----

**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, 200****7**     |
| 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 Mattei00144 RomaItaly**(Address of principal executive offices)**Marco MangiagalliEni SpA1, piazza Ezio VanoniSan Donato Milanese20097 MilanoItalyTel +39 02 52041730Fax +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 awell-known seasoned issuer, as defined in Rule 405 of theSecurities Act.

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

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

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

Note - Checking the box above will not relieveany registrant required to file reports pursuant to Section 13 or15(d) of the Securities Exchange Act of 1934 from theirobligations under those Sections.Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filingrequirements for the past 90 days.

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

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

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

Indicate by check mark which basis ofaccounting the registrant has used to prepare the financialstatements 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 inresponse to the previous question, indicate by check mark whichfinancial statement item the registrant has elected to follow.

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

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

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

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

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

|       |   |                                                           |   |   |
|------------|--------|----------------------------------------------------------------|--------|--------|
| **PART I** |   |                                                           |   |   |
| Item 1.    |   | IDENTITY OF DIRECTORS,        SENIOR MANAGEMENT AND ADVISORS   |   | 1      |
| Item 2.    |   | OFFER STATISTICS AND        EXPECTED TIMETABLE                 |   | 1      |
| Item 3.    |   | KEY INFORMATION                                                |   | 1      |
|       |   | Selected Financial        Information                          |   | 1      |
|       |   | Selected Operating        Information                          |   | 3      |
|       |   | Exchange Rates                                                 |   | 5      |
|       |   | Risk Factors                                                   |   | 5      |
| Item 4.    |   | INFORMATION ON THE        COMPANY                              |   | 16     |
|       |   | History and Development        of the Company                  |   | 16     |
|       |   | Business Overview                                              |   | 20     |
|       |   | Exploration &        Production                            |   | 20     |
|       |   | Gas & Power                                                |   | 43     |
|       |   | Refining & Marketing                                       |   | 52     |
|       |   | Petrochemicals                                                 |   | 59     |
|       |   | Engineering &        Construction                          |   | 61     |
|       |   | Corporate and other        activities                          |   | 64     |
|       |   | Research and Development                                       |   | 64     |
|       |   | Insurance                                                      |   | 65     |
|       |   | Environmental Matters                                          |   | 65     |
|       |   | Regulation of Eni’s        Businesses                     |   | 68     |
|       |   | Property, Plant and        Equipment                           |   | 77     |
|       |   | Organizational Structure                                       |   | 77     |
| Item 4A.   |   | UNRESOLVED STAFF COMMENTS                                      |   | 77     |
| Item 5.    |   | OPERATING AND FINANCIAL        REVIEW AND PROSPECTS            |   | 77     |
|       |   | Executive Summary                                              |   | 77     |
|       |   | Critical Accounting        Estimates                           |   | 80     |
|       |   | 2005-2007 Group Results        of Operations                   |   | 83     |
|       |   | Liquidity and Capital        Resources                         |   | 92     |
|       |   | Recent Developments                                            |   | 98     |
|       |   | Management's Expectations        of Operations                 |   | 100    |
| Item 6.    |   | DIRECTORS, SENIOR        MANAGEMENT AND EMPLOYEES              |   | 103    |
|       |   | Directors and Senior        Management                         |   | 103    |
|       |   | Board Practices                                                |   | 107    |
|       |   | Compensation                                                   |   | 117    |
|       |   | Employees                                                      |   | 124    |
|       |   | Share Ownership                                                |   | 125    |
| Item 7.    |   | MAJOR SHAREHOLDERS AND        RELATED PARTY TRANSACTIONS       |   | 126    |
|       |   | Major Shareholders                                             |   | 126    |
|       |   | Related Party        Transactions                              |   | 126    |
| Item 8.    |   | FINANCIAL INFORMATION                                          |   | 126    |
|       |   | Consolidated Statements        and Other Financial Information |   | 126    |
|       |   | Significant Changes                                            |   | 135    |
| Item 9.    |   | THE OFFER AND THE LISTING                                      |   | 136    |
|       |   | Offer and Listing Details                                      |   | 136    |
|       |   | Markets                                                        |   | 137    |
| Item 10.   |   | ADDITIONAL INFORMATION                                         |   | 138    |
|       |   | Memorandum and Articles        of Association                  |   | 138    |
|       |   | Material Contracts                                             |   | 145    |
|       |   | Documents on Display                                           |   | 145    |
|       |   | Exchange Controls                                              |   | 145    |
|       |   | Taxation                                                       |   | 146    |

i

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##### Table of Contents

 

| Item 11.     |   | QUALITATIVE AND        QUANTITATIVE DISCLOSURES ABOUT MARKET RISK                   |   | 149    |
|--------------|--------|-------------------------------------------------------------------------------------|--------|--------|
| Item 12.     |   | DESCRIPTION OF SECURITIES        OTHER THAN EQUITY SECURITIES                       |   | 149    |
|         |   |                                                                                |   |   |
| **PART II**  |   |                                                                                |   |   |
| Item 13.     |   | DEFAULTS, DIVIDEND        ARREARAGES AND DELINQUENCIES                              |   | 150    |
| Item 14.     |   | MATERIAL MODIFICATIONS TO        THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |   | 150    |
| Item 15.     |   | CONTROLS AND PROCEDURES                                                             |   | 150    |
| Item 16.     |   |                                                                                |   |   |
| 16A.         |   | Board of Statutory        Auditors Financial Expert                                 |   | 151    |
| 16B.         |   | Code of Ethics                                                                      |   | 151    |
| 16C.         |   | Principal Accountant Fees        and Services                                       |   | 151    |
| 16D.         |   | Exemptions from the        Listing Standards for Audit Committees                   |   | 152    |
| 16E.         |   | Purchases of Equity        Securities by the Issuer and Affiliated Purchasers       |   | 152    |
|         |   |                                                                                |   |   |
| **PART III** |   |                                                                                |   |   |
| Item 17.     |   | FINANCIAL STATEMENTS                                                                |   | 154    |
| Item 18.     |   | FINANCIAL STATEMENTS                                                                |   | 154    |
| Item 19.     |   | EXHIBITS                                                                            |   | 154    |

 

 

 

 

 

 

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*Certain disclosures contained herein including, withoutlimitation, information appearing in "Item 4 –Information on the Company", and in particular "Item 4– Exploration & Production", “Item 5 –Operating and Financial Review and Prospects” and "Item11 – Qualitative and Quantitative Disclosures about MarketRisk" contain forward-looking statements regarding futureevents and the future results of Eni that are based on currentexpectations, estimates, forecasts, and projections about theindustries in which Eni operates and the beliefs and assumptionsof the management of Eni. Eni may also make forward-lookingstatements in other written materials, including other documentsfiled with or furnished to the U.S. Securities and ExchangeCommission (the "SEC"). In addition, Eni’s seniormanagement may make forward-looking statements orally toanalysts, investors, representatives of the media and others. Inparticular, among other statements, certain statements withregard to management objectives, trends in results of operations,margins, costs, return on capital, risk management andcompetition are forward looking in nature. Words such as‘expects’, ‘anticipates’,‘targets’, ‘goals’, ‘projects’,‘intends’, ‘plans’, ‘believes’,‘seeks’, ‘estimates’, variations of suchwords, and similar expressions are intended to identify suchforward-looking statements. These forward-looking statements areonly predictions and are subject to risks, uncertainties, andassumptions that are difficult to predict because they relate toevents and depend on circumstances that will occur in the future.Therefore, Eni’s actual results may differ materially andadversely from those expressed or implied in any forward-lookingstatements. Factors that might cause or contribute to suchdifferences include, but are not limited to, those discussed inthis Report on Form 20-F under the section entitled "RiskFactors" and elsewhere. Any forward-looking statements madeby or on behalf of Eni speak only as of the date they are made.Eni does not undertake to update forward-looking statements toreflect any changes in Eni’s expectations with regardthereto or any changes in events, conditions or circumstances onwhich any such statement is based. The reader should, however,consult any further disclosures Eni may make in documents itfiles 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 with IFRS issuedby the International Accounting Standards Board (IASB) and IFRSissued by the IASB as adopted by the European Union following theprocedure contained in Article 6 of the EC Regulation No.1606/2002 of the European Parliament and Council of July 19,2002. 

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.

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**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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****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 minority interest.        For a discussion of management’s view of the        usefulness of this measure and its reconciliation with        the most directly comparable GAAP measure 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". |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *TSR (Total Shareholder        Return)* |   | Management uses this measure        to asses the total return of the Eni share. It is        calculated on a yearly basis, keeping account of changes        in prices (beginning and end of year) and dividends        distributed and reinvested at the ex-dividend date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***Business        terms***             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Associated gas*                        |   | Natural gas, occurring in        the form of a gas cap, overlying an oil zone, contained        in the reservoir’s crude oil gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Average reserve life        index*     |   | Ratio between the amount of        reserves at the end of the year and total production for        the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Barrel/BBL*                            |   | Volume unit corresponding to        159 liters. A barrel of oil corresponds to about 0.137        metric tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *BOE*                                   |   | Barrel of Oil Equivalent. It        is used as a standard unit measure for oil and natural        gas. The latter is converted from standard cubic meters        into barrels of oil equivalent using a certain        coefficient (see "Conversion Table").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Concession contracts*                  |   | Contracts currently applied        mainly in Western countries regulating relationships        between states and oil companies with regards to        hydrocarbon exploration and production. The company        holding the mining concession has an exclusive on        exploration, development and production activities and        for this reason it acquires a right to hydrocarbons        extracted against the payment of royalties on production        and taxes on oil revenues to the state.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Condensates*                           |   | These are light hydrocarbons        produced along with gas that condense to a liquid state        at surface temperature and pressure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Conversion capacity*                   |   | Maximum amount of feedstock        that can be processed in certain dedicated facilities of        a refinery to obtain finished products. Conversion        facilities include catalytic crackers, hydrocrackers,        visbreaking units, and coking units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Conversion index*                      |   | Ratio of capacity of        conversion facilities to primary distillation capacity.        The higher the ratio, the higher is the capacity of a        refinery to obtain high value products from the heavy        residue of primary distillation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Deep waters*                           |   | Waters deeper than 200        meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Development*                           |   | Drilling and other        post-exploration activities aimed at the production of        oil and gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| *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 Storage*                                       |   | According to Legislative        Decree No. 164/2000, these are volumes required for        allowing optimal operation of natural gas fields in Italy        for technical and economic reasons. The purpose is to        ensure production flexibility as required by long-term        purchase contracts as well as to cover technical risks        associated with production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Modulation Storage*                                    |   | According to Legislative        Decree No. 164/2000, these are volumes required for        meeting hourly, daily and seasonal swings in demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Natural gas liquids (NGL)*                             |   | Liquid or liquefied        hydrocarbons recovered from natural gas through        separation equipment or natural gas treatment plants.        Propane, normal-butane and isobutane, isopentane and        pentane plus, that were previously defined as natural        gasoline, are natural gas liquids.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Network Code*                                          |   | A code containing norms and        regulations for access to, management and operation of        natural gas pipelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Over/Under lifting*                                    |   | Agreements stipulated        between partners which regulate the right of each to its        share in the production for a set period of time. Amounts        lifted by a partner different from the agreed amounts        determine temporary Over/Under lifting situations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Primary balanced refining        capacity*             |   | Maximum amount of feedstock        that can be processed in a refinery to obtain finished        products measured in BBL/d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Production Sharing        Agreement ("PSA")* |   | Contract in use in African,        Middle Eastern, Far Eastern and Latin American countries,        among others, regulating relationships between states and        oil companies with regard to the exploration and        production of hydrocarbons. The 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 divided        between the contractor and the national company according        to variable schemes and represents the profit deriving        from exploration and production. Further terms and        conditions of these contracts may vary from country to        country. |

 

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

 

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**ABBREVIATIONS**

| mmCF   | =      | million cubic feet                       |   | KBBL     | =      | thousand barrels |
|--------|--------|------------------------------------------|--------|----------|--------|------------------|
|   |   |                                     |   |     |   |             |
| BCF    | =      | billion cubic feet                       |   | mmBBL    | =      | million barrels  |
|   |   |                                     |   |     |   |             |
| mmCM   | =      | million cubic meters                     |   | BBBL     | =      | billion barrels  |
|   |   |                                     |   |     |   |             |
| BCM    | =      | billion cubic meters                     |   | ktonnes  | =      | thousand tonnes  |
|   |   |                                     |   |     |   |             |
| BOE    | =      | barrel of oil equivalent                 |   | mmtonnes | =      | million tonnes   |
|   |   |                                     |   |     |   |             |
| KBOE   | =      | thousand barrel of oil        equivalent |   | GWh      | =      | gigawatthour     |
|   |   |                                     |   |     |   |             |
| mmBOE  | =      | million barrel of oil        equivalent  |   | TWh      | =      | terawatthour     |
|   |   |                                     |   |     |   |             |
| BBOE   | =      | billion barrel of oil        equivalent  |   | /d       | =      | per day          |
|   |   |                                     |   |     |   |             |
| BBL    | =      | barrels                                  |   | /y       | =      | per year         |

 

**CONVERSION TABLE**

| 1 acre                               | =      | 0.405 hectares                                         |   |                                                                                  |
|--------------------------------------|--------|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------|
|                                 |   |                                                   |   |                                                                                  |
| 1 barrel                             | =      | 42 U.S. gallons                                        |   |                                                                                  |
|                                 |   |                                                   |   |                                                                                  |
| 1 BOE                                | =      | 1 barrel of crude oil                                  | =      | 5,742 cubic feet of natural        gas                                                |
|                                 |   |                                                   |   |                                                                                  |
| 1 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) |

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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 Infor****mation**

The Consolidated Financial Statements of Eni have beenprepared in accordance with IFRS issued by the InternationalAccounting Standards Board (IASB) and IFRS issued by the IASB asadopted by the European Union. The tables below show Eni selectedhistorical financial data prepared in accordance with IFRS as ofand for the years ended December 31, 2004, 2005, 2006 and 2007.The selected historical financial data for the years endedDecember 31, 2004, 2005, 2006 and 2007 are derived fromEni’s Consolidated Financial Statements included in Item 18.All such data should be read in connection with the ConsolidatedFinancial Statements and the related notes thereto includedherein.

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

|   | **2003**(1) |   | **2004** |   | **2005** |   | **2006** |   | **2007** |
|--------|-------------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |             |   |          |   |          |   |          |   |          |

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

| **CONSOLIDATED PROFIT STATEMENT DATA**                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net sales        from operations                                                        |   | 57,545 |   |   | 73,728 |   |   | 86,105 |   |   | 87,256 |   |
| Operating profit by segment                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|      Exploration        & Production                       |   | 8,185  |   |   | 12,592 |   |   | 15,580 |   |   | 13,788 |   |
|      Gas & Power                                           |   | 3,428  |   |   | 3,321  |   |   | 3,802  |   |   | 4,127  |   |
|      Refining        & Marketing                           |   | 1,080  |   |   | 1,857  |   |   | 319    |   |   | 729    |   |
|      Petrochemicals                                            |   | 320    |   |   | 202    |   |   | 172    |   |   | 74     |   |
|      Engineering        & Construction                     |   | 203    |   |   | 307    |   |   | 505    |   |   | 837    |   |
|      Other activities                                          |   | (395   | )      |   | (934   | )      |   | (622   | )      |   | (444   | )      |
|      Corporate        and financial companies                  |   | (363   | )      |   | (377   | )      |   | (296   | )      |   | (217   | )      |
|      Impact of        unrealized intragroup profit elimination |   | (59    | )      |   | (141   | )      |   | (133   | )      |   | (26    | )      |
| Operating        profit                                                                 |   | 12,399 |   |   | 16,827 |   |   | 19,327 |   |   | 18,868 |   |
| Net profit attributable to Eni                                                          |   | 7,059  |   |   | 8,788  |   |   | 9,217  |   |   | 10,011 |   |
| **Data        per ordinary share**(euro)(2)                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating profit:                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| - basic                                                                                 |   | 3.29   |   |   | 4.48   |   |   | 5.23   |   |   | 5.14   |   |
| - diluted                                                                               |   | 3.28   |   |   | 4.47   |   |   | 5.22   |   |   | 5.14   |   |
| Net profit        attributable to Eni basic and diluted                                 |   | 1.87   |   |   | 2.34   |   |   | 2.49   |   |   | 2.73   |   |
| **Data per ADR******($)(2) (3)                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating        profit:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| - basic                                                                                 |   | 8.18   |   |   | 11.14  |   |   | 13.13  |   |   | 14.10  |   |
| - diluted                                                                               |   | 8.17   |   |   | 11.12  |   |   | 13.12  |   |   | 14.10  |   |
| Net profit attributable to Eni basic and diluted                                        |   | 4.66   |   |   | 5.82   |   |   | 6.26   |   |   | 7.48   |   |

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

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##### Table of Contents

 

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

|   | **2003**(1) |   | **2004** |   | **2005** |   | **2006** |   | **2007** |
|--------|-------------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |             |   |          |   |          |   |          |   |          |

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

| **CONSOLIDATED BALANCE SHEET DATA**                                                                   |   |   |   |   |   |   |   |   |   |    |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|
| Total        assets                                                                                   |   |   |   | 72,853 |   | 83,850 |   | 88,312 |   | 101,460 |
| Short-term and long-term debt                                                                         |   |   |   | 12,684 |   | 12,998 |   | 11,699 |   | 19,830  |
| Capital        stock issued                                                                           |   |   |   | 4,004  |   | 4,005  |   | 4,005  |   | 4,005   |
| Minority interest                                                                                     |   |   |   | 3,166  |   | 2,349  |   | 2,170  |   | 2,439   |
| Shareholders’        equity - Eni share                                                          |   |   |   | 32,374 |   | 36,868 |   | 39,029 |   | 40,428  |
| Capital expenditures                                                                                  |   |   |   | 7,499  |   | 7,414  |   | 7,833  |   | 10,593  |
| Weighted        average number of ordinary shares outstanding (fully        diluted - shares million) |   | 3,778  |   | 3,775  |   | 3,763  |   | 3,701  |   | 3,669   |
| Dividend per share (euro)                                                                             |   | 0.75   |   | 0.90   |   | 1.10   |   | 1.25   |   | 1.30    |
| Dividend        per ADR ($)(2)                                                                        |   | 1.83   |   | 2.17   |   | 2.73   |   | 3.24   |   | 3.74    |

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

----

| (1) |   | Until        December 31, 2004, Eni prepared its Consolidated        Financial Statements and other interim financial        information (including quarterly and semi-annual data) in        accordance with Italian GAAP. IFRS required adopting        companies to restate only one year of financial        statements prepared under previous GAAP. Accordingly,        selected IFRS financial information has not been        published for the year ended December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Euro per        Share or dollars per American Depositary Receipt (ADR),        as the case may be. From 2006, one ADR represents two Eni        shares. Previously, one ADR was equivalent to five Eni        shares. Data per ADR for 2003-2005 have been recalculated        accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (3) |   | 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 for each year presented        (see the table on page 5). Dividends per ADR for the        years 2003 through 2006 have been translated into U.S.        dollars for each year presented using the Noon Buying        Rate on payment dates, recorded on payment of the interim        dividend and the balance to the full-year dividend,        respectively. Eni started to pay an interim dividend in        2005. The dividend for 2007 was converted at the Noon        Buying Rate of the interim dividend (euro 0.60 per share)        payment date which occurred on October 25, 2007. The        balance of euro 0.70 per share payable on May 22, 2008        was translated at the Noon Buying Rate of December 31,        2007. On May 14, 2008, the Noon Buying Rate was $1.55 per        euro 1.00. |

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, 2003, 2004, 2005, 2006 and 2007. 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.

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

|   | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **2007** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

| Proved reserves of liquids of consolidated        subsidiaries at period end (mmBBL)           |   | 4,138    |   | 3,972    |   | 3,748    |   | 3,457    |   | 3,127    |
|------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
| *of which developed*                                                                           |   | *2,447*  |   | *2,471*  |   | *2,331*  |   | *2,126*  |   | *1,953*  |
| Proved reserves of liquids of equity-accounted        entities at period end (mmBBL)           |   |     |   | 36       |   | 25       |   | 24       |   | 142      |
| *of which developed*                                                                           |   |     |   |     |   | *19*     |   | *18*     |   | *26*     |
| Proved reserves of natural gas of consolidated        subsidiaries at period end (BCF)         |   | 18,008   |   | 18,278   |   | 17,501   |   | 16,897   |   | 16,549   |
| *of which developed*                                                                           |   | *10,224* |   | *10,501* |   | *11,159* |   | *10,949* |   | *10,967* |
| Proved reserves of natural gas of        equity-accounted entities at period end (BCF)         |   |     |   | 157      |   | 90       |   | 68       |   | 3,022    |
| *of which developed*                                                                           |   |     |   |     |   | *70*     |   | *48*     |   | *428*    |
| Proved reserves of hydrocarbons of consolidated        subsidiaries in mmBOE at period end (1) |   | 7,272    |   | 7,154    |   | 6,796    |   | 6,400    |   | 6,010    |
| *of which developed*                                                                           |   | *4,230*  |   | *4,300*  |   | *4,275*  |   | *4,032*  |   | *3,862*  |
| Proved reserves of hydrocarbons of        equity-accounted entities in mmBOE at period end (a) |   |     |   | 64       |   | 41       |   | 36       |   | 668      |
| *of which developed*                                                                           |   |     |   |     |   | *31*     |   | *27*     |   | *101*    |
| Reserve replacement ratio (2)                                                                  |   | 142      |   | 91       |   | 43       |   | 38       |   | 38       |
| Average daily production of liquids (KBBL/d)                                                   |   | 981      |   | 1,034    |   | 1,111    |   | 1,079    |   | 1,020    |
| Average daily production of natural gas        available for sale (mmCF/d)(3)                  |   | 3,174    |   | 3,171    |   | 3,344    |   | 3,679    |   | 3,819    |
| Average daily production of hydrocarbons        available for sale (KBOE/d)(3)                 |   | 1,536    |   | 1,586    |   | 1,693    |   | 1,720    |   | 1,684    |
| Hydrocarbon production sold (mmBOE)                                                            |   | 556.2    |   | 576.5    |   | 614.9    |   | 625.1    |   | 611.4    |
| Oil and gas production costs per BOE (4)                                                       |   |     |   |     |   | 5.59     |   | 5.79     |   | 6.90     |
| Profit per barrel of oil equivalent (5)                                                        |   |     |   |     |   | 12.20    |   | 14.97    |   | 14.03    |

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

----

| (a) |    | Mainly refers        to Eni’s share of proved reserves relating to three        Russian companies purchased by Eni as part of a bid        procedure for assets of bankrupt Yukos (Eni’s share        was 60%). Gazprom was granted an option to acquire a 51%        interest in these three entities. Should Gazprom exercise        its call option, Eni’s interest would be diluted to        approximately 30% and proved reserves that were booked in        connection with the acquisition would be reduced by        approximately 50%.                                                    |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) |    | Includes        approximately 747, 737, 760, 754 and 749 BCF of natural        gas held in storage in Italy at December 31, 2003, 2004,        2005, 2006 and 2007, respectively. See "Item 4        – Information on the Company – Exploration        & Production – Storage".                                                                                                                                                                                                                                                                                                       |
| (2) |    | 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 SFAS 69.        See the unaudited supplemental oil and gas information in        Notes 39 to the Consolidated Financial Statements.        Expressed as a percentage. |
| (3) |    | Natural gas        production volumes exclude gas consumed in operations        (151, 220, 251, 286 and 296 mmCF/d in 2003, 2004, 2005,        2006 and 2007, respectively).                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (4) |    | Consists of        production costs (costs incurred to operate and maintain        wells and field equipment including also royalties)        prepared in accordance with IFRS divided by actual        production net of production volumes of natural gas        consumed in operations. See the unaudited supplemental        oil and gas information in Notes 39 to the Consolidated        Financial Statements. Expressed in dollars. Data for the        years prior to 2005 are not available as they were        prepared in accordance with U.S. GAAP.                                                   |
| (5) |    | Results of        operations from oil and gas producing activities, divided        by actual sold production, in each case prepared in        accordance with IFRS to meet ongoing U.S. reporting        obligations. See the unaudited supplemental oil and gas        information in Notes 39 to the Consolidated Financial        Statements for a calculation of results of operations        from oil and gas producing activities. Expressed in        dollars. Data for the years prior to 2005 are not        available as they were in accordance with U.S. GAAP.                                         |

3 

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##### Table of Contents

**Selected Operating Information***continued*

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

|   | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **2007** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

| Sales of natural gas to third parties (6)                                                |   | 69.49  |   | 72.79  |   | 77.08  |   | 79.63  |   | 78.75  |
|------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Natural gas consumed by Eni (6)                                                          |   | 1.90   |   | 3.70   |   | 5.54   |   | 6.13   |   | 6.08   |
| Sales of natural gas of affiliates (Eni’s        share) (6)                         |   | 6.94   |   | 5.84   |   | 7.08   |   | 7.65   |   | 8.74   |
| Total sales and own consumption of natural gas        of the Gas & Power segment (6) |   | 78.33  |   | 82.33  |   | 89.70  |   | 93.41  |   | 93.57  |
| E&P natural gas sales in Europe and in the        Gulf of Mexico (7)                 |   | 5.03   |   | 4.70   |   | 4.51   |   | 4.69   |   | 5.39   |
| Worldwide natural gas sales                                                              |   | 83.36  |   | 87.03  |   | 94.21  |   | 98.10  |   | 98.96  |
| Transport of natural gas for third parties in        Italy (6)                           |   | 24.63  |   | 28.26  |   | 30.22  |   | 30.90  |   | 30.89  |
| Length of natural gas transport network in Italy        at period end (8)                |   | 30.1   |   | 30.2   |   | 30.7   |   | 30.9   |   | 31.1   |
| Electricity sold (9)                                                                     |   | 8.65   |   | 16.95  |   | 27.56  |   | 31.03  |   | 33.19  |
| Refinery throughputs (10)                                                                |   | 33.52  |   | 35.75  |   | 36.68  |   | 36.27  |   | 35.21  |
| Balanced capacity of wholly-owned refineries (11)                                        |   | 504    |   | 504    |   | 524    |   | 534    |   | 544    |
| Retail sales (in Italy and rest of Europe) (10)                                          |   | 14.01  |   | 14.40  |   | 13.72  |   | 12.48  |   | 12.65  |
| Number of service stations at period end (in        Italy and rest of Europe)            |   | 10,647 |   | 9,140  |   | 6,282  |   | 6,294  |   | 6,441  |
| Average throughput per service station (in Italy        and rest of Europe) (12)         |   | 2,109  |   | 2,488  |   | 2,479  |   | 2,470  |   | 2,486  |
| Petrochemical production (10)                                                            |   | 6.91   |   | 7.12   |   | 7.28   |   | 7.07   |   | 8.80   |
| Oilfield Services Construction and Engineering        order backlog at period end (13)   |   | 9,405  |   | 8,521  |   | 10,122 |   | 13,191 |   | 15,390 |
| Employees at period end (units)                                                          |   | 75,421 |   | 70,348 |   | 72,258 |   | 73,572 |   | 75,862 |

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

----

| (6)  |    | Expressed in        BCM.                                                                                                                                                                                                             |
|------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7)  |    | From 2006,        also includes E&P sales of volumes of natural gas        produced in the Gulf of Mexico.                                                                                                                       |
| (8)  |    | Expressed in        thousand kilometers.                                                                                                                                                                                             |
| (9)  |    | Expressed in        TWh.                                                                                                                                                                                                             |
| (10) |    | Expressed in        mmtonnes.                                                                                                                                                                                                        |
| (11) |    | Expressed in        KBBL/d.                                                                                                                                                                                                          |
| (12) |    | Expressed in        thousand liters per day. Refers to the Agip branded        network only, as in years up to 2005 Eni also sold        refined products on the "IP" branded network of        service stations in Italy. |
| (13) |    | The sum of        the order backlog of Saipem SpA and Snamprogetti SpA,        expressed in million euro.                                                                                                                            |

4

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##### Table of Contents

**Exchange Rates**

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

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

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

| Year ended December 31, |   |   |   |   |   |   |   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2003                    |   | 1.26   |   | 1.04   |   | 1.13   |   | 1.26   |
| 2004                    |   | 1.36   |   | 1.18   |   | 1.24   |   | 1.35   |
| 2005                    |   | 1.35   |   | 1.17   |   | 1.24   |   | 1.18   |
| 2006                    |   | 1.33   |   | 1.19   |   | 1.26   |   | 1.32   |
| 2007                    |   | 1.49   |   | 1.29   |   | 1.37   |   | 1.46   |

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

----

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

| November        2007                   |   | 1.49 |   | 1.44 |   | 1.47 |
|----------------------------------------|--------|------|--------|------|--------|------|
| December 2007                          |   | 1.48 |   | 1.43 |   | 1.46 |
| January        2008                    |   | 1.49 |   | 1.46 |   | 1.48 |
| February 2008                          |   | 1.52 |   | 1.45 |   | 1.52 |
| March 2008                             |   | 1.58 |   | 1.52 |   | 1.58 |
| April 2008                             |   | 1.60 |   | 1.56 |   | 1.56 |
| May 2008        (through May 14, 2008) |   | 1.55 |   | 1.54 |   | 1.55 |

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

Fluctuations in the exchange rate between the euro and thedollar affect the dollar equivalent of the euro price of theShares on the Telematico and the dollar price of the ADRs on theNYSE. Exchange rate fluctuations also affect the dollar amountsreceived by owners of ADRs upon conversion by the Depository ofcash dividends paid in euro on the underlying Shares. The NoonBuying Rate on May 14, 2008 was $1.55 per euro 1.00.

 

**Risk Factors**

> 
***Competition***

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

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

| • |   | In the Exploration &        Production business, Eni faces competition from both        international oil companies and state run oil companies        for obtaining exploration and development rights,        particularly outside of Italy, and developing and        applying new technology to maximize hydrocarbon recovery.        If Eni fails to obtain new exploration and development        acreage or to apply and develop new technology, its        growth prospects and future results of operations and        cash flows may be adversely affected. The current trend        of the industry towards a reduction of the number of        operators through takeovers or mergers may lead to        stronger competition from operators with greater        financial resources and a wider portfolio of development        projects.                                                                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Eni is increasingly in        competition with state run oil companies who are partners        of Eni in a number of oil and gas projects and titles in        the host countries where Eni conducts its upstream        operations. These state run 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, by this way reducing Eni’s profit        share. For example, Sonatrach, the Algeria national oil        company, is seeking to modify the contractual terms of        certain PSAs in which Eni is party to achieve a        redistribution of the tax burden of such PSAs. In fact,        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. If this negotiation results in a negative        outcome for Eni, the future profitability |

5

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##### Table of Contents

|   |   | of certain of Eni’s        PSAs in Algeria will be reduced. For more information on        this matter see "Item 4 – Exploration &        Production – Algeria". |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | In Eni’s Exploration        & Production activities in Libya, which accounted for        14% of its liquids production and 15% of its gas        production in 2007, the Company faces increasing        competition from other international oil and gas        companies. This competition has increased sharply in        recent years following the ending of economic sanctions        imposed on Libya by the United Nations and the U.S. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | In its domestic natural gas        business, Eni faces an increasingly strong competition        from both national and international natural gas        suppliers, also following the impact of the        liberalization of the Italian natural gas market        introduced by Legislative Decree No. 164/2000 which        provides for, among other things, the opening of the        Italian market to competition, limitations to the size of        gas companies relatively to the market and third party        access to infrastructures. Increasingly high levels of        competition in the Italian natural gas market could        possibly entail reduced natural gas selling margins (see        below). In addition, Legislative Decree No. 164/2000        grants the Italian Authority for Electricity and Gas        certain regulatory powers in matters of natural gas        pricing and access to infrastructures. Outside of Italy,        particularly in Europe, Eni 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. Furthermore a        number of large clients, particularly electricity        producers, in both the domestic market and other European        markets are planning to enter the supply market of        natural gas. 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 national        and other European markets for natural gas and reduce        Eni’s operating profit. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | In its domestic electricity        business, Eni competes with other producers and traders        from Italy or outside of Italy who sell electricity in        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,        political and institutional forces are urging greater        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. |
| • |   | Competition in the oilfield        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).                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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. The production ofoil and natural gas is highly regulated and is subject toconditions imposed by governments throughout the world in matterssuch as the award of exploration and production interests, theimposition of specific drilling and other work obligations,environmental protection measures, control over the developmentand abandonment of fields and installations, and restrictions onproduction. The oil and gas industry is subject to the payment ofroyalties and income taxes which tend to be higher than thosepayable in many other commercial activities.

> 
*Exploratory drilling efforts may not be successful*

Drilling for oil and gas involves numerous risks including therisk of dry holes or failure to find commercial quantities ofhydrocarbons. The costs of drilling, completing and operatingwells are often uncertain, and drilling operations may beunsuccessful as a result of a variety of factors, includingunexpected drilling conditions, pressure or irregularities informations, equipment failures or fires, blow-outs and variousforms of accidents, marine risks such as collisions and 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 thanonshore 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.Specifically, in the Caspian Region these complex environmentalconditions resulted in higher drilling expenses as discussedunder "Item 4 – Exploration & Production –Caspian Area". Failure to discover commercial quantities ofoil and natural gas could have an adverse impact on Eni’sfuture growth prospects, results of operations and liquidity.Because Eni plans to invest significant capital expenditures inexecuting high risk exploration projects, it is likely that Eniwill incur significant exploration and dry hole expenses. Highrisk exploration projects include projects executed in deep andultra-deep offshore and in new areas where the Company lacksinstalled production facilities. In particular Eni plans toexplore for oil and gas offshore, frequently in deep water or atdeep drilling depths, where operations are more difficult andcostly than on land or at shallower 

6

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depths and in shallower waters. Deep water operationsgenerally require a significant amount of time between adiscovery and the time that Eni can produce and market the oil orgas, increasing both the operational and financial risksassociated with these activities. In the case of the Company,risky exploration projects are conducted in the deep offshore ofthe Gulf of Mexico, Australia, Brazil, the Barents Sea, India,and offshore Ireland. In 2008, management plans to spendsignificant amounts of exploration expenditures in these areasthat may result in significant dry hole expenses.

In addition, lack of essential equipment such as a shortage ofdeep water rigs could delay operations or increase explorationcosts, thus increasing both operational and financial risks.Furthermore, failure to find additional commercial reserves couldreduce future production of oil and natural gas which is highlydependent on the rate of success of exploratory activity.

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

Eni is involved in several development projects for theproduction of hydrocarbon reserves, principally offshore.Eni’s future results of operations rely upon its ability todevelop and operate major projects as planned. Key factors thatmay affect the economics of 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 supplier        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, including the sharp rise in        procurement costs and costs for leasing third party        equipment or purchase services such as drilling rigs and        shipping that we have experienced in recent years as a        result of industry-wide cost inflation, resulting in cost        overruns;                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | 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 completion,the total amount of expenditures to be incurred and start up ofproduction from such projects and, consequently, actual returns.Finally, developing and market hydrocarbons reserves typicallyrequires several years after a discovery is made. This is becausea development project involving an array of complex and lengthyactivities, including appraising a discovery in order to evaluateits commerciality, sanctioning a development project and buildingand commissioning 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 increased budgeted expenditures and asubstantial delay in the scheduling of production start up on theKashagan field, where development is ongoing. Moreover, in July2007 these matters triggered a dispute with the relevant Kazakhauthorities. In January 2008, the Kazakh authorities and thepartners of the consortium North Caspian Sea Production SharingAgreement (NCSPSA), which conducts operations at the Kashaganfield, reached a settlement of this dispute. The parties haveagreed, among others, to the following terms: (i) theproportional dilution of the participating interests of all theinternational members of the Kashagan consortium, allowing thenational Kazakh company KazMunayGas’ stake to increasematching that of the four major shareholders at 16.81%, effectiveJanuary 1, 2008. The Kazakh partner will pay to the otherco-venturers an aggregate amount of U.S. $1.78 billion;(ii) a value transfer package to be implemented throughchanges to the terms of the NCSPSA, the amount of which will varyin proportion to future levels of oil prices. Eni will contributeto the value transfer package according to its new participatinginterest in the project. See "Item 4 – BusinessOverview – Exploration & Production". If theCompany is unable to develop and operate major projects asplanned, it may have a material adverse effect on our results ofoperations and liquidity.

7

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> 
*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. Eni’s provedreserves of subsidiaries declined by 6.1% in 2007 and by 5.8% in2006. In addition, Eni’s reserve replacement ratio was 38%in both 2007 and 2006, and 43% in 2005, meaning that the Companyreplaced less reserves than those produced. These reductions weregreatly impacted by lower reserves entitlements in theCompany’s Production Sharing Agreements and similarcontractual schemes. In accordance with such contracts, Eni isentitled to a portion of a field’s reserves, the sale ofwhich should cover expenditures incurred by the Company todevelop and operate the field. The higher the reference pricesfor Brent crude oil used to determine year-end amounts ofEni’s proved reserves, the lower the number of barrelsnecessary to cover the same amount of expenditures. See"Item 4 – Business Overview – Exploration &Production". Future oil and gas production is dependent onthe Company’s ability to access new reserves through newdiscoveries, application of improved techniques, success indevelopment activity, negotiation with countries and other ownersof known reserves and acquisitions. An inability to replacereserves could adversely impact future production levels andgrowth prospects, thus negatively affecting Eni’s futureresults of operations and financial condition.

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

Profits per BOE in the Exploration & Production segmentare being affected by a steady rising trend in lifting anddevelopment costs as a result of a number of industry-wideoperating factors, including: (i) the increasingly highpercentage of complex development projects in our portfolio (suchas those in deep and ultra deep waters and in harsh environments,such as with the Kashagan field). These projects in complexenvironments bear higher lifting and development costs ascompared to development projects located onshore and intraditional environments; (ii) continuing increases in thepurchase prices of raw materials and services due tosector-specific inflation; and (iii) an increasingly severeshortage of specialized resources (such as engineers and othervaluable technicians) and critical equipment (such as drillingrigs) especially in remote areas, leading to project delays andcost overruns. Eni’s management expects this rising trend inlifting and development costs to continue in the foreseeablefuture, resulting in a continuing pressure on our profit marginsper BOE.

> 
*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. Eni generally doesnot hedge its exposure to variability in future cash flows due tocrude oil price movements. As a consequence, Eni’sprofitability depends heavily on crude oil and natural gasprices.

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

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

Furthermore, lower oil and gas prices over prolonged periodsmay also adversely affect Eni’s results of operations andcash flows by: (i) reducing rates of return of developmentprojects either planned or being implemented, leading the Companyto reschedule, postpone or cancel development projects; (ii)reducing the Group’s liquidity, entailing lower resources tofund expansion projects, further dampening the Company’sability to grow future production and revenues; and (iii)triggering a review of future recoverability of theCompany’s carrying amounts of oil and gas properties, whichcould lead to the recognition of significant impairments charges.

8

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

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

| • |   | the quality of available        geological, technical and economic data and their        interpretation and judgment;                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | 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                                                                                                                                                                                                                                                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | changes in oil and natural        gas prices which could affect the quantities of        Eni’s proved reserves because 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 ultimately will 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*

In recent years, Eni has experienced adverse changes in taxregimes applicable to oil and gas operations in a number ofcountries where the Company conducts its upstream operations. Forexample, in 2006 changes were enacted in the rate of taxesapplicable to profit before taxation for upstream operations inthe United Kingdom and in Algeria. As a result, in its 2006profit and loss account Eni recorded an aggregate expense of euro526 million for higher taxes payable and adjustments to deferredtax liabilities.

Management believes that adverse changes are always possiblein the tax regimes of any country in which Eni conducts its oiland gas operations, regardless of the level of stability of thepolitical and legislative framework in each country. Theseadverse changes would translate into negative impacts onEni’s future results of operations and cash flows.Furthermore, the marginal tax rate in the oil and gas industrytends in the long-term to change in correlation with the price ofcrude oil which could make it difficult for Eni to translatehigher oil prices into increased net profit.

 

> 
***Political Considerations***

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

Substantial portions of Eni’s hydrocarbon reserves arelocated in countries outside the EU and North America, some ofwhich may be politically or economically less stable than EU orNorth American countries. At December 31, 2007, approximately 70%of Eni’s proved hydrocarbon reserves were located in suchcountries. Similarly, a substantial portion of Eni’s naturalgas supply comes from countries outside the EU and North America.In 2007, approximately 60% of Eni’s supplies of natural gascame from such countries. See "Item 4 – Gas & Power– Natural Gas Supplies". Adverse political, social andeconomic developments in any of those countries may affectEni’s ability to continue operating in an economic way,either temporarily or permanently, and Eni’s ability toaccess oil and gas reserves. Particularly Eni faces risks inconnection with the following issues: (i) lack ofwell-established and reliable legal systems and uncertaintiessurrounding enforcement of contractual rights; (ii) unfavorabledevelopments in laws, regulations and contractual arrangementsleading for example to expropriations or forced divestitures ofassets and unilateral cancellation or modification of contractualterms. A case in point was the expropriation of Eni’s assetsrelating to the Dación oilfield in Venezuela which occurred in2006, following the unilateral cancellation of a service contractregulating oil activities in this field by the Venezuelan stateoil company. For a discussion on developments for this matter see"Item 4 – Exploration & Production –Venezuela"; (iii) restrictions on exploration,production, imports and exports; (iv) tax or royalty increases(including retroactive claims); and (v) civil and social unrestleading to sabotages, acts of violence and incidents. Forexample, in 2007 we experienced continued social unrest inNigeria leading to a number of disruptions at certain Eni oilproducing facilities in the Country. As a consequence, our oiland gas production in the Country declined by an estimated amountof 25 KBOE/d from the previous year. In the first quarter of2008, the Company has experienced a slow ramp up of production.See "Item 4 – Exploration & Production – Oiland Natural Gas Reserves"; and "Item 5 – RecentDevelopments". While the occurrence of these events isunpredictable, it is likely that the occurrence of such eventscould cause Eni to incur material losses or facility disruptions,by this way adversely impacting Eni’s results of operationsand cash flows.

9

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> 
*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 United States ofAmerica impose sanctions on this country and may lead to theimposition of sanctions on any persons doing business in thiscountry or with Iranian counterparties.

Under the Iran Sanctions Act of 1996 (as amended,"ISA"), which implements sanctions against Iran withthe objective of denying it the ability to support acts ofinternational terrorism and fund the development or acquisitionof weapons of mass destruction, upon receipt by the U.S.authorities of information indicating potential violation of thisact, the President of the United States is authorized to start aninvestigation aiming at possibly imposing sanctions from asix-sanction menu against any person found in particular to haveknowingly made investments of U.S. $20 million or more in anytwelve-month period, contributing directly and significantly tothe enhancement of Iran’s ability to develop itshydrocarbons resources. Furthermore, the ISA envisages that thePresident of the United States is bound to impose sanctionsagainst any persons that knowingly contribute to certain militaryprograms of Iran, effective on June 6, 2006. Eni cannot predictinterpretations of, or the implementation policy of the U.S.Government under, ISA with respect to Eni’s current orfuture activities in Iran or other areas. Eni has incurredcapital expenditures in excess of U.S. $20 million in Iran ineach of the last 8 years. Management expects to continueinvesting in Iran yearly amounts in excess of that threshold inthe foreseeable future. Eni’s current activities in Iran areprimarily limited to carrying out residual development activitiesrelating to certain buy-back contracts it entered into in 2000and 2001 and no sanctions have ever been imposed on Eni’sactivities in the country.

Adding to Eni’s risks arising from this matter, a bill toamend and extend the extra-territorial reach of the economicsanctions imposed by the United States with respect to Iran hasbeen passed by the U.S. House of Representatives and may lead tothe passage of new laws in this area. Iran continues to bedesignated by the U.S. State Department as a State sponsoringterrorism. For a description of Eni’s operations in Iran see"Item 4 – Information on the Company – Exploration& Production – North Africa and Rest ofWorld". It is possible that in future years Eni’sactivities in Iran may be sanctioned under relevant U.S.legislation.

We are aware of initiatives by certain U.S. states and U.S.institutional investors, such as pension funds, to adopt orconsider adopting laws, regulations or policies requiringdivestment from, or reporting of interests in, companies that dobusiness with countries designated as state sponsors ofterrorism. These policies could adversely impact investment bycertain investors in our securities.

 

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

The petrochemical industry is subject to cyclical fluctuationsin demand, with consequential effects on prices and profitabilityexacerbated by the highly competitive environment of thisindustry. Eni’s petrochemical operations have been in thepast and may be adversely affected in the future by worldwideeconomic slowdowns and excess installed production capacity.Furthermore, Eni’s petrochemical operations face increasingcompetition from Asiatic companies and national oilcompanies’ petrochemical divisions which can leverage oncertain long-term competitive advantages in terms of loweroperating costs and feedstock purchase costs. In particular,Eni’s petrochemical operations are located mainly in Italyand Western Europe where regulatory framework and publicenvironmental sensitivity are generally more stringent than inother countries, especially Far East countries, resulting inhigher operating costs of our petrochemical operation compared tothe Company’s Asiatic competitors due to the need to complywith applicable laws and regulations in environmental and otherrelated matters.

 

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

Legislative Decree No. 164/2000 opened up the Italian naturalgas market to competition as from January 1, 2003. As a result,all customers in Italy are free to choose their supplier ofnatural gas. The decree, among other things, introduced ruleswhich have a significant impact on Eni’s activity, as theCompany is present in all the phases of the natural gas chain; inparticular:

| • |   | until December 31, 2010,        antitrust thresholds are in place for gas operators in        Italy as follows: (i) effective January 1, 2002,        operators are prohibited to transmit into the national        transport network imported or domestically produced gas        volumes higher than a preset share of Italian final        consumption. This share was 75% of total final        consumption in the first year of regulation, decreasing        by 2 percentage points per year to achieve a 61%        threshold in terms of final consumption by 2009 (this        share amounted to 65% in 2007); and (ii) effective        January 1, 2003, operators are forbidden from marketing        gas volumes to final customers in excess of 50% of        overall volumes marketed to final customers. Compliance        with these ceilings is verified annually by comparing        actual average shares reached by any operator in a given        three-year period for both volumes input and volumes        marketed to customers to average shares permitted by the        law for the same period. Actual shares are computed net        of losses (in the case of sales) and volumes of natural        gas consumed in own operations. Based on a bill passed by        the Italian upper house, Eni expects that these antitrust        thresholds will be renewed when they expire in 2010; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | access to natural gas        infrastructures is guaranteed to any natural gas operator        on the basis of certain procedures that must be        transparent and non discriminatory. Natural gas        infrastructures comprise high pressure, high sized        pipelines for transporting natural gas over long        distances, certain depleted fields to store natural gas,        regasification facilities and low pressure, small sized        pipelines for distributing natural gas to residential and        commercial clients located in urban centers. Tariffs to        use these infrastructures are set by the Authority for        Electricity and Gas, an independent governmental body. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni expects that a combination of regulatory effects andincreasing competition will limit growth prospects andprofitability of our natural gas business in Italy as discussedbelow.

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

Since the inception of the liberalization process in theItalian natural gas market, Eni has been experiencing risingcompetition in its natural gas business leading to lower sellingmargins due to the entry of new competitors into the market.Certain competitors of Eni are supplied by the Company itself,generally on the basis of long-term contracts. In fact, in orderto comply with the above mentioned regulatory thresholds relatingto volumes supplied through the national transport network andsales volumes in Italy, Eni sold part of its gas availabilityunder its take-or-pay supply contracts to third parties importingsaid volumes to Italy and marketing them to Italian customers.For more information on Eni’s take-or-pay contracts, see"Item 4 – Gas & Power – Natural gaspurchases".

Management expects Eni’s gas selling margins in Italy toremain under pressure in the foreseeable future consideringEni’s gas availability under its take-or-pay supplycontracts, build-up of Eni’s supplies to the above mentionedcompetitors and possibly new competitors entering the Italianmarket also in light of ongoing or planned capital projectsintended to expand the transport capacity of import pipelines toItaly and to build new import infrastructures, particularly LNGterminals. In fact, Eni is currently implementing its plans toupgrade its natural gas import pipelines mainly from Algeria andRussia to Italy to achieve an increase of 16 BCM/y in importcapacity reaching full operation in 2009, of which 10 BCM areexpected to come online in 2008 (3.3 BCM are already operating;6.6 BCM are expected to come online by year end). Further 3 BCM/yof new import capacity will be added by upgrading the GreenStreamgasline from Libya with expected start up in 2012. A largeportion of the new capacity deriving from Eni’s upgradingprojects has been or is planned to be sold to third parties. Inaddition, Eni expects a third party’s new LNG terminal withan 8 BCM/y capacity to commence operations by end of 2008.

