can, with reasonable                        certainty, be judged to be continuous                        with it and to contain economically                        producible oil or gas on the basis of                        available geoscience and engineering                        data.

(ii) In the absence of data on fluid                        contacts, proved quantities in a                        reservoir are limited by the lowest known                        hydrocarbons (LKH) as seen in a well                        penetration unless geoscience,                        engineering, or performance data and                        reliable technology establishes a lower                        contact with reasonable certainty.

(iii) Where direct observation from                        well penetrations has defined a highest                        known oil (HKO) elevation and the                        potential exists for an associated gas                        cap, proved oil reserves may be assigned                        in the structurally higher portions of                        the reservoir only if geoscience,                        engineering, or performance data and                        reliable technology establish the higher                        contact with reasonable certainty.

(iv) Reserves which can be produced                        economically through application of                        improved recovery techniques (including,                        but not limited to, fluid injection) are                        included in the proved classification                        when:

(A) Successful testing by a pilot                        project in an area of the reservoir with                        properties no more favorable than in the                        reservoir as a whole, the operation of an                        installed program in the reservoir or an                        analogous reservoir, or other evidence                        using reliable technology establishes the                        reasonable certainty of the engineering                        analysis on which the project or program                        was based; and (B) The project has been                        approved for development by all necessary                        parties and entities, including                        governmental entities.

 

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

 

> 
(v) Existing economic conditions                        include prices and costs at which                        economic producibility from a reservoir                        is to be determined. The price shall be                        the average price during the 12-month                        period prior to the ending date of the                        period covered by the report, determined                        as an unweighted arithmetic average of                        the first-day-of-the-month price for each                        month within such period, unless prices                        are defined by contractual arrangements,                        excluding escalations based upon future                        conditions.

*Developed oil and gas reserves*                    – Developed oil and gas reserves are                    reserves of any category that can be expected                    to be recovered:

(i) Through existing wells with                        existing equipment and operating methods                        or in which the cost of the required                        equipment is relatively minor compared to                        the cost of a new well; and

(ii) Through installed extraction                        equipment and infrastructure operational                        at the time of the reserves estimate if                        the extraction is by means not involving                        a well.

*Undeveloped oil and gas reserves*                    – Undeveloped oil and gas reserves are                    reserves of any category that are expected to                    be recovered from new wells on undrilled                    acreage, or from existing wells where a                    relatively major expenditure is required for                    recompletion.

(i) Reserves on undrilled acreage                        shall be limited to those directly                        offsetting development spacing areas that                        are reasonably certain of production when                        drilled, unless evidence using reliable                        technology exists that establishes                        reasonable certainty of economic                        producibility at greater distances.

(ii) Undrilled locations can be                        classified as having undeveloped reserves                        only if a development plan has been                        adopted indicating that they are                        scheduled to be drilled within five                        years, unless the specific circumstances                        justify a longer time.

> 
(iii) Under no circumstances shall                        estimates for undeveloped reserves be                        attributable to any acreage for which an

 

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> 
 

application of fluid injection or                        other improved recovery technique is                        contemplated, unless such techniques have                        been proved effective by actual projects                        in the same reservoir or an analogous                        reservoir, as defined in [section                        210.4–10 (a) Definitions], or by                        other evidence using reliable technology                        establishing reasonable certainty.

 

**Primary Economic Assumptions**

The following economic assumptions were used                for estimating existing and future prices and                costs:

*Oil, Condensate, and LPG Prices*

Eni has represented that the oil,                        condensate, and LPG prices were based on                        a reference price, calculated as the                        unweighted arithmetic average of the                        first-day-of-the-month price for each                        month within the 12-month period prior to                        the end of the reporting period, unless                        prices are defined by contractual                        arrangements. A dated Brent oil price of                        79.00 United States dollars (U.S.$) per                        barrel (U.S.$/bbl) was the resulting                        reference price. Where appropriate, Eni                        supplied differentials by field to the                        relevant reference price and the prices                        were held constant thereafter. The                        volume-weighted average prices in this                        report were:
  
**Oil                    and Condensate (U.S.$/bbl)**
 
**LPG                    (U.S.$/bbl)**
   Africa 77.93 17.88Italy None NoneRest                    of Europe 74.27 55.31   **Average                    for Total** **77.69** **24.68**
*Natural Gas Prices*

Eni has represented that the natural                        gas prices were based on a reference                        price, calculated as the unweighted                        arithmetic average of the                        first-day-of-the-month price for each                        month 

 

 

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> 
within the 12-month period prior to                        the end of the reporting period, unless                        prices are defined by contractual                        arrangements. A significant quantity of                        the gas sold by Eni is subject to                        contract prices, and the range of such                        prices is varied. Where appropriate, Eni                        supplied differentials by field to the                        relevant reference price and the prices                        were held constant thereafter. The                        volume-weighted average gas prices in                        this report in U.S.$/Mcf were:
  
**Gas (U.S.$/Mcf)**
  Africa 2.53Italy 8.41Rest of Europe 5.08  **Average for Total** **3.838**

> 
*Operating Expenses and Capital Costs*

Operating expenses and capital costs,                        based on information provided by Eni,                        were used in estimating future costs                        required to operate the properties. In                        certain cases, future costs, either                        higher or lower than existing costs, may                        have been used because of anticipated                        changes in operating conditions. These                        costs were not escalated for inflation.

While the oil and gas industry may be subject to            regulatory changes from time to time that could            affect an industry participant’s ability to            recover its oil and gas reserves, we are not aware of            any such governmental actions which would restrict            the recovery of the December 31, 2010, estimated oil            and gas volumes. The reserves estimated in this            report can be produced under current regulatory            guidelines.