Despite the fact that an increasing portion of natural gasvolumes purchased by Eni under its take-or-pay contracts isplanned to be marketed outside Italy, management believes that inthe long-term unfavorable trends in the Italian demand and supplyfor natural gas, also due to the possible implementation of allpublicly announced plans for the construction of new supplyinfrastructures, and the evolution of Italian regulations of thenatural gas sector, represent risk factors to the fulfillment ofEni’s obligations in connection with its take-or-pay supplycontracts and may result in a downward pressure on gas sellingmargins. Based on the foregoing, Eni’s future results ofoperations and cash flows might be adversely affected.

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

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

> 
*Eni is committed to increasing natural gas sales in    Europe. If Eni fails to achieve this target, future growth    prospects may be adversely affected. Furthermore, Eni may be    unable to fulfill its minimum take obligations under its    take-or-pay purchase contracts and this could adversely    impact 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 it has entered into with majornatural gas producing countries (namely Russia, Algeria, Libya,Norway and the Netherlands). Should Eni fail to increase naturalgas sales in Europe as planned due to poor strategy execution orcompetition, Eni’s future growth prospects, results ofoperations and cash flows might be adversely affected also takingaccount that Eni might be unable to fulfill its contractualobligations to purchase certain minimum amounts of natural gasbased on its take-or-pay purchase contracts currently in force.

> 
*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*

Over the medium term, Eni has scheduled its import volumes ofnatural gas to Italy based on the assumption to use the purchaseflexibility contractually provided by its take-or-pay purchasecontracts during periods in which 

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

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demand is expected to peak. These import programs are alsobased on the assumption that Eni will obtain the necessarytransport capacity on the Italian transport network. However,Eni’s planning assumptions are inconsistent with currentrules regulating the access to the Italian transportinfrastructures as provided for by the Network Code currently inforce which has been drafted in accordance with Decision No. 137of July 17, 2002 of the Authority for Electricity and Gas. Suchrules establish certain priority criteria for transport capacityentitlements at points where the Italian transport infrastructureconnects with international import pipelines (the so-called entrypoints to the Italian transport system). Specifically, Eni’sgas volumes purchased under take-or-pay contracts are entitled toa priority in the allocation of available transport capacity foramounts not exceeding average daily contractual volumes.Accordingly, Eni’s purchase volumes exceeding average dailycontractual volumes are not entitled to any priority in gainingaccess to the Italian transport infrastructures. The contractualflexibility represented by Eni’s right to uplift dailyvolumes larger than average daily contractual volumes under itstake-or-pay purchase contracts is used when demand peaks, usuallyduring the wintertime. In the event congestion occurs at entrypoints to the Italian transport network, under current regulationavailable transport capacity would be entitled firstly tooperators having a priority right, i.e. holders of take-or-paycontracts within the limits of average daily contractual volumes.Then any residual available transport capacity would be allocatedin proportion to all pending capacity requests. Eni considersDecision No. 137/2002 to be inconsistent with the overallrationale of the European natural gas regulatory framework,especially with reference to Directive 98/30/CE (superseded andreplaced by Directive 03/55/CE) and Legislative Decree No.164/2000, and has opened an administrative procedure to repealDecision No. 137/2002 before an administrative court. See"Item 4 – Regulation of the Italian HydrocarbonsIndustry – Gas & Power". Eni cannot rule out anegative outcome for this matter. However, management believesthat Eni’s results of operations and cash flows could beadversely affected should market conditions in light of currentregulatory constraints prevent Eni from selling its wholeavailability of natural gas purchased to fulfill its minimum takecontract obligations (e.g. in case a congestion occurs at theentry points of the Italian transport infrastructure, Eni wouldbe forced to uplift a smaller volume of gas than the minimumcontractual take). See "Item 5 – ManagementExpectations of Operations".

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

In 2003, Law No. 290 was enacted which prohibits Eni fromholding an interest higher than 20% in undertakings owningnatural gas transport infrastructure in Italy (Eni currentlyholds a 50.04% interest in Snam Rete Gas, which owns and managesapproximately 97% of the Italian natural gas transportinfrastructure). A decree is expected to be enacted by theItalian Prime Minister to establish the relevant provisions toimplement this mandatory disposal. The deadline for the disposal,which was initially scheduled for December 31, 2008, is to bere-scheduled in a 24-month term starting from the date in whichthis decree from the Italian Prime Minister becomes effective.Currently, Eni is unable to predict any deadline of thisdisposal.

On the basis of a joint inquiry conducted from 2003 throughJune 2004 on the Italian natural gas market, the Authority forElectricity and Gas and the Italian Antitrust Authority (the"Antitrust Authority") concluded that the overall levelof competition of the Italian natural gas market isunsatisfactory due to the dominant position held by Eni in manyphases of the natural gas chain. According to both the Authorityfor Electricity and Gas and the Antitrust Authority, the verticalintegration of Eni in the supply, transport and storage of gashas restricted the development of competition in Italynotwithstanding the antitrust ceilings introduced by LegislativeDecree No. 164/2000. It was further stated that the price ofnatural gas in Italy (in particular for the industrial sector) ishigher than in other European countries.

In November 2006, the Authority for Electricity and Gasconcluded an inquiry concerning the competitive behavior ofoperators selling natural gas to residential and commercialcustomers. This inquiry acknowledged that the retailing marketfor natural gas in Italy lacked a sufficient degree ofcompetition due to current commercial practices and the existenceof both entry and exit barriers. The Authority plans to implementmeasures to improve competition in this market.

In November 2007, the Italian Authority for Electricity andGas and the Italian Antitrust Authority opened an inquiry to gaininsight into the functioning of the natural gas storage activityin Italy, particularly with regard to lack of investments byoperators directed to expand capacity to store natural gas inItaly. Eni through its wholly-owned subsidiary Stogit Italia ownsalmost the entire storage capacity currently existing in Italy.

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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.

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

On the basis of certain legislative provisions, the Authorityfor Electricity and Gas ("the Authority") holds ageneral monitoring power on pricing in the natural gas market inItaly and the power to establish reference selling tariffs forsupply of natural gas to residential users taking into account,among other things, the public interest goal of containinginflationary pressure due to rising energy costs. The decisionsof the Authority on these matters may limit the ability of Eni topass an increase in the purchase cost of natural gas on to thefinal consumers. Specifically, upon finalization of a complexlengthy administrative procedure started in 2004 and closed inMarch 2007, the Authority: (i) set the raw material costcomponent in supplies to residential users consuming less than200,000 CM/y for the period from January 1, 2005 to June 30, 2006– at the same time imposing to Italian natural gas importers(including Eni) to renegotiate supply contracts with resellers toresidential users in order to take account of the impact of thesenew amounts; and (ii) confirmed the indexation mechanism forupdating the raw material cost component in supplies to abovementioned users in force from July 1, 2006, establishing inparticular that in case the international price of Brent crudeoil decrease below the 20 dollars per barrel threshold or exceedthe 35 dollars per barrel threshold the corresponding variationsof the raw material cost are only partially transferred on toresidential users of natural gas. Management cannot exclude thepossibility that in the future the Authority could implementsimilar measures that may negatively affect Eni results ofoperations and liquidity. For more information on this issue(particularly the Authority’s Decisions No. 248/2004,134/2006 and 79/2007) see "Item 4 – Regulation –Gas & Power".

 

> 
***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 2007, Eni accrued significant provisionsamounting to euro 130 million against pending antitrustproceedings before the European Commission. In previous years,Eni also recorded significant loss provisions against antitrustproceedings before the Italian Antitrust Authority, the Authorityfor Electricity and Gas and the European Commission. It ispossible that the Group may incur significant loss provisions infuture years relative to ongoing antitrust proceedings orpossible new proceedings. The Group is particularly exposed tothis risk in its natural gas and refining and marketingactivities due to its large presence in these markets in Italyand in Europe. See Note 28 to the Consolidated FinancialStatements for a full description of Eni’s main ongoingantitrust proceedings.

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. In particular, these laws and regulationsrequire the acquisition of a permit before drilling forhydrocarbons may commence, restrict the types, quantities andconcentration of various substances that can be released into theenvironment in connection with exploration, drilling andproduction activities, as well as refining, petrochemicals andother Group operations, limit or prohibit drilling activities incertain protected areas, provide for measures to be taken toprotect the safety of the workplace and health of communitiesinvolved by the company’s activities, and impose criminal orcivil liabilities for pollution resulting from oil, natural gas,refining, petrochemical and other Group’s operations.

These laws and regulations may also restrict emissions anddischarges to surface and subsurface water resulting from theoperation of natural gas processing plants, petrochemical plants,refineries, pipeline systems and other facilities owned by Eni.In addition, Eni’s operations are subject to laws andregulations relating to the production, handling, transportation,storage, disposal and treatment of waste materials.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, particularly theimplementation of increasingly strict measures decided at bothinternational and country level to reduce greenhouse gasemissions.

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> 
*Eni’s results of operations and financial    condition are exposed to risks deriving from environmental,    health and safety accidents and liabilities*

Risks of environmental, health and safety incidences andliabilities are inherent in many of Eni’s operations andproducts. Notwithstanding management’s belief that Eniadopts high standards to ensure safety of its operations, it isalways possible that incidents like blow-outs, spillovers,contaminations and similar events could occur that would resultin damage to the environment, workers and communities. Inparticular, Eni is performing a number of remedial actions torestore certain industrial sites which were contaminated as aresult of the Group’s activities in previous years.Management expects other remedial actions to be implemented infuture years. 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 incurredtaking into account the probability that new and stricterenvironmental laws might be implemented and third parties’claims. Notwithstanding this, management believes that it ispossible that in the future Eni may incur significantenvironmental expenses and liabilities in addition to the amountsalready accrued due to: (i) the chance of as yet unknowncontamination; (ii) the results of on-going surveys or surveys tobe carried out on the environmental status of certain Eni’sindustrial sites as required by the applicable regulations oncontaminated site; and (iii) the possibility that new litigationmight arise.

 

> 
***Legal Proceedings***

Eni is party to a number of civil actions and administrativeproceedings arising in the ordinary course of the 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.

 

> 
***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 movements in crudeoil prices on margins of refined and petrochemical products.

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

Overall, lower oil prices have a net adverse impact onEni’s results of operations. The effect of lower oil priceson Eni’s average realizations 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 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 these changes. Wholesale margins in the Gas& Power business are substantially independent fromfluctuations in crude oil prices as purchase and selling pricesof natural gas are contractually indexed to prices of crude oiland certain refined products according to similar pricingschemes. However, quarterly performance and year-to-yearcomparability of results of Eni’s natural gas business maybe somewhat affected by the indexation mechanism of the rawmaterial component in gas supplies to residential customers andcertain resellers to residentials in Italy in accordance withapplicable regulations from the Italian Authority for Electricityand Gas as outlined above in the risk factor describing the"Liberalization of the Italian Natural Gas Market".Specifically, this indexation mechanism provides a certain timelag between movements in the price of crude oil and the relatedadjustment to the selling price of natural gas. For a detaileddiscussion of this indexation mechanism in Italy see "Item 4– Regulation – Gas & Power – Natural gasprices".

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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*

The results of operations of Eni’s Refining &Marketing segment are substantially affected by changes inEuropean refining margins which reflect changes in relativeprices of crude oil and refined products as outlined above.Furthermore, Eni’s realized margins are also affected byrelative price movements of heavy crude qualities vs. light crudequalities. In 2007, Eni’s refining margins declinedsignificantly compared to 2006 due to a weak trading environmentexacerbated by the circumstances that price differentials betweenheavy crudes and light ones narrowed sharply resulting in asubstantial reduction in the profitability of complexthroughputs.

> 
*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 changes in oilprices which influence changes in purchase costs ofpetroleum-based feedstock. 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. In 2007, the profitability of Eni’spetrochemical segment was significantly affected by lower sellingmargins for commodity petrochemical products due to higherpurchase costs for oil-based feedstock that were not fullytransferred to selling prices of products. Management’soutlook for 2008 is also challenging, and management does notexpect any significant improvement in the trading environmentfrom 2007 and possibly a further contraction in margins onpetrochemical products.

 

***Risks from Acquisitions***

Eni constantly monitors the oil and gas market in search ofopportunities to acquire individual assets or corporations inorder to achieve its growth targets or complement its assetportfolio. Acquisitions entail an execution risk – the riskthat the acquirer will not be able to effectively integrate thepurchased assets so as to achieve expected synergies. Inaddition, in the current high oil price environment, acquisitionsentail a financial risk – the risk of not being able torecover the purchase costs of acquired assets, in case aprolonged decline in the market prices of oil and natural gasoccurs. We also incur unanticipated costs or assume unexpectedliabilities and losses in connection with companies or assets weacquire. If the integration and financial risks connected toacquisitions materialize our financial performance may beadversely affected.

 

***Exchange Rates***

Movements in the exchange rate of the euro against the U.S.dollar can have a material impact on Eni’s results ofoperations. Prices of oil, natural gas and refined productsgenerally are denominated in, or linked to, U.S. dollars, while asignificant portion of Eni’s expenses are denominated ineuros. Similarly, prices of Eni’s petrochemical products aregenerally denominated in, or linked to, the euro, whereasexpenses in the 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 indollar-denominated expenses. The Exploration & Productionsegment is particularly affected by movements in the U.S. dollarvs. the euro exchange rates. In 2007, Eni’s operating profitin this business segment declined by an estimated amount of euro1.4 billion due to a 9.2% depreciation of the U.S. dollar versusthe euro. Based on current trends in the U.S. dollar vs. the euroexchange rates, management expects the operating profit of theExploration & Production segment to be negatively affected in2008.

 

> 
***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.In 2007, operating profit in the Gas & Power business wasnegatively affected by unusually mild winter weather resulting inlower gas sales from a year ago.

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.

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> 
***Interest Rates***

Interest on Eni’s finance debt is primarily indexed at aspread to benchmark rates such as the Europe Interbank OfferedRate, "Euribor", and the London Interbank Offered Rate,"Libor". As a consequence, movements in interest ratescan have a material impact on Eni’s finance expense inrespect to its finance 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; theavailability of new informative elements, variations in economicconditions such as prices, significant factors (e.g. removaltechnologies and costs) and the final outcome of legal,environmental or regulatory proceedings. See "Item 5 –Critical Accounting Estimates".

> 
 

 

**Item 4. INFORMATION ON THE COMPANY**

**History and Development of the Company**

Eni SpA with its consolidated subsidiaries is engaged in theoil and gas, electricity generation, petrochemicals, oilfieldservices and engineering industries. Eni has operations in about70 countries and 75,862 employees as of December 31, 2007.

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

Eni’s registered head office is located at PiazzaleEnrico Mattei 1, Rome, Italy (telephone number: +39-0659821). Enibranches are located in:• San Donato Milanese (Milan), Via Emilia, 1; and

• San Donato Milanese (Milan), Piazza Ezio Vanoni, 1.

Internet address: www.eni.it.

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

Eni’s principal segments of operations are describedbelow.

Eni’s Exploration & Production segment involves oiland natural gas exploration and field development and production,as well as LNG operations in 36 countries, including Italy, theUK, Norway, Libya, Egypt, Angola, Nigeria, Congo, the U.S.,Kazakhstan, Russia and Australia. In 2007, Eni’s productionof oil and natural gas amounted to 1,684 KBOE/d on anavailable-for-sale basis. As of December 31, 2007, Eni’sproved reserves of subsidiaries stood at 6,010 mmBOE; Eni’sshare of reserves of equity-accounted entities amounted to 668mmBOE. In 2007, Eni’s Exploration & Production segmentreported net sales from operations (including inter-segmentsales) of euro 27,278 million and operating profit of euro 13,788million.

Eni’s Gas & Power segment involves supply, transport,distribution and marketing of natural gas, as well as of LNG.This segment also includes the activity of power generation thatenables Eni to extract further value from gas, diversifying itscommercial outlets. In 2007, Eni’s worldwide sales ofnatural gas amounted to 98.96 BCM, including 5.39 BCM of gassales made directly by the Eni’s Exploration &Production segment in Europe and the U.S.. Sales in Italyamounted to 56.13 BCM, while sales in European markets were 35.02BCM that included 10.67 BCM of gas sold to certain importers toItaly. Through its 50.04 per cent-owned subsidiary Snam Rete Gas,Eni operates an Italian network of high and medium pressurepipelines for natural gas transport that is approximately31,081-kilometer long, while outside Italy Eni holds capacityentitlements on a network of European pipelines extending forapproximately 5,000 kilometers made up of high pressure pipelinesto import gas from Russia, Algeria, Libya and North Europeproduction basins to European markets. Eni, through its 100percent-owned 

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subsidiary Italgas and other subsidiaries, is engaged innatural gas distribution activity in Italy serving 1,318municipalities through a low pressure network consisting ofapproximately 48,750 kilometers of pipelines as of December 31,2007. Eni produces electricity and steam at its operated sites ofLivorno, Taranto, Mantova, Ravenna, Brindisi, Ferrera Erbognoneand Ferrara with a total installed capacity of approximately 4.9GW as of December 31, 2007. In 2007, sales of electricity totaled33.19 TWh. Eni operates a re-gasification terminal in Italy andholds indirect interest or capacity entitlements in a number ofLNG facilities in Europe, Egypt and in certain projects underconstruction in the U.S.. In 2007, Eni’s Gas & Powersegment reported net sales from operations (includinginter-segment sales) of euro 27,633 million and operating profitof euro 4,127 million.

Eni’s Refining & Marketing segment involves refiningand marketing of petroleum products mainly in Italy and in therest of Europe. In 2007, processed volumes of crude oil and otherfeedstock amounted to 37.15 mmtonnes and sales of refinedproducts were 50.15 mmtonnes, of which 28.05 mmtonnes in Italy.Retail sales of refined product at operated service stationsamounted to 12.65 mmtonnes including Italy and the rest ofEurope. In 2007, Eni’s retail market share in Italy throughits Agip-branded network of service stations was 29.2%. In 2007,Eni’s Refining & Marketing segment reported net salesfrom operations (including inter-segment sales) of euro 36,401million and operating profit of euro 729 million.

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 2007, Eni sold5.5 mmtonnes of petrochemical products. In 2007, Eni’sPetrochemical segment reported net sales from operations(including inter-segment sales) of euro 6,934 million and anoperating profit of euro 74 million.

Eni’s oilfield services, construction and engineeringactivities are conducted through its 43 per cent-owned subsidiarySaipem and Saipem’s controlled entities. Activities involveoffshore construction, particularly fixed platform installation,subsea pipe laying and floating production systems and onshoreconstruction. Offshore and onshore drilling services andengineering and project management services are also provided tothe oil and gas, refining and petrochemical industries. In 2007,Eni’s Engineering & Construction segment reported netsales from operations (including intragroup sales) of euro 8,678million and operating profit of euro 837 million.

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

 

> 
***Strategy***

Eni’s strategy is to grow the Company’s mainbusinesses over both the medium and the long-term, with improvingprofitability. This strategy is designed to create long-termshareholder’s value particularly through significantdividend distributions. Over the next four-years, Eni plans toexecute a capital expenditure program amounting to euro 49.8billion to support organic growth. Eni plans to fund this capitalexpenditure program by means of cash flows provided by operatingactivities. Over the next four-years, the Company expects todistribute to its shareholders annual amounts of dividends inline with the current level in real terms (See "Item 8– Dividends"). Eni plans to allocate cash flowsprovided by operating activities in excess of capitalexpenditures and dividend payments to continue its program ofshare repurchases, while at the same time maintaining a strongbalance sheet. See "Item 5 – Management Expectations ofOperations".

Eni’s strategy in its Exploration & Productionoperations is to grow production leveraging on development ofassets in its portfolio and the integration of the assetsacquired in 2007, including Burren Energy Plc that was acquiredin January 2008. Eni plans to achieve a production growth rate of4.5% on average over the 2008-2011 period, under Eni’s Brentprice scenario of 64 U.S. dollar per barrel in 2008, decreasingto 55 U.S. dollar per barrel in 2011 (See "Item 5 –Management Expectations of Operations"). High oil pricesrepresent a risk to the achievement of the Company’s plannedproduction target due to Eni’s exposure to PSAs wherebyhigher oil prices result in lower production entitlements. On May14, 2008 Brent price was 121.14 U.S. dollar per barrel. For adescription of Eni’s production volume sensitivity to oilprices see "Item 5 – Management Expectations ofOperations". Management will continue to evaluateopportunities to increase production through acquisitions. Eniintends to pay special attention to reserve replacement in orderto secure the medium to long-term sustainability of its business.

In its Gas & Power activities, Eni intends to grow naturalgas sales in the international market, preserve the profitabilityof the Italian marketing business, effectively manage regulatedbusinesses, and develop a global LNG business. Eni targetsworldwide gas sales of 110 BCM in 2011, including E&P salesin the North Sea and the U.S.. In particular, Eni plans toachieve an annual average growth rate of 9% in internationalsales in the four-year period 2008 to 2011. Eni plans to grow itsinternational sales mainly: (i) in Europe, where Eni expects toexpand sales in those markets where its presence is alreadyestablished – i.e. the Iberian Peninsula, Germany, Turkey,France and the UK – leveraging on the Company’scompetitive advantages given by gas availability, access toinfrastructures and long-term relationships with the mostimportant producing countries (mainly Russia, Algeria and Libya);and (ii) in the U.S. where Eni plans to grow sales byleveraging on a number of LNG projects that are currently being 

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executed. In Italy, Eni plans to implement a marketing planaiming at preserving the profitability of its Italian operationsagainst an expected increase in competition. Management forecastssale volumes to remain stable compared to current levels. Eniintends to focus the most profitable customer segments, upgradethe commercial offer by tailoring pricing and services tocustomers’ specific needs and leverage the full potential ofthe combined supply of gas and electricity ("dualoffer"). A strong focus will be devoted to reducingmarketing expenses.

In its Refining & Marketing activities, Eni intends toimprove profitability through the following steps. In itsrefining activities, Eni plans to implement a number of capitalprojects designed to upgrade its refineries with the aim of: (i)increasing conversion capacity so as to obtain a higher yield ofmiddle distillates; (ii) enhancing flexibility in order toprocess low-quality crude that is typically discounted in themarket-place; and (iii) reducing operating costs. In marketing,Eni intends to strengthen its leadership position in the Italianretail market by improving the quality of the offer through highstandards of service, the marketing of premium fuels, tailoredpromotional initiatives to retain customers and advancedconvenience formats. Eni will also continue to develop sales in anumber of selected markets in the rest of Europe.

In its Engineering & Construction activities, Eni aimsdeveloping and expanding its geographical reach and technicalcharacteristics of its world class fleet, by capturingopportunities arising from a growing market in drilling andoilfield services sectors. In order to achieve this, managementplans to leverage on Eni’s strong position in faster growingmarkets and its consolidating relationships with major companiesand National Oil Companies.

In technological research and innovation activities, Eni plansto implement significant capital expenditures amounting to euro1.7 billion to develop such technologies that management believesmay ensure competitive advantages in the long-term. Eni plans tocontinue developing ongoing programs focused on reducing costs tofind and recover hydrocarbons, developing clean fuels, upgradingheavy crudes (in particular the EST project), monetizing naturalgas through projects such as high pressure high distance gastransmission (TAP) and Gas to Liquids (GTL), and protecting theenvironment by investing in the fields of renewable sources ofenergy and reduction of GHG emissions.

 

> 
***Significant business and Portfolio Developments***

The significant business and portfolio developments thatoccurred in 2007 and to date in 2008 were the following:

| • |   | In April 2007, as part of        the liquidation procedure of bankrupt Russian company        Yukos, Eni purchased a 60% interest in OAO Arctic Gas Co,        ZAO Urengoil Inc and OAO Neftegaztechnologia which are        engaged in the development of hydrocarbon reserves,        mainly consisting of natural gas reserves. Eni’s        share of proved reserves purchased in connection with        this transaction amounted to 617 mmBOE. Eni also acquired        20% of OAO Gazprom Neft. Net cash consideration for this        transaction amounted to U.S. $5 billion (equivalent to        euro 3.73 billion). Gazprom was granted an option to        acquire a 51% interest in those three gas companies and        the entire 20% interest in OAO Gazprom Neft. Should        Gazprom exercise its call option to purchase a 51%        interest in those gas companies, Eni’s interest        would be diluted to approximately 30% and proved reserves        that were booked in connection with the acquisition would        be reduced by approximately 50%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In May 2007, Eni finalized        the purchase of proved and unproved oil and gas        properties onshore Congo from the French company Maurel        & Prom for cash consideration of U.S. $1,434 million        (equivalent to approximately euro 1 billion). Acquired        properties brought in an incremental production of 17,000        BOE/d; additions to Eni’s proved reserves amounted        to 33 mmBOE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | In July 2007, Eni closed the        acquisition of oil and gas properties from U.S. Company        Dominion Resources in the Gulf of Mexico for total cash        consideration of U.S. $4,757 million (equivalent to euro        3.5 billion). Acquired properties, 60% of which operated,        contributed an incremental production of 75,000 BOE/d;        additions to Eni’s proved reserves amounted to 123        mmBOE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | In October 2007, Eni signed        a major agreement with NOC, the Libyan National Oil        Corporation. The agreement provides for the extension of        the duration of Eni’s mineral rights in Libya, for        oil properties until 2042 and for gas properties until        2047, and the launch of large projects aiming at        monetizing substantial gas reserves and overhauling        offshore exploration activities. Relevant agreements will        be effective from January 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | In November 2007, Eni        announced the terms of a recommended cash offer to        acquire the entire issued share capital of the UK-based        oil company Burren Energy Plc. This acquisition closed in        January 2008. Total cash consideration amounted to        approximately euro 2.3 billion, of which euro 0.6 billion        were spent in 2007. Burren holds producing assets in        Congo and Turkmenistan flowing at a rate of over 25,000        BOE/d and partners with Eni in the Congolese assets that        Eni bought from Maurel & Prom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

In addition, in 2007 Eni closed the followingtransactions:

| • |   | In April 2007, Eni acquired        an additional interest in the Nikaitchuq field in Alaska,        thus achieving a 100% interest. Production start-up is        expected by end of 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | In June 2007, a gas sale        agreement was signed between the consortium conducting        operations at the Karachaganak field (Eni is co-operator        with a 32.5% stake) and KazRosGaz, a joint venture        established by the Kazakh and Russian companies        KazMunaiGaz and Gazprom. This agreement lays the        foundations for the development of field gas reserves. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In June 2007, Eni signed a        framework agreement with Gazprom to build the South        Stream pipeline system which is expected to import into        Europe volumes of natural gas produced in Russia across        the Black Sea.                                                                                                                                                     |

| • |   | In June 2007, Eni acquired a        27.8% interest in Altergaz, the main independent operator        in the French gas market. Eni plans to support Altergaz        development in the French retail and small enterprises        segments through 10 year supply contract for 1.3 BCM/y.             |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In September 2007, Eni        purchased a 16.11% stake in the Czech Refining Company,        increasing Eni’s ownership interest to 32.4% and        equal to a refining capacity of 2.6 mmtonnes/y.                                                                                             |
| • |   | In October 2007, Eni        purchased 102 retail fuel stations from ExxonMobil        Central Europe located in Czechia, Slovakia and Hungary        and related additional marketing activities.                                                                                                     |
| • |   | In November 2007, Eni        purchased a 13.6% interest in the Angola LNG Ltd        Consortium (A-LNG) committed to build an LNG plant. The        plant will be designed with a processing capacity of 1        BCF/d of natural gas and produce 5.2 mmtonnes/y of LNG        and related products. |

Recent developments are described below.

| • |   | In January 2008 the        international partners of the North Caspian Sea        Production Sharing Agreement (NCSPSA) Consortium and the        Kazakh authorities signed a Memorandum of understanding        to settle a dispute commenced in August 2007 regarding        conditions and rights for developing and exploiting the        Kashagan field. For further details on this transaction        see "Item 4 – Exploration & Production        – Kazakhstan". |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In February 2008, Eni and        the Venezuelan authorities reached a final settlement        over the dispute regarding the expropriation of the        Dación field that occurred in April 2006. Under the        terms of the settlement, Eni will receive cash        compensation in line with the carrying value of the        expropriated asset.                                                                                                                                     |
| • |   | In February 2008, Eni and        the Venezuelan State oil company PDVSA signed a strategic        agreement for the development of the Junin Block 5        located in the Orinoco oil belt. According to        management’s estimates, this block covering a gross        acreage of 670 square kilometers holds an important        resource potential.                                                                                                                                   |

In 2007, capital expenditures amounted to euro 10.6 billion,of which 84.7% related to the Exploration & Production,Gas & Power and Refining & Marketing businesses, andprimarily related to: (i) the development of oil and gas reserves(euro 4,788 million) deployed predominantly in Kazakhstan, Egypt,Angola, Italy and Congo, and exploration projects (euro 1,659million) particularly in the Gulf of Mexico, Egypt, Norway,Nigeria and Brazil; (ii) development and upgrading of Eni’snatural gas transport and distribution networks in Italy (euro886 million) as well as upgrading of natural gas import pipelinesto Italy (euro 253 million); (iii) the ongoing construction ofcombined cycle power plants (euro 175 million); (iv) projectsdesigned to upgrade the conversion capacity and flexibility ofEni’s refineries, including construction of a newhydrocracking unit at the Sannazzaro refinery, and to build andupgrade service stations (totaling euro 979 million); and (v) theupgrading of the fleet used in the Engineering & Constructionsegment (euro 1,410 million).

In 2007, Eni’s acquisitions amounted to euro 9.7 billionand mainly related to: (i) a 60% interest in three Russian gascompanies as part of the liquidation procedure of bankruptRussian company Yukos. Through the same transaction Eni alsopurchased a 20% stake in the oil and gas company OAO GazpromNeft. Gazprom was granted a call option to purchase a 51%interest in those three gas companies and the 20% stake in OAOGazprom Neft; (ii) the purchase of upstream assets in theGulf of Mexico; (iii) the purchase of upstream assets onshoreCongo; (iv) the purchase of a 24.9% interest in BurrenEnergy; (v) the acquisition of a further 16.11% stake in theCeska Rafinerska in the Czech Republic increasing Eni’sownership interest to 32.4%; (vi) the purchase of 102 retail fuelstations and related marketing assets located in the CzechRepublic, Slovakia and Hungary; and (vii) the purchase of a 13.6%stake in the Angola LNG consortium.

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

In 2005, capital expenditures amounted to euro 7.4 billion, ofwhich 91% related to the Exploration & Production, Gas& Power and Refining & Marketing segments, and wasprimarily related to: (i) the development of oil and gas reserves(euro 3,952 million), in particular in Kazakhstan, Libya, Angola,Italy and Egypt, exploration 

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projects (euro 656 million) and the purchase of proved andunproved property (euro 301 million); (ii) upgrading Eni’snatural gas transport and distribution networks in Italy (euro825 million); (iii) the continuation of construction of combinedcycle power plants (euro 239 million); (iv) actions for improvingflexibility and yields of refineries, including the completion ofconstruction of the tar gasification plant at the Sannazzarorefinery, and the upgrade of the refined product distributionnetwork in Italy and in the rest of Europe (overall euro 656million); and (v) upgrading vessels and other equipment andfacilities in Kazakhstan and West Africa in the oilfield servicesand construction business (euro 346 million).

 

 

**BUSINESS OVERVIEW**

**Exploration & Production**

Eni’s Exploration & Production segment involves oiland natural gas exploration and field development and production,as well as LNG operations, in 36 countries, including Italy, theUK, Norway, Libya, Egypt, Angola, Nigeria, Congo, the U.S.,Kazakhstan, Russia and Australia. In 2007, Eni produced 1,684KBOE/d on an available-for-sale basis. As of December 31, 2007,Eni’s proved reserves of subsidiaries stood at 6,010 mmBOE;Eni’ share of reserves of equity-accounted entities amountedto 668 mmBOE.

Eni’s strategy in its Exploration & Productionoperations is to increase production leveraging on thedevelopment of assets in portfolio and the integration of theassets acquired in 2007, including Burren Energy Plc that wasacquired in January 2008. Eni plans to achieve a productiongrowth rate of 4.5% on average over the 2008-2011 period, undercertain trading environment assumptions (See "Item 5 –Management Expectations of Operations"). High oil pricesrepresent a risk factor to the achievement of the Company’splanned production target due to Eni’s exposure to PSAswhereby higher oil prices result in lower productionentitlements. On May 14, 2008, Brent price was 121.14 U.S. $/BL.A description of Eni’s production volume sensitivity to oilprices is disclosed under "Item 5 – ManagementExpectations of Operations". Future growth will be driven bythe development of new projects located mainly in the keyproducing basins of North and West Africa and the Caspian region,and the contribution of long-life fields, including Kazakhstan,Libya, Congo, Nigeria and Italy. Management will continue toevaluate opportunities to increase production through thepurchase of corporations or individual assets. Eni intends to payspecial attention to reserve replacement in order to guaranteethe medium-to long-term sustainability of its business. Eniintends to optimize its portfolio of development properties byfocusing on areas where its presence is established, seeking newopportunities and divesting marginal assets. Eni also intends todevelop its LNG business in order to monetize its large base ofgas reserves mainly in North and West Africa.

In exploration activities, Eni intends to concentrateresources in well established areas of presence whereavailability of production facilities, existing competencies andlong-term relationships with host countries will enable Eni toreadily put in production discovered reserves, reducing thetime-to-market and capturing synergies. Approximately 70% ofplanned capital expenditures will be directed to such core areas(located mainly in the United States, Egypt, Libya, Nigeria,Angola, Italy, Norway and Congo). Eni also plans to selectivelypursue high risk/high reward opportunities arising from expansionin areas with high mineral potential. Eni expects to purchase newexploration permits and to divest or exit marginal or nonstrategic ones.

Eni plans to improve profitability of its operations byimplementing operating solutions with lower operating costs andexploiting synergies.

In order to execute these strategies, Eni intends to investapproximately euro 25.1 billion on reserve development and fieldoptimization and euro 4.7 billion on exploration projects overthe next four-year period. Further euro 3.7 billion will be spentto upgrade natural gas storage sites in Italy and to execute LNGand transport projects through equity-accounted entities.

 

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

Eni has always exercised rigorous control over the booking ofproved reserves. The Reserve Department of the Exploration &Production segment, reporting directly to the General Manager, isentrusted with the task of continuously updating theCompany’s guidelines concerning reserve evaluations andmonitoring the periodic quantification process. Companyguidelines follow Regulation S-X Rule 4-10 of the U.S. Securitiesand Exchange Commission (SEC) as well as, on specific issues notregulated by rules, the consolidated practice recognized byqualified reference institutions. Company guidelines have beenreviewed by DeGolyer and MacNaughton (D&M), an independentpetroleum engineering company, which has certified theircompliance with applicable SEC rules. D&M has also statedthat the company guidelines regulate situations for which the SECrules are less precise, providing a reasonable interpretation inline with the generally accepted practices in internationalmarkets. When participating in exploration and productionactivities operated by other entities, Eni also estimates itsproved reserves on the basis of the above guidelines.

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The process for evaluating reserves involves: (i) businessunit managers (geographic units) and Local Reserve Evaluators(LRE), who perform the evaluation and classification of reservesincluding estimates of production profiles, capital expenditure,operating costs and costs related to asset retirementobligations; (ii) geographic area managers at head officeschecking evaluations carried out by business unit managers; and(iii) the Reserve Department, which provides independent reviewsof the fairness and correctness of classifications carried out bybusiness units and aggregates worldwide reserve data andcalculates equity volumes. Moreover, the Reserve Department hasthe responsibility to ensure the periodic certification processof reserves, to perform economic evaluation of reserves and toupdate continuously the Company guidelines on reserves evaluationand classification.

Since 1991, Eni has requested qualified independent oilengineering companies to carry out an independent evaluation2of its proved reserves on a rotational basis. Eni believes theseindependent evaluators to be experienced and qualified in themarketplace. In the preparation of their reports, theseindependent evaluators relied, without independent verification,upon information furnished by Eni with respect to propertyinterest, production, current cost of operation and development,agreements relating to future operations and sale, prices andother factual information and data that were accepted asrepresented by the independent evaluators. This information wasused by Eni in determining its proved reserves and included log,directional surveys, core and PVT (Production Volume Temperature)analysis, maps, oil/gas/water monthly production/injection dataof wells, reservoir, and field; field studies, reservoir studies;engineers comments relative to field performances, reservoirperformances, development programs, work programs etc.; budgetdata for each field, long range development plans, future capitaland operating costs, actual prices received from hydrocarbonsales, instructions on future prices, and other pertinentinformation to calculate NPV for the fields required to undertakean independent evaluation. Accordingly, Eni believes that thework performed by the independent evaluators is to be consideredan evaluation of Eni’s proved reserves as opposed to adetermination. We also note that the work performed in evaluatingour reserves may not be the same work that the independentevaluators perform when evaluating other companies’reserves. Notwithstanding the above, the fact that theindependent evaluations achieved the same results as those of theCompany for the vast majority of fields support themanagement’s confidence that the Company’s bookedreserves meet the regulatory definition of proved reserves andare reasonably certain to be produced in the future.Additionally, for those fields where a discrepancy arose, theCompany has adopted the reserve estimate indicated by theindependent evaluators whenever the latter was lower than theCompany’s estimate. In any case, those differences were notsignificant.

In 2007, a total of 1.8 BBOE of proved reserves ofsubsidiaries have been evaluated, representing approximately 30%of Eni’s total proved reserves of subsidiaries at December31, 2007. In the 2005-2007 three-year period, 64% of Eni’stotal proved reserves of subsidiaries were subject to independentevaluations. As at December 31, 2007 the most important ofEni’s properties which were not subject to an independentevaluation were: Kashagan (Kazakhstan), Bayu Undan (Australia),Cerro Falcone and Monte Alpi-Monte Enoc (Italy). In 2007,Eni’s proved reserves purchased in Russia have also beenevaluated as amounting to 617 mmBOE. These reserves related tothe acquisition of a 60% interest in three equity-accountedRussian gas companies.

Eni’s proved reserves of subsidiaries at December 31,2007 totaled 6,010 mmBOE (oil and condensates 3,127 mmBBL;natural gas 16,549 BCF) representing a decrease of 390 mmBOE, or6.1%, from December 31, 2006. Additions to proved reserves bookedby Eni’s subsidiaries in 2007 were 81 mmBOE deriving from:(i) extensions and discoveries (201 mmBOE), with major increasesbooked in Angola, Congo, Egypt, Kazakhstan, Tunisia and UnitedStates; and (ii) improved recovery (23 mmBOE) mainly in Algeriaand Angola. These increases were offset in part by a negativebalance of 143 mmBOE resulting from downward and upward revisionsof previous estimates. Downward revisions of previous estimatesmainly related to adverse price impacts in determining volumeentitlements in Eni’s PSAs (down 348 mmBOE) resulting fromhigher year end oil prices (Brent price was $96.02 per barrel atDecember 31, 2007 compared to $58.925 per barrel at December 31,2006). These negative revisions were recorded mainly inKazakhstan, Libya and Angola, and were partly offset by upwardrevisions in Egypt, Italy, Nigeria and Norway. Acquisitionsamounted to 156 mmBOE reflecting a contribution of purchasedproperties in the Gulf of Mexico and Congo. Due to risks inherentin the exploration and production business, a degree ofuncertainty still exists as to whether these additions willactually be produced. See "Item 3 – Risks associatedwith exploration and production of oil and natural gas" and– "Uncertainties in estimates of oil and natural gasreserves". Proved reserves of Eni’s subsidiaries weredetermined based on Eni’s working interest of 18.52% inquantifying reserve entitlements of the Kashagan project as ofDecember 31, 2007. As part of the agreements defined with theKazakh Republic, the change of Eni’s interest to 16.81% in2008 will determine a decrease of approximately 50 mmBBL inEni’s estimated net proved reserves of the Kashagan fieldwith respect to December 31, 2007 (information on the Kashaganagreements is provided below under the section "CaspianArea" on page 35).

As of December 31, 2007 Eni’s share of proved reserves ofequity-accounted entities amounted to 668 mmBOE. In 2007, provedreserves booked in connection with the acquisition of a 60%interest in three Russian gas companies amounted to 617 mmBOE.Gazprom was granted an option to acquire a 51% interest in thosethree gas companies. Should Gazprom exercise the call option,Eni’s interest would be diluted to approximately 30% andproved reserves that were booked in connection with theacquisition would be reduced by approximately 50%. Managementbelieves that Gazprom will likely exercise its call option.

----

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

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The reserve replacement ratio for Eni’s subsidiaries was38% in 2007 (38% in 2006 and 43% in 2005). The average reservelife index for Eni’s subsidiaries was 9.6 years at December31, 2007. 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 SFAS No. 69 – See supplemental oil andgas information in Note 39 to the Consolidated FinancialStatements. The reserve replacement ratio is a measure used bymanagement to assess the extent to which produced reserves in theyear are replaced by reserve additions booked according with SECcriteria under Rule 4-10 of Regulation S-X. Management considersthe reserve replacement ratio to be an important measure of theability of the Company to sustain its growth prospects. However,this ratio measures past performances and is not an indicator offuture production because the ultimate development and productionof reserves is subject to a number of risks and uncertainties.These include the risks associated with the successful completionof large-scale projects, including addressing ongoing regulatoryissues and completion of infrastructure, as well as changes inoil and gas prices, political risks and geological and otherenvironmental risks. Specifically, in recent years Eni’sperformance in replacing produced reserves has been affected bythe impact of higher year-end oil prices on reserves entitlementsin the Company’s Production Sharing Agreements (PSAs) andsimilar contractual schemes. In accordance with such contracts,Eni is entitled to a portion of field reserves, the sale of whichshould cover expenditures incurred by the Company to develop andoperate the field. The higher the reference prices for Brentcrude oil used to determine year-end amounts of Eni’s provedreserves, the lower the number of barrels necessary to cover thesame amount of expenditures.

The table below show Eni’s calculations of its reservereplacement ratios for the years ended December 31, 2005, 2006and 2007.

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

|   | **2005** |   | **2006** |   | **2007** |   | **2005** |   | **2006** |   | **2007** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |   |          |

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

| Additions to proved reserves                               |   | 271   |   |   | 244    |   |   | 237   |   |   | (18    | )      |   | 1      |   |   | 639   |   |
|------------------------------------------------------------|--------|-------|--------|--------|--------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|
| *of        which purchases and sales of reserves-in-place* |   | *106* |   |   | *(172* | *)*    |   | *156* |   |   |   |   |   |   |   |   | *617* |   |
| Production for the year                                    |   | (629  | )      |   | (640   | )      |   | (627  | )      |   | (5     | )      |   | (6     | )      |   | (7    | )      |

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

 

|   | **Subsidiaries** |
|--------|------------------|
|   |                  |

|   | **2005** |   | **2006** |   | **2007** |
|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |

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

| Proved reserves replacement ratio of        subsidiaries | 43 |   | 38 |   | 38 |
|----------------------------------------------------------|----|--------|----|--------|----|

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

Proved developed reserves of subsidiaries at December 31, 2007amounted to 3,862 mmBOE (1,953 mmBBL of liquids and 10,967 BCF ofnatural gas), representing 64% of total estimated proved reserves(63% and 63% at December 31, 2006 and 2005, respectively).

Volumes of oil and natural gas applicable to long-term supplyagreements with foreign governments in mineral assets where Eniis operator totaled 676 mmBOE as of December 31, 2007 (583 and604 mmBOE as of December 31, 2006 and 2005, respectively). Saidvolumes are not included in reserves volumes shown in the tableherein.

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

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**Proved reserves**

Eni’s proved reserves of hydrocarbons by geographic area

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 868       |   | 805       |   | 747       |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                 |   | 2,026     |   | 2,018     |   | 1,879     |
| West Africa                         |   | 1,279     |   | 1,122     |   | 1,095     |
| North Sea                           |   | 758       |   | 682       |   | 617       |
| Caspian Area                        |   | 1,087     |   | 1,219     |   | 1,061     |
| Rest of        the World            |   | 778       |   | 554       |   | 611       |
| **Total consolidated subsidiaries** |   | **6,796** |   | **6,400** |   | **6,010** |
| Equity-accounted        entities    |   | 41        |   | 36        |   | 668       |

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

Eni’s proved reserves of liquids by geographic area

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 228       |   | 215       |   | 215       |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                 |   | 961       |   | 982       |   | 878       |
| West Africa                         |   | 936       |   | 786       |   | 725       |
| North Sea                           |   | 433       |   | 386       |   | 345       |
| Caspian Area                        |   | 778       |   | 893       |   | 753       |
| Rest of        the World            |   | 412       |   | 195       |   | 211       |
| **Total consolidated subsidiaries** |   | **3,748** |   | **3,457** |   | **3,127** |
| Equity-accounted        entities    |   | 25        |   | 24        |   | 142       |

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

Eni’s proved reserves of natural gas by geographic area

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 3,676      |   | 3,391      |   | 3,057      |
|-------------------------------------|--------|------------|--------|------------|--------|------------|
| North        Africa                 |   | 6,117      |   | 5,946      |   | 5,751      |
| West Africa                         |   | 1,965      |   | 1,927      |   | 2,122      |
| North Sea                           |   | 1,864      |   | 1,697      |   | 1,558      |
| Caspian Area                        |   | 1,774      |   | 1,874      |   | 1,770      |
| Rest of        the World            |   | 2,105      |   | 2,062      |   | 2,291      |
| **Total consolidated subsidiaries** |   | **17,501** |   | **16,897** |   | **16,549** |
| Equity-accounted        entities    |   | 90         |   | 68         |   | 3,022      |

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

Eni’s proved developed reserves of hydrocarbons bygeographic area

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 620       |   | 562       |   | 534       |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                 |   | 1,230     |   | 1,242     |   | 1,183     |
| West Africa                         |   | 793       |   | 798       |   | 766       |
| North Sea                           |   | 611       |   | 571       |   | 524       |
| Caspian Area                        |   | 548       |   | 525       |   | 494       |
| Rest of        the World            |   | 473       |   | 334       |   | 361       |
| **Total consolidated subsidiaries** |   | **4,275** |   | **4,032** |   | **3,862** |
| Equity-accounted        entities    |   | 31        |   | 27        |   | 101       |

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

23

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##### Table of Contents

Eni’s proved developed reserves of liquids by geographicarea

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 149       |   | 136       |   | 133       |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                 |   | 697       |   | 713       |   | 649       |
| West Africa                         |   | 568       |   | 546       |   | 511       |
| North Sea                           |   | 353       |   | 329       |   | 299       |
| Caspian Area                        |   | 266       |   | 262       |   | 219       |
| Rest of        the World            |   | 298       |   | 140       |   | 142       |
| **Total consolidated subsidiaries** |   | **2,331** |   | **2,126** |   | **1,953** |
| Equity-accounted        entities    |   | 19        |   | 18        |   | 26        |

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

Eni’s proved developed reserves of natural gas bygeographic area

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Italy                               |   | 2,704      |   | 2,449      |   | 2,304      |
|-------------------------------------|--------|------------|--------|------------|--------|------------|
| North        Africa                 |   | 3,060      |   | 3,042      |   | 3,065      |
| West Africa                         |   | 1,289      |   | 1,447      |   | 1,469      |
| North Sea                           |   | 1,484      |   | 1,395      |   | 1,293      |
| Caspian Area                        |   | 1,618      |   | 1,511      |   | 1,580      |
| Rest of        the World            |   | 1,004      |   | 1,105      |   | 1,256      |
| **Total consolidated subsidiaries** |   | **11,159** |   | **10,949** |   | **10,967** |
| Equity-accounted        entities    |   | 70         |   | 48         |   | 428        |

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

> 
***Mineral Right Portfolio and Exploration************Activity for    the year***

As of December 31, 2007, Eni’s mineral right portfolioconsisted of 1,220 exclusive or shared rights for exploration anddevelopment in 36 countries on five continents, for a total netacreage of 394,490 square kilometers (385,219 at December 31,2006). Of these, 37,642 square kilometers concerned productionand development (48,273 at December 31, 2006). Outside Italy netacreage (373,826 square kilometers) increased by 11,103 squarekilometers mainly due to the acquisition of assets in Angola,Congo, Russia and the Gulf of Mexico, as well as explorationproperty in Australia, India, Nigeria, Pakistan, the UnitedKingdom and Alaska. In Italy, net acreage (20,664 squarekilometers) declined by 1,832 square kilometers due to releases.