> 
Eni has represented that its estimated net proved            reserves attributable to the reviewed properties in            Africa, Italy, and Rest of Europe are based on the            definitions of proved reserves of the SEC. Eni            represents that its estimates of the net proved            reserves attributable to these properties, which            represent 13 percent of Eni’s reserves on a net            equivalent basis, are as follows, expressed in            millions of barrels (MMbbl), billions of cubic feet            (Bcf), and millions of barrels of oil equivalent            (MMboe):

 

 

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| DEGOLYER AND        MACNAUGHTON | 8 |
|---------------------------------|---|

 

 

|                                                                                                                             |   | **Estimated by Eni         Net Proved Reserves as of        December 31, 2010** |
|----------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|
|                                                                                                                             |   |                                                                                 |
|                                                                                                                             |   | **Oil, Condensate,        and LPG        (MMbbl)**                              |   | **Marketable        Gas        (Bcf)** |   | **Oil        Equivalent        (MMboe)** |
|                                                                                                                             |   |                                                                                 |   |  |   |  |
| **Properties reviewed        by DeGolyer and MacNaughton**                                                                       |   |                                                                            |   |   |   |   |
| **Total Proved**                                                                                                                 |   | 461                                                                             |   | 2,398 |   | 893 |
|                                                                                                                             |   |                                                                            |   |   |   |   |
| Note: Gas        is converted to oil equivalent using a factor of 5,550        cubic feet of gas per 1 barrel of oil equivalent. |

> 
 

> 
In our opinion, the information relating to            estimated proved reserves of oil, condensate, natural            gas liquids, and gas contained in this report has            been prepared in accordance with Paragraphs            932-235-50-4, 932- 235-50-6, 932-235-50-7, and            932-235-50-9 of the Accounting Standards Update 932-            235-50, *Extractive Industries – Oil and Gas            (Topic 932): Oil and Gas Reserve Estimation and            Disclosures* (January 2010) of the Financial            Accounting Standards Board and Rules 4–10(a)            (1)–(32) of Regulation S–X and Rules            302(b), 1201, and 1202(a) (1), (2), (3), (4), (8) of            Regulation S–K of the Securities and Exchange            Commission.

To the extent the above-enumerated rules,            regulations, and statements require determinations of            an accounting or legal nature, we, as engineers, are            necessarily unable to express an opinion as to            whether the above-described information is in            accordance therewith or sufficient therefor.

> 
In comparing the detailed net proved reserves            estimates prepared by us and by Eni, we have found            differences, both positive and negative, resulting in            an aggregate difference of less than 5 percent when            compared on the basis of net equivalent barrels. It            is our opinion that the net proved reserves estimates            prepared by Eni on the properties reviewed by us and            referred to above, when compared on the basis of net            equivalent barrels, in aggregate, do not differ            materially from those prepared by us. 

 

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| DEGOLYER AND        MACNAUGHTON | 9 |
|---------------------------------|---|

 

 

 

> 
DeGolyer and MacNaughton is an independent            petroleum engineering consulting firm that has been            providing petroleum consulting services throughout            the world since 1936. DeGolyer and MacNaughton does            not have any financial interest, including stock            ownership, in Eni. Our fees were not contingent on            the results of our evaluation. This letter report has            been prepared at the request of Eni. DeGolyer and            MacNaughton has used all assumptions, data,            procedures, and methods that it considers necessary            and appropriate to prepare this report.

|   | Submitted,                              |
|--------|-----------------------------------------|
|   |                                    |
|   | /s/ DEGOLYER AND MACNAUGHTON            |
|   |                                    |
|   | DeGOLYER and MacNAUGHTON                |
|   | Texas Registered Engineering Firm F-716 |

> 
 

|   | /s/ LLOYD W. CADE, P.E.  |
|--------|--------------------------|
|   |                     |
|   | Lloyd W. Cade, P.E.      |
| [SEAL] | Senior Vice President    |
|   | DeGolyer and MacNaughton |

 

 

 

 

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| DEGOLYER AND        MACNAUGHTON |   |
|---------------------------------|--------|

 

 

 

 

**CERTIFICATE of QUALIFICATION**

> 
I, Lloyd W. Cade Petroleum Engineer with DeGolyer            and MacNaughton, 5001 Spring Valley Road, Suite 800            East, Dallas, Texas, 75244 U.S.A., hereby certify:
1.  That I am a                    Senior Vice President with DeGolyer and                    MacNaughton, which company did prepare the                    letter report addressed to Eni dated March                    17, 2011, and that I, as Senior Vice                    President, was responsible for the                    preparation of this report.   2.  That I attended                    Kansas State University, and that I graduated                    with a Bachelor of Science degree in                    Mechanical Engineering in the year 1982; that                    I am a Registered Professional Engineer in                    the State of Texas; that I am a member of the                    International Society of Petroleum Engineers;                    and that I have approximately 28 years of                    experience in oil and gas reservoir studies                    and reserves evaluations.
 

 

 

SIGNED: March 17, 2011

 

 

 

|   | /s/ LLOYD W. CADE, P.E.  |
|--------|--------------------------|
|   |                     |
|   | Lloyd W. Cade, P.E.      |
| [SEAL] | Senior Vice President    |
|   | DeGolyer and MacNaughton |

 

 

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**EXHIBIT 15.a(ii)**

 

Eni S.p.A.

 

 

Estimated

Future Reserves and Income

Attributable to CertainLeasehold and Royalty Interests

 

 

 

 

SEC Parameters

 

 

As of

December 31, 2010

/s/HERMAN G. ACUÑA————————————————————————————————Herman G. Acuña, P.E.TBPE License No. 92254Managing Senior International Vice President

RYDER SCOTT COMPANY, L.P.TBPE Firm Registration No. F-1580

[SEAL]

 

 

RYDER SCOTT COMPANY     PETROLEUMCONSULTANTS

 

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February 14, 2011

 

Eni S.p.A.E&P DivisionMs. Manuela FeudaroliVice President ReservesVia Emilia 120097 San Donato MilaneseMilano, Italy

Dear Ms. Feudaroli:

At the request of Eni S.p.A. (Eni), Ryder Scott Company (RyderScott) has conducted a reserves audit of the estimates of theproved reserves as prepared by Eni’s engineering andgeological staff based on the definitions and disclosureguidelines of the United States Securities and ExchangeCommission (SEC) contained in Title 17, Code of FederalRegulations, Modernization of Oil and Gas Reporting, Final Rulereleased January 14, 2009 in the Federal Register (SECregulations). Our third party reserves audit, completed onJanuary 31, 2011 and presented herein, was prepared for publicdisclosure by Eni in filings made with the SEC in accordance withthe disclosure requirements set forth in the SEC regulations. Enihas indicated that the proved net reserves attributable to theproperties that we reviewed account for 15 percent of their totalnet proved remaining hydrocarbon reserves. The subject propertiesare located in the following geographic locations:

> 
• Africa                        • Asia                        • America

As prescribed by the Society of Petroleum Engineers inParagraph 2.2(f) of the Standards Pertaining to the Estimatingand Auditing of Oil and Gas Reserves Information (SPE auditingstandards), a reserves audit is defined as "the process ofreviewing certain of the pertinent facts interpreted andassumptions made that have resulted in an estimate of reservesprepared by others and the rendering of an opinion about (1) theappropriateness of the methodologies employed; (2) the adequacyand quality of the data relied upon; (3) the depth andthoroughness of the reserves estimation process; (4) theclassification of reserves appropriate to the relevantdefinitions used; and (5) the reasonableness of the estimatedreserve quantities."

Based on our review, including the data, technical processesand interpretations presented by Eni, it is our opinion that theoverall procedures and methodologies utilized by Eni in preparingtheir estimates of the proved reserves as of December 31, 2010comply with the current SEC regulations and that the overallproved reserves for the reviewed properties as estimated by Eniare, in the aggregate, reasonable within 5 percent of RyderScott’s estimates which is less than the established audittolerance guidelines of 10 percent as set forth in the SPEauditing standards.

The conclusions discussed in this report, as of December 31,2010, are related to hydrocarbon prices. The hydrocarbon pricesused in the preparation of this report are based on the averageprices during the 12-month period prior to the ending date of theperiod covered in this report, determined as the unweightedarithmetic averages of the prices in effect on thefirst-day-of-the-month for each month 

 

 

| 1015 4TH STREET, S.W.SUITE 600 CALGARY, ALBERTA        T2R IJ4 TEL (403) 262-2799 |   | FAX (403) 262-2790 |
|-----------------------------------------------------------------------------------|--------|--------------------|
| 621 17TH STREET, SUITE 1550 DENVER, COLORADO        80293-1501 TEL (303) 623-9147 |   | FAX (303) 623-4258 |

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Eni S.p.A.February 14, 2011Page 2

 

within such period, unless prices were defined by contractualarrangements, as required by the SEC regulations. Actual futureprices may vary significantly from the prices required by SECregulations; therefore, volumes of reserves actually recoveredmay differ significantly from the estimated quantities audited byRyder Scott.

 

***Reserves Included in This Report***

The proved reserves included herein conform to the definitionas set forth in the Securities and Exchange Commission’sRegulations Part 210.4-10(a). An abridged version of the SECreserves definitions from 210.4-10(a) entitled "PetroleumReserves Definitions" is included as an attachment to thisreport. The various proved reserve status categories are definedunder the attachment entitled "Petroleum ReservesDefinitions" in this report. 

No attempt was made to quantify or otherwise account for anyaccumulated gas production imbalances that may exist. The auditedproved gas volumes included gas consumed in operations asreserves. Non-hydrocarbon or inert gas volumes have been excludedfrom the reserves reported herein.

Reserves are those estimated remaining quantities of petroleumthat are anticipated to be economically producible, as of a givendate, from known accumulations under defined conditions. Allreserve estimates involve an assessment of the uncertaintyrelating the likelihood that the actual remaining quantitiesrecovered will be greater or less than the estimated quantitiesdetermined as of the date the estimate is made. The uncertaintydepends chiefly on the amount of reliable geologic andengineering data available at the time of the estimate and theinterpretation of these data. The relative degree of uncertaintymay be conveyed by placing reserves into one of two principalclassifications, either proved or unproved. Unproved reserves areless certain to be recovered than proved reserves, and may befurther sub-classified as probable and possible reserves todenote progressively increasing uncertainty in theirrecoverability. At Eni’s request, this report addresses onlythe proved reserves attributable to the properties evaluatedherein.

Proved oil and gas reserves are those quantities of oil andgas which, by analysis of geoscience and engineering data, can beestimated with reasonable certainty to be economically produciblefrom a given date forward. The proved reserves included hereinwere estimated using deterministic methods. If deterministicmethods are used, the SEC has defined reasonable certainty forproved reserves as a "high degree of confidence that thequantities will be recovered." 

Proved reserve estimates will generally be revised only asadditional geologic or engineering data become available or aseconomic conditions change. For proved reserves, the SEC statesthat "as changes due to increased availability of geoscience(geological, geophysical, and geochemical), engineering, andeconomic data are made to the estimated ultimate recovery (EUR)with time, reasonably certain EUR is much more likely to increaseor remain constant than to decrease." Moreover, estimates ofproved reserves may be revised as a result of future operations,effects of regulation by governmental agencies or geopolitical oreconomic risks. Therefore, the proved reserves included in thisreport are estimates only and should not be construed as beingexact quantities, and if recovered, the revenues therefrom, andthe actual costs related thereto, could be more or less than theestimated amounts.