A total of 81 new exploratory wells were drilled in 2007 (43.5of which represented Eni’s share), as compared to 68exploratory wells completed in 2006 (35.9 of which representedEni’s share). In addition, 28 exploratory wells were inprogress at year end. The overall commercial success rate was 40%(38% net to Eni) as compared to 43% (49% net to Eni) in 2006. In2005, 52 exploratory wells were completed (21.8 of whichrepresented Eni’s share), with an overall success rate of39.3% in 2005 (the success rate of Eni’s share ofexploratory wells was 47.4%).

 

> 
***Production***

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

In 2007, oil and natural gas production available for saleaveraged 1,684 KBOE/d (liquids 1,020 KBBL/d; natural gas 3,819mmCF/d), a decrease of 36 KBOE/d, or 2.1%, compared to 2006mainly due to disruptions in Nigeria due to continuing socialunrest (down 25 KBOE/d), unplanned downtime and technical issuesin the North Sea and mature field declines, particularly in Italyand the United Kingdom, as well as price impacts in certain PSAs.Production performance for the year was also impacted byVenezuela’s expropriation of the Dación oilfield 

24

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##### Table of Contents

assets which took place on April 1, 2006 (down 15 KBBL/d over2006). These negative factors were offset in part by thecontribution of acquired assets in the Gulf of Mexico and Congo(up 45 KBOE/d on annual average) and production increases inLibya, Egypt and Kazakhstan. Oil and natural gas production shareoutside Italy was 88% (as compared to 87% in 2006).

Production of liquids (1,020 KBBL/d) decreased by 59 KBBL/d,or 5.5%, compared to 2006. Production decreases were reportedmainly in Nigeria, Venezuela and the United Kingdom due to theabove-mentioned causes. The most significant increases wereregistered in: (i) the United States due to the contribution ofpurchased assets and the resumption of full activity at plantsdamaged by hurricanes in the second half 2005; (ii) Egypt, as aresult of production ramp-up at the el Temsah fields; and (iii)Kazakhstan due to a better performance of the Karachaganak field.

Production of natural gas available for sale (3,819 mmCF/d) in2007 increased over 2006 by 140 mmCF/d, or 3.8%, mainly in Libya,as a result of the build-up of the Western Libyan Gas Project;the Gulf of Mexico, due to the contribution of acquired assets;Norway, particularly at the Aasgard (Eni’s interest 14.81%)and Kristin (Eni’s interest 8.25%) fields. Gas productiondecreased due to mature field declines in Italy and the UnitedKingdom.

Oil and gas production sold in 2007 amounted to 611.4 mmBOE.Approximately 61% of liquids production sold (370.3 mmBBL) wasdestined to Eni’s Refining & Marketing segment; 37% ofnatural gas production sold (1,385 BCF) was destined toEni’s Gas & Power segment.

The tables below set forth Eni’s production of liquidsand natural gas on an available-for-sale basis for the periodsindicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| **Liquids production**(1) |   |      |   |      |   |      |
|---------------------------|--------|-----------|--------|-----------|--------|-----------|
| Italy                     |   | 86        |   | 79        |   | 75        |
| North Africa              |   | 308       |   | 329       |   | 337       |
| West        Africa        |   | 310       |   | 322       |   | 280       |
| North Sea                 |   | 179       |   | 178       |   | 157       |
| Caspian        Area       |   | 64        |   | 64        |   | 70        |
| Rest of the World         |   | 164       |   | 107       |   | 101       |
| **Total**                 |   | **1,111** |   | **1,079** |   | **1,020** |

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

----

| (1) |   | Data includes        Eni’s share of production of affiliates and joint        venture accounted for under the equity method of        accounting amounting to 7, 8 and 8 KBBL/d in 2007, 2006        and 2005 respectively. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| **Natural gas production available for sale**(1) (2) |   |      |   |      |   |      |
|------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Italy                                                |   | 972       |   | 883       |   | 763       |
| North Africa                                         |   | 900       |   | 1,187     |   | 1,357     |
| West        Africa                                   |   | 151       |   | 232       |   | 220       |
| North Sea                                            |   | 563       |   | 557       |   | 557       |
| Caspian        Area                                  |   | 207       |   | 214       |   | 222       |
| Rest of the World                                    |   | 551       |   | 606       |   | 700       |
| **Total**                                            |   | **3,344** |   | **3,679** |   | **3,819** |

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

----

| (1) |   | Data includes        Eni’s share of production of affiliates and joint        venture accounted for under the equity method of        accounting amounting to 28, 31 and 38 mmCF/d in 2007,        2006 and 2005 respectively. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Excluding        production volumes of natural gas consumed in operations.        Said volumes were 251, 286 and 296 mmCF/d in 2005, 2006        and 2007, 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 75 KBOE/d, 57KBOE/d and 20.5 KBOE/d in 2007, 2006 and 2005, respectively.

25

----

##### Table of Contents

The table below sets forth certain information and operatingdata regarding Eni’s principal oil and natural gas interestsas of December 31, 2007.

**Principal oil and natural gas interests at December 31,2007**

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

| **Italy**                                      |   | 1926   |   | **162**   |   | **25,991**  |   | **20,664**  |   | **12,582** |   | Onshore/Offshore |   | **82**  |   | **103** |
|------------------------------------------------|--------|--------|--------|-----------|--------|-------------|--------|-------------|--------|------------|--------|------------------|--------|---------|--------|---------|
|                                           |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **North Africa**                               |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Algeria                                        |   | 1981   |   | 36        |   | 11,432      |   | 3,041       |   | 902        |   | Onshore          |   | 24      |   | 14      |
| Egypt                                          |   | 1954   |   | 56        |   | 24,443      |   | 14,469      |   | 3,011      |   | Onshore/Offshore |   | 34      |   | 30      |
| Libya                                          |   | 1959   |   | 16        |   | 37,749      |   | 33,289      |   | 796        |   | Onshore/Offshore |   | 12      |   | 14      |
| Tunisia                                        |   | 1961   |   | 11        |   | 6,464       |   | 2,274       |   | 1,558      |   | Onshore/Offshore |   | 19      |   | 3       |
|                                           |   |   |   | **119**   |   | **80,088**  |   | **53,073**  |   | **6,267**  |   |             |   | **89**  |   | **61**  |
|                                           |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **West Africa**                                |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Angola                                         |   | 1980   |   | 55        |   | 20,527      |   | 3,570       |   | 1,398      |   | Offshore         |   | 42      |   | 27      |
| Congo                                          |   | 1968   |   | 24        |   | 11,099      |   | 4,905       |   | 968        |   | Offshore         |   | 19      |   | 7       |
| Nigeria                                        |   | 1962   |   | 50        |   | 44,049      |   | 7,756       |   | 5,715      |   | Onshore/Offshore |   | 83      |   | 51      |
|                                           |   |   |   | **129**   |   | **75,675**  |   | **16,231**  |   | **8,081**  |   |             |   | **144** |   | **85**  |
|                                           |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **North Sea**                                  |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Norway                                         |   | 1965   |   | 49        |   | 15,335      |   | 5,390       |   | 123        |   | Offshore         |   | 13      |   | 7       |
| United Kingdom                                 |   | 1964   |   | 88        |   | 5,445       |   | 1,239       |   | 610        |   | Offshore         |   | 36      |   | 11      |
|                                           |   |   |   | **137**   |   | **20,780**  |   | **6,629**   |   | **733**    |   |             |   | **49**  |   | **18**  |
|                                           |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **Caspian Area**                               |   | 1995   |   | **6**     |   | **4,933**   |   | **959**     |   | **488**    |   | Onshore/Offshore |   | **1**   |   | **5**   |
|                                           |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **Rest of world**                              |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Australia                                      |   | 2001   |   | 19        |   | 62,510      |   | 31,544      |   | 891        |   | Offshore         |   | 2       |   | 1       |
| Brazil                                         |   | 1999   |   | 4         |   | 2,920       |   | 2,774       |   |       |   | Offshore         |   |    |   |    |
| China                                          |   | 1983   |   | 3         |   | 632         |   | 103         |   | 103        |   | Offshore         |   | 10      |   | 3       |
| Croatia                                        |   | 1996   |   | 2         |   | 1,975       |   | 988         |   | 988        |   | Offshore         |   | 5       |   | 5       |
| East Timor                                     |   | 2006   |   | 5         |   | 12,224      |   | 9,779       |   |       |   | Offshore         |   |    |   |    |
| Ecuador                                        |   | 1988   |   | 1         |   | 2,000       |   | 2,000       |   | 2,000      |   | Onshore          |   | 1       |   |    |
| India                                          |   | 2005   |   | 3         |   | 24,425      |   | 9,091       |   |       |   | Onshore/Offshore |   |    |   |    |
| Indonesia                                      |   | 2001   |   | 10        |   | 27,999      |   | 16,047      |   | 656        |   | Onshore/Offshore |   | 7       |   | 8       |
| Iran                                           |   | 1957   |   | 4         |   | 1,456       |   | 820         |   | 820        |   | Onshore/Offshore |   | 3       |   |    |
| Pakistan                                       |   | 2000   |   | 22        |   | 38,426      |   | 21,155      |   | 601        |   | Onshore/Offshore |   | 6       |   | 3       |
| Russia                                         |   | 2007   |   | 4         |   | 5,126       |   | 3,076       |   | 1,168      |   | Onshore          |   | 3       |   | 6       |
| Saudi Arabia                                   |   | 2004   |   | 1         |   | 51,687      |   | 25,844      |   |       |   | Onshore          |   |    |   |    |
| Trinidad & Tobago                          |   | 1970   |   | 1         |   | 382         |   | 66          |   | 66         |   | Offshore         |   | 2       |   | 3       |
| United States                                  |   | 1968   |   | 558       |   | 10,619      |   | 6,024       |   | 937        |   | Onshore/Offshore |   | 63      |   | 13      |
| Venezuela                                      |   | 1998   |   | 3         |   | 1,556       |   | 614         |   | 145        |   | Offshore         |   |    |   | 1       |
|                                           |   |   |   | **640**   |   | **243,937** |   | **129,925** |   | **8,375**  |   |             |   | **102** |   | **43**  |
| Other countries                                |   |   |   | **9**     |   | **6,311**   |   | **1,364**   |   | **1,116**  |   | Offshore         |   |    |   |    |
| Other countries with only exploration activity |   |   |   | **18**    |   | **299,568** |   | **165,646** |   |       |   | Onshore/Offshore |   |    |   |    |
| Outside Italy                                  |   |   |   | 1,058     |   | 731,292     |   | 373,827     |   | 25,060     |   |             |   | 385     |   | 212     |
| **Total**                                      |   |   |   | **1,220** |   | **757,283** |   | **394,491** |   | **37,642** |   |             |   | **467** |   | **315** |

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

----

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

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

> 
*Italy*

Eni has been operating in Italy since 1926. In 2007,Eni’s oil and gas production amounted to 208 KBOE/d.Eni’s activities in Italy are deployed in the Adriatic Sea,the Central Southern Apennines, mainland and offshore Sicily andthe Po Valley. Eni’s exploration and development activitiesin Italy are regulated by concession contracts.

26

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##### Table of Contents

The Adriatic Sea represents Eni’s main production area inItaly, accounting for 30% of Eni’s domestic production in2007. Production is composed mainly of natural gas. Main operatedfields are Barbara (155 mmCF/d net to Eni), Angela-Angelina (64mmCF/d), Porto Garibaldi (57 mmCF/d) and Cervia (46 mmCF/d).

Eni is operator of the Val d’Agri concession (Eni’sinterest 60.77%) in Basilicata Region, Southern Italy, resultingfrom the unitization of the Volturino and Grumento Novaconcessions made in late 2005. Production from the Monte Alpi,Monte Enoc and Cerro Falcone fields is fed by 22 production wellsof the 47 foreseen by the sanctioned development plan and issupported by the Viggiano oil center with a treatment capacity of104 KBBL/d. Oil produced is carried to Eni’s refinery inTaranto via a 136-kilometer long pipeline. In 2007, the Vald’Agri concession produced 106 KBOE/d (65 net to Eni)corresponding to 31% of Eni’s production in Italy.

| Eni is operator of 15        production concessions onshore and offshore Sicily. Its        main fields are Gela, Ragusa, Giaurone, Fiumetto and        Prezioso, which in 2007 accounted for 9% of Eni’s        production in Italy.
In 2007, production started at:        (i) Fiumetto-4 well and Pizzo Tamburino concessions in        the onshore of Sicily, with production at 600 BOE/d and        1,000 BOE/d, respectively; (ii) Tea/Arnica/Lavanda field        in the Adriatic Sea, with production peaking at 35 mmCF/d        and which was linked to Ravenna Mare power station; and        (iii) Candela field in the Puglia Region, with production        at 3,531 CF/d. The first development phase was completed        through linking of existing facilities.

In 2007, development activities concerned in        particular: (i) optimization of producing fields by means        of sidetracking and infilling (Gela, Gagliano, Cervia,        Barbara, Bonaccia and Emma); and (ii) continuation of        drilling and upgrading of producing facilities in the Val        d’Agri.

The main ongoing development project is Miglianico,        located in the onshore of the Abruzzi Region. Three        development wells have been drilled. The project provides        for the construction of facilities to treat production        volumes of oil, to be delivered to logistic structures of        the Refining & Marketing segment. The production        volumes of gas will be input into Italian natural gas        transportation network. Production is expected to start        in the second half of 2009, peaking at 7 KBOE/d. |   |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

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##### Table of Contents

In the medium term, management expects production in Italy toremain stable at current level due to the production ramp-up ofthe Val d’Agri fields and ongoing new field project andcontinuing development activities designed to counteract maturefield decline.

> 
*North Africa*

Eni’s operations in North Africa are conducted inAlgeria, Egypt, Libya and Tunisia. In 2007, North Africaaccounted for 34% of Eni’s total worldwide production of oiland natural gas.

*Algeria*. Eni has been present in Algeria since 1981. In2007, Eni’s oil production in Algeria averaged 85 KBOE/d.Operating activities are located in the Bir Rebaa area in theSouth-Eastern desert and include the following exploration andproduction blocks: (a) Blocks 403 a/d (Eni’s interest 100%);(b) Blocks 401a/402a (Eni’s interest 55%); (c) Blocks 403(Eni’s interest 50%) and 404a (Eni’s interest 12.25%);and (d) Blocks 212 (Eni’s interest 22.38%) and 208(Eni’s interest 12.25%).

Exploration and production activities in Algeria are regulatedby Production Sharing Agreements (PSAs) and concession contracts.

Production in Block 403a/d is supplied mainly by the HBN andRom and satellite fields and accounted for approximately 23% ofEni’s production in Algeria in 2007. The main projectunderway is the Rom Integrated project, designed to develop thereserves of the Rom Main (Eni’s interest 100%), ZEA(Eni’s interest 75%) and Rom Nord fields. The projectprovides for the construction of a new oil treatment plant with acapacity of 32 KBBL/d. First oil is expected in 2011.

Production in Blocks 401a/402a is supplied mainly by the Rodand satellite fields and accounted for approximately 22% ofEni’s production in Algeria in 2007. Infilling activitiesare being performed in order to maintain the current productionplateau.

The main fields in Block 403 are BRN, BRW and BRSW andaccounted for approximately 14% of Eni’s production inAlgeria in 2007. Extensive exploration activity is beingperformed. In October 2007, Eni and the Algerian state companySonatrach signed an agreement for the renewal of the developmentand production concession on this block.

Block 208 is located South of Bir Rebaa. The El Merk Synergyplan for the development of this block in conjunction with thedevelopment of adjoining blocks operated by other companies isthe main project underway in Algeria. The project scheme providesfor the construction of a Central Production Facility. Start-upis expected after 2011. In 2007, basic engineering work wascompleted.

In 2006, Sonatrach requested international oil companies,including Eni, to renegotiate the economic terms of certain PSAsin light of certain changes enacted in the tax regime applicableto oil activities. Although tax terms applicable to existing PSAspartied by international oil companies have not been modified,Sonatrach asserts that it is currently bearing higher taxation onbehalf of foreign oil companies. On this basis, Sonatrach intendsto renegotiate the economic terms of those PSAs, particularlyBlocks 401a/402a (Eni’s interest 55%), 404 (Eni’sinterest 12.25%) and 208 (Eni’s interest 12.25%), in orderto restore the initial economics of such contracts. At present,management is not able to foresee the final outcome of suchrenegotiations.

In the medium term, management expects production in Algeriato decline slightly due to mature fields decline.

*Egypt.* Eni has been present in Egypt since 1954. In2007, Eni’s share of production in this country amounting to231 KBOE/d and accounted for 14% of Eni’s total annualhydrocarbon production. Eni’s main producing liquid fieldsare located in the Belayim concession (Eni’s interest 100%)offshore in the Gulf of Suez. Gas production mainly comes fromthe operated or participated concession of North Port Said(former Port Fouad, Eni’s interest 100%), Baltim (50%interest), Ras el Barr (50% interest, non-operated) and el Temsah(50% interest) offshore the Nile Delta. In 2007, production fromthese concessions also including a portion of liquids accountedfor 90% of Eni’s production in Egypt.

Exploration and production activities in Egypt are regulatedby concession contracts and PSAs.

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| Development activities are        underway in the offshore area of the Nile Delta: (i) in        the North Port Said concession (Eni’s interest        100%), production started at the Semman gas field.        Production is expected to peak at 46 mmCF/d net to Eni.        Development activities at the el Gamil plant progressed        by increasing compression capacity to support the el        Temsah and Ras el Barr production concessions; (ii) in        the Ras el Barr concession (Eni’s interest 50%),        development activities of the Taurt field are underway.        This project provides the drilling of production wells        which are expected to be linked by sealines and        umbilicals to existing onshore treatment facilities.        Production is expected to start in second half of 2008;        and (iii) in the el Temsah concession (Eni operator with        a 50% interest), production started at the Denise A        platform. The production build-up is expected to be        completed in the first half of 2008.
Through its        affiliate Unión Fenosa Gas, Eni has an indirect        participation in the Damietta natural gas liquefaction        plant with a producing capacity of 5 mmtonnes/y of LNG        corresponding to approximately 268 BCF/y of feed-gas. Eni        is currently supplying 53 BCF/y to the first unit for a        twenty-year period. Future supplies will be secured by        developing the Taurt and Denise fields which are expected        to supply 23 KBOE/d of feed-gas to the first unit. The        partners of this project are planning to double the plant        capacity by means of the construction of a second train        seen operating in 2011. Eni will supply 88 BCF/y to the        second train for a twenty-year period. The reserves which        are destined to feed this second train have already been        identified, including any additional amounts that must be        developed to meet the country’s domestic requirement        under existing laws. The approval from relevant Egyptian        Authorities is expected in the first half of 2008.

In April 2008, Eni signed a memorandum of        understanding relating to the thermoelectric sector in        Egypt, where the Company will provide its technology for        the combined production of electricity and steam from        gas-fired plants.

Main discoveries for the year were achieved in:        (a) the offshore area of the Nile Delta with the        Satis-1 discovery well (Eni’s interest 50%), showing        the presence of significant amounts of gas at a depth of        over 6,500 meters, as well as the Andaleeb-1 and Aten-1        discovery wells (Eni’s interest 100%); (b) the        onshore area of the Western Desert with two near field        discoveries in the Melehia (Eni’s interest 56%) and        West Razzak (Eni’s interest 80%) development permits        and in the East Obayed exploration permit (Eni’s        interest 100%) with in Faramid-1 exploration well; and        (c) the Gulf of Suez with near field discoveries in        the offshore Belayim Marine permit (Eni’s interest        100%). These ongoing exploration activities aim at        supporting the expansion plan of the Damietta LNG plant.

In the medium term, management expects to increase        Eni’s production in Egypt to approximately 240        KBOE/d reflecting ongoing development of gas reserves,        despite expected mature oil field declines.

*Libya.* Eni started operations in Libya in 1959.        In 2007, Eni’s oil and gas production averaged 242        KBOE/d, the portion of liquids being 58%. Production        activity is carried out in the Mediterranean offshore        facing Tripoli and in the Libyan desert area. |   |     |
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In October 2007, Eni signed a major petroleum agreement withNOC, the Libyan National Oil Corporation. The agreement providesthe extension of Eni’s mineral rights in Libya until 2042and 2047 for oil and gas properties respectively, and the launchof large projects in gas monetization and exploration. Thisagreement will enable Eni to efficiently develop its long-lifeproducing fields over a long time frame by applying its advancedtechniques for maximizing the recoverability of hydrocarbons. Theprojects defined by the agreement regard: (i) overhauling theexploration activities in high-potential areas where Eni isalready present; (ii) monetizing additional and substantial gasreserves through the upgrading of the GreenStream exportpipeline, achieving an additional transport capacity of 106 BCF/yand the construction of a new LNG plant near Mellitah designed toproduce 177 BCF/y, equivalent of LNG to be marketed worldwide.Under this agreement, the properties owned by Eni have beengrouped into six contract areas (onshore and offshore) regulatedaccording to Production Sharing Agreements. Onshore, thefollowing areas have been identified: (i) Area A, including theformer concession 82 (Eni’s interest 50%); (ii) Area B,former concessions 100 and the NC 125 field (Eni’s interest50%); (iii) Area E, with Block NC 174 (Eni’s interest33.3%); and (iv) Area F, with Block 118 (Eni’s interest50%). Offshore areas are: (i) Area C with the Bouri oil field(Eni’s interest 50%); and (ii) Area D, with Blocks NC 41 andNC 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) an in the Kufra area        (186/1, 2, 3 & 4).
In May 2007, the Government of        Libya issued a tax law that amended the profit taxation        regime for foreign oil companies operating under PSA        schemes. In line with past practice, Libya’s        National Oil Company (NOC) was designated as tax agent on        behalf of foreign oil companies operating under PSA. The        new tax regime is expected to become effective from 2008,        after receiving instructions from NOC on the        determination of the asset tax base recognized at January        1, 2008 (which instructions might result in an adjustment        of related deferred tax liabilities). Eni does not expect        the adoption of the new law to have a significant impact        on the agreed oil profit share under PSAs currently        existing between the Libyan state company and Eni.

As a part of the Western Libyan Gas project        (Eni’s interest 50%), ongoing projects to upgrade        production facilities aim at increasing current natural        gas production by 35 BCF/y and supporting current oil        production plateau of the Wafa field. Export of natural        gas leverages on the GreenStream pipeline, which        delivered 313 BCF in 2007. In addition, 29 BCF were sold        on the Libyan market for power generation. In 2007, the        production of the Wafa and Bahr Essalam fields was 154        KBOE/d net to Eni (up 36% from 2006).

Other ongoing development projects regarded the ANC118        field (Eni’s interest 50%) by linking it to existing        facilities at the Wafa and Mellitah plants and the        monetization of gas volumes currently flared at the Bouri        field (Eni’s interest 50%) by processing at the        Sabratha platform and exporting them via the GreenStream        pipeline. |   |  |
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Main discoveries for the year were achieved in: (a) offshoreBlock NC41 (Eni’s interest 100%), where the U1-NC41discovery well showed the presence of oil and natural gas at adepth of over 2,600 meters; and (b) onshore concession 82(Eni’s interest 50%), where the YY1-82 discovery well showedthe presence of oil at a depth of about 5,000 meters.

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

*Tunisia.* Eni has been present in Tunisia since 1961. In2007, Eni’s production amounted to 15 KBOE/d. Eni’sactivities are located mainly in the Mediterranean offshorefacing Hammamet and in the Southern desert areas.

Exploration and production in this country are regulated byconcessions and Production Sharing Agreements.

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Production mainly comes from the Adam (Eni operator with a 25%interest), Oued Zar (Eni operator with a 50% interest), MLD(Eni’s interest 50%) and El Borma (Eni’s interest 50%)onshore blocks. In 2007, the development of Maamoura offshorefield was sanctioned. Production is expected to start in 2009 andflow at 7 KBOE/d.

Main discoveries in 2007 were achieved in: (i) the Adamconcession, where the Karma-1 and Ikhil-1 exploration wells foundoil and the Nadir-1 exploration well showed the presence of gas.The three wells were linked to existing production facilities;(ii) the Bordi el Khadra permit, where the Nakhil 1 explorationwell showed an oil formation and was linked to existingproduction facilities; and (iii) the Larich concession, where theLarich SW-1 exploration well showed the presence of oil and gas.

In the medium term Eni expects production in Tunisia toincrease due to the development of recent discoveries.

*West Africa*

Eni’s operations in West Africa are conducted in Angola,Congo and Nigeria. In 2007, West Africa accounted for 19% ofEni’s total worldwide production of oil and natural gas.

*Angola.* Eni has been present in Angola since 1980. In2007, Eni’s production averaged 132 KBOE/d. Eni’sactivities are concentrated in the conventional and deepoffshore.

| The main blocks participated        by Eni are: (i) Block 0 in Cabinda (Eni’s interest        9.8%) west of the Angolan coast; (ii) Development Areas        in the former Block 14 (Eni’s interest 20%) in the        deep offshore west of Block 0; and (iii) 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        some areas of Block 3 (with interests varying from 12 to        15%) and in the 14K/A IMI Unit Area (Eni’s interest        10%). In the exploration phase, Eni is operator of Block        15/06 (with a 35% interest) and holds interests in Block        3/05-A with a 12% interest.
Exploration and production        activities in Angola are regulated by concessions and        PSAs.

In November 2007, Eni acquired a 13.6% stake in the        Angola LNG Ltd Consortium responsible for the        construction of an LNG plant in Soyo, 300 kilometers        North of Luanda. This facility will be designed to        produce 5.2 mmtonnes/y of LNG by processing 1 BCF/d of        natural gas. The project has been sanctioned by the        Angolan Government and Parliament and will develop        significant amounts of gas reserves along a 30-year        period. The project has high environmental value since it        allows the collection of the associated gas from offshore        production blocks, in compliance with the zero flaring        policy. The LNG is expected to be delivered to the U.S.        market at the re-gasification plant in Pascagoula, in the        Gulf of Mexico, in which Eni, following this agreement,        has acquired a re-gasification capacity equivalent to        approximately 177 BCF/y. |   |  |
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In December 2007, Eni finalized another agreement to be partof a second gas consortium which will evaluate existing gasdiscoveries and explore further potential in the Angolan offshoreto support the feasibility of a second LNG train. Eni istechnical operator, with a 20% interest.

Development activities at the Landana and Tombua oil fields inoffshore Block 14 progressed, achieving early production at theLandana field which was linked to existing facilities atBenguela/Belize. Production is expected to peak in 2009 at 130KBBL/d (23 net to Eni).

Development of the Banzala oil field in Block 0 in Cabindamoved forward with the installation of the two scheduledproduction platforms, which had been previously started up inJune 2007 and in January 2008, respectively. Production isexpected to peak in 2009 at 27 KBBL/d (3 KBBL/d net to Eni).

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As part of Phase C of the development of reserves in theKizomba deep offshore area, development activities of the Mondoand Saxi/Batuque fields in Block 15 are ongoing. A commondevelopment strategy is expected to be deployed in both projects,envisaging the installation of FPSO vessels. In January 2008, theMondo field was started up. The Saxi/Batuque fields are expectedto start-up in 2008. Peak production at 100 KBBL/d (18 net toEni) is expected in 2008 and 2009, respectively. In September2007, production started at the Marimba field by linking toexisting facilities at Kizomba A. Production is expected to peakin 2008 at 39 KBBL/d (7 KBBL/d net to Eni).

Main oil discoveries were made in Block 14, with the Lucapa-1,Menongue-1 and Malange-1 wells and in Block 15/06 with the Sangos1 discovery well.

In the medium term, management expects to increase Eni’sproduction to approximately 130 KBBL/d reflecting contributionsfrom ongoing development projects, despite mature field declines.

*Congo.* Eni has been present in Congo since 1968 and itsactivities are concentrated in the conventional and deep offshorefacing Pointe Noire and onshore. In 2007, production averaged 67KBOE/d net to Eni.

| In April 2007, an agreement        was signed awarding to Eni the Marine XII exploration        permit (Eni operator with a 90% interest) offshore Congo.        The goal of the initiative is to exploit the relevant gas        potential and feeding a power plant.
In May 2007, Eni        closed the acquisition of exploration and production        assets from the French company Maurel & Prom onshore        Congo, for a cash consideration of approximately for euro        1 billion. Acquired properties brought in an additional        production of approximately 17 KBOE/d and proved reserves        amounting to approximately 33 mmBOE.

Eni’s principal oil producing interests operated        in Congo are the Zatchi (Eni’s interest 65%) and        Loango (Eni’s interest 50%) fields and Blocks Marine        VI (Eni’s interest 65%) and VII (Eni’s interest        35.75%) as well as the acquired assets including the        producing fields of M’Boundi (Eni’s interest        43.1%) and Kouakouala A (Eni’s interest 66.67%). In        2008, Eni’s working interest in the M’Boundi        field will reach 80.1% due to the acquisition of Burren        Energy finalized early in 2008.

Eni holds a 35% interest in the Pointe Noire Grand        Fonde and Pex permits. Eni also holds interests in the        exploration phase in three deep offshore blocks: Mer        Très Profonde Nord (Eni operator with a 40% interest),        Mer Très Profonde Sud (Eni’s interest 30%), Marine        X (Eni operator with a 72% interest), and Le Kouilou        onshore permit (Eni operator with a 48% interest). |   |  |
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Exploration and production activities in the Congo areregulated by Production Sharing Agreements.

Development activities of the acquired M’Boundi fieldmoved forward with the revision of the production scheme andlayout, as well designing activities regarding application ofadvanced recovery techniques and associated gas monetization. Inparticular, Eni signed an agreement with Congolese authoritiesfor doubling the Djeno power plant and building a new power plantto be fired with associated gas produced at the M’Boundifield. These projects are expected to start-up in the second halfof 2008 and by end of 2009, respectively.

Development activities at the Awa Paloukou (Eni’sinterest 90%) and Ikalou-Ikalou Sud (Eni’s interest 100%)fields are underway. Production is expected to start in 2008,peaking at 13 KBOE/d net to Eni in 2009.

Main oil discoveries were made in Mer Très Profonde Sudpermit (Eni’s interest 30%) with the Persée Nord Est-1well, drilled at a depth between 2,700 and 3,500 meters, and theCassiopea Est-1 well, drilled at a depth of 2,900 meters andwhich yielded 5,300 BBL/d in test production.

In the medium term, management expects to increase Eni’sproduction in Congo due to the contribution from recentlyacquired assets, targeting a level of 140 KBBL/d in 2011. Keygrowth drivers will be the integration and development of assetsacquired from Maurel & Prom and Burren Energy in addition toprojects underway.

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*Nigeria.* Eni has been present in Nigeria since 1962. In2007, Eni’s oil and gas production averaged 119 KBOE/dlocated mainly in the onshore and offshore of the Niger Delta.

In the development /production phase Eni is operator ofonshore Oil Mining Leases (OML) 60, 61, 62 and 63 (Eni’sinterest 20%) and offshore OML 125 (Eni’s interest 50.19%),OMLs 120-121 (Eni’s interest 40%) and OML 118 (Eni’sinterest 12.5%). Through SPDC JV oil joint venture, Eni alsoholds a 5% interest in 31 onshore blocks and a 12.86% interest in5 conventional offshore blocks.

In the exploration phase Eni is operator of Oil ProspectingLeases (OPL) 244 (Eni’s interest 60%), OML 134 (former OPL211 - Eni’s interest 50.19%) and onshore OML 135 (former OPL219 - Eni’s interest 12.5%) and OPL 282 (Eni’s interest90%).

In March 2007, Eni signed a Production Sharing Contract forthe OPL 135 permit (Eni operator with a 48% interest) located inthe Niger Delta. The arrangement with a 25-year term envisages anexploration stage with a five-year term and a subsequentdevelopment phase of oil and natural gas reserves located in theproximity of existing facilities and the Kwale/Okpai powerstation where Eni is operator.

Exploration and production activities in Nigeria are regulatedmainly by Production Sharing Agreements and service contractswhere Eni acts as contractor for state owned companies.

The Forcados/Yokri oil and gas fields (Eni’s interest 5%)are currently under development offshore and onshore the NigerDelta. Development is expected to be completed in 2008 as part ofan integrated project aiming at providing natural gas supplies tothe Bonny liquefaction plant. Offshore production facilities havebeen installed. The onshore project provides for the upgrading ofthe Yokri and North/South Bank flowstations and the realizationof a gas compressor plant.

Eni holds a 10.4% interest in the Bonny liquefaction plantlocated in the eastern Niger Delta, with a treatment capacity ofapproximately 1,236 BCF/y of feed gas corresponding to aproduction of 22 mmtonnes/y of LNG on 6 trains. The sixth trainhas been started in 2007. The seventh unit is being engineeredwith start-up expected in 2012. When fully operational, totalcapacity will amount to approximately 30 mmtonnes/y of LNG,corresponding to a feedstock of approximately 1,624 BCF/y.Natural gas supplies to the plant are provided under a gas supply

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agreement with a 20-year term from the SPDC joint venture andthe NAOC JV of OMLs 60, 61, 62 and 63.When fully operational in2008, supplies will total approximately 3,461 mmCF/d (268 net toEni). In 2007, Eni’s supplies were 173 mmCF/d. LNGproduction 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 is operator with a 17% interest of the Brass LNG LtdCompany for the construction of a natural gas liquefaction plantto be built near the existing Brass terminal. This plant isexpected to start operating in 2012 with a treatment capacity of10 mmtonnes/y of LNG corresponding to 618 BCF/y (approximately 64net to Eni) of feed gas on 2 trains for twenty years. Supplies tothis plant will derive from the collection of associated gas fromnearby producing fields and from the development of gas fields inthe OMLs 61 and 62 onshore blocks. The venture signed preliminarylong-term contracts to sell the whole LNG production capacity.Eni acquired 2 mmtonnes/y of LNG capacity. The front endengineering is underway and the final investment decision isexpected in the second half of 2008.

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

> 
*North Sea*

Eni’s operations in the North Sea area are conducted inNorway and United Kingdom. In 2007, the North Sea accounted for15% of Eni’s total worldwide production of oil and naturalgas.

*Norway.* Eni has been operating in Norway since 1964.Eni’s activities are performed in the Norwegian Sea, in theNorwegian section of the North Sea and in the Barents Sea.Eni’s production in Norway amounted to 134 KBBL/d in 2007.

Exploration and production activities in Norway are regulatedby Production Licenses (PLs). According to a production license,the holder is entitled to perform seismic surveys and drillingand production activities for a few years with possibleextensions.

Eni holds interests in six production areas in the NorwegianSea. The main producing fields are Aasgard (Eni’s interest14.82%), Kristin (Eni’s interest 8.25%), Heidrun (Eni’sinterest 5.12%), Mikkel (Eni’s interest 14.9%) and Norne(Eni’s interest 6.9%), which together accounted for 68% ofEni’s production in Norway. The main structures underdevelopment are located near Kristin, particularly Tyrihans(Eni’s interest 6.23%). Economic development of this fieldis expected to be achieved through synergies with the Kristinproduction facilities. Production is expected to start in 2009,when production of Kristin is expected to decline which will makespare capacity available to process production from Tyrihans.

Eni holds interest in four production licenses in theNorwegian section of the North Sea. The main producing field isEkofisk (Eni’s interest 12.39%) in PL018 which in 2007produced 352 KBOE/d (44 net to Eni) and accounted for 32% ofEni’s production in Norway. Ongoing projects for Ekofisk aimat maintaining and optimizing production by means of infillingwells, the development of the Growth Area and upgrading ofexisting facilities.

Currently Eni is only performing exploration activities inBarents Sea. Operations in this area are focused on the appraisalof the mineral potential of the large Goliath discovery made in2000 at a water depth of 370 meters in PL 229 (Eni operator witha 65% interest) aimed at its commercial development. The projectis progressing in accordance with the program. The finalinvestment decision is expected in 2008. Critical equipment(rigs) to develop the field has already been booked.

In 2007, Eni sold a 30% stake of the Prospecting License 259(Eni’s interest 70%) and the whole interest of theProspecting License 256.

Main discoveries for 2007 were achieved in the: (i)Prospecting License 393 (Eni’s interest 30%), near theGoliath discovery, where the 7125/4-1 Nucula exploration wellshowed the presence of hydrocarbons at a depth between 800 and1,450 meters; (ii) Prospecting License 122 (Eni’s interest20%), the appraisal of the Marulk discovery increased therecognized mineral potential; (iii) Prospecting License 312(Eni’s interest 17%), where the Gamma discovery well showedthe presence of gas at a depth of 2,500 meters; and (iv) theProspecting License 293 (Eni operator with a 45% interest) theAfrodite discovery well showed the presence of gas andcondensates at a depth of 373 meters.

In the medium term, management expects to slightly increaseEni’s production in Norway, reflecting the planneddevelopment projects, partly offset by mature field declines.

*The United Kingdom.* Eni has been present in the UnitedKingdom since 1964. Eni’s activities are carried out in theBritish section of the North Sea, in the Irish Sea and in someareas East and West of the Shetland Islands. In 2007, Eni’snet production of oil and gas averaged 120 KBOE/d.

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Exploration and production activities in the United Kingdomare regulated by concession contracts.

| Eni holds interests in 12        production areas in the British section of the North Sea.        The main fields are Elgin/Franklin (Eni’s interest        21.87%), the J-Block (Eni’s interest 33%), the        Flotta Catchment Area (Eni’s interest 20%), Andrew        (Eni’s interest 16.2%) and Farragon (Eni’s        interest 30%), which in 2007 accounted for 58% of        Eni’s production in the United Kingdom. In 2007,        production started at the Blane (Eni’s interest 18%)        and West Franklin (Eni’s interest 21.87%). The Blane        field was linked to existing production facilities with a        peak production of 21 KBOE/d (approximately 4 net to Eni)        already reached. The West Franklin field was linked to        the production facilities of the nearby Elgin Franklin        field and is expected to peak at 20 KBOE/d (4 net to Eni)        in the second half of 2008 with the scheduled start-up of        a second development well. Appraisal of the large Jasmine        discovery in the J-Block is underway.
Eni holds        interests in six production blocks in the Liverpool Bay        area (Eni’s interest 53.9%) in the Eastern section        of the Irish Sea. Main fields are Douglas, Hamilton and        Lennox and their extensions which in 2007 accounted for        24% of Eni’s production in UK.

Eni holds interest in 6 production permits located        East of the Shetland Islands. Main fields are Ninian        (Eni’s interest 12.94%) and Magnus (Eni’s        interest 5%) which in 2007 accounted for 4% of Eni’s        production in the United Kingdom.

Main discoveries in 2007 were in: (a) Block 205/5a        (Eni’s interest 23%) with the Tormore discovery, at        a depth of 610 meters, which yielded 32 mmCF/d of gas and        2,200 BBL/d of condensates. Production is expected to        start through synergies with the adjoining Laggan        discovery (Eni’s interest 20%); and (b) the J-Block        gas and condensates were found nearby the recent Jasmine        discovery. Joint development of these two structures is        being assessed in combination with existing facilities. |   |  |
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> 
*Caspian Area*

In 2007, Eni’s operations in the Caspian Area accountedfor 6% of its total worldwide production of oil and natural gas.

*Kazakhstan-Kashagan.* Eni has been present in Kazakhstansince 1992. Eni is the single operator of the North Caspian SeaProduction Sharing Agreement (NCSPSA) with a participatinginterest equal to 18.52% as of December 31, 2007. The otherpartners of this initiative are Total, Shell and ExxonMobil, eachwith a participating interest currently of 18.52%, ConocoPhillipscurrently with 9.26%, and Inpex and KazMunayGas each currentlywith 8.33%. Each partner’s participating interest in theproject will change according to the terms of the Memorandum ofUnderstanding signed among the parties, including the Kazakhauthorities, on January 14, 2008. Information on this agreementis included below. The change in participating interests willapply retroactively as of January 1, 2008.

The NCSPSA defines terms and conditions for the explorationand development activities to be performed in the area covered bythe contract. The Kashagan field was discovered in the northernsection of the contractual area in the year 2000. Managementbelieves this field to contain a large amount of hydrocarbonresources.

As of December 31, 2007, Eni’s proved reserves booked forthe Kashagan field amounted to 520 mmBOE, recording a decrease of76 mmBOE with respect to 2006 mainly due to the impact ofincreased year-end oil prices on reserve entitlements inaccordance with the PSA scheme. Proved reserves for the field asof December 31, 2007 were determined according to Eni’s thencurrent participating interest of 18.52%. As part of theagreements defined with the Kazakh Republic, the change ofEni’s interest to 16.81% in 2008 will determine a decreaseof approximately 50 mmBBL in Eni’s estimated net provedreserves of the Kashagan field with respect to December 31, 2007.

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As of December 31, 2006, Eni’s proved reserves booked forthe Kashagan field amounted to 596 mmBOE, recording an increaseof 107 mmBOE with respect to 2005 due to an extension of theproved area and project cost revision, offset in part by theimpact of price revisions.

As of December 31, 2007, the aggregate costs incurred by Enifor the Kashagan project capitalized in the financial statementsamounted to $2.6 billion. This capitalized amount included: (i)$1.8 billion relating to expenditures incurred by Eni for thedevelopment of the oilfield; and (ii) $0.8 billion relatingprimarily to accrued finance charges and expenditures for theacquisition of interests in the North Caspian Sea PSA consortiumfrom exiting partners upon exercise of pre emption rights inprevious years. The $2.6 billion amount was equivalent to euro1.8 billion based on the 2007 year-end euro/U.S. dollar exchangerate. As of December 31, 2006 the aggregate costs incurred by Enifor the Kashagan project that were capitalized by Eni in itsfinancial statements amounted to $1.9 billion, corresponding toeuro 1.5 billion based on 2006 year-end exchange rates.

Costs borne by Eni to explore and develop this field arerecovered in accordance with the mechanisms typicallycontemplated by a PSA scheme, which is widely used in theindustry. In this type of contract the national oil company orState-owned entity assigns to the international oil company (thecontractor) the task of performing exploration and productionwith the contractor’s equipment and financial resources.Exploration risks are borne by the contractor and production isgenerally divided into two portions: "cost oil" is usedto recover costs borne by the contractor and "profitoil" is divided between the contractor and the nationalcompany according to variable schemes and represents the profitderiving from exploration and production. Accordingly,recoverability of the expenditures is subject to approval fromthe relevant State-owned or controlled entity who is party to theagreement. Similarly, cost overruns are recovered to the extentthey are sanctioned by the State-owned or controlled entity whois party to the agreement.

To date, costs incurred for the development of the Kashaganoilfield relate to scheduled works and in accordance to thebudget duly approved by the Kazakhstan authorities, and aretherefore recoverable subject to customary audit rights.

The development plan of the Kashagan field was originallysanctioned by the Kazakh authorities in February 2004,contemplating a three-phase development scheme including partialgas re-injection in the reservoir to enhance the recovery factorof the crude oil. The sanctioned plan budgeted expendituresamounting to U.S. $10.3 billion (in 2007 real terms) to developphase-one, with a target production level of 300 KBBL/d. Firstoil was originally scheduled to be produced by the end of 2008.Eni was expected to fund these expenditures according to itsparticipating interest in this project. On June 29, 2007, Eni, asoperator, filed with the relevant Kazakh authorities amendmentsto the sanctioned development plan. These amendments rescheduledthe production start-up to 2010 and estimated developmentexpenditures for phase-one at U.S. $19 billion. The productiondelay and cost overruns were driven by a number of factors:depreciation of the U.S. Dollar versus the Euro and othercurrencies; cost price escalation of goods and services requiredto execute the project; an original underestimation of the costsand complexity to operate in the North Caspian Sea due to lack ofbenchmarks; design changes to enhance the operability and safetystandards of the off-shore facilities.

In July 2007, the Kazakh authorities rejected the proposedamendments to the sanctioned development plan. In August 2007,the Government of the Kazakh Republic sent to the companiesforming the NCSPSA consortium a notice of dispute allegingfailure on part of the consortium to fulfil certain contractualobligations and violation of the Republic’s laws.Negotiations commenced with a view to settle this dispute.

On January 14, 2008, all parties to the NCSPSA consortium andthe Kazakh authorities signed a memorandum of understanding forthe amicable resolution of this dispute. The material terms ofthe agreement are: (i) the proportional dilution of theparticipating interest of all the international members of theKashagan consortium, following which the stake held by thenational Kazakh Company KazMunayGas and the stakes held by theother four major shareholders will each be equal to 16.81%. Thesechanges will be effective January 1, 2008. The Kazakh partnerwill pay the other co-venturers an aggregate amount of U.S. $1.78billion; (ii) a value transfer package to be implemented throughchanges to the terms of the NCSPSA, the amount of which will varyin proportion to future levels of oil prices. Eni is expected tocontribute to the value transfer package in proportion to its newparticipating interest in the project; and (iii) an increasedrole of the Kazakh partner in operations and a new operating andgovernance model which will entail a greater involvement of themajor international partners.

Although the project was not stopped during the negotiationprocess, its progress slowed down. The NCPSA consortium haspresented to the Kazakh authorities a revised budget and schedulefor the execution of the phase-one of the project, and therelevant discussions are currently ongoing.

The magnitude of the reserves base, the results of the firstfour tests conducted on development wells and the subsurfacestudies completed to date support expectations for a full fieldproduction plateau of 1.5 mmBBL/d, which represents a 25%increase above the original plateau as presented in the 2004development plan. An independent reserve evaluation performed bya petroleum engineer (Ryder Scott Petroleum Consultants) fullysupports the target production plateau of the Kashagan field. Theachievement of the full field production plateau will require amaterial 

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amount of expenditures in addition to the developmentexpenditures needed to complete the execution of phase-one.However, taking into account that future development expenditureswill be incurred over a long time horizon, management does notexpect any material impact on the company’s liquidity or itsability to fund these capital expenditures.

In addition to the expenses incurred for developing the field,further capital expenditures will be required to build theinfrastructures needed for exporting the production tointernational markets, for which various options are currentlyunder consideration by the consortium. These include: (i) the useof existing infrastructure, such as the Caspian PipelineConsortium pipeline (Eni’s interest 2%) and theAtyrau-Samara pipeline, both of which are expected to undergo acapacity expansion; and (ii) the construction of a newtransportation system. In this respect, it is worth mentioningthe project aimed at building a line connecting the onshoreBolashak production center with the Baku-Tbilisi-Cehyan pipeline(where Eni holds an interest of 5% corresponding to the right totransport 50 KBBL/d).

*Kazakhstan-Karachaganak.* Located in West onshoreKazakhstan, Karachaganak is a liquid and gas field. Operationsare conducted by the Karachaganak Petroleum Operating consortium(KPO) and are regulated by Production Sharing Agreement lasting40 years, until 2037. Eni is co-operator of the venture with32.5% interest.

In 2007, production from this field averaged 234 KBBL/d ofliquids and 743 mmCF/d of natural gas, being 70 KBBL/d and 238mmCF/d Eni’s share, respectively. This field is developed byproducing liquids from the deeper layers of the reservoir andre-injecting the associated gas in the higher layers. This schemeenables to increase the recovery of liquids. Approximatelytwo-thirds of liquid production are stabilized at theKarachaganak Processing Complex (KPC) with a capacity of 150KBBL/d and exported to Western markets through the CaspianPipeline Consortium (Eni's interest 2%) and the Atyrau-Samarapipeline. The remaining third of non-stabilized liquid productionand volumes of associated gas not re-injected in the reservoirare marketed at the Russian terminal in Orenburg. The planttreatment capacity is being upgraded which will enable toincrease exported volumes by 56 KBBL/d from 2009.

| In June 2007, the operating        consortium and KazRosGaz, a joint company established by        KazMunaiGaz and Gazprom, signed a gas sale contract.        According to the terms of this agreement, the consortium        will deliver, from 2012, approximately 565 BCF/y of raw        gas to the Orenburg plant, in Russia. This agreement has        created conditions for the start up of Phase 3 of the        development project of the field targeting development of        natural gas reserves that management believes to amount        to significant volumes. The agreement was approved by the        Boards of both parties. In this context, in 2007        construction started of the Uralsk gas Pipeline,        150-kilometer long linking from 2009 the field to the        Kazakh pipeline network.
As of December 31, 2007,        Eni’s proved reserves booked for the Karachaganak        field amount to 541 mmBOE, recording a decrease of 82        mmBOE with respect to 2006 as a result of downward and        upward revisions of previous estimates. Downward        revisions mainly related to an adverse price impact in        determining volume entitlements in accordance with the        PSA scheme. These negative revisions were partly offset        by upward revisions mainly related to the finalization of        the gas sale contract as outlined above.