The proved reserves reported herein are limited to the periodprior to expiration of current contracts providing the legalrights to produce, or a revenue interest in such production,unless evidence indicates that contract renewal is reasonablycertain. Furthermore, properties in the different countries maybe subjected to significantly varying contractual fiscal termsthat affect the net revenue

 

RYDER SCOTT COMPANY     PETROLEUMCONSULTANTS

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to Eni for the production of these volumes. The prices andeconomic return received for these net volumes can varysignificantly based on the terms of these contracts. Therefore,when applicable, Ryder Scott reviewed the fiscal terms of suchcontracts and discussed with Eni the net economic benefitattributed to such operations for the determination of the nethydrocarbon volumes and income thereof. Ryder Scott has notconducted an exhaustive audit or verification of such contractualinformation. Neither our review of such contractual informationnor our acceptance of Eni’s representations regarding suchcontractual information should be construed as a legal opinion onthis matter.

Ryder Scott did not evaluate the country and geopoliticalrisks in the countries where Eni operates or has interests.Eni’s operations may be subject to various levels ofgovernmental controls and regulations. These controls andregulations may include, but may not be limited to, mattersrelating to land tenure and leasing, the legal rights to producehydrocarbons including the granting, extension or termination ofproduction sharing contracts, the fiscal terms of variousproduction sharing contracts, drilling and production practices,environmental protection, marketing and pricing policies,royalties, various taxes and levies including income tax, andforeign trade and investment and are subject to change from timeto time. Such changes in governmental regulations and policiesmay cause volumes of proved reserves actually recovered andamounts of proved income actually received to differsignificantly from the estimated quantities.

The estimates of proved reserves audited herein were basedupon a detailed study of the properties in which Eni owns aninterest; however, we have not made any field examination of theproperties. No consideration was given in this report topotential environmental liabilities that may exist nor were anycosts included for potential liabilities to restore and clean updamages, if any, caused by past operating practices.

 

***Audit Data, Methodology, Procedure and Assumptions***

The estimation of reserves involves two distinctdeterminations. The first determination results in the estimationof the quantities of recoverable oil and gas and the seconddetermination results in the estimation of the uncertaintyassociated with those estimated quantities in accordance with thedefinitions set forth by the Securities and ExchangeCommission’s Regulations Part 210.4-10(a). The process ofestimating the quantities of recoverable oil and gas reservesrelies on the use of certain generally accepted analyticalprocedures. These analytical procedures fall into three broadcategories or methods: (1) performance-based methods; (2)volumetric-based methods; and (3) analogy. These methods may beused singularly or in combination by the reserve evaluator in theprocess of estimating the quantities of reserves. Reserveevaluators must select the method or combination of methods whichin their professional judgment is most appropriate given thenature and amount of reliable geoscience and engineering dataavailable at the time of the estimate, the established oranticipated performance characteristics of the reservoir beingevaluated and the stage of development or producing maturity ofthe property.

In many cases, the analysis of the available geoscience andengineering data and the subsequent interpretation of this datamay indicate a range of possible outcomes in an estimate,irrespective of the method selected by the evaluator. When arange in the quantity of reserves is identified, the evaluatormust determine the uncertainty associated with the incrementalquantities of the reserves. If the reserve quantities areestimated using the deterministic incremental approach, theuncertainty for each discrete incremental quantity of thereserves is addressed by the reserve category assigned by theevaluator. Therefore, it is the categorization of reservequantities as proved, probable and/or possible that addresses theinherent uncertainty in the estimated quantities reported. Forproved reserves, uncertainty is defined by the SEC as reasonablecertainty wherein the "quantities

RYDER SCOTT COMPANY     PETROLEUMCONSULTANTS

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actually recovered are much more likely than not to beachieved." The SEC states that "probable reserves arethose additional reserves that are less certain to be recoveredthan proved reserves but which, together with proved reserves,are as likely as not to be recovered." The SEC states that"possible reserves are those additional reserves that areless certain to be recovered than probable reserves and the totalquantities ultimately recovered from a project have a lowprobability of exceeding proved plus probable plus possiblereserves." All quantities of reserves within the samereserve category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reservecategories may be revised in the future as additional geoscienceor engineering data become available. Furthermore, estimates ofreserves quantities and their associated reserve categories mayalso be revised due to other factors such as changes in economicconditions, results of future operations, effects of regulationby governmental agencies or geopolitical or economic risks aspreviously noted herein.

The proved reserves for the properties included herein wereestimated by performance methods, analogy methods, the volumetricmethod, or a combination of performance and volumetric methods.These performance methods include, but may not be limited to,decline curve analysis and analogy which utilized extrapolationsof historical production and pressure data available throughDecember, 2010 in those cases where such data were considered tobe definitive. The data utilized in this analysis were suppliedto Ryder Scott by Eni and were considered sufficient for thepurpose thereof. The volumetric method was used where there wereinadequate historical performance data to establish a definitivetrend and where the use of production performance data as a basisfor the reserve estimates was considered to be inappropriate. Thevolumetric analysis utilized pertinent well and seismic datasupplied to Ryder Scott by Eni that were available throughDecember, 2010. The data utilized from the well and seismic dataincorporated into our volumetric analysis were consideredsufficient for the purpose thereof.

To estimate economically recoverable proved oil and gasreserves and related future net cash flows, we consider manyfactors and assumptions including, but not limited to, the use ofreservoir parameters derived from geological, geophysical andengineering data that cannot be measured directly, economiccriteria based on current costs and SEC pricing requirements, andforecasts of future production rates. Under the SEC regulations210.4-10(a)(22)(v) and (26), proved reserves must be anticipatedto be economically producible from a given date forward based onexisting economic conditions including the prices and costs atwhich economic producibility from a reservoir is to bedetermined. While it may reasonably be anticipated that thefuture prices received for the sale of production and theoperating costs and other costs relating to such production mayincrease or decrease from those under existing economicconditions, such changes were, in accordance with rules adoptedby the SEC, omitted from consideration in making this evaluation.

Eni has informed us that they have furnished us all of thematerial accounts, records, geological and engineering data, andreports and other data required for this investigation. Inpreparing our forecast of future proved production and income, wehave relied upon data furnished by Eni with respect to propertyinterests owned, production and well tests from examined wells,normal direct costs of operating the wells or leases, other costssuch as transportation and/or processing fees, ad valorem andproduction taxes, recompletion and development costs, abandonmentcosts after salvage, product prices based on the SEC regulations,adjustments or differentials to product prices, geologicalstructural and isochore maps, well logs, core analyses, andpressure measurements. Ryder Scott reviewed such factual data forits reasonableness; however, we have not conducted an independentverification of the data furnished by Eni. We consider thefactual data used in this report appropriate and sufficient forthe purpose of our investigations. 

 

RYDER SCOTT COMPANY     PETROLEUMCONSULTANTS

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In summary, we consider the assumptions, data, methods andanalytical procedures used in this report appropriate for thepurpose hereof, and we have used all such methods and proceduresthat we consider necessary and appropriate to conduct the auditof reserves of the properties described herein. The provedreserves discussed herein were determined in conformance with theUnited States Securities and Exchange Commission (SEC)Modernization of Oil and Gas Reporting; Final Rule, including allreferences to Regulation S-X and Regulation S-K, referred toherein collectively as the "SEC Regulations." In ouropinion, the proved reserves reviewed in this report comply withthe definitions, guidelines and disclosure requirements asrequired by the SEC regulations.

 

***Future Production Rates***

For wells currently on production, our forecasts of futureproduction rates are based on historical performance data. If noproduction decline trend has been established, future productionrates were held constant, or adjusted for the effects ofcurtailment where appropriate, until a decline in ability toproduce was anticipated. An estimated rate of decline was thenapplied to depletion of the reserves. If a decline trend has beenestablished, this trend was used as the basis for estimatingfuture production rates.

Test data and other related information were used to estimatethe anticipated initial production rates for those wells orlocations that are not currently producing. For reserves not yeton production, sales were estimated to commence at an anticipateddate furnished by Eni. Wells or locations that are not currentlyproducing may start producing earlier or later than anticipatedin our estimates due to unforeseen factors causing a change inthe timing to initiate production. Such factors may includedelays due to weather, the availability of rigs, the sequence ofdrilling, completing and/or recompleting wells and/or constraintsset by regulatory bodies. 

The future production rates from wells currently on productionor wells or locations that are not currently producing may bemore or less than estimated because of changes including, but notlimited to, reservoir performance, operating conditions relatedto surface facilities, compression and artificial lift, pipelinecapacity and/or operating conditions, producing market demandand/or allowables or other constraints set by regulatory bodies.

 

***Hydrocarbon Prices***

The hydrocarbon prices used herein are based on SEC priceparameters using the average prices during the 12-month periodprior to the ending date of the period covered in this report,determined as the unweighted arithmetic averages of the prices ineffect on the first-day-of-the-month for each month within suchperiod, unless prices were defined by contractual arrangements.For hydrocarbon products sold under contract, the contractprices, including fixed and determinable escalations, exclusiveof inflation adjustments, were used until expiration of thecontract. Upon contract expiration, the prices were adjusted tothe 12-month unweighted arithmetic average as previouslydescribed.

Eni furnished us with the above mentioned average prices ineffect on December 31, 2010. Eni has assured us that theseinitial SEC hydrocarbon prices were determined using the 12-monthaverage first-day-of-the-month benchmark prices appropriate tothe geographic area where the hydrocarbons are sold. The averagedated Brent oil price of $79/Bbl was used by Eni. Eni alsoprovided us with the gas prices based on their gas salesagreements. The average realized prices provided by Eni and usedin our evaluation are as follows: 

 

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| **Geographic Area** |   | **Product** |   | **Average         Realized         Prices** |
|---------------------|--------|-------------|--------|---------------------------------------------|
|                     |   |             |   |                                             |

| Africa  |   | Gas                  |   | $307.07/Mm3 |
|---------|--------|----------------------|--------|-------------|
|    |   | Oil & Condensate |   | $76.14/Bbl  |
| Asia    |   | Gas                  |   | $355.43/Mm3 |
|    |   | Oil & Condensate |   | $67.92/Bbl  |
| America |   | Oil                  |   | $72.36/Bbl  |
|         |   |                      |   |             |

The product prices that were actually used to determine thefuture gross revenue for each property reflect adjustments to thebenchmark prices for gravity, quality, local conditions and/ordistance from market, referred to herein as"differentials." The differentials used in thepreparation of this report were furnished to us by Eni. Thedifferentials furnished to us were accepted as factual data andreviewed by us for their reasonableness; however, we have notconducted an independent verification of the data used by Eni todetermine these differentials.

 

***Costs***

Operating costs used in our evaluation were based on theoperating expense reports of Eni and include only those costsdirectly applicable to the evaluated assets. The operating costsinclude a portion of general and administrative costs allocateddirectly to the leases and wells. The operating costs furnishedto us were accepted as factual data and reviewed by us for theirreasonableness; however, we have not conducted an independentverification of the operating cost data used by Eni. No deductionwas made for loan repayments, interest expenses, or explorationand development prepayments that were not charged directly to theassets.

Development costs were furnished to us by Eni and are based onauthorizations for expenditure for the proposed work or actualcosts for similar projects. The development costs furnished to uswere accepted as factual data and reviewed by us for theirreasonableness; however, we have not conducted an independentverification of these costs. The estimated net cost ofabandonment after salvage was included for properties whereabandonment costs net of salvage were significant. The estimatesof the net abandonment costs furnished by Eni were acceptedwithout independent verification. 