*Rest of the World*

In 2007, Eni’s operations in the rest of world        accounted for 13% of its total worldwide production of        oil and natural gas.

*Australia.* Eni has been present in Australia        since 2000. In 2007, Eni’s net production of oil and        natural gas averaged 18 KBOE/d. Activities are focused on        conventional and deep offshore fields.

The main production blocks in which Eni holds        interests are WA-25-L (Eni operator with a 65% interest)        and JPDA 03-13 (Eni’s interest 10.99%). In the        exploration phase Eni is operator with a 100% interest of        7 blocks in permits WA-279 P and WA-313-P, where the        Blacktip and Penguin fields are located. |   |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

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In August 2007, Eni signed an agreement to purchase a 30%interest in four exploration blocks in the Exmouth Plateau areain Australia. The four blocks are located at a maximum waterdepth of 2,000 meters. Eni’s equity interest will increaseby 10% after at least one exploration well is drilled. Eni willbe the operator during the development phase.

In September 2007, Eni acquired a 40% interest and theoperatorship of the JPDA 06-105 exploration permit, located inthe international offshore cooperation zone between East Timorand Australia. Two oil discoveries are located in this permit.The exploration plan provides the drilling of a well in 2008.

Exploration and production activities in Australia areregulated by concessions, while in the cooperation zone betweenEast Timor and Australia (JPDA) they are regulated by PSAs.

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

*China.* Eni has been present in China since 1984. In2007, Eni’s production amounted to 8 KBOE/d. Activities arelocated in the South China Sea.

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

Production derives mainly from offshore blocks 16/08 and 16/09operated by the CACTOG consortium (Eni’s interest 16.33%).Oil production, destined to the domestic market, derives mainlyfrom the HZ26-1 field (Eni’s interest 16.33%) through fixedplatforms, one of them underwater, linked to an underwatertransport facility to the Zhuhai treatment plant. Ongoingdevelopment activities concerned mainly the HZ25-3/1 field withexpected start-up in 2009.

*Croatia.* Eni has been present in Croatia since 1999. In2007, Eni’s net production of natural gas averaged 51mmCF/d. Activities are deployed in the Adriatic offshore facingthe city of Pula.

Exploration and production activities in Croatia are regulatedby PSA.

The main producing gas fields are Ivana, Ika & Ida, Maricaand Katerina which operated by Eni through a 50/50 joint venturewith the national Croatian oil company.

Development activities of the Annamaria, Irina and Ana/Vesnadiscoveries are ongoing. A common project is expected to bedeployed in all of them, envisaging the installation ofproduction platforms which shall be linked to existingfacilities. Start-up is expected in 2009.

*India.* Eni has been present in India since 2005 and isperforming exploration activities in onshore Block RJONN-2003/1(Eni’s interest 34%) and offshore Blocks AN-DWN-2003/2(Eni’s interest 40%) and MNDWN 2002/1 (Eni’s interest34%).

The exploration program for Block RJ-ONN-2003/1, located inthe desert of Rajastan, provides drilling of four wells in thefirst four years of the license. Any hydrocarbons discovered willbe sold locally.

The exploration program for Block AN-DWN-2003/2 near theAndaman Islands provides drilling of three wells in the firstfour years of the license. In 2007, activity concerned theacquisition of seismic data in order to plan the exploration anddrilling activity.

*Indonesia.* Eni has been present in Indonesia since2000. Eni’s production amounted to 17 KBOE/d, mainly gas, in2007. Activities are concentrated in the western offshore andonshore of Borneo and offshore Sumatra.

Exploration and production activities in Indonesia areregulated by PSAs.

Production consists mainly of gas and derives from the SangaSanga permit (Eni’s interest 37.81%) with seven productionfields. This gas is treated at the Bontang liquefaction plant,the largest in the world, and is exported to the Japanese, SouthKorean and Taiwanese markets. Ongoing activities aim atmaintaining the current production plateau by means of infillingwells and the optimization of existing ones.

In January 2007, Eni and Pertamina signed a Memorandum ofUnderstanding aimed at identifying joint developmentopportunities for exploration and development activities.

Main ongoing projects include the joint development of thefive discoveries in the Kutei Deep Water Basin area (Eni’sinterest 20%). Production will be treated at the Bontang LNGplant. The project has not yet been sanctioned by authorities.

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Exploration activity was successful with the Tulip Eastoffshore discovery (Eni’s interest 100%), and an appraisalwell of the Aster field (Eni’s interest 66.25%) was drilledand yielded 5 KBOE/d in test production.

*Iran.* Eni has been present in Iran since 1957. In 2007,production net to Eni averaged 26 KBOE/d. Eni’s activitiesare concentrated in the offshore of the Persian Gulf and onshore.

Exploration and production activities in Iran are regulated bybuy-back contracts.

The main producing fields are South Pars phases 4 and 5 in theoffshore of the Persian Gulf and Darquain located onshore whichaccounted for 88% of Eni’s production in Iran in 2007. Enialso holds interests in the Dorood field (Eni’s interest45%).

The main ongoing project regards the Darquain field operatedby Eni with a 60% interest. Upgrading activities are underway bymeans of drilling additional wells, increasing capacity of theexisting treatment plant and gas-injection. These actions aim atincreasing production from the present 50 KBBL/d to over 160KBBL/d (14 net to Eni) by 2009.

The legislation and other regulations of the United States ofAmerica impose sanctions on this country and may lead to theimposition of sanctions on any persons doing business in thiscountry or with Iranian counterparties. Particularly, under theIran Sanctions Act of 1996 (as amended, "ISA"), whichimplements sanctions against Iran with the objective of denyingit the ability to support acts of international terrorism andfund the development or acquisition of weapons of massdestruction, upon receipt by the U.S. authorities of informationindicating potential violation of this act, the President of theUnited States is authorized to start an investigation aiming atpossibly imposing sanctions from a six-sanction menu against anyperson found in particular to have knowingly made investments ofU.S. $20 million or more in any twelve-month period, contributingdirectly and significantly to the enhancement of Iran’sability to develop its hydrocarbons resources. Furthermore, theISA envisages that the President of the United States is bound toimpose sanctions against any persons that knowingly contribute tocertain military programs of Iran, effective on June 6, 2006. Enicannot predict interpretations of, or the implementation policyof the U.S. Government under, ISA with respect to Eni’scurrent or future activities in Iran or other areas. Eni hasincurred capital expenditures in excess of U.S. $20 million inIran in each of the last 8 years. Management expects to continueinvesting in Iran yearly amounts in excess of that threshold inthe foreseeable future. Eni’s current activities in Iran areprimarily limited to carrying out residual development activitiesrelating to certain buy-back contracts it entered into in 2000and 2001 and no sanctions have ever been imposed on Eni’sactivities in the country. It is possible that in future yearsEni’s activities in Iran may be sanctioned under relevantU.S. legislation.

*Pakistan.* Eni has been present in Pakistan since 2000.In 2007, production net to Eni averaged 50 KBOE/d, mainly gas.

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

Eni’s main permits are Bhit (Eni operator with a 40%interest), Sawan (23.68%) and Zamzama (17.75%), which in 2007accounted for 90% of Eni’s production in Pakistan.

In 2007, Eni and State oil company PPL signed an agreementproviding for a swap of interests in the offshore Blocks M, N andC. Within this agreement, Eni holds 70% interest in the M and Nblocks and 60% interest as operator in the C block.

In April 2008, upgrading facilities was completed at the Bhitgas field leading to the start-up of the satellite Badhra field.

Main discoveries for 2007 were achieved in: (a) the Gambatpermit (Eni’s interest 30%) where the Tajjal 1 explorationwell showed the presence of gas at a depth of 3,845 meters; (b)the Kadanwari permit (Eni operator with a 18.42% interest) wherethe Kadanwari 18 appraisal well confirmed the presence of gas ata depth of approximately 3,400 meters; and (c) the Latif permit(Eni’s interest 33.3%) where the Latif 1 exploration welldiscovered a hydrocarbon formation at a depth of 3,520 meters.

*Russia.* In April 2007, as part of Eni’s strategicalliance with Gazprom, Eni, through the partnership inSeverEnergia (60% Eni, 40% Enel), former EniNeftegaz, acquiredassets of Lot 2 as part of the liquidation procedure of bankruptRussian company Yukos. Eni’s share of cash consideration ofthis transaction amounted to euro 3.73 billion. Acquired assetsincluded: (i) a 100% interest in three Russian companies(Eni’s share being 60%) operating in the exploration anddevelopment of natural gas reserves, OAO Arctic Gas Co, ZAOUrengoil Inc and OAO Neftegaztechnologia with proved reservesamounting to 617 mmBOE net to Eni, as well as certain minorassets that are expected to be sold or liquidated. Eni and Enelgranted Gazprom a call option to purchase a 51% interest in theseinvestments to be exercisable within two years from the purchasedate. Should Gazprom exercise its call option, Eni’sinterest would be diluted to approximately 30% and provedreserves that were booked in connection with the acquisitionwould be reduced by approximately 50%. These investments areaccounted under

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the equity method as Eni jointly controls them based on agreedterms with the other partners. As these entities did not produceany revenue in the year, no significant loss or gain on equityevaluation was recorded in the profit or loss account; and (ii) a20% interest in OAO Gazprom Neft which was purchased only by Eni.Eni granted Gazprom a call option on this 20% interest in OAOGazprom Neft to be exercisable within two years from the purchasedate. The strike price equals the purchase price plus acontractual remuneration on capital employed, less dividenddistributed. This interest is classified as a current asset andassessed at fair value trough profit or loss as provided by thefair value option of IAS 39, considering that the call option isbeing assessed in the same way. The fair value of OAO GazpromNeft is based on currently quoted market price as this company islisted at the London Stock exchange. As a result of thisaccounting treatment, a gain equal to the contractualremuneration of capital employed was recognized in 2007 profitand loss account (net gain of euro 188 million). See Item 5 for amore detailed discussion.

The three acquired gas companies are located in the YamalNenets region: (i) OAO Arctic Gas Co owns two explorationlicenses, Sambugurskii and Yevo-Yahinskii including seven fieldscurrently in the appraisal/development phase. Main fields areSambugorskoye currently under development and production testingand Urengoiskoye; (ii) ZAO Urengoil Inc owns exploration anddevelopment licenses for the Yaro-Yakhinskoye gas and condensatefield; and (iii) OAO Neftegaztechnologia owns the exploration anddevelopment license of the Severo-Chasselskoye field.

During 2007, certain activities were executed in order to setup the operational organization and take control of existingassets. An overall plan was assessed to complete and startacquired assets. Ongoing development activities moved forwardbringing the wells to a sufficient level of safety and assessingresumption of construction of production and transportationfacilities, as well as defining a seismographic activity.Finalization of the gas sale contracts is underway.

*Saudi Arabia.* Eni has been present in Saudi Arabiasince 2004. Ongoing activities concern exploration of theso-called C area in order to discover and develop gas reserves.This license is located in the Rub al Khali basin at the borderwith Qatar and the United Arab Emirates. The exploration planprovides for the drilling of four wells in five years. In case ofa commercial discovery, the contract will last 25 years with apossible extension to a maximum of 40 years. Any gas discoveredwill be sold locally for power generation and as feedstock forpetrochemical plants. Condensates and NGL will be sold oninternational markets. Drilling of the second commitmentexploratory well is underway.

*United States.* Eni has been present in the UnitedStates since 1966. Activities are performed in the conventionaland deep offshore in the Gulf of Mexico and more recently onshoreand offshore Alaska.

In 2007, Eni’s oil and gas production deriving only fromthe Gulf of Mexico averaged 68 KBOE/d, significantly growing from2006 (up 114%) due to the acquisition of producing assets fromDominion Resources. This acquisition closed in July 2007 with anoutlay of euro 3.5 billion. Acquired properties brought in anadditional production of approximately 75 KBOE/d and provedreserves amounting to 123 mmBOE.

Exploration and production activities in the United States areregulated by concessions.

Eni holds interests in 400 exploration and production blocksin the Gulf of Mexico, 60% operated.

In October 2007, following an international bid procedure Eniwas awarded 26 new exploration licenses in the Gulf of Mexico,covering a gross acreage of 606 square kilometers.

In March 2008, following an international bid procedure Eniwas awarded 32 exploration leases. The subsequent developmentphase will leverage synergies relating to proximity of acquiredacreage to existing operated facilities. Formal assignation issubject to approval by the relevant authorities.

The main fields operated by Eni with a 100% interest areAllegheny, East Breaks and Morphet as well as assets acquiredfrom Dominion Resources including Devils Towers, Triton andGoldfinger (Eni operator with a 75% interest). Eni also holdsinterests in the Medusa (Eni’s interest 25%), Europa(Eni’s interest 32%), and King Kong (Eni operator with a 56%interest) fields.

Development of acquired assets in the year allowed thestart-up of production at the San Jacinto (Eni is operator with a53.3% interest), Q (Eni’s interest 50%) and Spiderman(Eni’s interest 36.7%) fields. Development of these fieldswas performed by installing underwater facilities to link to theIndependence Hub platform. The production plateau ofapproximately 25 KBOE/d has been reached at the end of 2007. Mainprojects include the development of reserves at the Longhorndiscovery (Eni’s interest 75%) trough installing productionplatform. Production is expected to start in 2009 peaking at 28KBOE/d (approximately 19 net to Eni).

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| Exploration activity was        successful with the Kodiak oil and gas discovery        (Eni’s interest 25%) that will be developed trough        the facilities of the operated Devil’s Tower        platform.
Eni’s activities in Alaska are currently        in the exploration and development phase in 158 blocks        with interests ranging from 10 to 100%, over half as        operator.

In February 2008, following an international bid        procedure Eni was awarded 18 exploratory license in        Alaska, 4 blocks as operator. Formal assignation is        subject to approval by the relevant authorities.

In April 2007, Eni acquired 70% and the operatorship        of the Nikaitchuq field, located offshore on the North        Slope of Alaska. Eni, which already owned a 30% stake in        the field, now retains the 100% working interest.        Nikaitchuq will be the first development project operated        by Eni in Alaska. In October 2007, the phased development        plan was sanctioned by the authorities. Production is        expected to start at the end of 2009 with production        plateau at 25 KBOE/d in 2014.

Main projects include the development of reserves at        the offshore Oooguruk field (Eni’s interest 30%) in        the Beaufort Sea. Production is expected to start in the        second half of 2008 peaking at 17 KBOE/d (5 KBOE/d net to        Eni) in 2010. |   |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--|

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In the medium term, management expects to increase Eni’sproduction reflecting the development and integration of assetsacquired and the start-up of fields in Alaska.

*Venezuela.* Eni has been present in Venezuela since1998.

In June 2007, Eni signed a memorandum of understanding withnational state-owned company PDVSA which defines the terms forthe transfer of the development activity of the Corocoro field inVenezuela to the new contractual regime of "empresamixta". Eni will retain its 26% interest in this project. OnDecember 5, 2007, the agreement was finalized. First oil wasachieved in the first quarter of 2008. Production is expected topeak at 66 KBBL/d (17 KBBL/d net Eni).

In February 2008, Eni and the Venezuelan Authorities reached afinal settlement over the dispute regarding the expropriation ofthe Dación field which took place on April 1, 2006. Under theterms of the settlement, Eni will receive cash compensation to bepaid in seven yearly installments. This cash compensation is notsubject to Venezuelan taxation and yields interest income fromthe date of the settlement. The net present value of this cashcompensation is in line with the book value of assets, net of therelated provisions. In February 2008, Eni dropped theinternational arbitration proceeding commenced in 2006 againstPDVSA.

In February, 2008 Eni and PDVSA signed a strategic agreementfor the development of the Junin Block 5 located in the Orinocooil belt. This block covers a gross acreage of 670 squarekilometers. Once relevant studies have been performed and adevelopment plan defined, a joint venture between PDVSA (60%) andEni (40%) will be established to execute the project. Eni intendsto contribute its experience and leading technology to theproject in order to maximize the value of the heavy oil. Inparticular, it will make available its EST (Eni SlurryTechnology) proprietary technology. This is a highly innovativetechnology for the complete conversion of heavy oils intohigh-quality light products.

 

> 
***Capital Expenditures***

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

 

> 
***Storage***

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

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

In 2007, the share of storage capacity used by third partieswas 56%. From the beginning of its operations, Stogit markedlyincreased the number of customers served and the share ofrevenues from third parties; the latter, from a non-significantvalue, passed to 43%.

| **Storage** |   | **2005** |   | **2006** |   | **2007** |
|-------------|--------|----------|--------|----------|--------|----------|
|        |   |          |   |          |   |          |

| Available capacity:                 |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| -        modulation and mineral     |   | (BCM)  |   | 7.5    |   | 8.4    |   | 8.5    |
|   . share utilized by Eni |   | (%)    |   | 44     |   | 54     |   | 44     |
| -        strategic                  |   | (BCM)  |   | 5.1    |   | 5.1    |   | 5.1    |
| Total customers                     |   | (No.)  |   | 35     |   | 38     |   | 44     |

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

----

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

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**Gas & Power**

Eni’s Gas & Power segment involves supply, transport,distribution and marketing of natural gas, as well as of LNG.This segment also includes the activity of power generation thatenables Eni to extract further value from gas, diversifying itscommercial outlets.

Eni’s strategy in its Gas & Power segment is to growinternational sales, preserve the profitability of Italian gasmarketing operations, increase operational efficiency andeffectiveness mainly in regulated businesses (i.e., Italiantransport and distribution activities), and develop a global LNGbusiness.

In the future, management expects that natural gas willsatisfy an increasing portion of global energy needs. Accordingto Eni’s internal estimates, worldwide gas demand will growat an annual rate of approximately 2.8% through 2020, outpacingthe expected annual growth rate in total energy consumption.

In Europe, Eni expects gas demand to grow at an average annualrate of 2-3% by 2020, reaching an amount of 780 BCM. The maindriver of this growth will be the wider use of gas in powergeneration. A growing portion of European gas requirements isexpected to be satisfied by imports via pipeline. According toEni’s estimates, European gas imports will cover at least85% of consumption from the current level of 60%, due to domesticproduction decrease. Eni expects that LNG will play anincreasingly important role in diversifying sources of supply andwill cover approximately 25% of European consumption needs by2020 (currently LNG represents 15% of European needs).

Against this backdrop, management plans to increaseinternational natural gas sales leveraging on Eni’s gasavailability under long-term supply contracts and equity gas,access to infrastructures, long-term relationships with keyproducing countries (mainly Russia, Algeria and Libya), marketknowledge and a wide portfolio of clients. Eni intends tostrengthen its presence in European markets where its presence isalready established – such as the Iberian Peninsula,Germany, France, the United Kingdom and Turkey – and todevelop its marketing activities internationally, particularly inthe U.S. leveraging on the planned expansion of theCompany’s LNG business.

In 2007, natural gas demand in Italy amounted to 84.9 BCM;approximately 90% of gas requirements were met through importsand 10% was covered by domestic production. Eni expects naturalgas consumption in Italy to increase at an average growth rate ofapproximately 2% through 2020, reaching an amount of 111.2 BCM in2020 (gas volumes are projected at 93.2 BCM in 2011), driven byrising consumption in the power generation sector. Growing gasneeds will be met by a projected increase in import capacity,which will be supported by significant capital expenditureprojects designed to upgrade existing infrastructures and tobuild new ones.

In Italy, in an increasingly competitive market, Eni intendsto preserve selling margins and sales volumes of its marketingoperations by leveraging on the expected growth of gas demand andimplementing marketing initiatives designed: (i) to focus themost profitable customer segments; (ii) to upgrade the commercialoffer by tailoring pricing and services to customers’specific needs; and (iii) to develop the combined offer of gasand electricity ("dual offer"). A strong focus will bedevoted to reducing marketing expenses.

In the medium term, Eni plans to increase worldwide salestargeting a volume of 110 BCM by 2011, leveraging on expectedgrowth in international sales that are projected to achieve anaverage annual rate of increase of 9%.

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

 

> 
**Supply of natural gas**

In 2007 Eni’s consolidated subsidiaries supplied 83.80BCM of natural gas with a 5.47 BCM decrease from 2006, down 6.1%.

Natural gas volumes supplied outside Italy in 2007 (75.15 BCM)decreased by 3.91 BCM from 2006, or 4.9%, reflecting unusuallymild winter weather in Europe. Lower volumes were purchased: (i)from the Netherlands (down 2.54 BCM from 2006); (ii) from Russia(down 2.51 BCM from 2006) also due to implementation ofagreements signed in 2006 with Gazprom, whereby Gazprom startedto supply certain Italian importers that were supplied by Eni inprevious years; and (iii) from Algeria via pipeline (down 2.29BCM from 2006).

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Supplies from Libya increased by 1.54 BCM in 2007 due to thebuild-up of gas production from Eni-operated fields. In additionsupplies from Russia to Turkey increased by 0.97 BCM, in linewith the development of the Turkish market.

Supplies in Italy (8.65 BCM in 2007) declined by 1.56 BCM from2006, or 15.3%, due to mature fields declines.

Gas volumes from equity production amounted to 20 BCMrepresenting approximately 20% of total volumes available forsales. Main equity volumes derived from: (i) Eni’s Italiangas fields (7.87 BCM); (ii) the Wafa and Bahr Essalam fields inLibya linked to Italy through the GreenStream pipeline. In 2007,these two fields supplied 3.62 BCM of equity production to theGas & Power segment; (iii) certain Eni’s fields locatedin the British and Norwegian sections of the North Sea (5.81BCM); and (iv) the Gulf of Mexico (1.8 BCM).

In 2007, natural gas volumes uplifted from the storagedeposits owned by Eni’s subsidiary Stoccaggi Gas were 1.49BCM, compared to net input of 3.01 BCM in 2006.

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

| **Natural        gas supply** |   | **2005** |   | **2006** |   | **2007** |
|-------------------------------|--------|----------|--------|----------|--------|----------|
|                          |   |          |   |          |   |          |

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

| ***Italy***                                                      |   | **10.73** |   |   | **10.21** |   |   | **8.65**  |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Russia for        Italy                                          |   | 21.03     |   |   | 21.30     |   |   | 18.79     |   |
| Russia for Turkey                                                |   | 2.47      |   |   | 3.68      |   |   | 4.65      |   |
| Algeria                                                          |   | 19.58     |   |   | 18.84     |   |   | 16.55     |   |
| Libya                                                            |   | 4.61      |   |   | 7.70      |   |   | 9.24      |   |
| the        Netherlands                                           |   | 8.29      |   |   | 10.28     |   |   | 7.74      |   |
| Norway                                                           |   | 5.78      |   |   | 5.92      |   |   | 5.78      |   |
| the United        Kingdom                                        |   | 2.28      |   |   | 2.50      |   |   | 3.15      |   |
| Hungary                                                          |   | 3.63      |   |   | 3.28      |   |   | 2.87      |   |
| Croatia                                                          |   | 0.43      |   |   | 0.86      |   |   | 0.54      |   |
| Algeria (LNG)                                                    |   | 1.45      |   |   | 1.58      |   |   | 1.86      |   |
| Others        (LNG)                                              |   | 0.69      |   |   | 1.57      |   |   | 2.32      |   |
| Other supplies Europe                                            |   | 0.41      |   |   | 0.78      |   |   | 0.76      |   |
| Outside        Europe                                            |   | 1.18      |   |   | 0.77      |   |   | 0.90      |   |
| ***Outside Italy***                                              |   | **71.83** |   |   | **79.06** |   |   | **75.15** |   |
| **Total        supplies of subsidiaries**                        |   | **82.56** |   |   | **89.27** |   |   | **83.80** |   |
| Withdrawals from (input to) storage                              |   | 0.84      |   |   | (3.01     | )      |   | 1.49      |   |
| Network        losses and measurement differences                |   | (0.78     | )      |   | (0.50     | )      |   | (0.46     | )      |
| **Volumes available for sale of Eni’s        subsidiaries** |   | **82.62** |   |   | **85.76** |   |   | **84.83** |   |
| **Volumes        available for sale of Eni’s affiliates**   |   | **7.08**  |   |   | **7.65**  |   |   | **8.74**  |   |
| **E&P volumes**                                              |   | **4.51**  |   |   | **4.69**  |   |   | **5.39**  |   |
| **Total        volumes available for sale**                      |   | **94.21** |   |   | **98.10** |   |   | **98.96** |   |

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

In order to meet the medium and long-term demand for naturalgas, particularly in the European markets including Italy, Enientered into long-term purchase contracts with producingcountries. In 2006, Eni signed a long-term supply agreement withGazprom whereby Eni extended the duration of its gas supplycontracts to approximately 22 years. Existing contracts, whichgenerally contain take-or-pay clauses, will ensure a total ofapproximately 62.4 BCM/y of natural gas by 2010.

Despite the fact that an increasing portion of natural gasvolumes purchased under said contracts is planned to be soldoutside Italy, management believes that in the long-termunfavorable trends in the Italian demand and supply for naturalgas, also due to the possible implementation of all publiclyannounced plans for the construction of new supplyinfrastructures, and the evolution of Italian regulations of thenatural gas sector, represent risk factors to the fulfillment ofEni’s obligations in connection with its take-or-pay supplycontracts. See "Item 3 – Risk Factors" and"Item 5 – Contractual Obligations".

In 2007, Eni purchases under its take-or-pay contracts werehigher than its minimum uplift obligation. This amount relatesmainly to a contractual year, rather than a calendar year (fromOctober to end of September for a sizeable part of Eni Gas &Power long-term supply contracts).

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> 
**Marketing**

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

In 2007, Eni’s worldwide gas sales (98.96 BCM, includingown consumption, Eni’s share of affiliates sales and E&Psales in Europe and in the Gulf of Mexico) were up 0.86 BCM from2006, or 0.9%, due to growth achieved on international markets,in particular in markets in Europe (up 3.64 BCM) and outsideEurope (up 0.91 BCM). These increases were partly offset by lowersales to Italian importers (down 3.43 BCM) and to the domesticmarket (down 0.96 BCM).

Natural gas sales in Italy were 56.13 BCM (including ownconsumption) and declined by 0.96 BCM from 2006, or 1.7%.

The Italian market includes three groups of clients:industrial, residential and power generation users; they arefurther grouped as follows: (i) large industrial clients andpower generation utilities directly linked to the national andthe regional natural gas transport networks; (ii) residentialcustomers include households (also referred to as the retailmarket), the tertiary sector (mainly commercial outlets,hospitals, schools and local administrations) and smallbusinesses (also referred to as the middle market) located inlarge metropolitan areas and urban centers; and(iii) wholesalers, mainly local selling companies whichresell natural gas to residential customers through low pressuredistribution networks.

In 2007, the decline in sales on the Italian gas market wasprimarily due to lower sales to industrial users (down 1.56 BCM),also owing to competitive pressure, and residential users (down0.64 BCM) mainly due to unusually mild winter weather. Salesincreased by 0.54 BCM and 0.38 BCM in the power generation andwholesalers segments. Sales under the gas release programs (2.37BCM) increased by 0.37 BCM from 2006. These sales related tocertain proceedings settled between Eni and the Italian AntitrustAuthority. In June 2004, Eni agreed with the Antitrust Authorityto sell a total volume of 9.2 BCM of natural gas (2.3 BCM/y) inthe four thermal years from October 1, 2004 to September 30, 2008at the Tarvisio entry point into the Italian network. In March2007 a new gas release program was signed for volumes amountingto 4 BCM of natural gas to sell in the two thermal years fromOctober 1, 2007 to September 30, 2009 at a virtual exchange pointin the Italian market.

Sales to importers in Italy (10.67 BCM) declined by 3.43 BCMmainly due to a switch from supplies of Libyan gas to volumesdirectly sold in Italy to a number of clients in view ofoptimizing Eni equity production, as well as the expiration of asupply contract with Promgas.

Gas sales in markets in the rest of Europe (24.35 BCMincluding affiliates) increased in 2007 by 3.64 BCM, or 17.6%,reflecting also market share gains. Main increases were mainlyregistered in: (i) Spain (up 1.67 BCM over 2006), due to highersupplies to the power generations segment; (ii) Turkey (up 0.94BCM over 2006), due to the progressive reaching of fulloperations of the Blue Stream pipeline; (iii) France (up 0.55 BCMover 2006) due to marketing initiatives targeting smallbusinesses and residential customers; and (iv) Northern Europe(up 0.53 BCM over 2006). Sales in markets outside Europe (2.42BCM in 2007) grew by 0.91 BCM, or 60.3% as compared to 2006, onthe back of higher LNG volumes sold on the Asian and NorthernAmerican markets by the affiliate Unión Fenosa Gas (Eni’sshare 50%).

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

| **Natural        gas sales by entities** |   | **2005** |   | **2006** |   | **2007** |
|------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                     |   |          |   |          |   |          |

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

| **Total sales of subsidiaries**                                    |   | **82.62** |   | **85.76** |   | **84.83** |
|--------------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| *Italy*                                                            |   | *58.01*   |   | *57.07*   |   | *56.08*   |
| *Rest of Europe*                                                   |   | *23.44*   |   | *27.93*   |   | *27.86*   |
| *Outside        Europe*                                            |   | *1.17*    |   | *0.76*    |   | *0.89*    |
| **Total sales of Eni’s affiliates**        (Eni’s share) |   | **7.08**  |   | **7.65**  |   | **8.74**  |
| *Italy*                                                            |   | *0.07*    |   | *0.02*    |   | *0.05*    |
| *Rest of Europe*                                                   |   | *6.47*    |   | *6.88*    |   | *7.16*    |
| *Outside        Europe*                                            |   | *0.54*    |   | *0.75*    |   | *1.53*    |
| **Total sales of G&P**                                         |   | **89.70** |   | **93.41** |   | **93.57** |
| E&P in        Europe and in the Gulf of Mexico (a)             |   | 4.51      |   | 4.69      |   | 5.39      |
| **Worldwide gas sales**                                            |   | **94.21** |   | **98.10** |   | **98.96** |

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

----

| (a) |   | E&P sales        include volumes marketed by the Exploration &        Production segment in Europe for 3.59 BCM and in the Gulf        of Mexico for 1.8 BCM for the year 2007 (4.07 and 0.62        BCM, respectively for the year 2006). It also includes        volumes marketed in Europe for 4.51 BCM for the year        2005. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

| **Natural        gas sales by market** |   | **2005** |   | **2006** |   | **2007** |
|----------------------------------------|--------|----------|--------|----------|--------|----------|
|                                   |   |          |   |          |   |          |

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

| ***Italy***                                 |   | **58.08** |   | **57.09** |   | **56.13** |
|---------------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| Wholesalers                                 |   | 12.05     |   | 11.54     |   | 11.92     |
| Gas release                                 |   | 1.95      |   | 2.00      |   | 2.37      |
| Industries                                  |   | 13.07     |   | 13.33     |   | 11.77     |
| Power generation                            |   | 17.60     |   | 16.67     |   | 17.21     |
| Residential                                 |   | 7.87      |   | 7.42      |   | 6.78      |
| Own consumption                             |   | 5.54      |   | 6.13      |   | 6.08      |
| ***Rest        of Europe***                 |   | **29.91** |   | **34.81** |   | **35.02** |
| Importers to Italy                          |   | 11.53     |   | 14.10     |   | 10.67     |
| Markets                                     |   | 18.38     |   | 20.71     |   | 24.35     |
| *Iberian Peninsula*                         |   | *4.59*    |   | *5.24*    |   | *6.91*    |
| *Germany-Austria*                           |   | *4.23*    |   | *4.72*    |   | *5.03*    |
| *Turkey*                                    |   | *2.46*    |   | *3.68*    |   | *4.62*    |
| *Northern        Europe*                    |   | *2.93*    |   | *2.62*    |   | *3.15*    |
| *Hungary*                                   |   | *3.39*    |   | *3.10*    |   | *2.74*    |
| *France*                                    |   | *0.15*    |   | *1.07*    |   | *1.62*    |
| *Other*                                     |   | *0.63*    |   | *0.28*    |   | *0.28*    |
| ***Outside        Europe***                 |   | **1.71**  |   | **1.51**  |   | **2.42**  |
| E&P in Europe and in the Gulf of Mexico |   | 4.51      |   | 4.69      |   | 5.39      |
| **Worldwide        gas sales**              |   | **94.21** |   | **98.10** |   | **98.96** |

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

> 
 

***Electricity Sales for the Year***

In 2007, sales of electricity (33.19 TWh) increased by 2.16TWh from 2006, up 7%, reflecting higher production availabilitydue to full operations of the Brindisi plant and higher volumespurchased from third parties in Italy and outside Italy. Sales ofsteam (10,849 ktonnes) in 2007 increased by 562 ktonnes from2006, up 5.5% and were directed to end customers.

Sales of electricity amounting to 33.19 TWh were directed tothe free market (63%), the electricity exchange (26%), industrialsites (8%) and Electricity Sevice Operator (3%). In 2007, Enistarted to market electricity to the retail segment leveraging onthe launch of a combined integrated offer of gas and electricity(dual offer) leading to the acquisition of approximately 120,000customers.

To this end, in 2007 Eni implemented an internalreorganization of its activities of production and marketing ofelectricity. Effective from January 1, 2007, electricitymarketing activity has been managed by the Eni gas marketingdepartment in order to better manage and integrate the marketingof gas and electricity. Power generation activity remainedentrusted to Eni’s subsidiary EniPower.

 

> 
***Planned Actions and Sales Target***

In the medium term, Eni plans to increase its sales volumes ofnatural gas in international markets, mainly in Europe and theU.S., in order to compensate for lower growth opportunities onits domestic market due to sector-specific regulation imposinglimits to the size of Italian gas operators. In order to achieveits growth targets, Eni will leverage on its strengthsrepresented by gas availability both as equity gas and underlong-term purchase contracts, operational flexibility ensured byaccess to a large transport network, re-gasification terminalsand logistic assets, a large portfolio of clients and marketknowledge.

 

> 
***(i) Italy***

In the medium term management expects to comply with marketlimits imposed by Italian sector-specific regulation, in terms ofboth volumes intake into the national network and sales volumes,through the optimal allocation of Eni’s available volumes ofgas between sales in Italy and in the rest of Europe, and the useof gas in Eni’s power generation plants, leveraging also onthe expected increase in demand.

Eni targets sales volumes of approximately 50 BCM in 2011.This target takes account of the expected increase in competitivepressure due to new supplies coming on stream on the Italian gasmarket. Specifically, import capacity to Italy is projected toincrease by 25 BCM over the next four years. In next two-yearperiod, approximately 21 BCM of new capacity are expected to comeon stream in connection with Eni’s ongoing upgradingprojects of its international pipelines, mainly from Russia andAlgeria, as well as the ongoing construction of an LNG plant by athird party.

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In order to support sales and profitability of its marketingoperations in Italy, Eni intends to implement an effectivemarketing policy, intended to deliver value to customersleveraging on the quality of the service and the offer ofcustomized price formulas. Eni’s marketing initiatives willfocus mainly the middle and retail markets, also leveraging onthe expected development of the combined offer of gas andelectricity to residential customers ("dual offer").

At the same time, Eni expects to preserve its selling marginsby means of reducing the cost to serve leveraging ontechnological innovation, streamlining front-end and back-endprocesses and achieving economies of scale and synergies,particularly those driving from the dual offer in terms ofprocess integration for acquiring, retaining and managingcustomers.

 

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

In the future, Eni intends to strengthen its leadership in theEuropean gas markets, targeting to increase both volumes andmarket shares. A review of Eni’s presence in key Europeanmarkets and volume targets for 2011 is presented below.

*France.* Eni sells natural gas to industrial clients andresellers and plans to increase its market share mainly in thesegments of small businesses and retail, leveraging on theliberalization of the market that has started from July 1, 2007.

Specifically, the retail segment presents attractive growopportunities with 11.5 million of customers and consumptionequaling 60% of total national consumption. Eni expects toramp-up sales on the French market to achieve approximately 5 BCMof sales by 2011. This target represents an annual average growthrate of 33%. Eni expects its market share to reach 9% from thecurrent 3%.

Eni’s development plans on the French market willleverage on the expansion of direct sales and on the partnershipwith the affiliated entity Altergaz, of which Eni acquired a27.8% stake in 2007 exercising joint control with the otherpartners. Altergaz markets gas to small businesses and the retailsegments supplying 3,500 clients, with revenues of approximatelyeuro 60 million. Eni will support Altergaz’s development inthe target segments through a 10-year supply contract of 1.3BCM/y and will pursue synergies with its own commercialstructure.

*Germany.* Eni is present on the German natural gasmarket through its affiliate GVS (Gasversorgung SüddeutschlandGmbH - Eni 50%) which sold approximately 4.94 BCM in 2007 (2.47BCM being Eni’s share). Eni boasts also a direct marketingstructure.

In the medium term, Eni plans to increase significantly itssales to the business segment, leveraging on the pursuit ofopportunities arising from the ongoing liberalization process.The planned target is to sell 6.9 BCM in 2011, equal to a 6%market share with an annual growth rate of 8.4%.

*Iberian PeninsulaPortugal.* Eni operates on the Portuguese market through itsaffiliate Galp Energia (Eni’s interest 33.34%), which soldapproximately 5.94 BCM in 2007 (1.98 BCM being Eni’s share).In the medium term, sales are expected to remain stable.

*Spain.* Eni operates in the Spanish gas market throughUnión Fenosa Gas (Eni’s interest 50%) which mainly suppliesnatural gas to final customers and power generation utilities.Eni boasts also a direct marketing structure. In 2007, gas salesof Unión Fenosa Gas amounted to 3.64 BCM (1.82 BCM Eni’sshare). Unión Fenosa Gas operates in the LNG business through an80% 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, with42.5% and 18.9% interest, respectively.

Eni plans to increase sales volumes in the Iberian Peninsulafrom the current 6.91 BCM level to approximately 8.9 BCM by 2011,with an annual average growth rate of 7%. Sale increases will bedriven by an expected expansion of Unión Fenosa Gas and thedevelopment of direct sales, mainly to the Spanish powergeneration segment supplied by means of LNG.

*UK/Northern Europe.* Eni through its subsidiary NorthSea Gas & Power (Eni UK Ltd) markets equity gas produced atEni’s fields in the North Sea and operates in the maincontinental natural gas hubs (NBP, Zeebrugge, TTF). Eni plans togrow volumes sold on the markets of the UK/Northern Europe fromthe current 3.2 BCM level to approximately 6.9 BCM by 2011, witha 21% average annual growth rate.

*Turkey.* Eni and Gazprom jointly market natural gas tothe Turkish company Botas under a long-term supply contract.Volumes of natural gas are supplied via the Blue Stream transportsystem (see below) that links the Russian coast (Dzhubga) to theTurkish coast (Samsun) crossing the Black Sea. In 2007,Eni’s share of sales amounted to 4.62 BCM. Leveraging on theexpected demand growth, Eni plans to increase sales up to 6.4 BCMby 2011, equal to a 9% growth rate.

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> 
***(iii) The United States***

Eni’s plans to expand its natural gas sales in the U.S.are described under the "LNG business" below.

> 
**Infrastructures**

Eni operates a large European network of integratedinfrastructures for transporting natural gas, linking keyconsumption basins with the main producing areas (North Africa,Russia and the North Sea).

In Italy, Eni operates almost all the national transportnetwork and a significant portion of local distribution networksfor the delivery of natural gas to residential and commercialusers. Availability of re-gasification capacity in Italy and theIberian Peninsula and storage sites ensure a high level ofoperating flexibility. These assets represent a significantcompetitive advantage. In order to increase the diversificationand reliability of supplies and to cope with expected Europeandemand growth, Eni is implementing plans for upgrading thetransport capacity of its import pipelines from Russia, Algeria,North Europe and Libya, and expanding and modernizing itsnational transport and distribution networks. This plan envisagescapital expenditures of approximately euro 5.6 billion to bedeployed in the next four-year period. Particularly, the Companyplans to increase the transport capacity of its internationalpipeline by 10 BCM, coming on stream in 2008, and further 6 BCMcoming on stream in 2009 relating to ongoing upgrading projects.

 

> 
***International Transport Activities***

In order to import natural gas to Italy, Eni owns capacityentitlements in a network of international high pressurepipelines extending for a total of over 4,300 kilometers enablingthe Company to import natural gas produced in Russia, Algeria,the North Sea and Libya to Italy. A description of the mainpipelines is provided below.

| • |   | The TAG pipeline imports        natural gas from Russia. This is a 1,140-kilometer long        pipe made up of three lines, each about 380-kilometer        long, with a transport capacity of 37 BCM/y, and three        compression stations. Russian natural gas is transported        from Baumgarten, the delivery point at the border of        Austria and Slovakia, to Tarvisio, point of entry in the        Italian natural gas transport system. This facility is        undergoing an upgrade project designed to increase the        transport capacity by 6.5 BCM/y from the current level of        37 BCM/y. A first portion of 3.2 BCM/y is expected to be        operating from October 2008. The second portion is        expected to start operating late in 2009. The whole new        capacity has been or is expected to be awarded to third        parties.                                                                   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | The TTPC pipeline imports        natural gas from Algeria. This is a 742-kilometer long        pipe made up of two lines each 371-kilometer long with a        transport capacity of 27 BCM/y and three compression        stations. Natural gas from Algeria is transported 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 transport capacity of this facility is        expected to be increased by 6.5 BCM/y from the current        level of 27 BCM/y. A first portion of 3.2 BCM/y has come        on line late in April 2008, while the second portion is        expected to start operations by October 2008. The whole        new capacity has been awarded to third parties. The        capacity of the TMPC downstream pipeline is already        adequately dimensioned. TMPC crosses underwater the        Sicily channel. |
| • |   | The TMPC pipeline importing        natural gas from Algeria is 775-kilometer long, is made        up of five lines each 155-kilometer long with a transport        capacity of 33.5 BCM/y. It crosses underwater the Sicily        Channel from Cap Bon to Mazara del Vallo in Sicily, the        point of entry into the Italian natural gas transport        system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | The TENP pipeline importing        natural gas from the Netherlands is 1,000-kilometer long        (two 500-kilometer long lines) with transport capacity of        15.5 BCM/y and four compression stations. This facility        transports natural gas from the Netherlands through        Germany, from the German-Dutch border of Bocholtz to        Wallbach at the German-Swiss border. Eni plans to expand        the transport capacity of this pipeline by 2 BCM coming        on stream late in 2009. A further capacity expansion is        being assessed.                                                                                                                                                                                                                                                                                                                                                                               |
| • |   | The Transitgas pipeline        importing natural gas from the Netherlands and Norway is        291-kilometer long, with one compression station,        transports natural gas from the Netherlands and from        Norway crossing Switzerland with its 165-kilometer long        main line and a 71-kilometer long doubling line, from        Wallbach where it joins the TENP pipeline to Passo Gries        at the Italian border. It has a transport capacity of 20        BCM/y. A new 55-kilometer long line from Rodersdorf at        the French-Swiss border to Lostorf, an interconnection        point with the line coming from Wallbach was built for        the transport of Norwegian gas. Eni is assessing an        upgrade of the capacity of this pipeline of 2 BCM. The        final investment decision is subject to the approval of        the relevant authorities.                                                           |
| • |   | The GreenStream pipeline        imports natural gas from Libya. This is a 520-kilometer        long pipe on a single line. This facility has transport        capacity of 8 BCM/y and crosses underwater the        Mediterranean Sea from Mellitah to Gela in Sicily, the        entry point into the Italian natural gas transport        system. The pipeline started operations in October 2004        and transports gas volumes produced by the Libyan fields        of Wafa and Bahr Essalam operated by Eni with a 50%        interest. Eni plans to upgrade the transport capacity of        this pipeline from the current level of 8 BCM to 11 BCM/y        with full capacity available from 2012.                                                                                                                                                                                                                                        |

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Eni holds a 50% interest in the Blue Stream underwaterpipeline linking the Russian coast to the Turkish coast of theBlack Sea. Through this pipeline, Eni transports gas volumespurchased in Russia to be sold on the Turkish market. Thispipeline is 774-kilometer long on two lines and has transportcapacity of 16 BCM/y.

> 
*Agreement with Gazprom: South Stream project*

On June 23, 2007, as part of the strategic alliance withGazprom, Eni signed a Memorandum of Understanding for buildingthe South Stream pipeline system that will transport volumes ofRussian gas to European markets across the Black Sea. Theagreement provides for a technical and economic feasibility studyof the project, also including political and regulatoryevaluations and considerations, and sets the guidelines for thecooperation between both companies for planning, funding,building and running the pipeline. The transport capacity ofSouth Stream will be defined through feasibility studies on thebasis of market analyses that will be carried out in thecountries involved as well as in end markets. An evaluation bySaipem indicates that expenditures required by this project arecomparable to those required for the construction of a full LNGchain. The South Stream pipeline is expected to be composed oftwo sections: (i) an offshore section crossing the Black Sea fromthe Russian coast at Beregovaya (where also the Blue Streampipeline originates) to Varna on the Bulgarian coast for a totalof 900 kilometers at maximum depths of 2,000 meters; and (ii) anonshore section crossing Bulgaria, with two alternatives: onedirected to North-West crossing Serbia and Hungary linking withthe gaslines from Russia and the other directed to South-Westthrough Greece and Albania linking directly to the Italiannetwork. This initiative will support Eni in extracting furthervalue from the gas properties that Eni bought in Russia upon abid for assets of bankrupt Russian company Yukos. See"Exploration & Production – Russia".

 

> 
***Italian Transport Activity***

Eni, through Snam Rete Gas, a company listed on the ItalianStock Exchange, in which Eni holds a 50.04% interest, owns themajor part of the Italian natural gas transport network as wellas the only re-gasification terminal currently operating inItaly.

Under Legislative Decree No. 164/2000 that regulates theItalian natural gas market, transport activities are supervisedby the Authority for Electricity and Gas which sets methods forcalculating tariffs and transport return on capital employed.

Eni’s network extends for 31,081 kilometers andcomprises:

| (i)  |   | a system of trunk-lines that        extends for approximately 8,548 kilometers and is made up        of high pressure large diameter pipes which carry natural        gas from the entry points to the system – import        lines, storage sites and main Italian natural gas fields        – to the linking points with regional transport        networks. This network also includes certain        interregional lines reaching important markets; and |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | a system of regional        transport networks extending over 22,533 kilometers, made        up of smaller pipes which transport volumes of natural        gas to large industrial complexes, power stations and        local distribution companies in the various local areas        served.                                                                                                                                                                         |

In 2007, Eni’s national transport network increased by192 kilometers due to certain upgrades to both national backbones(69 kilometers) and the regional network (123 kilometers).

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

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

|   |   | - |   | two lines with a 48/42-inch        diameter, 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 an upgrade with the laying of a        third line with a 48 inch diameter 403-kilometer long (of        these 309 are already operating). Available transport        capacity at the Mazara del Vallo entry point is        approximately 91 mmCM/d; |
|--------|--------|---|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

|   |   | - |   | two lines with 42/36/34-inch        diameters extends for a total length of approximately 900        kilometers and are connected to the TAG pipeline from        Russia at Tarvisio. This facility cross 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 diameter from 48 to 56        inches from Tarvisio to Zimella (Verona) and by upgrading        the Malborghetto compression station. The pipeline        transport capacity at the Tarvisio entry point amounts to        approximately 113 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: |
|--------|--------|------------------------------------------------------------------|

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|   |   | - |   | one line, with a 48-inch        diameter, 177-kilometer long extends from the Italian        border at Passo Gries (Verbania) where it connects with        the Transitgas pipeline carrying gas from Norway and the        Netherlands, to the node of Mortara, in the Po Valley.        The pipeline transport capacity at the Passo Gries entry        point is of 64 mmCM/d; |
|--------|--------|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

Eni’s transport system is complemented by: (i) 10compressor stations with a total power of 758 MW; (ii) 5 marineterminals linking underwater pipelines with the on-land networkat Mazara del Vallo, Messina and Gela in Sicily and Favazzina andPalmi in Calabria for the GreenStream pipeline; and (iii) acontrol room of the dispatching system located in San DonatoMilanese, which oversees and monitors the whole network incooperation with peripheral units.

Snam Rete Gas is currently assessing the construction of theItalian section of the new Galsi pipeline connecting Algeria toItaly through Sardinia with an 8 BCM/y capacity.

The Italian section of this new infrastructure will be made upof an onshore section crossing Sardinia and an offshore sectionreaching Tuscany where it will link with the national network fora total length of 600 kilometers. Galsi will be responsible forproject engineering and obtaining needed licenses andauthorizations, while Snam Rete Gas will build the pipeline andmanage it when operational.

For the next four years Snam Rete Gas approved a capitalexpenditure plan of approximately euro 4.3 billion aimed mainlyat the upgrade of its transport network in view of the expectedincrease in import capacity.

In 2007, volumes of natural gas input in the national grid(83.28 BCM) decreased by 4.71 BCM from 2006, down 5.4%, mainlydue to lower volumes of natural gas input to storage for therebuilding of stocks. Eni transported 30.89 BCM of natural gas onbehalf of third parties in Italy in line with 2006.

In 2007, the LNG terminal in Panigaglia (La Spezia) regasified2.38 BCM of natural gas (3.13 BCM in 2006), discharging 73 tankerships (96 in 2006).

| **Gas        volumes transported**(a) |   | **2005** |   | **2006** |   | **2007** |
|---------------------------------------|--------|----------|--------|----------|--------|----------|
|                                  |   |          |   |          |   |          |

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

| **Eni**                               |   | **54.88** |   | **57.09** |   | **52.39** |
|---------------------------------------|--------|-----------|--------|-----------|--------|-----------|
| **On        behalf of third parties** |   | **30.22** |   | **30.90** |   | **30.89** |
| Enel                                  |   | 9.90      |   | 9.67      |   | 9.36      |
| Edison Gas                            |   | 7.78      |   | 8.80      |   | 7.16      |
| Others                                |   | 12.54     |   | 12.43     |   | 14.37     |
| **Total**                             |   | **85.10** |   | **87.99** |   | **83.28** |

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

----

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

 

***Distribution Activity***

Distribution involves the delivery of natural gas toresidential and commercial customers in urban centers through lowpressure networks. Eni, through its 100% subsidiary Italgas andother subsidiaries, operates in the distribution activity inItaly serving 1,318 municipalities through a low pressure networkconsisting of approximately 49,000 kilometers of pipelinessupplying 5.6 million customers and distributing 7.3 BCM in 2007.

Under Legislative Decree No. 164/2000 that regulates theItalian natural gas market, distribution activities aresupervised by the Authority for Electricity and Gas which setsmethods for calculating distribution tariffs and return oncapital employed. Distribution activities are conducted underconcession agreements whereby local public administrations awardthe service of gas distribution to companies. According toLegislative Decree No. 164/2000, the award of the service willhave to take place by competitive bids from the end of atransition period and however, no later than December 31, 2012.Future concessions will last no more than twelve years.

Eni intends to develop its served market and improveefficiency and quality of services rendered. For the next fouryears Eni defined a capital expenditure plan of approximatelyeuro 1 billion for the development/upgrade of its distributionnetworks and their technological upgrade.

The target is to serve 6 million clients and increasedistributed volumes to 8.3 BCM by 2011.

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> 
**The LNG Business**

Eni intends to speed up the development of its LNG business ona global scale, aiming at building or acquiring assets in the LNGvalue chain in order to seize the opportunities arising from theincreasing role of LNG in satisfying energy requirements.Expansion in LNG will enable Eni to fully monetize its largeequity reserves.

By 2011 Eni plans to sell 14.5 BCM of LNG (including E&Psales) with an annual growth rate of 5.4% over the next fouryears.

Eni’s main assets in the LNG business are describedbelow.

*Italy.* Eni operates the only re-gasification terminaloperating in Italy at Panigaglia (Liguria). At full capacity,this terminal can input 3.5 BCM/y into the Italian transportnetwork. In 2007, a total of 2.38 BCM of natural gas were inputin the national network, of these 47% were re-gassified on behalfon Eni. Eni plans to increase the capacity of the Panigagliaplant by 4.5 BCM, expected to come on line by 2014. Estimatedcapital expenditures amount to euro 359 million.

*Egypt.* Eni, through its interest in Unión Fenosa Gas,has an indirect interest in the Damietta liquefaction plant thatproduces approximately 5 mmtonnes/y of LNG equal to a feedstockof 7.6 BCM/y of natural gas. The partners of the project(including Eni’s Exploration & Production segment)agreed on terms for doubling the plant capacity. The project isexpected to be sanctioned by relevant Egyptian authorities in thefirst half of 2008. In order to market its share of LNG, Eniintends also to build two gas tanker ships with a capacity of 155KCM each.

*Spain.* Eni through Unión Fenosa Gas holds a 21.25%interest in the Sagunto re-gasification plant, near Valencia,with a capacity of 6.7 BCM/y. At present, Eni’s capacityentitlements amount to 1.6 BCM/y of gas. A capacity upgradingplan has been sanctioned targeting a 0.8 BCM/y capacity increaseby 2009. Eni through Unión Fenosa Gas also holds a 9.5% interestin the El Ferrol re-gasification plant, located in Galicia, whichstarted operations in November 2007. This facility has treatmentcapacity of approximately 3.6 BCM/y, 0.4 BCM/y being Eni’scapacity entitlements.

*USA.* Eni is implementing plans to expand its presencein the strategic U.S. market where Eni holds a 40% capacityentitlement in the Cameron re-gasification terminal underconstruction on the coast of Louisiana. This facility is expectedto have an initial capacity of 15.5 BCM/y, 6 BCM being Eni’sentitlement. Eni is entering into a number of agreements toensure its share of supplies to the plant, particularly: (i) inFebruary 2007, an agreement was signed with Nigeria LNG Ltd,which operates the Bonny LNG plant in Nigeria, to purchase, overa twenty-year period, 1.375 mmtonnes/y of LNG, equivalent to 2BCM/y of gas, deriving from the upgrade of the Bonny liquefactionplant (Train 7) expected for 2012; and (ii) negotiations are alsoprogressing with Brass LNG Ltd for the purchase of 1.67mmtonnes/y of LNG capacity approximately equivalent to 2.3 BCM/yof gas.

In December 2007, Eni purchased a share of 5.6 BCM/y capacityof the Pascagoula re-gasification plant under construction inMississippi. This deal is related to the Angola LNG project inpartnership with Sonangol (See Development initiatives in theExploration & Production segment) which envisagesconstruction of an LNG plant designed to produce 5.2 mmtonnes/yto be fed with natural gas produced in Angola. The LNG will bemarketed in the Unites States at the Pascagoula site. Under theagreement, Eni will also have the right to have its equity gas inAngola liquefied, shipped and regasified at Pascagoula by AngolaLNG for a quantity equivalent to 0.94 BCM/y.

 

> 
**Electricity Generation**

Eni conducts its power generation activities at its sites ofFerrera Erbognone, Ravenna, Livorno, Taranto, Mantova, Brindisiand Ferrara. In 2007, electricity production sold was 25.49 TWh,up 0.67 TWh or 2.7% as compared to 2006 mainly due to the ramp-upof the Brindisi plant. Total installed capacity was 4.9 GW atDecember 31, 2007.

By 2010 Eni intends to complete its plan for expanding powergeneration capacity, targeting an installed capacity of 5.5 GW.At full capacity, production is expected to amount toapproximately 31 TWh. Supplies of natural gas are expected toamount to approximately 6 BCM/y from Eni’s diversifiedsupply portfolio. Residual expected capital expenditure amount toeuro 0.5 billion in addition to the euro 2.2 billion alreadyinvested until 2007.

High efficiency, low environmental impact and reducedexpenditure and construction times are the main features of theseplants, which show interesting profitability prospects due to theexpected increase in demand for electricity and the ability tooperate in co-generation (combined electricity and steamgeneration). The co-generation technology has been acknowledgedby the Authority for Electricity and Gas as a productiontechnology that entails priority on the national dispatchingnetwork and the exemption from the purchase of "greencertificates". Article 11 of Legislative Decree No. 79/1999concerning the opening up of the Italian electricity marketobliges importers and 

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producers of electricity from non renewable sources to inputinto the national electricity system a share of electricityproduced from renewable sources set at 2% of electricity importedor produced from non renewable sources exceeding 100 GW.Calculations are made on total amounts net of co-generation andown consumption. This obligation can be met also by purchasingvolumes or rights from other producers employing renewablesources (the so-called green certificates) to cover all or partof such 2% share. Legislative Decree No. 387/2003 establishedthat from 2004 to 2006 the minimum amount of electricity fromrenewable sources to be input in the grid in the following yearbe increased by 0.35% per year. The Minister of ProductiveActivities, with decrees issued in consent with the Minister ofthe Environment, will define further increases for the 2007-2009and 2010-2012 periods.

The development plan is underway at Ferrara (Eni’sinterest 51%), where in partnership with EGL Luxembourg (acompany belonging to Swiss group EGL), construction of two new390 MW combined cycle units is underway.

Eni has also planned the installation of a new 240 MW combinedcycle unit at the Taranto site (current capacity 75 MW).

New installed generation capacity uses the combined cycle gasfired technology (CCGT), ensuring a high level of efficiency andlow environmental impact.

| **Power Generation** |   | **2005** |   | **2006** |   | **2007** |
|----------------------|--------|----------|--------|----------|--------|----------|
|                 |   |          |   |          |   |          |

| **Purchases**                       |   |      |   |   |   |   |   |   |
|-------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|
| Natural        gas                  |   | (mmCM)    |   | 4,384  |   | 4,775  |   | 4,860  |
| Other fuels                         |   | (ktoe)    |   | 659    |   | 616    |   | 720    |
| *-        including cracking steam* |   |      |   | *96*   |   | *136*  |   | *137*  |
| **Sales**                           |   |      |   |   |   |   |   |   |
| Electricity        production sold  |   | (TWh)     |   | 22.77  |   | 24.82  |   | 25.49  |
| Steam                               |   | (ktonnes) |   | 10,660 |   | 10,287 |   | 10,849 |

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

Eni’s operated power stations are described below.

**Ferrera Erbognone.** This power station has an installedcapacity of approximately 1,030 MW articulated on three combinedcycle units, two of them with an approximately 390 MW capacityare fired with natural gas, the third one with approximately 250MW capacity is fired in part with natural gas and complementedwith refinery gas obtained from the gasification of a heavyresidue form crude processing at the nearby Eni-operatedSannazzaro refinery.

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

**Brindisi.** This power station has been upgraded byinstalling three new combined cycle units, each with capacity of390 MW, bringing overall capacity at approximately 1,320 MW.

**Mantova.** This power station has been upgraded byinstalling two new combined cycle units, each with capacity of390 MW, bringing overall capacity at approximately 840 MW. Thispower station also provides steam for heating purposes deliveredto the Mantova’s urban network through a heat exchanger.

 

> 
***Capital Expenditures***

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

 

 

**Refining & Marketing**

Eni’s Refining & Marketing segment involves refiningof crude oil and marketing of refined products in Italy and in anumber of European markets. Based on public data, Eni is the mainoperator in the markets for refining and marketing of refinedproducts in Italy. Eni’s refining and marketing operationsare efficiently integrated and supported by a full set oflogistic assets. Refining know-how, strong market acceptance ofthe Agip brand, the ability to develop innovative fuels, and theintegration with upstream operations represent Eni’sprincipal competitive advantages. Eni’s key medium termtarget is to enhance the profitability of its downstream oilbusiness.

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The strategic guidelines to attain this target are:

| • |   | to upgrade Eni’s        refining system;                                            |
|--------|--------|------------------------------------------------------------------------------------------|
| • |   | to improve profitability and        qualitative standards of the Italian retail network; |
| • |   | to selectively develop the        retail business outside Italy; and                     |
| • |   | to pursue higher levels of        operational efficiency.                                |

In the next four years the implementation of these strategiesis expected to be supported by a capital expenditure program ofapproximately euro 4 billion mainly targeting refinery upgrading,particularly by increasing conversion capacity, flexibility andefficiency of the Company’s plants. Significant expendituresare expected to be deployed to enhance Eni’s retailoperations in Italy and to increase the market share in selectedEuropean markets.

*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 2007, a total of 59.56 mmtonnes of crude were purchased bythe Company’s Refining & Marketing segment (65.70mmtonnes in 2006), of which 31.57 mmtonnes from Eni’sExploration & Production segment. Volumes amounting to 16.65mmtonnes were purchased under long-term supply contracts withproducing countries, while 11.34 mmtonnes were purchased on thespot market. Approximately 24% of crude purchased in 2007 camefrom West Africa, 22% from countries of the former Soviet Union,18% from North Africa, 15% from the Middle East, 12% from theNorth Sea and 7% from Italy.

Approximately 25.82 mmtonnes of crude purchased in 2007 wereresold, down 15.8% from 2006. In addition, 3.59 mmtonnes ofintermediate products were purchased (3.18 mmtonnes in 2006) tobe used as feedstock in conversion plants and 16.14 mmtonnes ofrefined products (16 mmtonnes in 2006) were purchased tocomplement production availability.

 

> 
**Refining**

Eni’s refining system has total refinery capacity(balanced with conversion capacity) of approximately 38.1mmtonnes (equal to 748 KBBL/d) and a conversion index of 56%.Eni’s five 100 percent owned refineries have balancedcapacity of 27.2 mmtonnes (equal to 544 KBBL/d), with a 58.6%conversion rate. In 2007, refinery throughputs in Italy andoutside Italy were 37.15 mmtonnes.

In the next four years, Eni plans to increase theprofitability of its refining operations by investing euro 2.4billion in plant upgrading and enhancement.

Eni’s investment plans are designed to take advantage ofcertain expected market trends in the refining industry:

| (i)   |   | a significant reduction in        European demand for gasoline is expected in the medium        term, while consumption of diesel fuel is expected to        grow driven by the continuing renewal of the car fleet;                                                                     |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | a slowdown in the demand for        gasoline on the U.S. market is expected, reflecting the        diffusion of more energy efficient car models and the        increasingly widespread use of bio-fuels;                                                                                |
| (iii) |   | demand for middle        distillates is expected to increase from current levels        reflecting, in addition to the above mentioned higher        needs of diesel fuels for automotive uses, increased        demand form the airlines sector and for petrochemical        feedstock; |
| (iv)  |   | implementation of        increasingly tight environmental regulations in Europe        will require significant capital expenditures for        refinery upgrading;                                                                                                                      |
| (v)   |   | demand for fuel oil is        expected to decrease due to increasingly strong        competition from natural gas in firing power plants; and                                                                                                                                            |
| (vi)  |   | opportunities will arise to        monetize heavy crudes and non conventional resources by        applying advanced refinery technologies.                                                                                                                                               |

Eni’s refinery capital projects will be designed to: (i)increase plant conversion capacity in view of boosting middledistillate yields and extracting value from equity crude, theavailability of which is expected to increase in theMediterranean basin over the medium term; (ii) improve refineryflexibility in order to optimize processed feedstock and capturemarket opportunities arising from an expected increasedavailability of heavy/sour crudes that are typically discountedin the marketplace; (iii) produce fuels in line with productspecifications provided for increasingly tight Europeanenvironmental standards; and (iv) enhance operational efficiencyof refineries. By 2011, Eni targets to achieve a conversion indexof 60% (65% in Italy) and a volume of refinery throughputs on ownaccount of 37 mmtonnes (the comparable volume in 2007 was 35mmtonnes that excludes volumes processed at 

53

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refineries where the Company has no interest). Middledistillate yields are expected to come in at 43% in 2011 from 41%in 2007 and equity crude volumes processed to increase from 30%to 35% relative to all processed feedstock.

The table below sets forth certain statistics regardingEni’s refineries at December 31, 2007.

**Refining system in 2007**

|                                                                                |   | 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        (%) |   | Fluid catalytic        cracking - FCC         (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**                                                         |   |                       |   | **678**                                                     |   | **678**                                                                |   | **544**                                                                             |   | **58.6**                    |   | **69**                                                 |   | **22**                             |   | **36**                   |   | **29**                                                       |   | **89**                                               |   | **46**                 |   | **82**                                                                             |      |                                                                                    | **102** |   |
| Italy                                                                               |   |                       |   |                                                        |   |                                                                   |   |                                                                                |   |                        |   |                                                   |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   |                                                                               |      |                                                                                    |   |   |
|    Sannazzaro                                                        |   | 100                        |   | 223                                                         |   | 223                                                                    |   | 170                                                                                 |   | 46.6                        |   | 34                                                     |   |                               |   |                     |   | 29                                                           |   | 29                                                   |   |                   |   | 73                                                                                 |      |                                                                                    | 95 |   |
|    Gela                                                              |   | 100                        |   | 129                                                         |   | 129                                                                    |   | 100                                                                                 |   | 143.5                       |   | 35                                                     |   |                               |   | 36                       |   |                                                         |   |                                                 |   | 46                     |   | 82                                                                                 |      |                                                                                    | 106 |   |
|    Taranto                                                           |   | 100                        |   | 118                                                         |   | 118                                                                    |   | 110                                                                                 |   | 64.3                        |   |                                                   |   | 22                                 |   |                     |   |                                                         |   | 38                                                   |   |                   |   | 97                                                                                 |      |                                                                                    | 104 |   |
|    Livorno                                                           |   | 100                        |   | 106                                                         |   | 106                                                                    |   | 84                                                                                  |   | 11.4                        |   |                                                   |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   | 88                                                                                 |      |                                                                                    | 110 |   |
|    Porto Marghera                                                    |   | 100                        |   | 102                                                         |   | 102                                                                    |   | 80                                                                                  |   | 20                          |   |                                                   |   |                               |   |                     |   |                                                         |   | 22                                                   |   |                   |   | 79                                                                                 |      |                                                                                    | 100 |   |
| **Partially        owned refineries**(1)                                            |   |                       |   | **917**                                                     |   | **232**                                                                |   | **204**                                                                             |   | **48.3**                    |   | **172**                                                |   | **25**                             |   |                     |   | **56**                                                       |   | **27**                                               |   |                   |   | **77**                                                                             |      |                                                                                    | **88** |   |
| Italy                                                                               |   |                       |   |                                                        |   |                                                                   |   |                                                                                |   |                        |   |                                                   |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   |                                                                               |      |                                                                                    |   |   |
|    Milazzo                                                           |   | 50                         |   | 248                                                         |   | 124                                                                    |   | 80                                                                                  |   | 72.3                        |   | 41                                                     |   | 25                                 |   |                     |   | 32                                                           |   |                                                 |   |                   |   | 68                                                                                 |      |                                                                                    | 106 |   |
| Germany                                                                             |   |                       |   |                                                        |   |                                                                   |   |                                                                                |   |                        |   |                                                   |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   |                                                                               |      |                                                                                    |   |   |
|    Ingolstadt/Vohburg/           Neustadt (Bayernoil) |   | 20                         |   | 258                                                         |   | 54                                                                     |   | 52                                                                                  |   | 32.6                        |   | 58                                                     |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   | 90                                                                                 |      |                                                                                    | 95 |   |
|    Schwedt                                                           |   | 8.33                       |   | 231                                                         |   | 19                                                                     |   | 19                                                                                  |   | 41.8                        |   | 49                                                     |   |                               |   |                     |   |                                                         |   | 27                                                   |   |                   |   | 91                                                                                 |      |                                                                                    | 92 |   |
| Czech        Republic                                                               |   |                       |   |                                                        |   |                                                                   |   |                                                                                |   |                        |   |                                                   |   |                               |   |                     |   |                                                         |   |                                                 |   |                   |   |                                                                               |      |                                                                                    |   |   |
|    Kralupy e Litvinov           (Ceska Rafinerska)    |   | 32.4                       |   | 180                                                         |   | 35                                                                     |   | 53                                                                                  |   | 29.6                        |   | 24                                                     |   |                               |   |                     |   | 24                                                           |   |                                                 |   |                   |   | 80                                                                                 |  (2) |                                                                                    | 80 |  (2) |
| **Total        refineries**                                                         |   |                       |   | **1,595**                                                   |   | **910**                                                                |   | **748**                                                                             |   | **56**                      |   | **241**                                                |   | **47**                             |   | **36**                   |   | **85**                                                       |   | **116**                                              |   | **46**                 |   | **81**                                                                             |      |                                                                                    | **101** |   |
|                                                                                |   |                            |   |                                                             |   |                                                                        |   |                                                                                     |   |                             |   |                                                        |   |                                    |   |                          |   |                                                              |   |                                                      |   |                        |   |                                                                                    |      |                                                                                         |

----

| (1) |   | Capacity of        conversion plant is 100%.                                                                                                                              |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The        utilization rates consider, all over the year 2007, the        Eni’s share in Ceska Rafinerska as at year end (it        became 32.4% in September 2007). |

> 
***Italy***

Eni’s refining system in Italy is composed of five 100percent owned refineries and a 50% interest in the Milazzorefinery in Sicily. Each of Eni’s refineries in Italy hasoperating and strategic features that aim at maximizing the valueassociated to the asset structure, the geographic positioningwith respect to end markets and the integration with Eni’sother activities.

The **Sannazzaro** refinery has balanced capacity of 170KBBL/d and a conversion index of 46.6%. Management regards it asone of Eni’s most profitable refining assets. Located in thePo Valley, it supplies mainly markets in North-Western Italy andSwitzerland. This refinery processes a wide range of feedstock,such as Caspian Pipeline Consortium Blend crude oil from theCaspian Sea and the Bonga crude from Nigeria. From a logisticalstandpoint, this refinery is located along the route of theCentral Europe Pipeline, which links the Genoa terminal withFrench speaking Switzerland. This refinery contains two primarydistillation plants and relevant facilities, including threedesulphurization units. Conversion is obtained through a fluidcatalytic cracker (FCC4), a hydro-cracker (HDCK)middle distillate conversion unit and a visbreaking thermalconversion unit with a gasification facility using the heavyresidue from visbreaking (tar) to produce syngas to feed thenearby EniPower electricity production plant at FerreraErbognone. A significant conversion capacity and flexibilityupgrading program is ongoing in order to further enhance thisfacility. Specifically, a high pressure hydrocracking unit with aprocessing capacity of 28 KBBL/d is under construction withexpected start-up in 2009. In addition, Eni plans to develop aconversion plant employing the Eni Slurry Technology with a 20KBBL/d capacity for the processing of extra heavy crude and tarsands producing high quality middle distillates and reducing theyield of fuel oil to zero. Start-up of this facility is scheduledin 2012.

The **Taranto** refinery has balanced refinery capacity of110 KBBL/d and a conversion index of 64.3%. This refinery canprocess a wide range of crude and other feedstock. It mainlyproduces fuels for automotive use and residential heatingpurposes for the Southern Italian markets. Besides its primarydistillation plants and relevant facilities, including two unitsfor the desulphurization of middle distillates, this refineryincludes a two-stage thermal conversion plant(visbreaking/thermal cracking) and an RHU conversion plant forthe conversion of high sulphur content residues into valuableproducts and catalytic cracking feedstock. It processes most ofthe oil produced in Eni’s Val d’Agri fields carried toTaranto through the Monte Alpi pipeline (in 2007 a total of 2.5mmtonnes of this oil were processed).

Eni plans to upgrade the conversion capacity of this refineryby building plants that will enable to extract value from fueloil and other semi-finished products currently exported.

----

| (4) |   | This        definition applies to the term margin whenever used in        Item 5. |
|-----|--------|-----------------------------------------------------------------------------------|

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**Gela**, with a balanced refinery capacity of 100 KBBL/dand a conversion index of 143.5%, this refinery located on thesouthern coast of Sicily is highly integrated with upstreamoperations as it processes heavy crude produced from nearby Enifields offshore and onshore Sicily. In addition, it is integrateddownstream as it supplies large volumes of petrochemicalfeedstock to Eni’s in site petrochemical plants. Therefinery also manufactures fuels for automotive use andresidential heating purposes.

Its high conversion level is ensured by an FCC unit withgo-finer for the upgrading of feedstock and two coking plants forthe vacuum conversion of heavy residues. The power plant of thisrefinery also contains modern residue and exhaust fume treatmentplants which allow full compliance with the tightestenvironmental standards.

An upgrade of the Gela refinery will be implemented by meansof an upgrade of the power plant, the building of a new gas firedgeneration plant and other facilities to increase profitabilityby exploiting the synergies deriving from the production offeedstock for electricity generation and sale of increasingvolumes of electricity on the market.

**Livorno**, with a balanced refinery capacity of 84 KBBL/dand a conversion index of 11.4%, manufactures mainly gasoline,fuel oil for bunkering, specialty products and lubricant bases.Besides its primary distillation plants, this refinery containstwo lubricant manufacturing lines. Its pipeline links with thelocal harbor and with the Florence storage sites by means of twopipelines optimizing intake, handling and distribution ofproducts.

**Porto Marghera**, with a balanced refinery capacity of 80KBBL/d and a conversion index of 20%, this refinery suppliesmainly markets in North-Eastern Italy and Austria. Besides itsprimary distillation plants, this refinery contains a two-stagethermal conversion plants (visbreaking/thermal cracking) designedto produce yields of valuable products.

 

> 
***Rest of Europe***

In Germany Eni holds 8.3% interest in the Schwedt refinery anda 20% interest in Bayernoil, an integrated pole that includes theIngolstadt, Vohburg and Neustadt refineries. Eni’s refiningcapacity in Germany amounts to approximately 70 KBBL/d mainlyused to supply Eni’s distribution network in Bavaria andEastern Germany.

The partners of these refineries plans to restructure thewhole complex, by building a new hydrocracker with a capacity ofapproximately 2 mmtonnes/y (40 KBBL/d), revamping other assets(in particular a reformer and a hydrofiner) and shutting-down atopping unit. This project is expected to be completed in 2009and aims at increasing middle distillate yields and reducing theproduction of gasoline. In 2007, Eni purchased a further 16.11%stake in Ceska Rafinerska, increasing its overall stake to 32.4%.The Ceska Rafinerska includes two refineries, Kralupy andLitvinov, in the Czech Republic. Eni’s share of refiningcapacity amounts to 53 KBBL/d.

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

| **Availability        of refined products** |   | **2005** |   | **2006** |   | **2007** |
|---------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                        |   |          |   |          |   |          |

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

| ***Italy***                                                    |   |      |   |   |      |   |   |      |   |
|----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| **Refinery        throughputs**                                |   |      |   |   |      |   |   |      |   |
| At wholly-owned refineries                                     |   | 27.34     |   |   | 27.17     |   |   | 27.79     |   |
| Less input        on account of third parties                  |   | (1.70     | )      |   | (1.53     | )      |   | (1.76     | )      |
| At affiliates refineries                                       |   | 8.58      |   |   | 7.71      |   |   | 6.42      |   |
| **Refinery        throughputs on own account**                 |   | **34.22** |   |   | **33.35** |   |   | **32.45** |   |
| Consumption and losses                                         |   | (1.87     | )      |   | (1.45     | )      |   | (1.63     | )      |
| **Products        available for sale**                         |   | **32.35** |   |   | **31.90** |   |   | **30.82** |   |
| Purchases of refined products and change in        inventories |   | 4.85      |   |   | 4.45      |   |   | 2.16      |   |
| Products        transferred to operations outside Italy        |   | (5.41     | )      |   | (4.82     | )      |   | (3.80     | )      |
| Consumption for power generation                               |   | (1.09     | )      |   | (1.10     | )      |   | (1.13     | )      |
| **Sales        of products**                                   |   | **30.70** |   |   | **30.43** |   |   | **28.05** |   |
| ***Outside Italy***                                            |   |      |   |   |      |   |   |      |   |
| **Refinery        throughputs on own account**                 |   | **4.57**  |   |   | **4.69**  |   |   | **4.70**  |   |
| Consumption and losses                                         |   | (0.24     | )      |   | (0.32     | )      |   | (0.31     | )      |
| **Products        available for sale**                         |   | **4.33**  |   |   | **4.37**  |   |   | **4.39**  |   |
| Purchases of refined products and change in        inventories |   | 11.19     |   |   | 11.51     |   |   | 13.91     |   |
| Products        transferred from Italian operations            |   | 5.41      |   |   | 4.82      |   |   | 3.80      |   |
| **Sales of products**                                          |   | **20.93** |   |   | **20.70** |   |   | **22.10** |   |
| **Refinery        throughputs on own account**                 |   | **38.79** |   |   | **38.04** |   |   | **37.15** |   |
| **Total equity crude input**                                   |   | **12.53** |   |   | **13.66** |   |   | **11.22** |   |
| **Total        sales of refined products**                     |   | **51.63** |   |   | **51.13** |   |   | **50.15** |   |

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

55

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##### Table of Contents

In 2007, refining throughputs on own account in Italy andoutside Italy were 37.15 mmtonnes, down 0.89 mmtonnes from 2006,or 2.3%, owing to the expiry of a processing contract at thePriolo refinery. Excluding this effect, refinery throughputs inItaly increased by 1.5% due to the better performance of Livornoand Gela refineries because of lower planned and unplanneddowntime.

Total throughputs on wholly-owned refineries in 2007 (27.79mmtonnes) increased 0.62 mmtonnes from 2006, up 2.3%.

Approximately 30.2% of volumes of processed crude in 2007 wassupplied by Eni’s Exploration & Production segment(35.9% in 2006), representing a decrease of over 5% from 2006.Lower equity volumes of some 2.44 mmtonnes related to a reductionof supplies of the Libyan Bu-Attifel crude processed at thePriolo refinery due to the above mentioned process contractexpiry.

 

> 
**Logistics**

Eni is the leader in storage and transport of petroleumproducts in Italy with its logistical integrated infrastructuresconsisting of 12 operated storage sites and a network ofpetroleum product pipelines.

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

Eni operates in the transport of oil and refined products: (i)on land through a pipeline network of leased and owned pipelinesextending over 2,130 kilometers (1,315 kilometers are whollyowned by Eni); and (ii) by sea through spot and long-term leasecontracts of tanker ships.

Secondary distribution to retail and wholesale markets isexecuted almost exclusively through the management of thirdparties who also owns their means of transportation.

In the medium term Eni plans to enhance the efficiency of itslogistic operations by: (i) implementing an integrated logisticmodel ("hub" model) designed to centralize handling ofproducts flows on a single platform enabling real timemonitoring; and (ii) introducing more efficient operating modesin the collection and delivery of orders with the aim of reducingunit delivery costs.

> 
**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.

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** |   | **2005** |   | **2006** |   | **2007** |
|----------------------------------------------------------|--------|----------|--------|----------|--------|----------|
|                                                     |   |          |   |          |   |          |

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

| *Italy*                    |   |      |   |      |   |      |
|----------------------------|--------|-----------|--------|-----------|--------|-----------|
| Retail        marketing    |   | 10.05     |   | 8.66      |   | 8.62      |
| Wholesale marketing        |   | 12.11     |   | 11.74     |   | 11.09     |
|                       |   | **22.16** |   | **20.40** |   | **19.71** |
| Petrochemicals             |   | 3.07      |   | 2.61      |   | 1.93      |
| Other        sales         |   | 5.47      |   | 7.42      |   | 6.41      |
| **Total**                  |   | **30.70** |   | **30.43** |   | **28.05** |
| *Outside        Italy*     |   |      |   |      |   |      |
| Retail marketing           |   | 3.67      |   | 3.82      |   | 4.03      |
| Wholesale        marketing |   | 4.50      |   | 4.60      |   | 4.96      |
|                       |   | **8.17**  |   | **8.42**  |   | **8.99**  |
| Other        sales         |   | 12.76     |   | 12.28     |   | 13.11     |
| **Total**                  |   | **20.93** |   | **20.70** |   | **22.10** |
|                       |   | **51.63** |   | **51.13** |   | **50.15** |

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

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In 2007, sales volumes of refined products (50.15 mmtonnes)decreased by 0.98 mmtonnes from 2006, or 1.9%, mainly due tolower volumes sold to oil companies and traders in Italy, lowervolumes supplied to the petrochemical sector due to the expiry ofa processing contract at the Priolo refinery and a decline inwholesale sales in Italy. These declines were partly offset byhigher retail and wholesale sales on markets in the rest ofEurope (up 0.41 mmtonnes, or 5.1%).

> 
***Retail Sales in Italy***

Eni markets refined products in Italy trough its Agip-brandednetwork of operated service stations.

In 2007, volumes of refined products marketed on the Italiannetwork (8.62 mmtonnes) were down 39 ktonnes from 2006, or 0.5%,mainly due to a decline in domestic consumption. This declinemainly regarded gasoline volumes, while gasoil sales increasedfollowing the same pattern as national consumption trends. Marketshare decreased slightly from 29.3% to 29.2%; market share iscomputed as ratio of Eni’s sales volumes to nationalconsumption as published in national statistics.

The average throughput per service station measured ongasoline and gasoil sales was 2,444 kliters, down 0.8% from 2006.

At December 31, 2007, Eni’s retail network in Italyconsisted of 4,390 service stations, 34 more than at December 31,2006, resulting from the start of 26 new service stations and apositive balance between acquisitions/releases of leased outletsconcessions (up 23 units), in addition to 13 service stationsthat were acquired upon rental from third parties. In 2007, 23low throughput service stations were shut down or divested and 5highway concessions expired.

Retail volumes of BluDiesel – a high performance and lowenvironmental impact gasoil – amounted to approximately 735ktonnes (850 mmliters in 2007), up 1.2% from 2006 and represented14% of gasoil sales on the Eni’s retail network. Atyear-end, virtually all Agip branded service stations marketedBluDiesel (about 4,094 equal to 93%).

Retail volumes of BluSuper – a high performance and lowenvironmental impact gasoline, on sale since 2004 – amountedto approximately 98 ktonnes (114 mmliters), in line with 2006 andcovered 3% of gasoline volumes sold on the Eni’s retailnetwork. At year-end, service stations marketing BluSuper totaled2,565 units (2,316 at December 31, 2006) covering toapproximately 58% of Eni’s network.

In March 2007, Eni launched its new "You&Agip"promotional program designed to boost customer loyalty to theAgip brand. This three-year long initiative offers prizes tocustomers in proportion to purchases of fuels and convenienceitems at Agip’s stores as well as at the ones of certainpartners to the program. At every purchase of fuels orconvenience items, clients are granted a proportional amount ofpoints that are credited to a fidelity card. Clients are able todecide how to accumulate points and when to spend them. At yearend, the number of active cards was approximately 3.9 million.Volumes of fuel marketed under this initiative represented 40.1%of total volumes marketed on Eni’s service stations joiningthe program, and 39.4% of overall volumes marketed on the Agipnetwork.

Eni plans to strengthen its competitive position in Italy byupgrading its outlets to attain European standards of quality andservice. The Company intends to leverage on marketing initiativesdesigned to retain the various segments of clients, develop theoffer of premium products and execute its convenience offerthrough quality store formats. A strong focus will be devoted topursue high levels of operating efficiency. In the next fouryears, Eni plans to invest approximately euro 0.7 billion in theupgrading of its network, targeting to build, acquire and upgradeservice stations with planned standards of service and quality.Expenditures will also be directed to comply with applicableenvironmental standards and regulations.

By 2011, Eni expects to achieve approximately 11.4 billionliters of volumes sold (approximately 11 billion liters in 2007)with a retail network composed of approximately 4,400 servicestations, of which 75% of owned sites.

57

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##### Table of Contents

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

In recent years, Eni’s strategy focused on selectivelygrowing its market share, particularly by means of acquiringvaluable assets in European areas with interesting profitabilityperspectives. In implementing its growth strategy, Eni has beenable to leverage on synergies ensured by the proximity of thesemarkets to Eni’s production and logistic facilities, brandawareness and economies of scale.

Over the last four years, retail volumes of refined productsmarketed in the rest of Europe have grown more than 33% (equal toa compound average growth rate of 7.5%).

Growth outside Italy will continue to be selective and aimedat strengthening Eni’s competitive position in key markets.Capital expenditures aimed at growing and upgrading Eni’snetwork are planned at euro 0.4 billion in the next four years.

In 2007, retail volumes of fuels marketed in the rest ofEurope totaled 5 billion liters (4.03 mmtonnes), up 5.5% from2006 reflecting both organic growth and the purchase of 102service stations in the Czech Republic, Slovakia and Hungary.

At December 31, 2007 Eni’s retail marketing networkoutside Italy was represented by 2,051 service stations anincrease of 113 units from December 31, 2006. The network’sevolution was as follows: (i) 125 service stations were acquired,of which 102 units in the Czech Republic, Slovakia and Hungary;(ii) 10 new outlets were opened; (iii) 25 low throughput servicestations were closed in Spain and Austria; and (iv) a positivebalance of acquisitions/releases of lease concessions (up 3units) was recorded, with positive changes in Spain, Hungary andthe Czech Republic, and negative ones in Germany and France.Average throughput (2,578 kliters) was up 3.7%.

The key markets of Eni’s presence are: Austria with a7.8% market share, Hungary with 7.9%, Czech Republic with 7.7%,Switzerland with 5.9%, South-Central Germany with a 4.2%, andSouth-Western France with 1.1% on national base. These marketshares were calculated by Eni based on public data on nationalconsumption and Eni’s sales volumes.

In 2008, management expects to divest its retail and wholesalemarketing activities in the Iberian Peninsula following theexercise of a call option on part of Eni’s partner GalpEnergia (Eni’s share being 33.34%), in accordance with theagreement signed in December 2005 by the majority shareholders ofGalp Energia (in addition to Eni, Amorim Energia and Caixa Geralde Depósitos). The transaction, subject to approval fromEuropean antitrust authorities, includes 371 Agip-branded servicestations.

 

> 
***Other businesses***

*Wholesale*

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

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

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

In 2007, volumes marketed on wholesale markets in Italy, whichexcludes the Avio and Bunker businesses, were approximately 7.54mmtonnes down 0.68 mmtonnes from 2006, or 8%, mainly reflecting adecline in domestic consumption of heating oil by the powergeneration sector, the exceptionally mild weather conditions thatnegatively influenced the sales of heating products in the firstquarter and competitive pressure.

Sales volumes on wholesale markets outside Italy in 2007 were4.96 mmtonnes, up approximately 360 ktonnes from 2006, or 7.8%,mainly due to the growth in the Czech and Iberian markets.

Eni also markets jet fuel directly at 47 airports, of which 27in Italy. In 2007, these sales amounted to 2.35 mmtonnes (ofwhich 1.97 mmtonnes in Italy) up approximately 175 ktonnes. Eniis active also in the international market of bunkering,marketing marine fuel in 38 ports, of which 23 in Italy. In 2007,marine fuel sales were 1.72 mmtonnes (1.58 in Italy) decreasingapproximately 86 ktonnes as compared to 2006.

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##### Table of Contents

Other sales amounted to 21.31 mmtonnes and mainly regardedsales to oil companies and traders (19.39 mmtonnes) and 1.93mmtonnes supplies to the petrochemical sector.

> 
*LPG*

In Italy Eni is leader in LPG production, marketing and salewith 539 ktonnes sold for heating and automotive use (under theAgip brand and wholesale) equal to a 17.4% market share.Additional 225 ktonnes of LPG were marketed through otherchannels mainly to oil companies and traders.

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

> 
*Lubricants*

Eni operates 8 (owned and co-owned) blending plants, in Italy,Europe, North and South America, Africa and the Far East whichmanufacture finished and fatty lubricants. With a wide range ofproducts composed of over 650 different blends, Eni has animportant know-how for the formulation of products for vehicles(engine oil, special fluids and transmission oils) and industries(lubricants for hydraulic systems, industrial machinery and metalprocessing).

In Italy Eni is leader in the manufacture and sale oflubricant bases according to public data. Base oils aremanufactured primarily at Eni refinery in Livorno. Eni also ownsone facility for the production of additives and solvents inRobassomero.

In 2007, retail and wholesale sales in Italy amounted to 132ktonnes with a 24.3% market share. Eni also sold approximately 4ktonnes of special products (white oils, transformer oil andanti-freeze fluids). Outside Italy sales amounted toapproximately 90 ktonnes, of these about 50% were registered inEurope (mainly Spain, Germany, and France).

> 
*Oxygenates*

Eni, through its subsidiary Ecofuel (Eni’s interest100%), markets over 2 mmtonnes/y of oxygenates mainly ethers(approximately 10% of world demand) and methanol (approximately1.5% of world demand). About 56% of products are manufactured inItaly at Eni’s plants in Ravenna, Venezuela (in jointventure with Pequiven) and Saudi Arabia (in joint venture withSabic), the remaining 44% is bought and resold. In 2007, a testcampaign of ETBE from bioethanol was carried out at Eni’splant in Ravenna. In Venezuela MTBE plants are being converted tothe production of isooctane.

 

> 
***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 and the commoditized feature of Eni’s mainproducts. In fact, Eni’s profitability in the petrochemicalbusinesses is particularly sensitive to movements in productmargins that are mainly affected by changes in oil-basedfeedstock costs and the speed at which product prices adjust tohigher oil prices, also considering the cyclical nature ofdemand. See "Item 3 – Risk factors". The Companydoes not expect to incur significant amount of expenditures todevelop this business. In future years, management forecast ayearly level of expenditures in line with 2007 mainly targeted toupgrade plant efficiency, execute de-bottlenecking interventionsand to comply with all applicable regulations on environment,health and safety issues.

In 2007, sales of petrochemical products (5,513 ktonnes)increased by 237 ktonnes from 2006, up 4.5%, increasing in allbusiness areas except for aromatics (down 2.9%). Increasesreflected the fact that performance in 2006 was hit by anaccident occurred at the Priolo refinery in April 2006, as wellas positive market trends.

59

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Petrochemical production (8,795 ktonnes) increased by 1,723ktonnes from 2006, up 24.4% due to the transfer of the PortoTorres plant from the Other Activities segment (up 1,274 ktonnes)and the impact on 2006 production of an accident occurred at thePriolo plant as outlined. Excluding these effects, productionincreased by 195 ktonnes, or 2.8%, due to a good performance atthe Ravenna, Ragusa and Sarroch plants. Production was lower atPorto Marghera due to unplanned standstills in the second half ofthe year.

Nominal production capacity was in line with 2006. Excludingthe impact of the consolidation of the Porto Torres plant,average plant utilization rate calculated on nominal capacityincreased by 4 percentage points from 76.4% to 80.6%, due to theimpact of the Priolo plant outage in 2006.

Approximately 48.9% of total production was directed toEni’s own productions cycle (35.2% in 2006). Oil basedfeedstock supplied by Eni’s Refining & Marketing segmentcovered 21% of requirements (10% in 2005).

Prices of Eni’s main petrochemical products increased onaverage by 4%; all business areas posted increases. The mostrelevant increases were registered in: (i) styrenes (up 6.0%), inparticular compact polystyrene and ABS/SAN; (ii) elastomers (up5.5%), in particular nytrilic, SBR and thermoplastic rubbers;(iii) polyethylene (up 4.9%) with increases in all products; (iv)intermediates (up 4.8%) in particular phenol and cycloexanone;and (v) olefins (up 3.8%), in particular ethylene. However,these prices increases did not made for higher purchase costs ofoil-based feedstock (virgin naphtha was up 20.4% in dollar terms,10.3% in euro), particularly from the second half of the year,and as a result product margins significantly decreased from ayear ago. Based on current trends in oil prices, the Company doesnot expect any meaningful improvement in 2008.

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

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Basic petrochemicals                       |   | 4,450     |   |   | 4,275     |   |   | 5,688     |   |
|--------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Styrene        and elastomers              |   | 1,523     |   |   | 1,545     |   |   | 1,632     |   |
| Polyethylene                               |   | 1,309     |   |   | 1,252     |   |   | 1,475     |   |
|                                       |   | **7,282** |   |   | **7,072** |   |   | **8,795** |   |
| Internal consumption                       |   | (2,606    | )      |   | (2,488    | )      |   | (4,304    | )      |
| Purchases        and change in inventories |   | 700       |   |   | 692       |   |   | 1,022     |   |
| **Total products**                         |   | **5,376** |   |   | **5,276** |   |   | **5,513** |   |

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

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

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Basic petrochemicals          |   | 3,022     |   |   | 2,882     |   |   | 3,023     |   |
|-------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Styrene        and elastomers |   | 1,003     |   |   | 1,000     |   |   | 1,041     |   |
| Polyethylene                  |   | 1,351     |   |   | 1,394     |   |   | 1,449     |   |
| **Total        sales**        |   | **5,376** |   |   | **5,276** |   |   | **5,513** |   |

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

> 
*Basic petrochemicals*

Sales of basic petrochemicals of 3,023 ktonnes reported anincrease of 141 ktonnes from 2006, up 4.9%, mainly due to higherproduct availability and due in particular to the fact that 2006was affected by the outage of the Priolo cracker. Main increaseswere registered in olefins (up 5.8%) and intermediates (up 8.9%)while aromatics sales declined (down 3%), in particular xylene(down 12.5%) due to the shutdown of the paraxylene line at Prioloin April 2007, offset in part by higher sales of benzene (up15.8%).

Basic petrochemical production (5,688 ktonnes) increased by1,413 ktonnes, up 33.1%.

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##### Table of Contents

> 
*Styrene and elastomers*

Styrene sales in 2007 (594 ktonnes) were slightly higher from2006 (up 1.2%). Increasing sales in ABS/SAN (up 34%) reflect thehigher product availability due to the fact that 2006 wasaffected by technical problems at the Mantova plant. Increases ofcompact polystyrene (up 7.3%) were due to market recovery.Declines were registered in styrene (down 41%) due to loweravailability because of unexpected outages.

Elastomers sales in 2007 (447 ktonnes) increased by 8.3% from2006 due to the consolidation of nytrilic rubber sales followingthe purchase of the Porto Torres plant from Syndial. Excludingthis effect, elastomer sales were in line with 2006. Increasesrecorded in SBR (up 1.3%), BR (up 5.3%) and thermoplastic rubbers(up 5.5%), due to a positive market trend, were offset by lowersales of EPR (down 3.6%) and lattices (down 5.1%).

Styrene production in 2007 (1,117 ktonnes) increased by 2.7%over 2006.

Elastomer production in 2007 (515 ktonnes) increased by 12.7%over 2006 due to the consolidation of the Porto Torres plant.Excluding this effect, elastomer production increased by 6%.Increases were registered in all products, except for EPR rubber(down 2.7%) reflecting lower availability of raw materials due totechnical problems at the Porto Marghera plant and lattices (down3.8%) due to technical problems at the Hythe plant.

> 
*Polyethylene*

Polyethylene sales in 2007 (1,449 ktonnes) were up 55 ktonnesor 3.9%, from 2006, reflecting positive market conditions forLPDE (up 6.7%) and EVA (up 3.6%).

Production in 2007 (1,475 ktonnes) increased by 223 ktonnesover 2006, or 17.8%, affecting all products, except for EVA (down2%). HDPE production increased (up 78.7%) due to theconsolidation of the Porto Torres 

plant, also LLDPE and LDPE increased by 9.8% and 8%respectively due to the fact that 2006 was impacted by the outageof the Priolo cracker.

 

> 
***Capital Expenditures***

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

 

 

**Engineering & Construction**

Eni operates in engineering, oilfield services andconstruction both offshore and onshore through Saipem, asubsidiary listed on the Italian Stock Exchange (Eni’sinterest is 43%). Saipem boasts strong competitive position inthe relevant market leveraging on technological and operationalskills, engineering and project management capabilities andability to operate in complex environments, owing also to theintegration with Snamprogetti. Considering ongoing favorabletrends in demand and profitability in the market of oilfieldservices, Saipem intends to leverage on its skills, to carry outthe following fundamental strategies: (i) to strengthen itscompetitive position in the field of large offshore and onshoreprojects for the development of hydrocarbon fields; (ii) todevelop its market share in the strategic field of deepwater,FPSO, gas monetization and heavy crude upgrading; (iii) toincrease efficiency levels, particularly by reducing procurementand execution costs while maintaining a high utilization rate ofequipment and improving its flexible structure in order to reducethe impact of possible negative cycles; (iv) to promote use oflocal contractors and assets in host countries; and (v) tosupport Eni’s investment plans.

Saipem expects to invest approximately euro 4.7 billion overthe next four years to upgrade its fleet of construction vesselsand offshore drilling rigs as well as logistic centers andsupport facilities.

Orders acquired in 2007 amounted to euro 12,011 million, ofthese projects to be carried out outside Italy represented 95%,while orders from Eni companies amounted to 16% of the total.Order backlog was euro 15,390 million at December 31, 2007 (euro13,191 million at December 31, 2006). Projects to be carried outoutside Italy represented 95% of the total order backlog, whileorders from Eni companies amounted to 22% of the total.