The proved developed and undeveloped reserves in this reporthave been incorporated herein in accordance with Eni’s plansto develop these reserves as of December 31, 2010. Theimplementation of Eni’s development plans as presented to usand incorporated herein is subject to the approval processadopted by Eni’s management. As the result of our inquiresduring the course of preparing this report, Eni has informed usthat the development activities included herein have beensubjected to and received the internal approvals required byEni’s management at the appropriate local, regional and/orcorporate level. In addition to the internal approvals as noted,certain development activities may still be subject to specificpartner AFE processes, Joint Operating Agreement (JOA)requirements or other administrative approvals external to Eni.Additionally, Eni has informed us that they are not aware of anylegal, regulatory, political or economic obstacles that wouldsignificantly alter their plans. 

Current costs used by Eni were held constant throughout thelife of the properties.

 

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***Standards of Independence and Professional Qualification***

Ryder Scott is an independent petroleum engineering consultingfirm that has been providing petroleum consulting servicesthroughout the world for over seventy years. Ryder Scott isemployee-owned and maintains offices in Houston, Texas; Denver,Colorado; and Calgary, Alberta, Canada. We have over eightyengineers and geoscientists on our permanent staff. By virtue ofthe size of our firm and the large number of clients for which weprovide services, no single client or job represents a materialportion of our annual revenue. We do not serve as officers ordirectors of any publicly-traded oil and gas company and areseparate and independent from the operating and investmentdecision-making process of our clients. This allows us to bringthe highest level of independence and objectivity to eachengagement for our services.

Ryder Scott actively participates in industry-relatedprofessional societies and organizes an annual public forumfocused on the subject of reserves evaluations and SECregulations. Many of our staff have authored or co-authoredtechnical papers on the subject of reserves related topics. Weencourage our staff to maintain and enhance their professionalskills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scottrequires that staff engineers and geoscientists have receivedprofessional accreditation in the form of a registered orcertified professional engineer’s license or a registered orcertified professional geoscientist’s license, or theequivalent thereof, from an appropriate governmental authority ora recognized self-regulating professional organization.

We are independent petroleum engineers with respect to Eni.Neither we nor any of our employees have any interest in thesubject properties and neither the employment to do this work northe compensation is contingent on our estimates of reserves forthe properties which were reviewed.

The results of this study, presented herein, are based ontechnical analysis conducted by teams of geoscientists andengineers from Ryder Scott. The professional qualifications ofthe undersigned, the technical person primarily responsible foroverseeing, reviewing and approving the evaluation of thereserves information discussed in this report, are included as anattachment to this letter.

 

***Terms of Usage***

The results of our third party study, presented in report formherein, were prepared in accordance with the disclosurerequirements set forth in the SEC regulations and intended forpublic disclosure as an exhibit in filings made with the SEC byEni. 

We have provided Eni with a digital version of the originalsigned copy of this report letter. In the event there are anydifferences between the digital version included in filings madeby Eni and the original signed report letter, the original signedreport letter shall control and supersede the digital version.

 

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The data and work papers used in the preparation of thisreport are available for examination by authorized parties in ouroffices. Please contact us if we can be of further service.

 

 

|   | Very truly yours,                                   |
|--------|-----------------------------------------------------|
|   | **RYDER SCOTT COMPANY, L. P.**                      |
|   | TBPE Firm Registration No. F-1580                   |
|   |                                                |
|   | /s/ HERMAN G. ACUÑA, P.E.                      |
|   |                                                |
|   | Herman G. Acuña, P.E.                          |
|   | TBPE License No. 92254                              |
|   | Managing Senior Vice        President-International |
|   | [SEAL]                                              |
| HGA/sm |                                                |

 

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**Professional QualificationsHerman G. Acuña**

The conclusions presented in this report for Eni propertieslocated in Africa, Asia and America are the result of technicalanalysis conducted by teams of geoscientists and engineers fromRyder Scott Company, L.P. Herman G. Acuña was the primarytechnical person responsible for overseeing the independentestimation of the reserves, future production and income torender the audit conclusions of the report.

Mr. Acuña, an employee of Ryder Scott Company L.P. (RyderScott) since 1997, is a Managing Senior International VicePresident and serves as an Engineering Group Coordinatorresponsible for coordinating and supervising staff and consultingengineers of the company in ongoing reservoir evaluation studiesworldwide. Before joining Ryder Scott, Mr. Acuña served in anumber of engineering positions with Exxon. For more informationregarding Mr. Acuña’s geographic and job specificexperience, please refer to the Ryder Scott Company website atwww.ryderscott.com.

Mr. Acuña earned a Bachelor (Cum Laude) and a Masters (MagnaCum Laude) of Science degree in Petroleum Engineering from TheUniversity of Tulsa in 1987 and 1989 respectively. He is aregistered Professional Engineer in the State of Texas, a memberof the Association of International Petroleum Negotiators (AIPN)and the Society of Petroleum Engineers (SPE).

In addition to gaining experience and competency through priorwork experience, the Texas Board of Professional Engineersrequires a minimum of fifteen hours of continuing educationannually, including at least one hour in the area of professionalethics, which Mr. Acuña fulfills. Mr. Acuña has attendedformalized training and conferences including dedicated to thesubject of the definitions and disclosure guidelines contained inthe United States Securities and Exchange Commission Title 17,Code of Federal Regulations, Modernization of Oil and GasReporting, Final Rule released January 14, 2009 in the FederalRegister. Mr. Acuña has recently taught various company reservesevaluation schools in Argentina, Bolivia, China, Denmark, Spain,U.S.A and Venezuela. Mr. Acuña has participated in variouscapacities in reserves conferences such as being a panelist a the2008 Trinidad and Tobago’s Petroleum Conference, deliveringthe reserves evaluation seminar during IAPG convention inMendoza, Argentina in 2006 and chairing the first ReservesEvaluation Conference in the Middle East in Dubai, U.A.E in 2006.