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|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Orders acquired and breakdown by business**      |   | (million euro) |   | **8,395**  |   | **11,172** |   | **12,011** |
|----------------------------------------------------|--------|----------------|--------|------------|--------|------------|--------|------------|
| Offshore        construction                       |   |           |   | 3,096      |   | 3,681      |   | 3,496      |
| Onshore construction                               |   |           |   | 4,720      |   | 4,923      |   | 6,236      |
| Offshore        drilling                           |   |           |   | 367        |   | 2,230      |   | 1,644      |
| Onshore drilling                                   |   |           |   | 212        |   | 338        |   | 635        |
| Originated        by Eni companies                 |   | (%)            |   | 11         |   | 24         |   | 16         |
| To be carried out outside Italy                    |   | (%)            |   | 90         |   | 91         |   | 95         |
| **Order        backlog and breakdown by business** |   | (million euro) |   | **10,122** |   | **13,191** |   | **15,390** |
| Offshore construction                              |   |           |   | 3,721      |   | 4,283      |   | 4,215      |
| Onshore        construction                        |   |           |   | 5,721      |   | 6,285      |   | 7,003      |
| Offshore drilling                                  |   |           |   | 382        |   | 2,247      |   | 3,471      |
| Onshore        drilling                            |   |           |   | 298        |   | 376        |   | 701        |
| Originated by Eni companies                        |   | (%)            |   | 7          |   | 20         |   | 22         |
| To be        carried out outside Italy             |   | (%)            |   | 88         |   | 90         |   | 95         |

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

> 
***Business areas***

*Offshore construction*

Saipem is well positioned in the market of large, complexprojects for the development of offshore hydrocarbon fieldsleveraging on its technical and operational skills, supported bya technologically-advanced fleet, ability to operate in complexenvironments, and engineering and project management capabilitiesacquired on the marketplace over recent years. Saipem intends toenhance its market share strengthening its EPIC oriented businessmodel and leveraging on its relationships with major oilcompanies and National Oil Companies ("NOCs"). Higherlevels of profitability are expected to be achieved outsourcingnon core engineering and building activities to low cost centers,achieving economies of scales in its engineering hub and usinglocal resources in contests where this represents a competitiveadvantage. Investments will be focused on constantly upgradingSaipem’s fleet, by building a new pipe layer, asemi-submersible unit for sub-sea development and two FPSO unitsto be leased to customers. These investments will allow theupgrading of operational capabilities in deepwater and sub arcticcontexts. Investments will also be directed to upgrading yardsand related equipment and facilities and building and upgradinglocal construction centers to support the execution of importantprojects.

Saipem’s offshore construction fleet is made up of 25vessels and 45 robotized vehicles able to perform advancedsub-sea operations. Its major vessels are: (i) the Saipem 7000semi-submersible dynamic positioned vessel, with 14 ktonnes oflift capacity, capable to lay pipelines using the J-lay techniqueto the maximum depth of 3,000 meters; (ii) the Saibos FDS for thedevelopment of underwater fields in dynamic positioning, providedwith cranes lifting up to 600 tonnes and a system for J-lay pipelaying to a depth of 2,000 meters; (iii) the Castoro 6semi-submersible vessel, capable of laying pipes in waters up to1,000 meters deep; (iv) the Saipem 3000 multifunction vessel forthe development of hydrocarbon fields, able to lay rigid andflexible pipes and provided with cranes capable of lifting over 2ktonnes; and (v) the Semac semi-submersible vessel used for largediameter underwater pipe laying. The fleet also includes remotelyoperated vehicles (ROV), highly sophisticated and advancedunderwater robots capable of performing complex interventions indeep waters.

The most significant orders awarded in 2007 in Offshoreconstruction were: (i) an EPC contract on behalf of MEDGAZ forthe installation of an underwater pipeline system to transportnatural gas from Algeria to Spain; (ii) an EPC contract onbehalf of Saudi Aramco for the construction and installation of16 platforms, 80 kilometers of underwater pipelines and relatedfacilities aimed at maintaining production capacity at certainoilfields in Saudi Arabia; (iii) an EPIC contract on behalf ofTotal for the construction and installation of a sub-sea pipelinedesigned to transport natural gas from Block 17 field to anonshore LNG terminal under construction in Soyo in Angola; and(iv) an EPIC contract on behalf of Enagas SA for the constructionand installation of two pipelines for gas transportation inSpain.

> 
*Onshore construction*

Saipem operates in the construction of plants for hydrocarbonproduction (separation, stabilization, collection ofhydrocarbons, pumping stations, water injection) and treatment(removal and recovery of sulphur dioxide and carbon dioxide,fractioning of gaseous liquids, recovery of condensates) and inthe installation of large onshore transport systems (pipeline,compression stations, terminals). Saipem intends to captureopportunities arising from an expected increase in demand forthose services from oil majors, by leveraging on its solidcompetitive position and integration with Snamprogettiengineering capabilities.

Operations are mainly conducted in Africa and the Middle East.Saipem also boasts an established presence in remote areas suchas the Caspian Sea and Far East Russia, leveraging on its abilityto operate in hostile 

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environments, managing complex projects and enhancing localcontent, in addition to providing on land services complementingoffshore activities (key factor in projects in areas such as theCaspian Sea).

The most significant orders awarded in 2007 in Onshoreconstruction were: (i) an EPC contract on behalf of QatarFertliser Company SAQ for the construction of two new plantsdesigned to produce ammonia and urea and associated productionfacilities at the Qafco industrial complex in Qatar; (ii) an EPCcontract on behalf of Sonatrach for the construction of three oilstabilization and treatment trains with a capacity of 100 KBBL/dand transport and storage facilities as part of the developmentproject of the Hassi Messaoud field in Algeria; (iii) an EPCcontract on behalf of Saudi Aramco for the construction of ninesea water treatment units as part of the expansion plan of theQurayya plant installed at the Khursaniyah field in Saudi Arabia;and (iv) an EPC contract also for the construction of in fieldwater injection units at the Qurayya plant.

> 
*Offshore drilling*

Saipem provides offshore drilling services to oil companiesmainly in West Africa, the North Sea and the Mediterranean Sea.It boasts significant market positions in the most complexsegments of deep and ultra-deep offshore leveraging on theoutstanding technical features of its drilling platforms andvessels, capable of drilling exploration and development wells ata maximum depth of 9,200 meters. Demand for drilling services isexpected to substantially increase in future years reflectingexploration and development plans of oil majors. Based on currenttrend in equipment availability, management expects unit tariffto rise in future years. In order to pursue market opportunities,Saipem intends to upgrade its drilling rigs, improving theirtechnical characteristics to enhance its role as high qualityplayer capable of operating also in complex and harshenvironments. Particularly, over the next four years Saipemintends to build: (i) the two semi-submersible new generationplatforms Scarabeo 8 and 9, to be employed in drilling operationsin the deep-water of the Barents Sea and in the Gulf of Mexico onbehalf of Eni’s upstream activity; (ii) the Perro Negro 6 toconduct operations in shallow water; and (iii) the new S12000drilling ship to perform operations in West Africa. Significantinvestments are planned to upgrade the equipment considering thecharacteristics of certain important projects and relevantcontractual conditions, as well as to set up equipment supportingthe project itself.

Saipem’s offshore drilling fleet consists of 10 vesselsfully equipped for its primary operations and some drillingplants installed on board of fixed offshore platforms. One of itsmost important offshore drilling vessels is the Saipem 10000,designed to explore and develop hydrocarbon reservoirs operatingin excess of 3,000 meters water depth in full dynamicpositioning. The ship has a storage capacity of 140,000 BBL andis able to maintain a steady operating position without anchormoorings by means of 6 computerized azimuth thrusters, whichoffset and correct the effect of wind, waves and current in realtime. The vessel is operating in ultra deep waters (over 1,000meters) in West Africa. Other relevant vessels are Scarabeo 5 and7, third and fourth generation semi-submersible rigs able tooperate at depths of 1,900 and 1,200 meters of water,respectively. Average utilization of drilling vessels in 2007stood at 94.7% (89.6% in 2006).

The most significant contracts awarded in Offshore drilling in2007 included: (i) a 5-years long contract for the use of theS12000 drilling ship, currently under construction, in Angola onbehalf of Total. This drilling ship is expected to commenceoperations in the first quarter of 2010; (ii) a 12-month longcontract for the use of the drilling ship Saipem 10000 in Angolaon behalf of Total; and (iii) a 12-month long contract for theuse of the semi-submersible platform Scarabeo 3 in Nigeria onbehalf of Addax Petroleum.

> 
*Onshore drilling*

Saipem operates in this area as main contractor for the majorinternational oil companies executing its activity mainly inSaudi Arabia, North Africa and South America, where it canleverage on its knowledge of markets, long-term relations withcustomers and integration with other business areas. Saipemboasts a solid presence 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 2007 stood at 99.6% (94.3% in2006). Rigs were located as follows: 13 in Peru, 12 in Venezuela,9 in Saudi Arabia, 7 in Algeria, 3 in Kazakhstan, 2 in Italy and1 in Ecuador.

The most significant orders awarded in 2007 in Onshoredrilling were: (i) a contract on behalf of PDVSA for a five-yearlease of three new rigs in Venezuela; (ii) a contract on behalfof Saudi Aramco for a three-year lease of five rigs in SaudiArabia; and (iii) a contract on behalf of Petrobras for afour-year lease of three new rigs (one conventional rig and twonew-generation hydraulic rigs) in the north-east of Brazil.

 

> 
***Capital Expenditures***

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

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**Corporate and other activities**

These activities include the following businesses:

| • |   | the "Other        activities" segment only encompasses 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 in past years; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the "Corporate and        financial companies" segment encompasses Eni        Corporate and certain Eni’s subsidiaries engaged in        treasury, finance and other general and business support        services. Eni Corporate is the 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 Sofid 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 intercompany        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.

 

> 
***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 innovation represent key factors inimplementing Eni’s business strategies. Eni’s effortsin technological innovation are primarily intended to developsuch technologies so as to meet the environmental issues andclimate change, to overcome limits in accessing to hydrocarbonresources, to strengthen partnerships with producing countriesand to develop renewable sources of energy.

Eni is conducting R&D activities aimed primarily atreducing the costs of finding and recovering hydrocarbons,upgrading heavy oils, monetizing stranded gas and protecting theenvironment. Over the next four years, Eni plans to investapproximately euro 1.7 billion to implement its strategy intechnological innovation matters. Particularly, the mainmanagement expects to upgrade the following lines of R&D:

| • |   | Reserve replacement ratio        and reduction of mineral risk;                                                                                                                                                 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Production and exploitation        of unconventional hydrocarbon reserves and optimization        in managing reserves with a high level of hydrogen        sulphide and sulphur;                               |
| • |   | Expansion of the natural gas        market and monetization of flaring gas or localized in        remote areas;                                                                                                 |
| • |   | Better quality and        performance of fuels, in connection with the evolution in        the automotive sector towards even more improved systems,        efficient and with lower impact on air quality; and |
| • |   | Efficient exploitation of        fossils, improved distillate yield and optimal use of        fossils with a lower environmental impact.                                                                        |

With regards to environmental protection, Eni intends todevelop the "Along with Petroleum" program aimed atidentifying and developing research projects on the most advancedaspects of large scale use of renewable energy sources and energyefficiency. Over the next four years, approximately euro 120million will be addressed to this program. In particular, Eniexpects to focus on the fields of greenhouse effect mitigationthrough bio-fuels, photovoltaics, solar energy, hydrogenproduction from renewable sources as well as carbon dioxidecapture and geological sequestration.

In 2007, Eni’s expenditures on R&D amounted to euro208 million which were almost entirely expensed as incurred. 47%of R&D expenditures were directed to the Exploration &Production segment, 32% to the Refining & Marketingsegment, 14% to the Petrochemical segment and 7% to theEngineering & Construction segment. Eni’s expenditureson R&D amounted to euro 220 million and euro 204 million in2006 and 2005.

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At December 31, 2007, a total of 1,082 people were employed inresearch and development activities.

In 2007, a total of 69 applications for patents were filed.

 

 

**Insurance**

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

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

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

 

 

**Environmental Matters**

> 
***Environmental Regulation***

Eni is subject to numerous EU, international, national,regional and local environmental, health and safety laws andregulations concerning its oil and gas operations, products andother activities, including legislation that implementsinternational conventions or protocols. In particular, these lawsand regulations require the acquisition of a permit beforedrilling for hydrocarbons may commence, restrict the types,quantities and concentration of various substances that can bereleased into the environment in connection with exploration,drilling and production activities, limit or prohibit drillingactivities on certain protected areas, provide for measures to betaken to protect the safety of the workplace and health ofcommunities affected by the company’s activities, and imposecriminal or civil liabilities for pollution resulting from oil,natural gas, refining and petrochemical operations. These lawsand regulations may also restrict emissions and discharges tosurface and subsurface water resulting from the operation ofnatural gas processing plants, 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); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | procedure 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;                                                                                                                       |
| • |   | 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, criteria for wasteclassification.

The Decree 152/2006 was amended by two subsequent decrees:Legislative Decrees 284/2006 and 4/2008; the latter introducedimportant changes regarding SEA and EIA procedures, landfill,waste and remediation. A principle of waste hierarchy wasintroduced along with definition of by-product and secondary rawmaterials.

The most important aspects of these regulations to Eni arethose regulating permits for industrial activities, wastemanagement, remediation of polluted sites, water protection andenvironmental liability.

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               **EuropeanUnion**On January 29, 2008, the new IPPC (Integrated PollutionPrevention and Control) directive 2008/1/EC was published in theOfficial Journal of the European Union No. 24. Therefore, fromFebruary 18, 2008, the new IPPC directive repeals the Directive96/61/EC with its successive amendments. This directiverationalizes all existing regulations on this issue, confirmingthe achievement of high levels of environmental protection to beof primary importance to member states.

According to the IPPC Directive, the Member States of the EUhave to communicate their national values of emissions into theatmosphere, wastes produced and managed and discharges ofcompounds into waste. The European Commission published inOfficial Journal of European Union, May 16, 2007 (2007/C 110/01)the definitive replacement of the European Pollutant EmissionRegister (EPER) by the European Pollutant Release and TransferRegister (E-PRTR), published in 2006 (Regulation No. 166/2006).2009 will be the first year of implementation of measuresintended to publicly disclose environmental data collected in2007 according to PRTR register. Eni is implementing anIntegrated Environmental Information System, able to gather,manage and report the data on all the pollutants requested byPRTR Regulations.

On December 21, 2007, the European Commission published itsproposal of directive on the issue of industrial emissions. Inview of the general call for "better regulation", thedraft incorporates the reviews of six sector-specific directives(IPPC, Large Combustion Plants, VOC - Volatile Organic Compounds- emissions, incineration of waste and titanium industry). Thedraft of directive intends to enforce BAT definition, togetherwith a tightening of current minimum emission values in somesectors. The directive extends the scope of the IPPC directive tocover certain activities (e.g. combustion plants between 20 and50 MW). The new proposal introduces also more robust monitoringand inspections on installations, the review of permit conditionsand the reporting of compliance.

In December 2005, the European Commission proposed a WasteFramework Directive which is now at the last stage ofelaboration. The draft introduces a new waste strategy andproposes a life-cycle approach, focuses on waste policy byimproving the way of resources consumption. The scope is toimprove the recycling market by setting environmental standardsspecifying under which conditions certain recycled waste are nolonger considered such. Moreover the new proposal simplifieswaste legislation by clarifying definitions, streamliningprovisions and integrating the directives on hazardous waste(91/689/EEC) and on waste oils (75/439/EEC).

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

Eni is committed to continuously improve its model formanaging health, safety and environment across all its ownoperational activities in order to minimize risks associated withits industrial activities, ensure reliability of its industrialoperations and comply with all applicable regulations.

In 2007, Eni’s business units continued to obtaincertifications of their management systems, industrialinstallations and operating units according to the most stringentinternational standards. In 2007, the total number ofcertifications obtained was 212 (185 in 2006), of which 113certifications according to the ISO 14001 standard, 9certifications according to the EMAS regulation (EMAS is theEnvironmental Management and Audit Scheme recognized by theEuropean Union) and 28 according to the OHSAS 18001 standard(Occupational Health and Safety management Systems -requirements).

*Environment.* In 2007, Eni incurred total expendituresamounting to euro 1,063 million for the protection ofenvironment, down 8.4% from 2006. Current environmental expensesrepresented approximately 64% of the whole environmentalexpenditure and mainly related to costs incurred with respect toremediation and reclamation activities, carried out mainly inItaly. Capitalized environmental expenditure mainly related tosoil and subsoil protection, water management and air emissions.

*Safety.* The safety of Eni’s employees andcontractors, people living in the area where its industrialactivities and assets are located, is of fundamental importanceto the Company.

As to safety regulations, in 2008 the Legislative Degree No.81/2008 on health and safety in workplaces came into force. Thisdecree meaningfully increases the administrative responsibilityof companies for violating applicable laws regulating work safetyin industrial sites, also requiring a lot of attention on part ofpeople in charge of supervisory and managing functions.

Eni’s safety strategy is based on:

| • |   | the dissemination of a        safety culture within its organization;                                                                            |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | a comprehensive policy,        specific guidelines and proper management systems in line        with International standards and best practices; |

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| • |   | identification of all        exposures and risks related to processes, products and        operations performed, control, prevention and protection        from exposure to dangerous situations; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | minimization of exposure to        risk in all production activities.                                                                                                                                 |

In 2007, safety indicators improved from 2006. The injuryfrequency rate was 3.01, down 5%, and the injury severity ratewas 0.10 in line with 2006.

Costs incurred in 2007 to support the safety levels ofoperations and to comply with applicable rules and regulationswere euro 468 million, up 18.8% from 2006.

*Health.* Eni’s activities for protecting health aimat the continuous improvement of work conditions. They addressthe following issues:

| • |   | improvement of efficiency        and reliability of plants;                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | adoption of best practices        and operating management systems based on advanced        criteria of protection of health and the internal and        external environment; |
| • |   | research and innovation,        specifically with reference to health issues and the        exposure to work-related risks;                                                    |
| • |   | results of internal and        external audits;                                                                                                                                |
| • |   | identification and        monitoring of indicators and guidelines for analysis and        intervention areas; and                                                              |

| • |   | certification programs of        management systems for production sites and operating        units. |
|--------|--------|------------------------------------------------------------------------------------------------------|

To protect the health and safety of its employees, Eni relieson a network of 296 health care centers located in its mainoperating areas; of these, 203 centers are outside Italy. A setof international agreements with the best local and internationalhealth centers ensures efficient services and timely responses toemergencies.

In 2007, Eni incurred a total expense of euro 54 million toprotect the health of its employees.

 

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

On February 16, 2005, the Kyoto Protocol entered into forceand, with it, the commitments of the Annex I Parties which haveratified the Protocol, including the EU and Italy. According toLaw No. 120/2002, Italy committed itself to reduce greenhouse gas(GHG) emissions by 6.5% in the period 2008-2012, as compared toGHG levels emitted in 1990. Reductions can be achieved throughboth internal measures and complementary initiatives. The latterinclude the so-called flexible mechanisms, which enables a Partyto carry out projects in developing countries (CDM - CleanDevelopment Mechanism) and in industrial countries withtransition economies (JI - Joint Implementation) in order toobtain emission credits to fulfil the Kyoto compliance.

Italy, as an EU Member State, is part of the EU EmissionTrading Scheme ("ETS") that was established byDirective 2003/87/EC. Effective from January 1, 2005, ETS is thelargest virtual market in the world for exchanging emissionallowances targeting industrial installations with high carbondioxide emissions.

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. Eni is part to the ETS. Moreover, Eni is active inthe utilization of the Kyoto Flexible Mechanisms. In fact, due toits presence in about 70 countries, Eni is an elective partnerfor carrying out CDM and JI projects thus contributing to theItalian program of greenhouse gas emissions reduction. InDecember 2003 during the Conference of Parties to the KyotoProtocol – COP9 – Eni and the Ministry of theEnvironment signed a Voluntary Agreement for using flexiblemechanisms, promoting CDM and JI and contributing to thesustainable development of host countries.

The ETS EU directive provides that each Member State shallensure that any operator who produces GHG emissions in excess ofthe amounts awarded based on national allocation plan, willprovide allowances to cover excess emissions a year later inaddition to pay a penalty. The excess emissions penalty shall beEUR 100 (EUR 40 for the first period 2005-2007) for each tonne ofcarbon dioxide equivalent emitted. All companies are expected toidentify and carry out projects for emission reductions. Eniparticipates in the ETS scheme with 56 plants in Italy and 1outside Italy, which collectively represent about a third of allgreenhouse gas emissions generated by Eni’s plantsworldwide. In the whole period (2005-2007) Eni was entitled toallowances equal to 77.2 mmtonnes of carbon dioxide for existingand new installations (of which 25.7 mmtonnes of carbon dioxidefor 2007). Based on the implementation of projects designed toreduce emissions, particularly the start-up of high efficiencycombined cycles for the cogeneration of electricity and steam,the amount of carbon dioxide emitted by Eni’s plantscomplied with mandatory limits in the whole period.

Management believes that a significant emission reduction canbe achieved in connection with oil and gas production activitiesoutside Italy, that in a number of cases, given lack of localmarket outlets, require the flaring of natural gas associated tooil production. The elimination of flaring and the use ofassociated gas for the development of local economies allowsustainable development while reducing greenhouse gas emissions.The validation of such projects as CDM and JI will provideemission credits and facilitate the achievement of the Italianreduction target, as 

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set by the Kyoto Protocol. Eni already carried out Zero GasFlaring projects in Nigeria and Congo while others are underway.In November 2006 the Nigerian Kwale-Okpai project has beenregistered as a CDM project. It regarded the construction of acombined cycle power station, which utilizes the associated gasto oil production formerly flared. More projects are beingassessed or implemented in Congo, Nigeria and Angola. Moreover,Eni endorsed the Global Gas Flaring Reduction Initiative of theWorld Bank, in order to fight for the elimination of obstacles tothe completion of gas flaring reduction projects.

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

To ensure comprehensive, transparent and accurate accountingfor GHG emissions, which is consistent over time, Eni introducedin 2005 its own Protocol for the accounting and reporting ofgreenhouse gas emissions (GHG Accounting and Reporting Protocol),which is an essential requirement for emission certification.Indeed, accurate reporting will support the strategic managementof risks and opportunities related to greenhouse gases, thedefinition of objectives and the evaluation of progress.

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

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

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

**Regulation of Eni’s Businesses**

> 
***Overview***

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

> 
 

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

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

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

In principle, the license holder is entitled to all productionminus any royalties that are payable in kind. A license holder isgenerally required to pay production taxes or royalties, whichmay be in cash or in kind. Both exploration and productionlicenses are generally for a specified period of time (except forproduction licenses in the 

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United States which remain in effect until production ceases).The term of Eni’s licenses and the extent to which theselicenses may be renewed vary by area.

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

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

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

 

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

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

> 
 

***Exploration & Production***

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

*Exploration permits and production concessions.*Pursuant to the Hydrocarbons Laws, all hydrocarbons existing intheir natural condition in strata in Italy or beneath itsterritorial waters (including its continental shelf) are theproperty of the State. Exploration activities require anexploration permit, while production activities require aproduction 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. Royalties are equal to 7%and 4%, respectively, for onshore and offshore production of oiland 7% for both onshore and offshore production of natural gas.

> 
*Storage of natural gas*

Storage activities in Italy are regulated by LegislativeDecree No. 164/2000 ("Decree No. 164"), which enactedthe European Directive on Natural Gas 98/30/CE into Italianlegislation. The most important aspects of Decree No. 164concerning storage activities are the following: (i) invertically integrated enterprises, storage is to be carried outby a separate company not operating in other gas activities (suchas Eni’s subsidiary Stoccaggi Gas Italia SpA) or bycompanies engaged only in transport and dispatching activities,provided the accounts of these two activities are clearlyseparated from the accounts of storage; (ii) storage activity isexercised pursuant to concessions granted by the Ministry ofProductive Activities. The duration of a concession is 20 years,with the possibility of obtaining at most two ten-year extensionsif operators 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 Authority for Electricity and Gas in order to ensure a presetreturn on capital employed, taking into account the typical riskinherent in this activity, as well as volumes stored for ensuringpeak supplies and the need to incentive capital expenditure forupgrading the storage system; and (vii) the Authority forElectricity and Gas establishes the criteria and priority ofaccess storage operators have to include in their own storagecodes.

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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.

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

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

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

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

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.

In November 2007, the Italian Authority for Electricity andGas and the Italian Antitrust Authority opened an inquiry to gaininsight into the functioning of the natural gas storage activityin Italy, particularly with regards to the lack of investments byoperators aimed at expanding natural gas storage capacity tostore natural gas in Italy. Eni, through its wholly-ownedsubsidiary Stogit Italia, owns nearly the entire storage capacitycurrently existing in Italy.

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

This code 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 code has been in force since November 1, 2006.

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

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

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 ofEconomic 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 of 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 capacityavailable and the maximum daily uplift capacity is awardedaccording to the following order of priority to: (i) holders ofproduction concessions requesting mineral storage services; (ii)natural gas selling operators who are held to provide amodulation service of their supply to their customers accordingto Article 18, paragraphs 2 and 3 of Legislative Decree No.164/2000, for maximum volumes corresponding to a seasonal demandpeak with average temperatures, on the terms and conditionsestablished by a procedure to be issued by the

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Authority for Electricity and Gas; (iii) to the entitiesmentioned in (ii) above only for those additional maximum volumesrelated to a seasonal demand peak in case of certain lowtemperatures measured on a 20-year period, under the terms andconditions of the procedure mentioned in (ii) above; and (iv) theentities requesting access for services different from the onesmentioned above.

Eni held natural gas for strategic reserve purposes in itsstorage business, as established by Decree No. 164. The strategicreserves of gas are defined as "stock destined to meetsituations of deficit/decrease of supply or crisis of the gassystem". The Ministry of the Economic Development determinesquantities and usage criteria of such reserves. As of December31, 2007 Eni held approximately 179 BCF of strategic reserves ofnatural gas (180 BCF at year end 2006).

 

> 
***Gas & Power***

*Natural gas market in Italy*

The European Directive on Natural Gas was implemented intoItalian legislation through Legislative Decree No. 164 of May 23,2000 ("Decree No. 164"), effective from June 21, 2000.As concerns natural gas activities carried out by Eni, the mostrelevant aspects of the decree are as follows:

| (i)   |   | Starting in 2003 all        customers are eligible customers (with access to the        natural gas system and free to choose their supplier of        natural gas);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | Antitrust thresholds are in        place for gas operators in Italy as follows: (a)        effective January 1, 2002, operators are prohibited to        transmit into the national transport network imported or        domestically produced gas volumes higher than a preset        share of Italian final consumption. This share is 75% of        total final consumption in the first year of regulation        and then is to decrease by 2 percentage points per year        to reach a 61% threshold in terms of final consumption by        2009; and (b) effective January 1, 2003, operators are        prohibited to market gas volumes to final customers in        excess of 50% of overall volumes marketed to final        customers. Compliance with these ceilings is verified        yearly by comparing actual average shares obtained by any        operator in a given three-year period for both volumes        input and volumes marketed to customers with average        shares permitted by the law for the same period. Actual        shares are computed net of losses (in the case of sales)        and volumes of natural gas consumed in own operations.        Based on a bill passed by the Italian upper house, Eni        expects that these antitrust thresholds will be renewed        when they expire in 2010; |
| (iii) |   | natural gas transport and        dispatching activities have to be carried out by a        separate company that is not allowed to carry out any        other activity in the natural gas field, with the only        exception of storage, for which, however, accounting and        operating separation is envisaged. Also distribution,        which includes the transport of natural gas by means of        local gas pipeline networks for delivery to customers,        has to be carried                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|   |   | out by a separate company        which cannot perform other gas related activities. Sales        activity to final customers is compatible only with        import, export and production activities and is subject        to authorization from the Ministry of Productive        Activities. Concessions for the distribution of natural        gas will be awarded by bid procedure; and                                                                                                                                                                                                                                           |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iv)   |   | tariff criteria and return        on capital employed for transport, dispatching, storage,        use of LNG terminals and distribution are determined by        the Authority for Electricity and Gas. Third parties are        allowed to access transport infrastructure, storage        sites, LNG terminals and distribution networks on a        regulated basis. As provided for by the decree, a Network        Code containing norms and regulations for the operation        of and access to infrastructure was prepared by operators        on the basis of criteria set by the Authority for        Electricity and Gas. |

In 2007, the fourth three-year regulated period closed fornatural gas volumes input in the domestic transport network (forwhich the allowed average percentage was 67% of domesticconsumption of natural gas) and the second three-year regulatedperiod for sales volumes (for which the allowed averagepercentage is 50% of gas sales). In this three-year periodEni’s presence on the Italian market complied with saidlimits.

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

This law provides for:

| • |   | a derogation to third party        access granted to companies that make direct or indirect        investments for the construction of new infrastructure or        the upgrading of existing ones such as: (i)        interconnections between EU Member States and national        networks; (ii) interconnections between non-EU States and        national networks for importing natural gas to Italy;        (iii) LNG terminals in Italy; and (iv) underground        storage facilities in Italy. Investing companies can        obtain priority on the conferral of new capacity for a        portion of not less than 80% of the new capacity        installed and for a period of at least 20 years; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | paragraph 69 provides the        authentic interpretation of the rule introduced by        Legislative Decree No. 164/2000 concerning the        transitional regime of concessions for natural gas        distribution activities in urban centers existing at June        21, 2000, which allows for an anticipated repayment of        the distribution service, despite being provided through        a bid procedure rather than direct entitlements. This law        changes the provisions defined by Legislative Decree No.        164/2000 by: (i) extending to December 31, 2007, the                                                                                                                 |

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|   |   | transitional period for the        continuation of existing concessions, with a possible        extension of one further year when public interest is        considered important by local authorities; and (ii)        canceling the adding up of possible extensions, as        provided for by Legislative Decree No. 164/2000, in case        of certain conditions (business restructuring, size        parameters, shareholding composition). The end of        concessions awarded on the basis of a bid procedure        remains set at December 31, 2012. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

> 
*Natural gas prices*

Prices of natural gas sold to industrial and thermoelectriccustomers as well as to wholesalers are freely established amongbuyers and sellers following the liberalization of the naturalgas sector introduced by Decree No. 164. Notwithstanding this,the Authority for Electricity and Gas holds a power ofsurveillance on this matter (see below) under Law No. 481/1995(establishing the Authority for Electricity and Gas) andLegislative Decree No. 164/2000. Furthermore, the Authority isentrusted with the power of regulating natural gas prices toresidential and commercial customers which were not eligiblecustomers until December 31, 2002.

In fact, the Presidential Decree dated October 31, 2002entrusted the Authority for Electricity and Gas with the power todefine, calculate and update gas selling prices for customers whowere not-eligible customers until December 31, 2002, also afterthe opening up of the gas markets from January 1, 2003,additionally targeting the public goal of containing inflationarypressure deriving from increasing energy costs. Consistently withthis decree, the Authority for Electricity and Gas: (i) withDecision No. 195 of November 29, 2002 changed the methods forperiodically updating selling prices for natural gas inconnection with changes in international prices of crude oil andrefined products. Such changes regarded the scheduled updateprocess (from every two months to every three), and the durationof the reference period for the calculation of changes in averageinternational prices as compared to the first application quarter(changes are calculated with reference to a nine-month periodpreceding the update). The invariance threshold, beyond whichtariffs are updated, remained at 5%; and (ii) with Resolution No.207 of December 12, 2002, it decided that companies sellingnatural gas through local networks have to maintain theconditions applied to non-eligible customers until December 31,2002 until the customer accepts a new contract offer. Inaddition, the Authority for Electricity and Gas decided thatthese companies can propose their own new contract offers and thetariffs determined according to the criteria established by theAuthority for Electricity and Gas, adequately advertising thembefore March 31, 2003 (such offers must be published on thecompanies web page, on at least one newspaper of generalcirculation and on the Gazzetta Ufficiale of their region orautonomous province).

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

With Resolution No. 79/2007 the Italian Authority forElectricity and Gas, after concluding a consultation procedurewith gas operators also taking account of the annulment of itsResolution No. 248/2004 due to formal flaws by the Administrativejustice bodies, established a new indexation mechanism for theraw material cost component in natural gas supplies to customersconsuming less than 200,000 CM/y who were not-eligible customersuntil December 31, 2002 (mainly residential and commercialcustomers located in urban centers). This Resolution reorganizedin a single measure this matter. In particular with thisResolution the Authority: (i) confirmed the indexation mechanismfor the raw material cost component contained in Resolution No.248/2004 and the changes introduced to this mechanism byResolution No. 134/2006 starting on July 1, 2006 (see below for afull description of said indexation mechanism); (ii) waiving thisprovision, it reviewed the updating of the raw material costcomponent for 2005 determining incremental values equal to thosederiving from the application of the indexation criteria ofResolution No. 195/2002; this provision resulted in the annulmentof the negative impact of Resolution No. 248/2004 on Eni’s2005 accounts; and (iii) decided that selling companies, only forwholesale purchase/sale contracts entered after January 1, 2005and in place in the January 1, 2006-June 30, 2006 period, wouldoffer their customers new contractual conditions consistent withthe new indexation mechanism and inform the Authority of 

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contract updates. Selling companies complying with thisrequirement would be entitled to 50% of the difference betweenthe updating of the raw material cost component under the newmechanism and the more favorable one under Resolution No.195/2002 applied to volumes consumed by customers under the200,000 CM/y threshold. On the basis of this Resolution in 2007,Eni reversed part of the reserves accrued in Eni’s accountsfor 2005 and 2006 with respect to the estimated impact ofResolution No. 248/2004. See "Item 5 – Results ofOperations – Gas & Power".

The new indexation mechanism of the raw material costcomponent in tariffs paid by end customers consuming less than200,000 CM/y as set in Resolution No. 79/2007 basically worksthis way: (i) it has limited the ability of gas operators totransfer to customers changes in the raw material cost by settinga cap of 75% for changes in the raw material component linked toa fall in Brent crude prices below 20 $/BBL or a rise within the35-60 $/BBL range, raising the cap at 95% if Brent crude pricesare higher than 60 $/BBL; (ii) it has changed the relative weightof the three products making up the reference index of energyprices whose variations – when higher or lower than 2.5% ascompared to the same index in the preceding period –determine the adjustment of raw material costs; (iii) it hasreplaced one of the three products included in the index (a poolof crudes) with Brent crude; and (iv) it has reduced the value ofthe variable wholesale component of the selling price by 0.26euro/CM. 

This indexation mechanism applies for a two-year periodeffective July 1, 2006, with the option of a one year extensionfollowing a decision of the Authority.

> 
*Transport*

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

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

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

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points. This tariff system regulated the four-thermal yearperiod starting October 1, 2001 and ending on September 30, 2005.

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

*Network code.* With Resolution No. 75 of July 1, 2003,the Authority for Electricity and Gas approved Snam Rete GasNetwork Code, which defines rules and regulations for theoperation and management of the transmission network. The NetworkCode, in accordance with Legislative Decree No. 164/2000, isbased on the criteria set by the Authority for Electricity andGas with Resolution No. 137/2002, aimed at guaranteeing equalaccess to all customers, maximum impartiality and neutrality intransport and dispatching activities. The Network Code regulatesentitlement of transport capacity, obligations of transporter andcustomer and the procedures through which customers can sellcapacity to other users. Transport capacity at entry points inthe national gasline network (point of interconnection withimport gas lines) is assigned on an annual basis and can last upto five thermal years. 

Entities eligible to be assigned transport capacity on amulti-year basis are those having multi-year import contractswithin the limit of their daily average contract volumes.Priority criteria envisage that available capacity is assignedfirst to parties in multi-year import contracts containingtake-or-pay clauses signed before August 10, 1998 (date of comingin force of European Directive 98/30/CE). If requests forcapacity in a given thermal year are higher than availablecapacity, a pro-rata mechanism is applied in compliance with theaforementioned priority.

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

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

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

*Adoption of guarantees for free access to LNGregasification services and rules for the regasification code.*With Resolution No. 167 of August 1, 2005, the Authority forElectricity and Gas published the criteria for access to LNGregasification services. The Decision also defines criteria forthe allocation of regasification capacity. In particular itestablishes that take-or-pay contracts entered into before 1998,as in the case of Eni, are awarded priority access limited to theminimum amount of volumes that have been regasified in the periodstarting from 

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thermal year 2001-2002. Eni filed a claim against thisdecision with the Regional Administrative Court of Lombardy thatrejected the claim. Subsequently, Eni filed a claim with a higherdegree administrative court.

> 
*Distribution*

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

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

 

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

*Refining.* Under Decree No. 112, companies that seek toestablish refining operations in Italy or to expand the capacityof existing refining operations must obtain an operatingconcession from the relevant Region, while companies that seek tobuild or operate new plants that do not increase refiningcapacity must obtain an authorization from the relevant Region.Management expects no material delays in obtaining relevantconcessions for the upgrading of the Sannazzaro and Tarantorefineries as planned in the medium term.

*Service stations.* Decree No. 32 of February 11, 1998,as amended by Legislative Decree No. 348 of September 8, 1999 andLaw Decree No. 383 of October 29, 1999, significantly changedItalian regulation of service stations. The decree replaces thesystem of concessions granted by the Ministry of Industry,regional and local authorities with an authorization granted bycity authorities. Legislative Decree No. 112/1998 confers thepower to grant concessions for the construction and operation ofservice stations on highways to Regions. Decree No. 32 alsorequires that contracts between license holders and servicestation operators have a duration of not less than six years andbe drafted in accordance with arrangements agreed by the relevanttrade group of license holders and the union representatives forthe service station operators. Decree No. 32 also provides for:(i) the testing of compatibility of existing service stationswith local planning and environmental regulations and with thoseconcerning traffic safety to be performed by city authorities;(ii) upon the closure of at least 7,000 service stations, theoption to extend by 50% the opening hours (currently 52 hours perweek) and a generally increased flexibility in scheduling openinghours; (iii) simplification of regulations concerning the sale ofnon-oil products and the permission to perform simple maintenanceand repair operations at service stations; and (iv) the openingup of the logistics segment by permitting third party access tounused storage capacity for petroleum products. With the goal ofrenewing the Italian distribution network, Law No. 57/2001provides that the Ministry of Productive Activities is to prepareguidelines for the modernization of the network, and the Regionsshall follow those guidelines in the preparation of regionalplans. The decree was issued on October 31, 2001 and establishedthe criteria for the closing down of incompatible stations, theapproval of the plan, the renewal of the network, the opening upof new stations and the regulations of the operations of servicestations on matters such as automation, working hours and non oilactivities.

*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.

With a recommendation approved at its meeting of January 18,2007 and submitted to the Government and the Regions, the ItalianAntitrust Authority requested the elimination of localconstraints to the opening up of the fuel distribution outletsaimed at increasing competition and reducing retail prices.Specifically, the Authority urged the following measures in orderto enhance the level of competition in the sector of retailmarketing of fuels: (i) the development of the marketing of fuelsby large retailers (supermarkets, large chain-stores, etc.); (ii)the elimination of administrative constraints to the opening ofnew service stations; (iii) a liberalization of opening hours;and 

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(iv) transparency for consumers, identifying any usefultools for proper information on actual prices imposed byoperators in each outlet. Currently, Eni is unable to forecast atime frame for this matter. Implementation of any of thesesuggested measures could enhance the level of competition in theretail marketing of fuels, leading to a reduction in retailmargins for all operators.

*Compulsory stocks.* According to Legislative Decree ofJanuary 31, 2001, No. 22 ("Decree 22/2001") enactingEuropean Directive No. 98/1993 (which regulates the obligation ofmember states to keep a minimum amount of stocks of crude oiland/or petroleum products) compulsory stocks, must be at leastequal to the quantities required by 90 days of consumption of theItalian market (net of oil products obtained by domesticallyproduced oil). In order to satisfy the agreement with theInternational Energy Agency (Law No. 883/1977), Decree 22/2001increased the level of compulsory stocks to reach at least 90days of net import, including a 10% deduction for minimumoperational requirements. Decree 22/2001 states that compulsorystocks are determined each year by a decree of the Minister ofProductive Activities based on domestic consumption data of theprevious year, defining also the amounts to be held by each oilcompany on a site-by-site basis.

At December 31, 2007 Eni owned 7 mmtonnes of oil productsinventories, of which 4.8 mmtonnes as "compulsorystocks", 1.4 mmtonnes related to operating inventories inrefineries and depots (including 0.2 mmtonnes of oil productscontained in facilities and pipelines), 0.4 mmtonnes related tooil products contained in ships and 0.4 mmtonnes related tospecialty products.

Eni’s compulsory stocks (at December 31, 2007) were heldin term of crude oil (35%), light and medium distillates (41%),fuel oil (19%) and other products (5%) and they were locatedthroughout the Italian territory both in refineries (73%) and instorage sites (27%).

 

> 
***Competition***

Like all Italian companies, Eni is subject to Italian and EUcompetition rules. EU competition rules are set forth in Articles81 and 82 of the Treaty of Rome as amended by the Treaty ofAmsterdam dated October 2, 1997 and entered into force on May 1,1999 ("Article 81" and "Article 82",respectively being the result of the new denomination of formerArticles 85 and 86) and EU Merger Control Regulation No. 4064 of1989 ("EU Regulation 4064"). Article 81 prohibitscollusion among competitors that may affect trade among memberstates and that has the object or effect of restrictingcompetition within the EU. Article 82 prohibits any abuse of adominant position within a substantial part of the EU that mayaffect trade among member states. EU Regulation 4064 sets certainlimits for cross-border transactions, above which enforcementauthority rests with the European Commission and below whichenforcement is carried out by national competition authorities,such as the Antitrust Authority in the case of Italy. On May 1,2004, a new regulation of the European Council came into force(No. 1/2003) which substitutes Regulation No. 17/1962 on theimplementation of the rules on competition laid down in Articles81 and 82 of the Treaty. In order to simplify the proceduresrequired of undertakings in case of concentration, the newregulation substitutes the obligation to inform the Commissionwith a declaration that such concentration does not infringe theTreaty. In addition, the burden of proving an infringement ofArticle 81(1) or of Article 82 of the Treaty shall rest on theparty or the authority alleging the infringement. The undertakingor association of undertakings claiming the benefit of Article81(3) of the Treaty shall bear the burden of proving that theconditions of that paragraph are fulfilled. The regulationdefines the functions of Authorities guaranteeing competition inMember States and the powers of the Commission and of nationalcourts. The competition authorities of the Member States shallhave the power to apply Articles 81 and 82 of the Treaty inindividual cases. For this purpose, acting on their owninitiative or on a complaint, they may take the followingdecisions:

| • |   | requiring that an        infringement be brought to an end;                                                      |
|--------|--------|------------------------------------------------------------------------------------------------------------------|
| • |   | ordering interim measures;                                                                                       |
| • |   | accepting commitments; and                                                                                       |
| • |   | imposing fines, periodic        penalty payments or any other penalty provided for in        their national law. |

National courts shall have the power to apply Articles 81 and82 of the Treaty. Where the Commission, acting on a complaint oron its own initiative, finds that there is an infringement ofArticle 81 or of Article 82 of the Treaty, it may: (i) requirethe undertakings and associations of undertakings concerned tobring such infringement to an end; (ii) order interim measures;(iii) make commitments offered by undertakings to meet theconcerns expressed to them by the Commission binding on theundertakings; and (iv) find that Articles 81 and 82 of the Treatyare not applicable to an agreement for reasons of Communitypublic interest.

Eni is also subject to the competition rules established bythe Agreement on the European Economic Area (the "EEAAgreement"), which are analogous to the competition rules ofthe Treaty of Rome and apply to competition in the EuropeanEconomic Area (which consists of the EU and Norway, Iceland andLiechtenstein). These competition rules are enforced by theEuropean Commission and the European Free Trade Area SurveillanceAuthority.

In addition, Eni’s activities are subject to Law No. 287of October 10, 1990 (the "Antitrust Law"). Inaccordance with the EU competition rules, the Antitrust Lawprohibits collusion among competitors that restricts 

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competition within Italy and prohibits any abuse of a dominantposition within the Italian market or a significant part thereof.However, the Antitrust Authority may exempt for a limited periodagreements among companies that otherwise would be prohibited bythe Antitrust Law if such agreements have the effect of improvingmarket conditions and ultimately result in a benefit forconsumers. The Antitrust Authority has intervened on the basis ofthe Antitrust Law in several instances, particularly in order toprohibit the imposition of discriminatory tariffs in thetelecommunications, railway and air transport sectors, amongothers.

 

**Property, Plant and Equipment**

Eni has freehold and leasehold interests in real estate innumerous countries throughout the world, but no one individualproperty is material to Eni as a whole. See "Exploration& Production" above for a description of Eni’sreserves and sources of crude oil and natural gas.

 

**Organizational Structure**

Eni SpA is the parent company of the Eni Group. As of December31, 2007, there were 341 subsidiaries, of which 257 were fullyconsolidated and 84 entities were accounted for under the equityor cost method. For a list of subsidiaries of the Company, see"Exibit 8 – List of Eni’s fully consolidatedsubsidiaries for year 2007".

 

 

**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 and IFRS as adopted by the EuropeanUnion.*

*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 iii.*

> 
 

**Executive Summary**

In 2007, net profit attributable to Eni amounted to euro10,011 million, representing an increase of 8.6% from 2006.

Operating profit in 2007 amounted to euro 18,868 million, down2.4% from 2006, mainly reflecting lower operating profit reportedby the Exploration & Production segment, down euro 1,792million from 2006, or 11.5%. This reduction was mainly due to anegative impact of the appreciation of the euro against thedollar, rising operating costs and amortization charges, higherexploration expenditures and lower production volumes. Thesenegative factors were partly offset by improved operating profitrecorded by:

| (i)  |   | the Refining & Marketing        segment, which reported an increase in operating profit        of euro 410 million over 2006. This improvement mainly        reflected a gain deriving from the impact of higher        year-end prices on the valuation of year-end inventories        of oil and refined products under the weighted-average        cost method of accounting. This method of accounting for        inventories of oil, gas and products implies a high        degree of volatility in Eni’s results of operations        for the Refining & Marketing segment as inventory        valuation is based on current market prices. This        positive effect was partly offset by lower realized        refining margins, mainly for complex refineries, and the        appreciation of the euro over the dollar; |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | the Engineering &        Construction segment, which reported an increase in        operating profit of euro 332 million over 2006. This        increase mainly reflected an improved underlying        performance against the backdrop of favorable market        trends; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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| (iii) |   | the Gas & Power segment,        which reported increased operating profit of euro 325        million over 2006. This improvement mainly reflected a        positive development with Italy’s regulatory        framework on gas pricing to residential clients and        resellers and an improved operating performance delivered        by the regulated business in Italy. |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni’s net profit for the year was supported by lowerincome taxes, down euro 1,349 million, mainly reflecting aone-time gain due to implementation of certain changes to the taxregime applicable to Italian subsidiaries (net gain of euro 394million) as well as recognition of certain deferred taxliabilities in the previous year in connection with changes inthe tax regime applicable to certain of the Group’s oil andgas operations (totaling euro 347 million). Higher income fromequity-accounted entities and gains on divestments were recorded(up euro 340 million). These positives were partly offset byhigher net interest expenses mainly due to an increased level ofnet borrowings (up euro 244 million).

Net cash provided by operating activities of euro 15,517million, coupled with cash from divestments (euro 659 million),was used to partially fund the cash outflows related to: (i)capital and exploratory expenditures totaling euro 10,593million; (ii) the acquisition of investments and businesses (euro9,665 million); and (iii) a dividend distribution to Eni’sshareholders (euro 4,583 million) and Eni share repurchases (euro680 million), as well as minority dividend payments and sharerepurchases relating mainly to the listed subsidiaries Snam ReteGas SpA and Saipem SpA (totaling euro 647 million).

As of December 31, 2007 net borrowings amounted to euro 16,327million, a euro 9,560 million increase over 2006, more than 100%,reflecting the large amount of capital expenditures andacquisitions executed in the year which was only partially fundedwith cash flows from operations.

On the basis of the results achieved, Eni’s managementproposed to the Annual Shareholders’ Meeting thedistribution of a dividend of euro 1.30 per share, of which euro0.60 was already paid as interim dividend in October 2007. Thisdividend is 4% higher than in 2006 (euro 1.25 per share) and wasapproved by the Annual Shareholders’ Meeting on April 29,2008.

Eni’s oil and gas production for the year (on anavailable for sale basis) decreased by 2.1% from 2006 to 1,684KBOE/d. This result was affected by:

| (i)   |   | disruptions in Nigeria due        to social unrest (down 25 KBOE/d compared to 2006);                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | unplanned downtime and        technical issues in the North Sea and mature field        declines, particularly in Italy and the United Kingdom;        and                                                                                                                                                                                                                                                                                                                                       |
| (iii) |   | lower entitlements in        certain Production Sharing Agreements (PSAs) and similar        contractual schemes (down 15 KBOE/d compared to 2006) due        to higher oil prices. Under such contracts, Eni is        entitled to fixed monetary amounts to recover the        expenses incurred for the development of the relevant        properties and as a consequence of higher oil prices, the        volumes entitled necessary to cover the same amount of        expenses are lower. |

These negative factors were offset in part by the contributionof acquired assets in the Gulf of Mexico and Congo (up 45 KBOE/don annual average) and underlying production growth in Libya,Egypt and Kazakhstan.