Based on his educational background, professional training andover 20 years of practical experience in petroleum engineeringand the estimation and evaluation of petroleum reserves, Mr.Acuña has attained the professional qualifications as a ReservesEstimator and Reserves Auditor set forth in Article III of the"Standards Pertaining to the Estimating and Auditing of Oiland Gas Reserves Information" promulgated by the Society ofPetroleum Engineers as of February 19, 2007.

 

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**PETROLEUM RESERVES DEFINITIONS**

**As Adapted From:RULE 4-10(a) of REGULATION S-X PART 210UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)**

 

 

***PREAMBLE***

On January 14, 2009, the United States Securities and ExchangeCommission (SEC) published the "Modernization of Oil and GasReporting; Final Rule" in the Federal Register of NationalArchives and Records Administration (NARA). The"Modernization of Oil and Gas Reporting; Final Rule"includes revisions and additions to the definition section inRule 4-10 of Regulation S-X, revisions and additions to the oiland gas reporting requirements in Regulation S-K, and amends andcodifies Industry Guide 2 in Regulation S-K. The"Modernization of Oil and Gas Reporting; Final Rule",including all references to Regulation S-X and Regulation S-K,shall be referred to herein collectively as the "SECRegulations". The SEC Regulations take effect for allfilings made with the United States Securities and ExchangeCommission as of December 31, 2009, or after January 1, 2010.Reference should be made to the full text under Title 17, Code ofFederal Regulations, Regulation S-X Part 210, Rule 4-10(a) forthe complete definitions, as the following definitions,descriptions and explanations rely wholly or in part on excerptsfrom the original document (direct passages excerpted from theaforementioned SEC document are denoted in italics herein).

Reserves are those estimated remaining quantities of petroleumwhich are anticipated to be economically producible, as of agiven date, from known accumulations under defined conditions.All reserve estimates involve some degree of uncertainty. Theuncertainty depends chiefly on the amount of reliable geologicand engineering data available at the time of the estimate andthe interpretation of these data. The relative degree ofuncertainty may be conveyed by placing reserves into one of twoprincipal classifications, either proved or unproved. Unprovedreserves are less certain to be recovered than proved reservesand may be further sub-classified as probable and possiblereserves to denote progressively increasing uncertainty in theirrecoverability. Under the SEC Regulations as of December 31,2009, or after January 1, 2010, a company may optionally discloseestimated quantities of probable or possible oil and gas reservesin documents publicly filed with the Commission. The SECRegulations continue to prohibit disclosure of estimates of oiland gas resources other than reserves and any estimated values ofsuch resources in any document publicly filed with the Commissionunless such information is required to be disclosed in thedocument by foreign or state law as noted in §229.1202Instruction to Item 1202.

Reserves estimates will generally be revised as additionalgeologic or engineering data become available or as economicconditions change.

Reserves may be attributed to either natural energy orimproved recovery methods. Improved recovery methods include allmethods for supplementing natural energy or altering naturalforces in the reservoir to increase ultimate recovery. Examplesof such methods are pressure maintenance, natural gas cycling,waterflooding, thermal methods, chemical flooding, and the use ofmiscible and immiscible displacement fluids. Other improvedrecovery methods may be developed in the future as petroleumtechnology continues to evolve.

 

 

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PETROLEUM RESERVES DEFINITIONSPage 2

 

 

Reserves may be attributed to either conventional orunconventional petroleum accumulations. Petroleum accumulationsare considered as either conventional or unconventional based onthe nature of their in-place characteristics, extraction methodapplied, or degree of processing prior to sale. Examples ofunconventional petroleum accumulations include coalbed orcoalseam methane (CBM/CSM), basin-centered gas, shale gas, gashydrates, natural bitumen and oil shale deposits. Theseunconventional accumulations may require specialized extractiontechnology and/or significant processing prior to sale. 

Reserves do not include quantities of petroleum being held ininventory. 

Because of the differences in uncertainty, caution should beexercised when aggregating quantities of petroleum from differentreserves categories.

 

**RESERVES (SEC DEFINITIONS)**

Securities and Exchange Commission Regulation S-X§210.4-10(a)(26) defines reserves as follows:

***Reserves.****Reserves are estimated remainingquantities of oil and gas and related substances anticipated tobe economically producible, as of a given date, by application ofdevelopment projects to known accumulations. In addition, theremust exist, or there must be a reasonable expectation that therewill exist, the legal right to produce or a revenue interest inthe production, installed means of delivering oil and gas orrelated substances to market, and all permits and financingrequired to implement the project.*

*Note to paragraph (a) (26)**: Reserves shouldnot be assigned to adjacent reservoirs isolated by major,potentially sealing, faults until those reservoirs are penetratedand evaluated as economically producible. Reserves should not beassigned to areas that are clearly separated from a knownaccumulation by a non-productive reservoir**(i.e.**,absence of reservoir, structurally low reservoir, or negativetest results). Such areas may contain prospective resources (**i.e.**,potentially recoverable resources from undiscoveredaccumulations).*

 

**PROVED RESERVES (SEC DEFINITIONS)**

Securities and Exchange Commission Regulation S-X§229.4-10(a) (22) defines proved oil and gas reserves asfollows:

***Proved oil and gas reserves.****Proved oil andgas reserves are those quantities of oil and gas, which, byanalysis of geoscience and engineering data, can be estimatedwith reasonable certainty to be economically producible—froma given date forward, from known reservoirs, and under existingeconomic conditions, operating methods, and governmentregulations—prior to the time at which contracts providingthe right to operate expire, unless evidence indicates thatrenewal is reasonably certain, regardless of whetherdeterministic or probabilistic methods are used for theestimation. The project to extract the hydrocarbons must havecommenced or the operator must be reasonably certain that it willcommence the project within a reasonable time.*