On January 14, 2008, the international partners of the NorthCaspian Sea Production Sharing Agreement (NCSPSA) consortium andthe Kazakh authorities signed a memorandum of understanding tosettle a dispute commenced in August 2007 regarding conditionsand rights for developing and exploiting the Kashagan field. Fora more detailed discussion of the term of the agreement see"Item 4 – Exploration & Production –Kazakhstan".

Worldwide gas sales in 2007 amounted to 98.96 BCM, upapproximately 1% from 2006 due to growth achieved oninternational markets, particularly in the main consumptiontarget areas in the rest of Europe (up 3.64 BCM) and outsideEurope (up 0.91 BCM), offset in part by lower sales to Italianimporters (down 3.43 BCM) and to the domestic market (down 0.96BCM).

Capital expenditures in 2007 amounted to euro 10,593 million(as compared to euro 7,833 million in 2006), of which 84.7%related to the Exploration & Production, Gas & Power andRefining & Marketing segments, and mainly regarded:

| (i)   |   | development activities (euro        4,788 million) mainly in Kazakhstan, Angola, Egypt, Italy        and Congo;                                                                                                                                                                                                                       |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | exploration projects (euro        1,659 million), of which 94% was spent outside Italy,        primarily in the Gulf of Mexico, Egypt, Brazil, Norway        and Nigeria;                                                                                                                                                             |
| (iii) |   | development and upgrading of        Eni’s natural gas transport and distribution        networks in Italy (euro 886 million) and upgrading of        natural gas import pipelines to Italy (euro 253 million);                                                                                                                   |
| (iv)  |   | ongoing construction of        combined cycle power plants (euro 175 million);                                                                                                                                                                                                                                                        |
| (v)   |   | the Refining & Marketing        segment (euro 979 million) for projects aimed at        upgrading the conversion capacity and flexibility of        refineries, including construction of a new hydrocracking        unit at the Sannazzaro refinery, building of new service        stations and upgrading of existing ones; and |
| (vi)  |   | upgrading of the fleet used        in the Engineering & Construction segment (euro 1,410        million).                                                                                                                                                                                                                         |

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In 2007, Eni successfully executed a number of strategicacquisitions and deals that strengthen its competitive positionin certain important markets to the Company. Total cash outlaysfor these acquisitions amounted to euro 9.7 billion mainlyrelated to the purchase of oil and gas assets in the Gulf ofMexico and onshore Congo; the purchase of certainequity-investments in Russia; a stake in the Angola LNG LtdConsortium responsible for the construction of an LNG plant;refining and marketing assets in the Czech Republic, Slovakia andHungary, as well as a stake in the independent British companyBurren Energy Plc following a recommended cash offer on theentire share capital of this entity launched in November 2007.This deal closed in January 2008.

In the 2008-2011 period, Eni expects to invest approximatelyeuro 49.8 billion in capital expenditures and explorationprojects to implement its strategy of organic growth.

 

> 
***Margin***5

Margin: the difference between the average selling price anddirect acquisition cost of a finished product or raw materialexcluding other production costs (e.g. refining margin, margin ondistribution of natural gas and petroleum products or margin ofpetrochemical products). Margin trends reflect the tradingenvironment and are, to a certain extent, a gauge of industryprofitability.

 

> 
***Trading Environment***

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Average price of Brent dated crude oil in U.S.        dollars (1) |   | 54.38 |   | 65.14 |   | 72.52 |
|-------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|
| Average        price of Brent dated crude oil in euro (2)         |   | 43.71 |   | 51.86 |   | 52.90 |
| Average EUR/USD exchange rate (3)                                 |   | 1.244 |   | 1.256 |   | 1.371 |
| Average        European refining margin in U.S. dollars (4)       |   | 5.78  |   | 3.79  |   | 4.52  |
| Euribor - three month euro rate % (3)                             |   | 2.2   |   | 3.1   |   | 4.3   |

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

----

| (1) |   | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) |   | Source: ECB.                                                                                                                                                                                                 |
| (4) |   | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

Eni’s results of operations and the year-to-yearcomparability of its financial results are affected by a numberof external factors which exist in the industry environment,including changes in oil, natural gas and refined productsprices, industry-wide movements in refining and petrochemicalmargins and fluctuations in exchange rates and interest rates.Changes in weather conditions from year to year can influencedemand for natural gas and some petroleum products, thusaffecting results of operations of the natural gas business and,to a lesser extent, of the refining and marketing business. See"Item 3 – Risk Factors".

In 2007, the trading environment was unfavorable to Eni’sbusiness trends and results of operations due to the appreciationof the euro over the dollar (up 9.2% as compared to 2006) andsharply lower realized refining margins reflecting a decrease insour crude discounts that affected Eni’s complex refineries.This decrease was driven by a relatively higher appreciation ofsour crudes on the marketplace compared to Brent prices due to asituation of shortage, particularly in the Mediterranean basin,and rising demand. Also Eni’s refining margins were affectedby the circumstance that margins on certain secondary products(particularly base lubricants and bitumen) were lower as theprices for these products did not increase in proportion to thecost of feedstock used to produce them. These negatives werepartly offset by higher Brent crude oil prices averaging 72.52$/BL for the year (up 11.3% as compared to 2006) which supportedEni’s realizations on oil (up 12.7% in dollar terms) in theExploration & Production business. Eni’srealizations on oil were higher than Brent crude oil prices dueto a reduction in sour crude discounts. Operating performance inthe Engineering & Construction business was supported byrobust demand trends for drilling and construction servicesdriven by higher capital expenditures made by oil companiesresulting in higher volumes and unit tariffs.

_______________

| (5) |   | This        definition applies to the term margin whenever used in        Item 5. |
|-----|--------|-----------------------------------------------------------------------------------|

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> 
***Key Consolidated Financial Data***

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Net sales from operations                                                                                 |   |             |   | 73,728 |   | 86,105 |   | 87,256 |
|-----------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|--------|--------|--------|--------|
| Operating        profit                                                                                   |   |             |   | 16,827 |   | 19,327 |   | 18,868 |
| Net profit attributable to Eni                                                                            |   |             |   | 8,788  |   | 9,217  |   | 10,011 |
| Net cash        provided by operating activities                                                          |   |             |   | 14,936 |   | 17,001 |   | 15,517 |
| Capital expenditures                                                                                      |   |             |   | 7,414  |   | 7,833  |   | 10,593 |
| Acquisitions        of investments and businesses                                                         |   |             |   | 127    |   | 95     |   | 9,665  |
| Shareholders’ equity including minority        interest at year end                                  |   |             |   | 39,217 |   | 41,199 |   | 42,867 |
| Net        borrowings at year end (1)                                                                     |   |             |   | 10,475 |   | 6,767  |   | 16,327 |
| Net profit per share attributable to Eni (basic        and diluted)                                       |   | (euro per share) |   | 2.34   |   | 2.49   |   | 2.73   |
| Dividend        per share                                                                                 |   | (euro per share) |   | 1.10   |   | 1.25   |   | 1.30   |
| Net borrowings to total shareholders’        equity ratio including minority interest (leverage) (1) |   |             |   | 0.27   |   | 0.16   |   | 0.38   |

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

----

| (1) |    | For a        discussion of the usefulness of and a reconciliation of        these non-GAAP financial measures with the most directly        comparable GAAP financial measures, which in the case of        the Company refers to IFRS, 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 the IASB and IFRSissued by the IASB as adopted by the European Union. Theserequire the use of estimates and assumptions that affect theassets, liabilities, revenues and expenses reported in thefinancial statements. Estimates made are based on complex andsubjective judgments and on past experience of other assumptionsdeemed reasonable in consideration of the information availableat the time. The accounting policies and areas that require themost significant judgments and estimates to be used in thepreparation of Consolidated Financial Statements are in relationto the accounting for oil and natural gas activities,specifically in the determination of proved and proved developedreserves, impairment of fixed assets, intangible assets andgoodwill, asset retirement obligations, business combinations,pensions and other post-retirement benefits, recognition ofenvironmental liabilities and recognition of revenues in theoilfield services construction and engineering businesses.Although the Company uses its best estimates and judgments,actual results could differ significantly 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 can be produced with reasonablecertainty to be recoverable in future years from known reservoirsunder existing economic and operating conditions. Although thereare authoritative guidelines regarding the engineering criteriathat must be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data andengineering and geological interpretation and judgment.

Field reserves will only be categorized as proved when all thecriteria for attribution of proved status have been met. At thisstage, all booked reserves will be classified as provedundeveloped. Volumes will subsequently be reclassified fromproved undeveloped to proved developed as a consequence ofdevelopment activity. The first proved developed bookings willoccur at the point of first oil or gas production. Majordevelopment projects typically take one to four years from thetime of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revision may be madeto the initial booking of reserves due to production, reservoirperformance, commercial factors, acquisition and divestmentactivity and additional reservoir development activity. Inparticular, changes in oil and natural gas prices could impactthe amount of Eni’s proved reserves as regards the initialestimate and, in the case of Production Sharing Agreements andbuy-back contracts, the share of production and reserves to whichEni is entitled. Accordingly, the estimated reserves could bematerially different from the quantities of oil and natural gasthat ultimately will be recovered.

Oil and natural gas reserves have a direct impact on certainamounts reported in the Financial Statements. Estimated provedreserves are used in determining depreciation and depletionexpenses and impairment expense. Depreciation rates on oil andgas assets using the UOP basis are determined from the ratiobetween the amount of 

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hydrocarbons extracted in the quarter and proved developedreserves existing at the end of the quarter increased by theamounts extracted during the quarter.

Assuming all other variables are held constant, an increase inestimated proved developed reserves for each field decreasesdepreciation, depletion and amortization expense. Conversely, adecrease in estimated proved developed reserves increasesdepreciation, depletion and amortization expense. In addition,estimated proved reserves are used to calculate future cash flowsfrom oil and gas properties, which serve as an indicator indetermining whether or not property impairment is to be carriedout. The larger the volumes of estimated reserves, the lower isthe likelihood of asset impairment.

 

> 
***Impairment of assets***

Eni assesses its tangible assets and intangible assets,including goodwill, for possible impairment if there are eventsor changes in circumstances that indicate the carrying values ofthe assets are not recoverable. Such indicators include changesin the Group’s business plans, changes in commodity pricesleading to unprofitable performance and, for oil and gasproperties, significant downward revisions of estimated provedreserve quantities. Determination as to whether and how much anasset is impaired involves management estimates on highlyuncertain matters such as future commodity prices, the effects ofinflation and technology improvements on operating expenses,production profiles and the outlook for global or regional marketsupply and demand conditions for crude oil, natural gas,commodity chemicals and refined products.

The amount of an impairment loss is determined by comparingthe book value of an asset with its recoverable amount. Therecoverable amount is the greater of fair value net of disposalcosts and value in use. The estimated value in use is based onthe present values of expected future cash flows net of disposalcosts. The expected future cash flows used for impairment reviewsare based on judgmental assessments of future production volumes,prices and costs, considering available information at the dateof review and are discounted by using a rate related to theactivity involved.

For oil and natural gas properties, the expected future cashflows are estimated, 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. The estimated future level of production isbased on assumptions on: future commodity prices, lifting anddevelopment costs, field decline rates, market demand and supply,economic regulatory climates and other factors.

Oil, natural gas and petroleum products prices used toquantify expected future cash flows are estimated based onforward prices prevailing in the marketplace for the first fouryears and management’s long-term planning assumptionsthereafter. Prior to 2007, our expected future cash flowestimates were entirely based upon management’s planningassumptions.

Goodwill and other intangible assets with an indefinite usefullife are not subject to amortization. The Company tests suchassets at the cash-generating unit level for impairment on anannual basis and between annual tests if an event occurs orcircumstances change that would more likely than not reduce thefair value below its carrying amount. In particular, goodwillimpairment is based on the determination of the fair value ofeach cash-generating unit to which goodwill can be attributed ona reasonable and consistent basis.

A cash generating unit is the smallest aggregate on which theCompany, directly or indirectly, evaluates the return on thecapital expenditures. If the recoverable amount of a cashgenerating 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. Estimatingfuture asset retirement obligations is complex. It requiresmanagement to make estimates and judgments with respect toremoval 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 impact of environmentallaws and regulations is not always clearly known as asset removaltechnologies and costs constantly evolve in the countries whereEni operates, as well as political, environmental, safety andpublic expectations. The subjectivity of these estimates is alsoincreased by the accounting method used that requires entities torecord the fair value of a liability for an asset retirementobligation in the period when it is incurred (typically, at thetime, the asset is installed at the production location).

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When liabilities are initially recorded, the related fixedassets are increased by an equal corresponding amount. Theliabilities are increased with the passage of time (interestaccretion) and any change of the estimates following themodification of future cash flows and discount rate adopted.

The recognized asset retirement obligations are based onfuture retirement cost estimates and incorporate many assumptionssuch as: expected recoverable quantities of crude oil and naturalgas, abandonment time, future inflation rates and the risk-freerate of interest adjusted for the Company’s credit costs.

 

> 
***Business Combinations***

Accounting for business combinations requires the allocationof the Company’s purchase price to the various assets andliabilities of the acquired business at their respective fairvalues. Any positive 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, includinglegislation that implements international conventions orprotocols. Environmental costs 

are recognized when it becomes probable that a liability hasbeen incurred and the amount can be reasonably estimated.Although management, considering the actions already taken,insurance policies to cover environmental risks and provision forrisks accrued, does not expect any material adverse effect onEni’s consolidated results of operations and financialposition as a result of such laws and regulations, there can beno assurance that there will not be a material adverse impact onEni’s consolidated results of operations and financialposition due to:

| (i)   |   | the possibility of a yet        unknown contamination;                                                                                                                                                                                            |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | the results of the ongoing        surveys and other possible effects of statements required        by Decree No. 471/1999 of the Ministry of Environment        concerning the remediation of contaminated sites;                                 |
| (iii) |   | the possible effect of        future environmental legislation and rules;                                                                                                                                                                         |
| (iv)  |   | the effect of possible        technological changes relating to future remediation; and                                                                                                                                                           |
| (v)   |   | the possibility of        litigation and the difficulty of determining Eni’s        liability, if any, as against other potentially        responsible parties with respect to such litigation and        the possible insurance recoveries. |

> 
 

***Employee benefits***

Defined benefit plans and other long-term benefits areevaluated with reference to uncertain events and based uponactuarial assumptions including discount rates, expected rates ofreturn on plan assets, expected rates of salary increases,medical cost trend rates, estimated retirement dates andmortality rates. The significant assumptions used to account forpensions and other post-retirement benefits are determined asfollows:

| (i)   |   | discount and inflation rates        reflect the rates at which benefits could be effectively        settled, taking into account the duration of the        obligation. Indications used in selecting the discount        rate include rates of annuity contracts and rates of        return on high quality fixed-income investments (such as        government bonds). The inflation rates reflect market        conditions observed country by country;                            |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | the future salary levels of        the individual employees are determined including an        estimate of future changes attributed to general price        levels (consistent with inflation rate assumptions),        productivity, seniority and promotion;                                                                                                                                                                                                                       |
| (iii) |   | healthcare cost trend        assumptions reflect an estimate of the actual future        changes in the cost of the healthcare related benefits        provided to the plan participants and are based on past        and current healthcare cost trends including healthcare        inflation, changes in healthcare utilization and changes        in health status of the participants;                                                                                            |
| (iv)  |   | demographic assumptions such        as mortality, disability and turnover reflect the best        estimate of these future events for the individual        employees involved, based principally on available        actuarial data; and                                                                                                                                                                                                                                             |
| (v)   |   | determination of expected        rates of return on assets is made through compound        averaging. For each plan, the distribution of investments        among bonds, equities and cash and their specific average        expected rate of return is taken into account.        Differences between expected and actual costs and between        the expected return and the actual return on plan assets        routinely occur and are called actuarial gains and        losses. |

Eni applies the corridor method to amortize its actuariallosses and gains. This method amortizes on a pro-rata basis thenet cumulative 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, 

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obligations for other 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 profit or loss in their entirety.

 

> 
***Contingencies***

In addition to accruing the estimated costs for environmentalliabilities, asset retirement obligations and employee benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining appropriate amounts foraccrual is a complex estimation process that includes subjectivejudgments.

 

> 
***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 contractualrevenues. The estimate of future gross profit is based on acomplex estimation process that includes the identification ofrisks related to the geographical region, market conditions inthat region and any assessment that it is necessary to estimatewith sufficient precision the total future costs as well as theexpected timetable. Requests for additional revenues, derivingfrom a change in the scope of the work, are included in the totalamount of revenues when it is probable that the customer willapprove the variation and the related amount; claims deriving,for instance, 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.

 

 

**2005-2007 Group Results of Operations**

> 
***Overview of the Profit and Loss Account for Three    Years Ended December 31, 2005, 2006 and 2007***

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,** |
|--------|-----------------------------|

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Net sales from operations                                    |   | 73,728     |   |   | 86,105     |   |   | 87,256     |   |
|--------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Other        income and revenues (1)                         |   | 798        |   |   | 783        |   |   | 827        |   |
|                                                         |   |            |        |   |            |        |   |            |        |
| Total revenues                                               |   | 74,526     |   |   | 86,888     |   |   | 88,083     |   |
| Operating        expenses                                    |   | (51,918    | )      |   | (61,140    | )      |   | (61,979    | )      |
| Depreciation, depletion, amortization and        impairments |   | (5,781     | )      |   | (6,421     | )      |   | (7,236     | )      |
|                                                         |   |            |        |   |            |        |   |            |        |
| **OPERATING        PROFIT**                                  |   | **16,827** |   |   | **19,327** |   |   | **18,868** |   |
| Finance income (expense)                                     |   | (366       | )      |   | 161        |   |   | (83        | )      |
| Income        from investments                               |   | 914        |   |   | 903        |   |   | 1,243      |   |
|                                                         |   |            |        |   |            |        |   |            |        |
| **PROFIT BEFORE INCOME TAXES**                               |   | **17,375** |   |   | **20,391** |   |   | **20,028** |   |
| Income        taxes                                          |   | (8,128     | )      |   | (10,568    | )      |   | (9,219     | )      |
|                                                         |   |            |        |   |            |        |   |            |        |
| NET PROFIT                                                   |   | 9,247      |   |   | 9,823      |   |   | 10,809     |   |
| Attributable        to:                                      |   |       |   |   |       |   |   |       |   |
| **- Eni**                                                    |   | **8,788**  |   |   | **9,217**  |   |   | **10,011** |   |
| - minority        interest                                   |   | 459        |   |   | 606        |   |   | 798        |   |
|                                                         |   |            |        |   |            |        |   |            |        |

----

| (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 |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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The table below sets forth certain income statement items as apercentage of net sales from operations for the periodsindicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Operating expenses                                           |   | 70.4     |   |   | 71.0     |   |   | 71.0     |   |
|--------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Depreciation,        depletion, amortization and impairments |   | 7.8      |   |   | 7.5      |   |   | 8.3      |   |
| **OPERATING PROFIT**                                         |   | **22.8** |   |   | **22.4** |   |   | **21.6** |   |

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

*2007 compared to 2006*. Net profit attributable to Eniin 2007 was euro 10,011 million with a euro 794 million increasefrom 2006 (up 8.6%), primarily due to:

| (i) |   | lower income taxes (down        euro 1,349 million) mainly reflecting: |
|-----|--------|------------------------------------------------------------------------|

|   |   | - |   | a one-time gain (euro 394        million) recorded upon an adjustment to deferred tax        assets and liabilities for Italian subsidiaries relating        to certain amendments to the Italian tax regime,        including a lower statutory tax rate enacted by the 2008        Budget Law; and |
|--------|--------|---|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | - |   | the circumstance that in        2006 deferred tax liabilities were recorded due to        changes in the tax regimes of Algeria and the United        Kingdom and charges regarding disputes on certain tax        matters (totaling euro 347 million); |
|--------|--------|---|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii) |   | an increase in net income        from investments, up euro 340 million, mainly due to net        gains on the divestment of interests in certain        associates of the Engineering & Construction segment        and higher earnings from equity-accounted and        cost-accounted entities. |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

These positive factors were partly offset by a lower operatingprofit (down euro 459 million) mainly in the Exploration &Production segment (down euro 1,792 million) and higher netfinance charges (up euro 244 million as a result of the increaseregistered in average net borrowings).

*2006 compared to 2005*. Net profit attributable to Eniin 2006 was euro 9,217 million with a euro 429 million increasefrom 2005 (up 4.9%) reflecting an increase in operating profit(up euro 2,500 million) recorded in particular in the Exploration& Production segment, due to higher realized hydrocarbonprices in dollars (oil up 22.4% and natural gas up 17.8%)combined with increased production volumes sold (up 10.2 mmBOE),which were offset in part by higher operating costs andamortization charges, and increased exploration expenses.Operating profit increased also in the Gas & Power andEngineering & Construction segments (up euro 481 and euro 198million, respectively) and lower restructuring charges wererecognized in the Other activities segment (up euro 312 million).These increases were offset in part by a decrease in theoperating profit of the Refining & Marketing segment (downeuro 1,538 million) due to the circumstance that in 2005 aninventory holding gain of euro 1,064 million was recorded inconnection with the impact of rising international prices of oiland refined products on the inventory evaluation according to theweighted-average cost method of inventory accounting, as comparedto a euro 215 million inventory holding loss reported in 2006 asa result of a reversal in the trend of refined product and oilprices.

The effect of the increase in operating profit on net profitwas offset in part by higher income taxes (up euro 2,440 million)reflecting the increase in Group tax rate, which rose from 46.8%to 51.8% mainly in the Exploration & Production segment dueto:

| • |   | the circumstance that a        windfall tax on upstream earnings was enacted in Algeria        effective as from August 1, 2006 (with a negative impact        of euro 328 million); and                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the circumstance that an        increase in the supplemental tax rate applicable to        profit before taxes earned by operations in the North Sea        was enacted by the British Government effective as from        January 1, 2006 (with a negative impact of euro 198        million). |

 

> 
***Discontinued Operations***

Discontinued operations in 2007, 2006 and 2005 wereimmaterial.

 

> 
***Analysis of the Line Items of the Profit and Loss    Account***

***a) Total Revenues***

Eni’s total revenues were euro 88,083, euro 86,888 andeuro 74,526 million in 2007, 2006 and 2005, respectively. Totalrevenues consist of net sales from operations and other incomeand revenues. Eni’s net sales from operations amounted toeuro 87,256, euro 86,105 and euro 73,728 million in 2007, 2006and 2005, respectively, and its other income and revenues totaledeuro 827, euro 783 and euro 798 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 intragroup sales, together with consolidatednet sales from operations.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Exploration & Production        |   | 22,531     |   |   | 27,173     |   |   | 27,278     |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power              |   | 22,969     |   |   | 28,368     |   |   | 27,633     |   |
| Refining & Marketing            |   | 33,732     |   |   | 38,210     |   |   | 36,401     |   |
| Petrochemicals                      |   | 6,255      |   |   | 6,823      |   |   | 6,934      |   |
| Engineering & Construction      |   | 5,733      |   |   | 6,979      |   |   | 8,678      |   |
| Other        activities             |   | 863        |   |   | 823        |   |   | 205        |   |
| Corporate and financial companies   |   | 1,239      |   |   | 1,174      |   |   | 1,313      |   |
| Consolidation        adjustment (1) |   | (19,594    | )      |   | (23,445    | )      |   | (21,186    | )      |
|                                |   |            |        |   |            |        |   |            |        |
|                                |   | **73,728** |   |   | **86,105** |   |   | **87,256** |   |

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

----

| (1) |   | 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. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*2007 compared to 2006.* Eni’s net sales fromoperations for 2007 (euro 87,256 million) were up euro 1,151million, a 1.3% increase from 2006, primarily reflecting higherrevenues in the Engineering & Construction segment andhigher realizations on oil and natural gas in dollar terms,partially offset by the impact of the appreciation of the euroversus the dollar (up 9.2%) on revenues in the Refining &Marketing and Exploration & Production segments.

Revenues generated by the Exploration & Production segment(euro 27,278 million) increased by euro 105 million, up 0.4%,mainly due to higher oil realizations in dollars (up 12.7%). Thisincrease was partially offset by the impact of the appreciationof the euro versus the dollar and lower hydrocarbon productionsold (down 14.7 mmBOE, or 2.2%). For a discussion on thereduction of production volumes see "ExecutiveSummary".

Revenues generated by the Gas & Power segment (euro 27,633million) declined by euro 735 million, down 2.6%, mainly due tolower average natural gas prices reflecting negative trends inenergy parameters to which gas prices are contractually indexedand a negative shift in the mix of volumes sold resulting inlower average realized prices on gas.

Revenues generated by the Refining & Marketing segment(euro 36,401 million) declined by euro 1,809 million, down 4.7%,mainly due to the effect of the appreciation of the euro over thedollar and lower product volumes marketed (down 0.98 mmtonnes),partly offset by higher international prices for oil andproducts.

Revenues generated by the Petrochemical segment (euro 6,934million) increased by euro 111 million from 2006, up 1.6%,reflecting mainly the fact that performance in 2006 was adverselyimpacted by the unplanned downtime of the Priolo craker anddownstream plants as a consequence of an accident that occurredat the nearby refinery in April 2006, resulting in a recovery inproduction volumes sold (up 4%). Commodity chemicals prices werealso up by 4% on average.

Revenues generated by the Engineering & Constructionsegment (euro 8,678 million) increased by euro 1,699 million, up24.3%, due to increased activity levels and higher prices in theOffshore and Onshore construction and Offshore drillingbusinesses due to favorable market trends as discussed underparagraph "Trading Environment".

Revenues generated by the Other activities segment decreasedby euro 618 million to euro 205 million, due to the intragroupdivestment of the Porto Torres plant for the production of basicpetrochemical products to Polimeri Europa, which occurred in2007.

*2006 compared to 2005.* Eni’s net sales fromoperations for 2006 were euro 86,105 million, up euro 12,377million from 2005, or 16.8%, primarily reflecting higher productprices in all of Eni’s main operating segments, highervolumes sold of hydrocarbons and natural gas and higher activitylevels in the Engineering & Construction segment, offset inpart by the negative impact of the appreciation of the euroversus the dollar (up 1%).

Revenues generated by the Exploration & Production segmentwere euro 27,173 million, up euro 4,642 million, or 20.6%,primarily reflecting higher realizations in dollars (oil up22.4%, natural gas up 17.8%) and higher oil and 

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gas production sold (up 10.2 mmBOE). These positives werepartially offset by the appreciation of the euro over the dollar.

Revenues generated by the Gas & Power segment were euro28,368 million, up euro 5,399 million, or 23.5%, primarilyreflecting increased natural gas prices related in particular toa favorable trading environment, higher natural gas volumes sold(up 3.14 BCM, or 3.8%) and higher electricity production sold (up2.05 TWh, or 9%).

Revenues generated by the Refining & Marketing segmentwere euro 38,210 million, up euro 4,478 million, or 13.3%,primarily reflecting higher international prices for oil andrefined products.

Revenues generated by the Petrochemical segment were euro6,823 million, up euro 568 million, or 9.1%, primarily reflectingan increase in average selling prices.

Revenues generated by the Engineering & Constructionsegment were euro 6,979 million, up euro 1,246 million, or 21.7%,primarily reflecting higher activity levels in the Offshore andOnshore construction businesses and a higher utilization rate ofvessels and higher tariffs in the Offshore Drilling area

> 
***b) Operating Expenses***

The table below sets forth the components of Eni’soperating expenses for the periods indicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Purchases, services and other    |   | 48,567     |   | 57,490     |   | 58,179     |
|----------------------------------|--------|------------|--------|------------|--------|------------|
| Payroll        and related costs |   | 3,351      |   | 3,650      |   | 3,800      |
| **Operating expenses**           |   | **51,918** |   | **61,140** |   | **61,979** |

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

*2007 compared to 2006.* Operating expenses for 2007(euro 61,979 million) increased by euro 839 million from 2006, up1.4%, mainly due to higher purchase prices for refinery andpetrochemical feedstock, as well as rising operating costs in theExploration & Production segment in dollar terms, partlyoffset by the appreciation of the euro against the dollar.Purchases, services and other include: (i) an expense of euro 91million relating to a provision against ongoing antitrustproceedings before the European authorities net of a gainderiving from the reversal of a previously accrued provision uponfavorable developments in certain proceedings before the ItalianAuthority for Electricity and Gas; and (ii) environmental charges(euro 327 million), recognized particularly by Syndial and theRefining & Marketing segment.

Payroll and related costs (euro 3,800 million) increased byeuro 150 million, up 4.1%, mainly due to higher unit labor costsin Italy and outside Italy and an increase in the average numberof employees outside Italy in the Engineering & Constructionsegment related to higher activity levels and the Exploration& Production segment related to acquired assets. Theseincreases were offset in part by exchange rate translationdifferences and a gain (euro 83 million) deriving from thecurtailment of the provision for post-retirement benefitsexisting at 2006 year-end related to obligations towards Italianemployees.

*2006 compared to 2005.* Operating expenses for 2006(euro 61,140 million) were up euro 9,222 million from 2005, or17.8%, reflecting primarily: (i) higher prices for oil-based andpetrochemical feed-stocks and for natural gas, affected also byhigher charges related to the climatic emergency of the firstquarter of 2006; (ii) higher operating costs in the Exploration& Production segment, reflecting mainly the higher share ofdevelopment projects in complex environments and sector-specificinflation; (iii) higher costs for refinery maintenance; and (iv)a provision of euro 239 million related mainly to fines imposedby certain antitrust and regulatory authorities. These negativefactors were offset in part by the impact of the appreciation ofthe euro over the dollar.

Payroll and related costs (euro 3,650 million) were up euro299 million, or 8.9%, reflecting primarily higher redundancyincentives (up euro 99 million), ordinary wage trends and higheraverage workforce outside Italy, in particular in the Engineering& Construction segment, partly offset by a reduction inaverage workforce in Italy.

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> 
***c) Depreciation, Depletion, Amortization and    Impairments***

The table below sets forth a breakdown of depreciation,depletion, amortization and impairments by business segment forthe periods indicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Exploration & Production (1)                          |   | 3,945     |   |   | 4,646     |   |   | 5,483     |   |
|-----------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Gas &        Power                                    |   | 684       |   |   | 687       |   |   | 687       |   |
| Refining & Marketing                                  |   | 462       |   |   | 434       |   |   | 433       |   |
| Petrochemicals                                            |   | 118       |   |   | 124       |   |   | 116       |   |
| Engineering & Construction                            |   | 176       |   |   | 195       |   |   | 248       |   |
| Other        activities                                   |   | 16        |   |   | 6         |   |   | 4         |   |
| Corporate and financial companies                         |   | 112       |   |   | 70        |   |   | 68        |   |
| Impact of        unrealized intragroup profit elimination |   | (4        | )      |   | (9        | )      |   | (10       | )      |
|                                                      |   |           |        |   |           |        |   |           |        |
| **Total depreciation, depletion and        amortization** |   | **5,509** |   |   | **6,153** |   |   | **7,029** |   |
| Impairments                                               |   | 272       |   |   | 268       |   |   | 207       |   |
|                                                      |   |           |        |   |           |        |   |           |        |
|                                                      |   | **5,781** |   |   | **6,421** |   |   | **7,236** |   |
|                                                      |   |           |        |   |           |        |   |           |        |

----

| (1) |   | Exploratory        expenditures of euro 1,778 million, euro 1,075 million        and euro 618 million were included in these amounts for        the years 2007, 2006 and 2005, respectively. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*2007 compared to 2006.* In 2007, depreciation, depletionand amortization charges (euro 7,029 million) increased by euro876 million, or 14.2%, from 2006, mainly in the Exploration &Production segment (up euro 837 million) related to higherexploratory expenditures that are expensed in full when incurred(euro 703 million), the consolidation of activities acquired inthe Gulf of Mexico and Congo and the impact on amortizationcharges of an estimate revision of asset retirement obligationsfor certain Italian and U.S. fields recognized upon preparationof 2006 consolidated financial statements which was appliedprospectively, offset in part by exchange rate translationdifferences.

In 2007, impairment charges amounted to euro 207 millionmainly regarding mineral assets in the Exploration &Production segment and plants and equipment in the Refining &Marketing segment.

*2006 compared to 2005.*In 2006, depreciation, depletionand amortization charges (euro 6,153 million) increased by euro644 million, or 11.7%, from 2005 mainly in the Exploration &Production segment (euro 701 million) reflecting primarily higherexploration expenditure and increased development costs incurredfor developing new fields and maintaining production levels inmature fields combined with the effects of higher productionlevels.

Impairments (euro 268 million) concerned mainly mineral assetsin the Exploration & Production segment (euro 129 million),intangible assets in the Gas & Power segment and tangibleassets in the Petrochemical segment.

 

> 
***d) Operating Profit by Segment***

The table below sets forth Eni’s operating profit bybusiness segment for the periods indicated. 

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Exploration & Production                              |   | 12,592     |   |   | 15,580     |   |   | 13,788     |   |
|-----------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power                                    |   | 3,321      |   |   | 3,802      |   |   | 4,127      |   |
| Refining & Marketing                                  |   | 1,857      |   |   | 319        |   |   | 729        |   |
| Petrochemicals                                            |   | 202        |   |   | 172        |   |   | 74         |   |
| Engineering & Construction                            |   | 307        |   |   | 505        |   |   | 837        |   |
| Other        activities                                   |   | (934       | )      |   | (622       | )      |   | (444       | )      |
| Corporate and financial companies                         |   | (377       | )      |   | (296       | )      |   | (217       | )      |
| Impact of        unrealized intragroup profit elimination |   | (141       | )      |   | (133       | )      |   | (26        | )      |
|                                                      |   |            |        |   |            |        |   |            |        |
| **Operating profit**                                      |   | **16,827** |   |   | **19,327** |   |   | **18,868** |   |
|                                                      |   |            |        |   |            |        |   |            |        |

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The table below sets forth operating profit for each ofEni’s principal business segments as a percentage of eachsegment’s net sales from operations (including intragroupsales) for the periods presented.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Exploration & Production   |   | 55.9     |   | 57.3     |   | 50.5     |
|--------------------------------|--------|----------|--------|----------|--------|----------|
| Gas &        Power         |   | 14.5     |   | 13.4     |   | 14.9     |
| Refining & Marketing       |   | 5.5      |   | 0.8      |   | 2.0      |
| Petrochemicals                 |   | 3.2      |   | 2.5      |   | 1.1      |
| Engineering & Construction |   | 5.4      |   | 7.2      |   | 9.6      |
|                           |   |          |   |          |   |          |
| **Group**                      |   | **22.8** |   | **22.4** |   | **21.6** |
|                           |   |          |   |          |   |          |

*Exploration & Production.*Operating profit in 2007amounted to euro 13,788 million, down euro 1,792 million from2006, or 11.5%, reflecting: (i) the appreciation of the euro overthe dollar (approximately euro 1,400 million), resulting in adecrease in revenues partly offset by lower dollar-denominatedoperating expenses when translated to the euro; (ii) lowerproduction volumes sold (down 14.7 mmBOE, or 2%). For adiscussion of this reduction in production see "ExecutiveSummary" above; (iii) increased exploration expenses inconnection with higher geological and geophysical expenses andincreased exploratory drilling expenditures that are expensed infull as incurred (resulting in a cumulative increase of euro 840million assuming constant exchange rates); (iv) rising operatingcosts reflecting the impact of sector-specific inflation; and (v)higher amortization and depreciation charges. These negativeswere partly offset by higher realizations in dollars (oil up12.7%, natural gas up 2.2%). For a discussion of trend inEni’s realizations see "Trading Environment".

Operating profit in 2006 amounted to euro 15,580 million, upeuro 2,988 million from 2005, or 23.7%, reflecting higherrealizations in dollars (oil up 22.4%, natural gas up 17.8%)combined with higher production volumes sold (up 10.2 mmBOE, or1.7%), partly offset by: (i) increased production costs andamortization charges related in particular to higher costincurred in developing new fields and maintaining productionlevels at mature fields and sector-specific inflation; (ii)increased exploration expenses (euro 457 million, includingexchange rate differences); and (iii) the negative net impact ofthe appreciation of the euro over the dollar (approximately euro155 million), as a decrease in revenues due to exchange ratedifferences was only partly offset by a decrease in operatingcosts and amortization charges.

*Gas & Power.*Operating profit in 2007 amounted toeuro 4,127 million, a euro 325 million increase compared to 2006,up 8.5%, reflecting: (i) a positive development with Italy’sregulatory framework on gas pricing to residential clients,reflecting a more favorable indexation mechanism of the rawmaterial cost component as established by the Authority forElectricity and Gas with Resolution No. 79/2007, changing theregime in force in the first half of 2006 as established byResolution No. 248/2004. Additionally, Eni fulfilled obligationsprovided by this resolution to renegotiate contracts with certaingas resellers based on the same indexation mechanism resulting inthe partial reversal of provisions accrued in 2005 and in thefirst half of 2006 with respect to expected charges for theserenegotiations. An in-depth discussion of these regulations isprovided under "Item 4 – Regulation of Gas& Power – Natural gas prices"; (ii) highersupply costs incurred in 2006 caused by a climatic emergencyduring the 2005-2006 winter; and (iii) an increase in operatingresult from transportation activities in Italy.

Operating profit in 2006 amounted to euro 3,802 million, aeuro 481 million increase compared to 2005, up 14.5%, reflecting:(i) higher selling margins on natural gas due to a favorabletrading environment; (ii) a lower impact of the tariff regimeimplemented by the Authority for Electricity and Gas withResolution No. 248/2004 as modified by Resolution No. 134/2006enacted on July 1, 2006. Resolution No. 134/2006, mitigated theimpact of the indexation mechanism provided for by Resolution No.248/2004 and, additionally, established that the impact ofResolution No. 248 on 2005 be split among gas supplier andwholesaler in case the former renegotiated gas supply contractsbased on the terms of Resolution No. 248/2004. As a consequence,Eni partly reversed a provision accrued in its 2005 consolidatedfinancial statements with respect to Resolution No. 248 havingfulfilled the renegotiation obligation set forth by ResolutionNo. 134/2006 (see "Item 4 – Regulation of Gas& Power – Natural gas prices"); and (iii) agrowth in natural gas sales by consolidated subsidiaries (up 3.14BCM, or 3.8%), in volumes transported outside Italy due to thecoming on line of volumes transported through the GreenStreampipeline from Libya, and in electricity production sold (up 2.05TWh, or 9%). Furthermore, the comparison of the operating resultfor 2007 to 2006 result benefits from the circumstance that in2005 a provision pertaining to a fine imposed by the ItalianAntitrust Authority was accrued for euro 290 million, partlyoffset by the circumstance that in 2006 a provision to the riskreserve regarding mainly certain fines imposed by the Authorityfor Electricity and Gas, and higher asset impairmentsenvironmental charges and provisions for redundancy incentiveswere recorded (for a cumulative amount euro 147 million).

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These positives were partly offset by: (i) a lower operatingresult from transportation activities in Italy due to the tariffregime enacted by the Authority for Electricity and Gas withResolution No. 166/2005 resulting in lower transport tariff and alower operating result from retail distribution activities due tolower volumes; and (ii) higher purchase costs incurred in thefirst quarter of the year, owing to a climatic emergency.

*Refining & Marketing.* Operating profit in 2007amounted to euro 729 million, a euro 410 million increasecompared to 2006, mainly due to: (i) an inventory holding gain ofapproximately euro 650 million recognized in 2007 profit and lossreflecting the impact of rising prices of crude oil and productson the valuation of year-end inventories using to the weightedaverage-cost method of inventory accounting. In 2006, aninventory holding loss of approximately euro 220 million had beenrecorded in connection with the impact of declining prices of oiland refined products; and (ii) the circumstance that in 2006a provision was made for a fine imposed by the Italian AntitrustAuthority for anti-competitive activities in the field ofsupplies of jet fuel (euro 109 million).

On the negative side, the refining business delivered a weakeroperating performance on the back of an unfavorable tradingenvironment for Eni’s complex refineries, reflecting reduceddiscounts on sour crudes, lower margins from certain of theCompany’s secondary products (such as base lubricants andbitumen) as the prices for these products did not increase inproportion to the costs of the feedstock used to produce them andthe appreciation of the euro over the dollar. Marketingactivities in Italy also reported a lower operating profit mainlydue to: (i) lower retail margins on refined productsmarketed on Eni’s networks due to increased internationalprices for purchasing those products which were net fullytransferred to selling prices to customers; and (ii) a decline inthe wholesale business results due to lower margins and volumesmarketed (down 1.8% over 2006), the latter also reflectingunusually mild winter weather in the first quarter of 2007causing lower sales of home-heating fuels.

Operating profit in 2006 amounted to euro 319 million, a euro1,538 million decrease compared to 2005, down 82.8%, dueessentially to: (i) the circumstance that in 2005 an inventoryholding gain of approximately euro 1,100 million was recorded inconnection with the impact of rising international prices of oiland refined products on the inventory evaluation according to theweighted-average cost method of inventory accounting, as comparedto an approximately euro 220 million inventory holding lossreported in 2006 as a result of a reversal in the trend ofrefined product and oil prices; (ii) lower realized refiningmargins reflecting an unfavorable trading environment and theappreciation of the euro versus the dollar, combined with theimpact of longer refinery standstills due to planned maintenance,partly offset by the higher profitability of processed crude;(iii) a decline in the operating performance of Italian marketingactivities due to lower volumes sold which were negativelyaffected by the mild weather conditions registered in the fourthquarter and the divestment of Italiana Petroli carried out inSeptember 2005; (iv) environmental provisions (euro 111million); (v) a fine imposed by the Italian Antitrust Authority(euro 109 million); and (vi) provisions for redundancy incentives(euro 47 million).

On the positive side, marketing activities in the rest ofEurope recorded improved results reflecting higher retail marginsand higher volumes sold.

*Petrochemicals.*Operating profit in 2007 amounted toeuro 74 million, a euro 98 million decrease compared to 2006,down 57%, due to lower selling margins of commodity chemicals,particularly the margin on cracker and on aromatic products(paraxylene), reflecting a sharp increase in the cost ofoil-based feedstock which was not fully transferred to finalselling prices. This negative was partly offset by: (i) higherproduction and sales volumes compared to 2006, when an accidentoccurred at the Priolo refinery which heavily impactedperformance; and (ii) lower asset impairments (euro 50million) and risk provisions (euro 31 million). In addition, alower inventory holding gain was recorded (down euro 54 million).

Operating profit in 2006 amounted to euro 172 million, a euro30 million decrease compared to 2005, down 14.9%, due to: (i)lower selling margins recorded mainly in the first half of theyear. This decline affected all businesses with the exception ofpolyethylene, owing to increases in the cost of oil-basedfeed-stocks not transferred to selling prices; and (ii) higherasset impairments (euro 21 million), higher redundancy incentives(euro 15 million) and a risk provision related to a fine imposedby the European Antitrust Authority (euro 13 million). Resultsfor the year were also negatively impacted by the accident thatoccurred at the Priolo refinery in April resulting in lowerproduct availability.

*Engineering & Construction.* Operating profit in2007 amounted to euro 837 million, a euro 332 million increasecompared to 2005, or 65.7%. This increase related to an improvedoperating performance recorded in all business areas,particularly in the Offshore and Onshore construction andOffshore drilling businesses due to higher activity levels andimproved prices driven by favorable demand trends. See"Trading Environment". Management expects this trend tocontinue in the foreseeable future based on capital expenditureplans announced by oil companies.

Operating profit in 2006 amounted to euro 505 million, a euro198 million increase compared to 2005, up 64.5%. This increasewas recorded in particular in the following business areas: (i)Offshore, due to a higher activity level in the Caspian regionand Nigeria; (ii) Offshore Drilling, due to higher tariffs forthe Scarabeo 3 and Scarabeo 5 semi-submersible platforms andhigher activity levels of the Perro Negro 5 jack-up and Scarabeo4 semi-

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submersible platform; and (iii) Onshore due to higher activityrelated essentially to the start up of some large projectsacquired in 2005.

*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 444million for 2007, representing an improvement of euro 178million, or 28.6%, compared to an operating loss recorded in 2006(euro 622 million) mainly due to lower provisions for risks andlower asset impairments (for a cumulative positive effect of euro78 million) and to a gain recognized upon settlement of certaincontractual issues with Dow Chemical. This was partly offset byhigher environmental charges (euro 84 million).

Other activities reported an operating loss of euro 622million for 2006, improving by euro 312 million, or 33.4%compared to the loss recorded in 2005 (euro 934 million), duemainly to lower environmental charges, lower provisions for risksand lower asset impairments (for a cumulative positive effect ofeuro 395 million). This was partly offset by the recording of acharge related to a fine imposed by the European AntitrustAuthority (euro 62 million).

*Corporate and financial companies.* These activitiesinclude expenses incurred in connection with corporate activitiesincluding the central treasury department and financialsubsidiaries that makes available a range of financial servicesto the Group, including supporting the financing of Eni’sprojects around the world, as well as results from operations ofcertain of Eni’s minor subsidiaries that provide a range ofservices including training, business support, real estate andgeneral purposes services to Group’s companies.

The aggregate Corporate and financial companies reported anoperating loss of euro 217 million in 2007, representing animprovement of euro 79 million, or 26.7%, compared to the lossrecorded in 2006 (euro 296 million), mainly reflecting loweroperating costs and lower provisions for redundancy incentives.

The aggregate Corporate and financial companies reported anoperating loss of euro 296 million in 2006, representing animprovement of euro 81 million, or 21.5%, compared to the lossrecorded in 2005 (euro 377 million), due essentially to loweroperating costs and lower risk provisions.

 

> 
***e) Finance Income (Expense)***

The table below sets forth a breakdown of Eni’s financeincome (expense) for the periods indicated:

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Gain (loss) on derivative financial instruments    |   | (386     | )      |   | 383     |   |   | 26       |   |
|----------------------------------------------------|--------|----------|--------|--------|---------|--------|--------|----------|--------|
| Exchange        differences, net                   |   | 169      |   |   | (152    | )      |   | (51      | )      |
| Interest income                                    |   | 60       |   |   | 194     |   |   | 236      |   |
| Finance        expense on short and long-term debt |   | (420     | )      |   | (462    | )      |   | (703     | )      |
| Finance expense due to passage of time             |   | (109     | )      |   | (116    | )      |   | (186     | )      |
| Income        from equity instruments              |   |     |   |   |    |   |   | 188      |   |
| Other finance income (expense)                     |   | 161      |   |   | 198     |   |   | 227      |   |
|                                               |   | **(525** | **)**  |   | **45**  |   |   | **(263** | **)**  |
| Capitalized finance expense                        |   | 159      |   |   | 116     |   |   | 180      |   |
|                                               |   |          |        |   |         |        |   |          |        |
|                                               |   | **(366** | **)**  |   | **161** |   |   | **(83**  | **)**  |
|                                               |   |          |        |   |         |        |   |          |        |

*2007 compared to 2006.* In 2007, net finance expense(euro 83 million) increased by euro 244 million from 2006 when anet finance income of euro 161 million was recorded. This changewas mainly due to:

| (i) |   | the recognition of        significantly lower gains on the fair value valuation of        certain financial derivative instruments that do not meet        the formal criteria to be assessed as hedges under IFRS,        including the ineffective portion of a change in fair        value of certain commodity derivatives designated as cash        flow hedges resulting in a loss of euro 52 million.
Eni        entered into those commodity instruments to hedge the        exposure to variability in future cash flows deriving        from marketing an amount of Eni’s proved reserves        equal to 2% of proved reserves as of December 31, 2006        (corresponding to approximately 125.7 mmBOE). These        hedging transactions were undertaken in connection with        the acquisitions executed in 2007 of proved and unproved        properties in |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   | Congo and in the Gulf of        Mexico. Eni put in place certain forward sale contracts        at a fixed price and call and put options with the same        date of exercise. These options can be exercised in        presence of crude oil market prices higher or lower        compared with preset contractual prices. The effective        portion of the change in fair value of these hedges was        directly recognized in equity and amounted to a loss of        approximately euro 1.3 billion net of the related tax        benefit with a corresponding increase in other current        and non-current liabilities; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)   |   | an increase in net finance        expenses as a result of the increase registered in        average net borrowings, as well as the impact of higher        interest rates on euro (Euribor up 1.2 percentage points)        and dollar loans (Libor up 0.1 percentage points). In        2007, net borrowings amounted to euro 16,327 million, a        euro 9,560 million increase over 2006, more than 100%,        reflecting the large amount of capital expenditures and        acquisitions executed in the year which was only        partially funded with cash flows from operations.                                              |

These negatives were partly offset by a net gain of euro 188million recognized in connection with fair value valuationrecorded through profit and loss of both a 20% interest in OAOGazprom Neft that Eni acquired on April 4, 2007 followingfinalization of a bid within the Yukos liquidation procedure, andthe related call option granted by Eni to Gazprom related to thisinvestment. This call option is exercisable within 24 months fromthe acquisition date, at a price of $3.7 billion equaling the bidprice, as modified by subtracting dividends received and addingpossible share capital increases, a contractual remuneration of9.4% on the capital employed and additional financing costs. Thenet gain recognized through profit and loss equaled theremuneration of the capital employed by Eni in the transactionaccording to the contractual arrangements between the twopartners. This accounting treatment is in accordance with thefair value option provided by IAS 39. Eni elected this accountingtreatment to eliminate a recognition inconsistency that wouldotherwise arise from measuring the 20% interest in OAO GazpromNeft and the related call option on different bases. In fact, thecall option granted to Gazprom is measured at fair value throughprofit or loss being a derivative instrument. The fair valuevaluation of the 20% interest in OAO Gazprom Neft was based onquoted market prices as this entity is currently listed on theLondon Stock Exchange.