> 
*(i) The area of the reservoir considered as proved    includes:*

*(A) The area identified by drilling and limited by        fluid contacts, if any, and*

 

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PETROLEUM RESERVES DEFINITIONSPage 3

 

 

 

> 
*(B) Adjacent undrilled portions of the reservoir        that can, with reasonable certainty, be judged to be        continuous with it and to contain economically producible        oil or gas on the basis of available geoscience and        engineering data.*

*(ii) In the absence of data on fluid contacts, proved    quantities in a reservoir are limited by the lowest known    hydrocarbons (LKH) as seen in a well penetration unless    geoscience, engineering, or performance data and reliable    technology establishes a lower contact with reasonable    certainty.*

 

**PROVED RESERVES (SEC DEFINITIONS) CONTINUED**

*(iii) Where direct observation from well penetrations    has defined a highest known oil (HKO) elevation and the    potential exists for an associated gas cap, proved oil    reserves may be assigned in the structurally higher portions    of the reservoir only if geoscience, engineering, or    performance data and reliable technology establish the higher    contact with reasonable certainty.*

*(iv) Reserves which can be produced economically    through application of improved recovery techniques    (including, but not limited to, fluid injection) are included    in the proved classification when:*

*(A) Successful testing by a pilot project in an        area of the reservoir with properties no more favorable        than in the reservoir as a whole, the operation of an        installed program in the reservoir or an analogous        reservoir, or other evidence using reliable technology        establishes the reasonable certainty of the engineering        analysis on which the project or program was based: and*

*(B) The project has been approved for development        by all necessary parties and entities, including        governmental entities.*

> 
*(v) Existing economic conditions include prices and    costs at which economic producibility from a reservoir is to    be determined. The price shall be the average price during    the 12-month period prior to the ending date of the period    covered by the report, determined as an unweighted arithmetic    average of the first-day-of-the-month price for each month    within such period, unless prices are defined by contractual    arrangements, excluding escalations based upon future    conditions.*

 

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**RESERVES STATUS DEFINITIONS AND GUIDELINES**

**As Adapted From:RULE 4-10(a) of REGULATION S-X PART 210UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)**

**and**

**PETROLEUM RESOURCES MANAGEMENT SYSTEM(SPE-PRMS)Sponsored and Approved by:SOCIETY OF PETROLEUM ENGINEERS (SPE),WORLD PETROLEUM COUNCIL (WPC)AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)**

 

 

 

Reserves status categories define the development andproducing status of wells and reservoirs. Reference should bemade to Title 17, Code of Federal Regulations, Regulation S-XPart 210, Rule 4-10(a) and the SPE-PRMS as the following reservesstatus definitions are based on excerpts from the originaldocuments (direct passages excerpted from the aforementioned SECand SPE-PRMS documents are denoted in italics herein).

 

**DEVELOPED RESERVES (SEC DEFINITIONS)**

Securities and Exchange Commission Regulation S-X§229.4-10(a) (6) defines developed oil and gas reserves asfollows:

> 
*Developed oil and gas reserves are reserves of any    category that can be expected to be recovered:*

*(i) Through existing wells with existing equipment        and operating methods or in which the cost of the        required equipment is relatively minor compared to the        cost of a new well:*

*and*

*(ii) Through installed extraction equipment and        infrastructure operational at the time of the reserves        estimate if the extraction is by means not involving a        well.*

**Developed Producing (SPE-PRMS Definitions)**While not a requirement for disclosure under the SECregulations, developed oil and gas reserves may be furthersub-classified according to the guidance contained in theSPE-PRMS as Producing or Non-Producing.

> 
***Developed Producing Reserves****Developed Producing Reserves are expected to    be recovered from completion intervals that are open and    producing at the time of the estimate.*

> 
*Improved recovery reserves are considered producing    only after the improved recovery project is in operation.*

 

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RESERVES STATUS DEFINITIONS AND GUIDELINESPage 2

 

 

> 
***Developed Non-Producing****Developed Non-Producing Reserves include    shut-in and behind-pipe reserves.*

***Shut-In****Shut-in Reserves are expected to be recovered    from:*

*(1) completion intervals which are open at the time        of the estimate but which have not yet started producing;*

*(2) wells which were shut-in for market conditions        or pipeline connections; or*

*(3) wells not capable of production for mechanical        reasons.*

***Behind-Pipe****Behind-pipe Reserves are expected to be    recovered from zones in existing wells which will require    additional completion work or future re-completion prior to    start of production.*

*In all cases. production can be initiated or restored    with relatively low expenditure compared to the cost of    drilling a new well.*

 

**UNDEVELOPED RESERVES (SEC DEFINITIONS)**

Securities and Exchange Commission Regulation S-X§229.4-10(a) (31) defines undeveloped oil and gas reserves asfollows:

> 
*Undeveloped oil and gas reserves are reserves of any    category that are expected to be recovered from new wells on    undrilled acreage, or from existing wells where a relatively    major expenditure is required for recompletion.*

*(i) Reserves on undrilled acreage shall be limited        to those directly offsetting development spacing areas        that are reasonably certain of production when drilled,        unless evidence using reliable technology exists that        establishes reasonable certainty of economic        producibility at greater distances.*

*(ii) Undrilled locations can be classified as        having undeveloped reserves only if a development plan        has been adopted indicating that they are scheduled to be        drilled within five years, unless the specific        circumstances. justify a longer time.*

> 
*(iii) Under no circumstances shall estimates for        undeveloped reserves be attributable to any acreage for        which an application of fluid injection or other improved        recovery technique is contemplated, unless such        techniques have been proved effective by actual projects        in the same reservoir or an analogous reservoir, as        defined in paragraph (a) (2) of this section. or by other        evidence using reliable technology establishing        reasonable certainty.*

 

 

 

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