*2006 compared to 2005*. Net finance income (euro 161million) was up euro 527 million from 2005 when net financeexpenses of euro 366 million were recorded. The change reflected:(i) gains arising from the fair value valuation of financialderivative instruments recorded in the profit and loss accountinstead of being recognized on the balance sheet in connectionwith related assets, liabilities and commitments becauseEni’s financial derivative instruments do not meet theformal criteria to be assessed as hedging instruments under IFRS.These gains were partially offset by the impact of exchange ratesdifferences which were recorded in connection with certain assetsor liabilities (said exchange rate differences reversed from anet gain of euro 169 million in 2005 to a net loss of euro 152million in 2006); and (ii) higher interest income deriving from ahigher average availability of cash and cash equivalents offsetin part by the impact of higher interest rates on dollar loans(Libor up 1.7 percentage points) and on euro loans (Euribor up0.9 percentage points).

 

> 
***f) Income from Investments***

*2007 compared to 2006*. Income from investments in 2007was euro 1,243 million and was mainly related to:(i) Eni’s share of profit (loss) of equity-accountedaffiliates (euro 773 million), particularly in the Gas &Power, Refining & Marketing and Engineering &Construction segments; (ii) net gains on the divestment ofinterests in Haldor Topsøe AS and Camom Group (totaling euro 290million) in the Engineering & Construction segment; and(iii) dividends received by affiliates accounted for at cost(euro 170 million).

The euro 340 million increase in income from investments from2006 was due essentially to higher gains on disposals ofinterests in the Engineering & Construction segment andhigher dividends distributed in particular by Nigeria LNG, whoseeffects were offset in part by lower results of operations ofaffiliates.

*2006 compared to 2005*. Income from investments in 2006was euro 903 million and concerned primarily: (i) Eni’sshare of profit of affiliates accounted for under the equitymethod (euro 795 million), in particular affiliates in the Gas& Power and Refining & Marketing segments. The equityresult recorded by Eni on its affiliate Galp Energia SGPS SAreflected a gain recorded by Galp in its statutory accounts onthe sale of certain regulated assets in the natural gas businessto Rede Eléctrica Nacional in Portugal. Eni’s share of thegain was euro 73 million; (ii) dividends received byaffiliates accounted for at cost (euro 98 million, of which euro56 million related to Nigeria LNG); and (iii) net gains ondisposal (euro 18 million).

The euro 11 million decrease in net income from investmentsfrom 2005 was due essentially to lower gains related inparticular to the recording in 2005 of the gain on the divestmentof Italiana Petroli SpA (euro 132 million), whose effects wereoffset in part by improved results of operations of affiliates inthe Gas & Power segment, in particular Unión Fenosa Gas SAand Blue Stream Pipeline Co BV and higher dividends distributedby Nigeria LNG.

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> 
***g) Income Taxes***

*2007 compared to 2006.* Income taxes were euro 9,219million down euro 1,349 million, or 12.8%, mainly reflecting anadjustment to deferred tax assets and liabilities for Italiansubsidiaries relating to certain amendments to the Italian taxregime, including a lower statutory tax rate enacted by the 2008Budget Law (of net euro 394 million), as well as the circumstancethat in 2006 deferred tax liabilities were recorded due tochanges in the tax regimes of Algeria and the United Kingdom andcharges regarding disputes on certain tax matters (totaling euro347 million).

Specifically, the adjustment to deferred tax assets andliabilities for Italian subsidiaries was recognized in connectionwith certain amendments to the Italian tax regime enacted by the2008 Budget Law. These included a lower statutory tax rate (IRESfrom 33% to 27.5%, IRAP from 4.25% to 3.9%) effective January 1,2008, and an option regarding the increase of the tax bases ofcertain tangible and other assets to their financial statementscarrying amounts by paying a special tax with a rate lower thanthe statutory tax rate. The Group effective tax rate (46%)declined by 5.8 percentage points from 2006 (51.8%) reflecting:(i) a lower share of profit before taxes generated by theExploration & Production segment; (ii) the abovementioned adjustment to deferred tax assets and liabilities forItalian subsidiaries; and (iii) the recognition of certain gainson divestment of certain interests which are subject to lowertaxation. These positives were partly offset by a higher tax raterecorded in the Exploration & Production segment.

*2006 compared to 2005.* Income taxes were euro 10,568million, up euro 2,440 million from 2005, or 30%, and reflectedprimarily higher profit before taxes (euro 3,016 million) and a 5percentage point increase (from 46.8 to 51.8%) in the Groupeffective tax rate, calculated as the ratio of income taxes tonet profit before taxes. This increase in the Group tax ratereflected mainly: (i) the enactment of a windfall tax on upstreamearnings in Algeria effective as from August 1, 2006 (with anoverall impact of euro 328 million, of which euro 149 millionpertaining to taxation for the period and euro 179 millionpertaining to the deferred tax impact); (ii) an increase in thesupplemental tax rate implemented by the British Government,applicable to profit before taxes earned by operations in theNorth Sea, effective as from the beginning of the year, affectingboth current taxation and deferred tax (with an overall impact ofeuro 198 million, of which euro 107 million pertaining totaxation for the period and euro 91 million pertaining to thedeferred tax impact); and (iii) a provision for the settlement ofa tax claim in Venezuela (with an overall impact of euro 77million).

 

> 
***h) Minority Interest***

*2007 compared to 2006.* Minority interest was euro 798million, up euro 192 million from 2006, or 31.7%, and concernedprimarily Saipem SpA (euro 514 million) and Snam Rete Gas SpA(euro 268 million). This increase in minority interest mainlyreflected the improvement in Saipem’s results of operations.

*2006 compared to 2005.* Minority interest was euro 606million, up euro 147 million from 2005, or 32.0%, and concernedprimarily Snam Rete Gas SpA (euro 287 million) and Saipem SpA(euro 303 million). This increase in minority interest mainlyreflected the improvement in Saipem’s results of operations.

 

 

**Liquidity and Capital Resources**

Eni’s cash requirements for working capital, sharebuyback, dividends to shareholders, capital expenditures andacquisitions over the past three years were financed primarily bya combination of funds generated from operations, borrowings anddivestments of non-strategic assets. The Group continuallymonitors the balance between cash flow from operating activitiesand net expenditures targeting a sound and well-balancedfinancing structure.

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The following table summarizes the Group’s cash flows andthe principal components of Eni’s change in cash and cashequivalents for the periods indicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| **Net profit**                                                                                                      |   | **9,247**  |   |   | **9,823**  |   |   | **10,809** |   |
|---------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| *Adjustments        to reconcile to cash generated from operating profit        before changes in working capital:* |   |       |   |   |       |   |   |       |   |
| - depreciation, depletion and amortization and        other non monetary items                                      |   | 6,518      |   |   | 5,753      |   |   | 6,346      |   |
| - net        gains on disposal of assets                                                                            |   | (220       | )      |   | (59        | )      |   | (309       | )      |
| - dividends, interest, income taxes and other        changes                                                        |   | 8,471      |   |   | 10,435     |   |   | 8,850      |   |
|                                                                                                                |   |            |        |   |            |        |   |            |        |
| **Cash generated from operating profit before        changes in working capital**                                   |   | **24,016** |   |   | **25,952** |   |   | **25,696** |   |
| Changes in        working capital related to operations                                                             |   | (2,422     | )      |   | (1,024     | )      |   | (1,667     | )      |
| Dividends received, taxes paid, interest (paid)        received during the year                                     |   | (6,658     | )      |   | (7,927     | )      |   | (8,512     | )      |
|                                                                                                                |   |            |        |   |            |        |   |            |        |
| **Net cash provided by operating activities**                                                                       |   | **14,936** |   |   | **17,001** |   |   | **15,517** |   |
| Capital        expenditures                                                                                         |   | (7,414     | )      |   | (7,833     | )      |   | (10,593    | )      |
| Acquisition of investments and businesses                                                                           |   | (127       | )      |   | (95        | )      |   | (9,665     | )      |
| Disposals                                                                                                           |   | 542        |   |   | 328        |   |   | 659        |   |
| Other cash flow related to investing activities                                                                     |   | 184        |   |   | 577        |   |   | (514       | )      |
| Changes in        short and long-term finance debt                                                                  |   | (540       | )      |   | (682       | )      |   | 8,761      |   |
| Dividends paid and changes in minority interest        and reserves                                                 |   | (7,284     | )      |   | (6,443     | )      |   | (5,836     | )      |
| Effect of        changes in consolidation and exchange differences                                                  |   | 33         |   |   | (201       | )      |   | (200       | )      |
|                                                                                                                |   |            |        |   |            |        |   |            |        |
| **Change in cash and cash equivalents for the        year**                                                         |   | **330**    |   |   | **2,652**  |   |   | **(1,871** | **)**  |
|                                                                                                                |   |            |        |   |            |        |   |            |        |
| Cash and cash equivalents at the beginning of        the year                                                       |   | 1,003      |   |   | 1,333      |   |   | 3,985      |   |
| Cash and        cash equivalents at year end                                                                        |   | 1,333      |   |   | 3,985      |   |   | 2,114      |   |
|                                                                                                                |   |            |        |   |            |        |   |            |        |

The table below sets forth the principal components ofEni’s change in net borrowings (1) for theperiods indicated.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| **Net cash provided by operating activities**                                       |   | **14,936** |   |   | **17,001** |   |   | **15,517** |   |
|-------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Capital        expenditures                                                         |   | (7,414     | )      |   | (7,833     | )      |   | (10,593    | )      |
| Acquisition of investments and businesses                                           |   | (127       | )      |   | (95        | )      |   | (9,665     | )      |
| Disposals                                                                           |   | 542        |   |   | 328        |   |   | 659        |   |
| Other cash flow related to capital expenditures,        investments and divestments |   | 293        |   |   | 361        |   |   | (35        | )      |
| Net        borrowings (1) of acquired companies                                     |   | (19        | )      |   |       |   |   | (244       | )      |
| Net borrowings (1) of divested        companies                                     |   | 21         |   |   | 1          |   |   |       |   |
| Exchange        differences on net borrowings and other changes                     |   | (980       | )      |   | 388        |   |   | 637        |   |
| Dividends paid and changes in minority interest        and reserves                 |   | (7,284     | )      |   | (6,443     | )      |   | (5,836     | )      |
|                                                                                |   |            |        |   |            |        |   |            |        |
| **Change in net borrowings**                                                        |   | **(32**    | **)**  |   | **3,708**  |   |   | **(9,560** | **)**  |
|                                                                                |   |            |        |   |            |        |   |            |        |
| Net borrowings at the beginning of the year                                         |   | 10,443     |   |   | 10,475     |   |   | 6,767      |   |
| Net        borrowings at year end                                                   |   | 10,475     |   |   | 6,767      |   |   | 16,327     |   |
|                                                                                |   |            |        |   |            |        |   |            |        |

----

| (1) |   | Net        borrowings are non-GAAP financial measures. For a        discussion of the usefulness of net borrowings and its        reconciliation with the most directly comparable IFRS        measures which in the case of the Company refers to IFRS,        see "Financial Condition" below. No        reconciliation has been provided regarding net borrowings        of acquired/divested companies as these borrowings mainly        refers to finance debt as measured in accordance with        IFRS. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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> 
***Analysis of Certain Components of Eni’s Change    in Net Borrowings:***

***a) Net Cash Generated from Operating Profit before    Changes in Working Capital***

Net cash generated from operating profit before changes inworking capital totaled euro 25,696 million in 2007 and euro25,952 million in 2006. A euro 256 million decrease from 2006 wasrecorded in spite of higher net profit that was affected byhigher non-cash items mainly recorded in income taxes. Seediscussion on profit and loss items.

Net profit for 2007 was adjusted to take into accountamortization, depletion and depreciation and other non-monetaryitems (euro 6,346 million), which primarily regardeddepreciation, depletion and amortization of tangible andintangible assets (euro 7,029 million), non-monetary chargesrelating to environmental and risk provisions, impairments ofproperty, plant and equipment and investments (euro 207 millionfor impairments). Adjustments to net profit also included theaddition of a non-cash charge amounting to euro 8,850 million,mainly related to income taxes.

Net profit for 2006 was adjusted to take into accountamortization, depletion and depreciation and other non-monetaryitems (euro 5,753 million), which primarily regarded depreciationand amortization of tangible and intangible assets (euro 6,153million), non-monetary charges relating to environmental and riskprovisions, impairments of property, plant and equipment andinvestments (euro 268 million for impairments). Adjustments tonet profit also included the addition of a non-cash chargeamounting to euro 10,435 million, mainly related to income taxes.

 

> 
***b) Changes in Working Capital related to Operations***

In 2007, the decrease in net working capital of euro 1,667million was mainly due to: (i) an increase in the carrying amountof inventories (euro 747 million) in connection with thevaluation of inventories of refined products under theweighted-average cost method of accounting; and (ii) a euro 379million increase in trade receivables. This increase was partlyoffset by an increase in trade payables (euro 564 million).

In 2006, the increase in net working capital (euro 1,024million) was mainly due to: (i) a euro 1,952 million increase intrade receivables essentially related to a growth in salesvolumes of oil and natural gas; and (ii) an increase ofinventories (euro 953 million) in connection with the valuationof inventories of refined products under the weighted-averagecost method of accounting. This increase was partly offset by anincrease in trade payables (euro 2,146 million).

 

> 
***c) Dividends received, Taxes paid, Interest (paid)    received during the Year***

Dividends, interest and taxes paid (which is net of amountsreceived) totaled euro 8,512 million in 2007 and euro 7,927million in 2006 and regarded primarily the payment of incometaxes (euro 8,948 million in 2007 and euro 8,876 million in2006).

 

> 
***d) Investing Activities***

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

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

| Exploration & Production                              |   | 4,965     |   |   | 5,203     |   |   | 6,625      |   |
|-----------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
| Gas &        Power                                    |   | 1,152     |   |   | 1,174     |   |   | 1,366      |   |
| Refining & Marketing                                  |   | 656       |   |   | 645       |   |   | 979        |   |
| Petrochemicals                                            |   | 112       |   |   | 99        |   |   | 145        |   |
| Engineering & Construction                            |   | 349       |   |   | 591       |   |   | 1,410      |   |
| Other        activities                                   |   | 48        |   |   | 72        |   |   | 59         |   |
| Corporate and financial companies                         |   | 132       |   |   | 88        |   |   | 108        |   |
| Impact of        unrealized intragroup profit elimination |   |      |   |   | (39       | )      |   | (99        | )      |
|                                                      |   |           |        |   |           |        |   |            |        |
| **Capital expenditures**                                  |   | **7,414** |   |   | **7,833** |   |   | **10,593** |   |
| **Acquisitions        of investments and businesses**     |   | **127**   |   |   | **95**    |   |   | **9,665**  |   |
|                                                      |   |           |        |   |           |        |   |            |        |
|                                                      |   | **7,541** |   |   | **7,928** |   |   | **20,258** |   |
| **Disposals**                                             |   | **(542**  | **)**  |   | **(328**  | **)**  |   | **(659**   | **)**  |
|                                                      |   |           |        |   |           |        |   |            |        |
| **NET INVESTMENT**                                        |   | **6,999** |   |   | **7,600** |   |   | **19,599** |   |
|                                                      |   |           |        |   |           |        |   |            |        |

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Capital expenditures totaled euro 10,593 and euro 7,833million respectively in 2007 and in 2006.

In 2007, 84.7% of capital expenditures related to theExploration & Production (euro 6,625 million), Gas& Power (euro 1,366 million) and Refining &Marketing (euro 979 million) segments.

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 9,665million in 2007 and euro 95 million in 2006. Main acquisitionsexecuted in the year are outlined in "Item 4 –Significant business and portfolio developments for theyear".

Disposals amounted to euro 659 million in 2007 and euro 328million in 2006. In 2007, disposals primarily related to: (i) theEngineering & Construction segment, in connection with thedivestment of interests in Haldor Topsøe AS and Camom Group(totaling euro 378 million); (ii) disposal of mineral assets andother minor assets in the Exploration & Production segment(euro 182 million); and (iii) minor assets in the Refining &Marketing segment (euro 53 million).

In 2006, disposals referred primarily: (i) the Exploration& Production segment (euro 229 million) related in particularto the disposal of mineral assets and other minor assets; (ii)the Gas & Power segment, related to the divestment of 13.5%of the share capital of EniPower Mantova (euro 17 million) andother minor assets; and (iii) the Refining & Marketingsegment related to the divestment of minor assets (euro 25million).

 

> 
***e) Dividends paid and Changes in Minority Interest    and Reserves***

In 2007, dividends paid and changes in minority interest andreserves (euro 5,836 million) related mainly to the dividenddistribution to Eni shareholders for euro 4,583 million (of whicheuro 2,384 million related to the balance for the fiscal year2006 and euro 2,199 million as an interim dividend for fiscalyear 2007), the distribution of dividends to minority interest bySnam Rete Gas SpA and Saipem SpA (euro 282 million) and otherconsolidated subsidiaries (euro 7 million) and the buy-backprogram (for euro 680 million by Eni SpA and for euro 358 millionby Snam Rete Gas SpA and Saipem SpA).

In 2006, dividends paid and changes in minority interest andreserves (euro 6,443 million) related mainly to the dividenddistribution to Eni shareholders for euro 4,610 million (of whicheuro 2,400 million related to the balance for the fiscal year2005 and euro 2,210 million as an interim dividend for fiscalyear 2006) and the distribution of dividend to minority interestby Snam Rete Gas SpA and Saipem SpA (euro 207 million) and otherconsolidated subsidiaries (euro 15 million) and the buy-backprogram (for euro 1,241 million by Eni SpA and for euro 477million by Snam Rete Gas SpA and Saipem SpA).

 

> 
***Financial Condition***

In evaluating its financing structure, Eni uses netborrowings, which is a "non-GAAP" financial measure.Non-GAAP measures are measures that either exclude or includeamounts that are not excluded or included in the comparablemeasures calculated and presented in accordance with generallyaccepted accounting principles, in Eni’s case IFRS issued bythe IASB and IFRS issued by the IASB as adopted by the EuropeanUnion. Eni calculates net borrowings as total finance debt(short-term and long-term debt) derived from its ConsolidatedFinancial Statements prepared in accordance with IFRS less: cash,cash equivalents and certain very liquid investments not relatedto operations including, among others, non-operating financingreceivables and securities not related to operations.Non-operating financing receivables consist mainly of 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 information aboutthe soundness of Eni’s capital structure and the wayswhereby Eni’s operating assets are financed. In addition,management utilizes the ratio of net borrowings to totalshareholders’ equity including minority interest (leverage)to assess Eni’s capital structure, to analyze whether theratio between finance debt and shareholders’ equity is wellbalanced according to industry standards and to trackmanagement’s short-term and medium-term targets. Managementconstantly monitors trends in net borrowings and trends inleverage in order to optimize the use of internally-generatedfunds vs. funds from third parties. The measure calculated inaccordance with IFRS that is most directly comparable to netborrowings is total debt (short-term and long-term debt). TheIFRS-calculated measure that is most directly comparable withleverage is the ratio of total debt to shareholders’ equity(including minority interest). Eni’s presentation andcalculation of net borrowings and leverage may not be comparableto that of other companies.

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The tables below set forth the calculations of net borrowingsand leverage for the periods indicated and their reconciliationto the most directly comparable GAAP measure.

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |
|--------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|
|   |   |                |   |               |   |           |   |                |   |               |   |           |   |                |   |               |   |           |

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

| **Total debt (short-term and long-term debt)** |   | **5,345** |   |   | **7,653** |   |   | **12,998** |   |   | **4,290** |   |   | **7,409** |   |   | **11,699** |   |   | **8,500** |   |   | **11,330** |   |   | **19,830** |   |
|------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
| Cash and        cash equivalents               |   | (1,333    | )      |   |      |   |   | (1,333     | )      |   | (3,985    | )      |   |      |   |   | (3,985     | )      |   | (2,114    | )      |   |       |   |   | (2,114     | )      |
| Securities not related to operations           |   | (903      | )      |   | (28       | )      |   | (931       | )      |   | (552      | )      |   |      |   |   | (552       | )      |   | (174      | )      |   |       |   |   | (174       | )      |
| Non-operating        financing receivables     |   | (12       | )      |   | (247      | )      |   | (259       | )      |   | (143      | )      |   | (252      | )      |   | (395       | )      |   | (990      | )      |   | (225       | )      |   | (1,215     | )      |
|                                           |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |   |           |        |   |            |        |   |            |        |
| **Net borrowings**                             |   | **3,097** |   |   | **7,378** |   |   | **10,475** |   |   | **(390**  | **)**  |   | **7,157** |   |   | **6,767**  |   |   | **5,222** |   |   | **11,105** |   |   | **16,327** |   |
|                                           |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |   |           |        |   |            |        |   |            |        |

 

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Shareholders’ equity including minority        interest as per Eni’s Consolidated Financial        Statements prepared in accordance with IFRS                             |   | (million euro) |   | 39,217  |   |   | 41,199  |   |   | 42,867  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| *Ratio        of total debt to total shareholders’ equity        including minority interest*                                                                                   |   |           |   | *0.33*  |   |   | *0.28*  |   |   | *0.46*  |   |
| *Less: ratio of cash, cash equivalents and        certain liquid investments not related to operations to        total shareholders’ equity including minority        interest* |   |           |   | *(0.06* | *)*    |   | *(0.12* | *)*    |   | *(0.08* | *)*    |
| *Ratio        of net borrowing to total shareholders’ equity        including minority interest (leverage)*                                                                     |   |           |   | *0.27*  |   |   | *0.16*  |   |   | *0.38*  |   |
|                                                                                                                                                                                 |   |           |   |         |        |   |         |        |   |         |        |

In 2007, net borrowings amounted to euro 16,327 million, aeuro 9,560 million increase over 2006, up 141%, reflecting thelarge amount of capital expenditures and acquisitions executed inthe year which was only partially funded by cash flows fromoperations. Total debt of euro 19,830 million consisted of euro8,500 million short-term debt (including the portion of long-termdebt, due within twelve months equal to euro 737 million) andeuro 11,330 million of long-term debt.

Total debt included bonds for euro 5,386 million (includingaccrued expense and discount on issuance). Bonds maturing in thenext 18 months amounted to euro 584 million. Bonds issued in 2007amounted to euro 1,118 million. Total debt was denominated in thefollowing currencies: euro 78%, U.S. dollar 13%, pound sterling8% and 2% in other currencies.

In 2006, net borrowings amounted to euro 6,767 million, a euro3,708 million decrease over 2005. Total debt of euro 11,699million consisted of euro 4,290 million short-term debt(including the portion of long-term debt due within twelve monthsequal to euro 890 million) and euro 7,409 million of long-termdebt.

> 
*Short-term Debt*

As of December 31, 2007, short-term debt of euro 8,500 million(including the portion of long-term debt due within twelve monthsfor euro 737 million) increased by euro 4,210 million over 2006.The weighted average interest rate of Eni’s short-term debtwas 3.9% and 4.9% for the years ended December 31, 2006 and 2007,respectively.

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As of December 31, 2007, Eni maintained committed anduncommitted unused borrowing facilities of euro 5,006 million andeuro 6,298 million, respectively (euro 5,896 million and euro6,523 million at December 31, 2006). These facilities were underinterest rates that reflected market conditions. Changes inunutilized facilities were not significant.

> 
*Long-term Debt*

As of December 31, 2007, long-term debt of euro 11,330 millionincreased by euro 3,921 million over 2006.

At December 31, 2006 and 2007, the amount of short andlong-term debt subject to restrictive covenants was euro 1,131million and euro 1,429 million respectively. Furthermore, SaipemSpA and Saipem SA entered into certain borrowing facilities foreuro 75 million and euro 34 million, respectively, with a numberof financial institutions subordinated to the maintenance ofcertain performance indicators based on the ConsolidatedFinancial Statements of Saipem and separate financial statementsof Saipem SA. Eni and Saipem are in compliance with the covenantscontained in their respective financing arrangements. Bonds ofeuro 5,386 million consisted of bonds issued within the EuroMedium Term Notes Program for a total of euro 4,916 million andother bonds for a total of euro 470 million.

 

> 
***Capital Expenditures by Segment***

*Exploration & Production*. In 2007, capitalexpenditures of the Exploration & Production segment amountedto euro 6,625 million, representing an increase of euro 1,422million, or 27.3%, from 2006 due to development of oil and gasreserves. This amount of expenditures was also affected byindustry-wide cost trends regarding oilfield services andequipment. Main projects were executed mainly outside Italy, inparticular Kazakhstan, Angola, Egypt and Congo. Developmentexpenditures in Italy concerned in particular well drillingprogram and facility upgrading in Val d’Agri and sidetrackand infilling interventions in mature fields. Significantexpenditures were directed toward exploratory projects. About 94%of these expenditures were also directed outside Italy, inparticular the Gulf of Mexico, Egypt, Brazil, Norway and Nigeria.In Italy, exploration activities were directed mainly to theoffshore of Sicily. Acquisition of proved and unproved propertyconcerned mainly a 70% interest in the Nikaitchuq oilfield inAlaska, in which Eni reached a 100% ownership.

In 2006, capital expenditures of the Exploration &Production segment amounted to euro 5,203 million, representingan increase of euro 238 million, or 4.8%, from 2005 due to theincrease in exploration expenditure, in particular in Egypt andNigeria. These effects were offset in part by lower developmentexpenditure resulting essentially from the completion of relevantprojects in Libya, Nigeria and the circumstance that in 2005 anadditional 1.85% interest in the Kashagan project was purchasedwith an outlay of euro 169 million. Capital expenditures for 2006concerned mainly development expenditure (euro 3,629 million,compared to euro 3,952 million in 2005) directed mainly outsideItaly (euro 3,226 million), in particular in Kazakhstan, Angolaand Egypt. Development expenditure in Italy (euro 403 million)concerned in particular the continuation of drilling developmentwells, the completion of work for plant and infrastructure in Vald’Agri and sidetrack and infilling actions in mature areas.Exploration expenditures amounted to euro 1,348 million (euro 656million in 2005), of which about 90% was directed outside Italy.Outside Italy exploration concerned in particular the followingcountries: Angola, Egypt, Norway, Nigeria and the Gulf of Mexico.In Italy exploration concerned essentially offshore Sicily, thePo Valley and the Adriatic Sea.

*Gas & Power.* In 2007, capital expenditures in theGas & Power segment totaled euro 1,366 million and relatedessentially to: (i) developing and upgrading Eni’s primarytransport network in Italy (euro 691 million); (ii) the upgradingplan of international pipelines (euro 253 million); (iii)developing and upgrading Eni’s natural gas distributionnetwork in Italy (euro 195 million); and (iv) ongoingconstruction of combined cycle power plants (euro 175 million),in particular at the Ferrara site.

In 2006, capital expenditures in the Gas & Power segmenttotaled euro 1,174 million and related essentially to: (i)development and upgrades of Eni’s transport network in Italy(euro 627 million); (ii) the continuation of the construction ofcombined cycle power plants (euro 229 million), in particularFerrara and Brindisi sites; and (iii) development andupgrades of Eni’s natural gas distribution network in Italy(euro 158 million).

*Refining & Marketing.* In 2007, capital expendituresin the Refining & Marketing segment amounted to euro 979million and regarded mainly: (i) refining, supply and logistics(euro 675 million) in Italy, with projects designed to improvethe conversion rate and flexibility of refineries, in particularthe start-up of construction of a new hydrocracking unit at theSannazzaro refinery, and expenditures on health, safety andenvironment upgrades; (ii) upgrade and restructuring of theretail network in Italy (euro 176 million); and (iii) upgrade ofthe retail network in the rest of Europe (euro 106 million).Expenditures on health, safety and the environment amounted toeuro 141 million.

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In 2006, capital expenditures in the Refining & Marketingsegment amounted to euro 645 million and concerned: (i) refining,supply and logistics (euro 376 million) in Italy, aiming atimproving flexibility and yields for refineries, in particularthe start up of construction of a new hydrocracking unit at theSannazzaro refinery; (ii) upgrades and restructuring of theretail network in Italy (euro 125 million), includingconstruction of new outlets; and (iii) upgrades of the retailnetwork in the rest of Europe (euro 98 million), includingpurchase and realization of new outlets, and, to a lesser extent,restructuring of existing ones.

*Petrochemicals.* In 2007, capital expenditures in thePetrochemical segment amounted to euro 145 million regardedmainly plant upgrades (euro 47 million), environmentalprotection, safety and environmental regulation compliance (euro39 million), extraordinary maintenance (euro 29 million) andupkeeping (euro 28 million).

In 2006, capital expenditures in the Petrochemical segmentamounted to euro 99 million and concerned in particular effortsin upkeep (euro 32 million), improving plant efficiency andstreamlining (euro 32 million), environmental protection, safetyand environmental regulation compliance (euro 23 million) andextraordinary and periodic maintenance (euro 12 million).

*Engineering & Construction.* In 2007, capitalexpenditures in the Engineering & Construction segment (euro1,410 million) mainly regarded: (i) ongoing construction of thenew semisubmersible platform Scarabeo 8 and a new pipelayer and anew deepwater drilling ship Saipem 12000; and (ii) the conversionof two tanker ships into FPSO vessels that will operate in Brazilon the Golfinho 2 field and in Angola.

In 2006, capital expenditures in the Engineering &Construction segment (euro 591 million) concerned: (i) theconversion of the Margaux tanker ship into an FPSO vessel thatwill operate in Brazil on the Golfinho 2 field;(ii) development and upgrading of equipment; and (iii)construction and installation of facilities in the onshore phaseof the Kashagan project in Kazakhstan.

 

 

**Recent Developments**

The table below sets forth certain indicators of the tradingenvironment for the periods indicated:

|   |   | **Three months        ended March 31,** |   | **One month        ended April 30,** |
|--------|--------|-----------------------------------------|--------|--------------------------------------|
|   |   |                                         |   |                                      |

|   |   | **2007** |   | **2008** |   | **2007** |   | **2008** |
|--------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |   |          |

| Average price of Brent dated crude oil in U.S.        dollars (1) |   | 57.75 |   | 96.90 |   | 67.51 |   | 108.97 |
|-------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|--------|--------|
| Average        price of Brent dated crude oil in euro (2)         |   | 44.08 |   | 64.60 |   | 49.93 |   | 69.19  |
| Average EUR/USD exchange rate (3)                                 |   | 1.310 |   | 1.500 |   | 1.352 |   | 1.575  |
| Average        European refining margin in U.S. dollars (4)       |   | 3.06  |   | 3.81  |   | 5.79  |   | 8.34   |
| EURIBOR - three month euro rate % (3)                             |   | 3.8   |   | 4.5   |   | 4.0   |   | 4.8    |

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

----

| (1) |    | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) |    | Source: ECB.                                                                                                                                                                                                 |
| (4) |    | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

 

> 
***Eni’s Results of Operations for the First    Quarter 2008***

Net profit for the first quarter of 2008 was up 28.3% over thefirst quarter of 2007 mainly due to higher reported operatingprofit (up 21%) as result of an improved operating profit in theExploration & Production segment, partially offset by anegative performance delivered by the Petrochemical segment. Thisincrease in net profit was supported by: (i) higher income fromequity-accounted entities and gains on divestments, mainlyrelated to the disposal of certain interests in the Engineering& Construction segment; and (ii) a lower tax rate (down 1.4percentage points from 47% to 45.6%) mainly resulting from areduced statutory tax rate for Italian subsidiaries (down from37.25% to 31.4%).

Eni’s results were achieved in a trading environmentcharacterized by higher oil and gas realizations which were up45.5% in dollar terms supported by higher Brent prices (up 67.8%as compared to the first quarter of 2007). Partially offsettingthis improved trading environment was the circumstance thatliquid realizations in dollar terms were reduced by approximately5% due to the settlement of certain commodity derivativesrelating to the sale of 11.5 mmBBL. This volume was part of thederivative transaction the Company entered into to hedge theexposure to variability in future cash flows expected from thesale of a portion of proved reserves for an original amount ofapproximately 125.7 mmBBL, decreasing to 114.2 mmBBL at the endof the quarter. These hedging transactions 

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were undertaken in connection with the acquisition of oil andgas assets in the Gulf of Mexico and Congo executed in 2007. Seethe management’s discussion on this issue in the analysis ofinterest expense for 2007 above under "2005-2007 GroupResults of Operations – Analysis of the line Items of theProfit and Loss Account".

Higher realizations in dollar terms were partially offset bythe appreciation of the euro versus the dollar (up 14.5%). TheExploration & Production segment performance in the quarterwas supported by higher production volumes.

Also gas marketing margins decreased from the first quarter of2007 due to unfavorable trends in energy parameters used indetermining purchase and selling prices of natural gas resultingin an increase of purchase prices that was higher than theincrease recorded in selling prices. This negative trend wasoffset by higher sale volumes.

Realized refining margins were affected by rising refiningutility costs and appreciation of the euro against the dollar.This negative trend was offset by higher sale volumes and theimpact of higher period-end prices on the valuation ofinventories of refined products under the weighted-average costmethod of accounting.

Selling margins of commodity chemicals were sharply lower dueto higher costs of oil-based feedstock that were not fullyrecovered in sales prices.

The appreciation of the euro over other currencies, inparticular the U.S. dollar (at March 31, 2008 the EUR/USDexchange rate was up 7.4% over December 31, 2007) resulted in adecrease in the book value of total assets, Enishareholders’ equity and net borrowings as compared withyear end 2007.

Net borrowings at March 31, 2008 declined by 4.5% fromDecember 31, 2007, due to cash inflows from operating activities,offset in part by financing requirements for capitalexpenditures, the completion of Burren energy’s acquisitionand the repurchase of own shares.

In the first quarter of 2008, hydrocarbon production increasedby 3.8% compared with the first quarter of 2007 mainly due to thebenefits generated by the assets acquired in 2007 in the Gulf ofMexico and Congo, as well as of Burren Energy from January 1,2008 (for further detailed information see "Item 4 –Exploration & Production"). Start-ups in Egypt andAngola and field performance in Kazakhstan also supportedproduction growth. These positives were partially offset byplanned and unplanned facility downtime in the North Sea andNigeria and mature field declines. Higher oil prices resulted inlower volume entitlements (down approximately 78 KBOE/d) inEni’s Production Sharing Agreements (PSAs) and similarcontractual schemes. Excluding the impact of lower entitlementsin PSAs, production was up by over 8%.

Worldwide natural gas sales were up 9.3% as compared to thefirst quarter of 2007, driven by higher seasonal sales and growthachieved in international sales.

 

> 
***Significant Transactions***

In January 2008 Eni closed the acquisition of the UK-based oilcompany Burren Energy Plc. Total cash consideration amounted toapproximately euro 2.3 billion. Burren holds producing assets inCongo and Turkmenistan flowing at a rate of over 25 KBOE/d andpartners Eni in the Congolese assets that Eni bought from Maurel& Prom in 2007. For further details on this transaction see"Item 4 – Exploration & Production".

In January 2008 the international partners of the NorthCaspian Sea Production Sharing Agreement (NCSPSA) Consortium andthe Kazakh authorities signed a Memorandum of understanding tosettle a dispute commenced in August 2007 regarding conditionsand rights for developing and exploiting the Kashagan field. Forfurther details on this transaction see "Item 4 –Exploration & Production – Kazakhstan".

In February 2008, Eni and the Venezuelan authorities reached afinal settlement over the dispute regarding the expropriation ofthe Dación field that occurred in April 2006. Under the terms ofthe settlement, Eni will receive cash compensation in line withthe carrying value of the expropriated asset. Therefore,consistent with management’s accounting treatment of thisissue in the 2007 consolidated financial statements, noimpairment charges will be recorded in connection withexpropriation of the Dación assets in the 2008 FinancialStatements. For further details on this transaction, see"Item 4 – Exploration & Production".

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**Management’s Expectations of Operations**

The following are the forecasts for Eni’s main productionand sales metrics in 2008.

Eni’s management expects:

| • |   | production of oil and        natural gas to be greater than in 2007 (actual oil and        gas production in 2007 averaged 1,684 mmBOE/d).        Management expects a full-year production level in excess        of 1.8 mmBOE/d assuming Eni’s planning scenario for        Brent prices at 64 $/BL in assessing volumes entitlements        in the Company’s PSAs and similar contractual        schemes. The drivers of expected production growth in        2008 will be the additional production flowing from        assets acquired in 2007 in the Gulf of Mexico and Congo,        Burren Energy assets from the start of the year, as well        as field start-ups in Angola, Egypt, Venezuela, Congo and        the USA. These increases are expected to be partly offset        by mature field declines; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | worldwide natural gas sales        to increase by approximately 4% over 2007 (actual sales        volumes in 2007 were 98.96 BCM) driven by strong seasonal        sales in the quarter and international growth. The        increase expected to be achieved in international sales        will be driven by growth in a number of markets in the        rest of Europe, mainly in France, the Iberian Peninsula        and Turkey, and in the LNG business; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | refinery throughputs to be        unchanged from 2007 (actual throughputs in 2007 were        37.15 mmtonnes). Higher throughputs are forecast at Ceska        Refinerska as a result of the acquisition of an increased        stake in 2007. This improvement will be partly offset by        an expected decrease in Italy due to facility downtime at        the Venice refinery; and                                                                     |
| • |   | retail sales of refined        products to increase by approximately 2% from 2007 level        (11.8 mmtonnes were the comparable volumes achieved in        2007, which exclude volumes marketed in the Iberian        Peninsula in 2007) driven by higher sales in Europe due        to the full contribution of assets acquired in 2007 in        Central-Eastern Europe.                                                                                  |

In the next four-year period, management plans to investapproximately euro 49.8 billion on exploration and capitalprojects to support the Company’s organic growth;approximately 67%, 13% and 8% of this new capital expendituresare planned to be deployed in the Exploration & Production,Gas & Power and Refining & Marketing segments,respectively. The main planned projects are as follows: (i)development of reserves of hydrocarbons mainly in Kazakhstan,Egypt, Angola, Nigeria, Italy, Norway, Congo, the U.S. and Libya;(ii) exploration projects to be executed mainly in the U.S.,Egypt, Libya, Nigeria, Angola, Italy, Indonesia, Norway, Braziland Congo; (iii) upgrading of national and internationallong-distance pipelines for transporting natural gas, as well asupgrading of Italian distribution networks; (iv) refineryupgrading, mainly targeting an increase in conversion capacityand flexibility of Eni’s main refineries; (v) upgrading ofEni’s networks of service stations for marketing petroleumproducts; and (vi) upgrading of the fleet of construction vesselsand offshore drilling rigs, as well as logistic centers and othersupport facilities in the Engineering & Construction segment.

In order to assess profitability of individual capitalexpenditure projects, management uses a long-term reference oilprice of 50 $/BL in 2012, than in subsequent years this value isincreased to take account of expected inflation. The internalrate of return of each project is compared to the relevant hurdlerate, differentiated by business segment and country ofoperation. These hurdle rates are calculated taking into account:(i) Eni’s weighted average cost of capital which isdifferentiated for each business segment; (ii) a countryrisk premium which reflects the riskiness of each country ofoperation in terms of macroeconomic, business and socio-politicalcurrent conditions and outlook; and (iii) a premium for thebusiness risk.

In the next four-year period management plans to pay toshareholders yearly dividends on the same level as in 2007 plusan increase to take account of expected inflation. For fiscalyear 2007, Eni will pay a dividend per share of euro 1.30, ofwhich euro 0.60 per share was paid in October 2007 as an interimdividend with the balance of euro 0.70 per share to be paid latein May 2008. In future years, management expects to continuepaying interim dividends for each fiscal year, with the balancefor the full year dividend paid in the following year. See"Item 8 – Dividend Policy" for more details onEni’s dividend policy and the uncertainties and constraintsto which it is subject.

In the next four-years, management expects to fund plannedcapital expenditures and dividend payments by means of cash flowsprovided by operating activities without making recourse toborrowings from third parties even in a low oil priceenvironment. Specifically, management assessed the Company’scash flows against a scenario of Brent prices at 40 $/BL for theyear 2011 and concluded that cash flows from operations would besufficient to fund planned capital expenditures and dividendpayments for that year. For planning purposes, management assumedan average exchange rate of approximately 1.31 U.S. dollars pereuro in the 2008-2011 period. Given the sensitivity of Eni’sresults of operations to movements in the euro versus the U.S.dollar exchange rate, current trends in the currency marketrepresent a factor of risk and uncertainty. See "Item 3– Risk Factors".

For the purpose of planning oil and gas production targets andlevels, management assumed a level of 64 and 57 $/BL respectivelyfor 2008 and 2009; then in the following years management assumedcrude oil prices to decline until settling on the long-term levelof 50 $/BL. Management plans to achieve an average productiongrowth rate of 4.5% in the 2008-2011 period based on theassumption of a Brent crude oil price of 55 $/BL in 2011 toassess 

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production entitlements under Eni’s PSAs and similarcontractual schemes. The Company’s oil and gas operationsare particularly sensitive to oil prices, given the significantweight of PSAs in the Company’s portfolio. For the currentyear, the Company estimates that production entitlements in itsPSAs would decrease on average by approximately 2,000 BBL/d foreach $1 increase in oil prices compared to Eni’s assumptionsfor oil prices. Applying the same criterion to the 2008-2011period and assuming Brent oil prices at 90 $/BL along the2008-2011 period, the Company estimates that its plannedproduction growth rate for that period would decline from 4.5% toapproximately 3.6%. This sensitivity analysis relates to theexisting Eni portfolio and might vary in the future.

In the next four years, Eni expects its core natural gasbusiness in Italy to face increasing competitive pressure as aresult of: (i) new supplies coming on line in connection withongoing upgrading projects of import infrastructures that arecurrently being executed by Eni and third parties. Specifically,the Company expects additional import capacity to amount up to 18BCM which will start supplying the Italian market by end of 2008;(ii) the entrance of new competitors in the Italian natural gasmarket, particularly gas producers; and (iii) the need on thepart of Eni to comply with the mandatory ceilings provided for byItalian regulation by selling natural gas volumes available undertake-or-pay purchase contracts to certain Italian natural gasimporters who resell those volumes on the Italian natural gasmarket (see "Item 4 – Regulation of the Italian NaturalGas Market" and "Item 3 – Risk Factors"). Asa result of this competitive pressure, management expectsEni’s sales volumes in Italy to decline from the 56 BCMlevel achieved in 2007 to approximately 50 BCM in 2011 and risingpressure on selling margins.

However, management intends to implement actions to counteractrising competitive pressure on the Italian market. Specifically,management plans to preserve profitability of the Company’sgas operations in Italy leveraging on the expected growth of gasdemand and implementing marketing initiatives designed: (i) tofocus on the most profitable customer segments; (ii) to upgradethe commercial offer by tailoring pricing and services tocustomers’ specific needs; (iii) to develop the combinedoffer of gas and electricity (the dual offer); and (iv) tosignificantly reduce marketing and general and administrativecosts.

In the medium term, Eni plans to increase worldwide salestargeting a volume of 110 BCM by 2011, leveraging on expectedgrowth in international sales that are expected to achieve anaverage annual rate of increase of 9%, particularly in Europe andthe U.S.. This planned growth will make for reduced growthexpectations on the Italian natural gas market.

For a discussion of certain risks relating to the impact ofthe evolution of Italian regulation of the natural gas sector onEni’s take-or-pay contracts see "Item 3 – RiskFactors – Liberalization of the Italian Natural GasMarket".

In 2008 management expects the Group effective tax-rate toincrease from the 46% level recorded in 2007 to approximately50%. This expected increase in the Group effective tax-rate willbe driven principally by an expected increase in the Exploration& Production share of the Group profit before income taxes,that will be partially offset by a reduction in the statutory taxrate for Italian subsidiaries (down from 37.25% in 2007 to 31.4%by 2008). The rate of taxes applicable to the Company’s oiland gas operations is significantly higher than the average Grouptax rate.

The expectations described above are subject to risks,uncertainties and assumptions associated with the oil and gasindustry, and economic, monetary and political developments inItaly and globally that are difficult to predict. There are anumber of factors that could cause actual results anddevelopments to differ materially, including, but not limited to,crude oil and natural gas prices; demand for oil and gas in Italyand other markets; developments in electricity generation; pricefluctuations; drilling and production results; refining marginsand marketing margins; currency exchange rates; general economicconditions; political and economic policies and climates incountries and regions where Eni operates; regulatorydevelopments; the risk of doing business in developing countries;governmental approvals; global political events and actions,including war, terrorism and sanctions; project delays; materialdifferences from reserves estimates; inability to find anddevelop reserves; technological development; technicaldifficulties; market competition; the actions of field partners,including the inability of joint venture partners to fund theirshare of operating or developments activities; industrial actionsby workers; environmental risks, including adverse weather andnatural disasters; and other changes to business conditions.

 

> 
***Off-Balance Sheet Arrangements***

Eni has entered into certain off-balance sheet arrangements,including guarantees, commitments and risks, as described in Note28 to the Consolidated Financial Statements. Eni’s principalfinancial obligations, including commitments under take-or-pay orship-or-pay clauses, are described under "ContractualObligations" below. See the Glossary for a definition oftake-or-pay or ship-or-pay clauses.

Off-balance sheet arrangements comprise those arrangementsthat may potentially impact Eni’s liquidity, capitalresources and results of operations, even though sucharrangements are not recorded as liabilities under generallyaccepted accounting principles. Although off-balance sheetarrangements serve a variety of Eni’s business purposes, Eniis not dependent on these arrangements to maintain its liquidityand capital resources; nor is 

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management aware of any circumstances that are reasonablylikely to cause the off-balance sheet arrangements to have amaterial adverse effect on the company’s financialcondition, results of operations, liquidity or capital resources.

Eni has provided various forms of guarantees on behalf ofunconsolidated subsidiaries and affiliated companies, mainlyrelating to guarantees for loans, lines of credit and performanceunder contracts. In addition, Eni has provided guarantees on thebehalf of consolidated companies, primarily relating toperformance under contracts. These arrangements are described inNote 28 to the Consolidated Financial Statements.

 

> 
***Contractual Obligations***

The following table summarizes the Company’s principalcontractual obligations existing as of December 31, 2007. Moreinformation on these items is provided in "Item 18 –Financial Statements – Notes 16, 21, 22, 28 and 30".Amounts in the table refer to expected payments by period undercontractual obligations commitments. 

|   | **Total** |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **2012** |   | **2013 and thereafter** |
|--------|-----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-------------------------|
|   |           |   |          |   |          |   |          |   |          |   |          |   |                         |

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

| **Total debt**                                                                                                         |   | **19,830**  |   | **8,500**  |   | **1,050**  |   | **1,356**  |   | **318**    |   | **4,149**  |   | **4,457**   |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|-------------|
|      Long-term        debt                                                                    |   | 12,067      |   | 737        |   | 1,050      |   | 1,356      |   | 318        |   | 4,149      |   | 4,457       |
|      Short-term debt                                                                          |   | 7,763       |   | 7,763      |   |       |   |       |   |       |   |       |   |        |
| **Interest        payments on debt**                                                                                   |   | **3,318**   |   | **605**    |   | **556**    |   | **528**    |   | **468**    |   | **365**    |   | **796**     |
| **Noncancelable operating lease obligations**(1)                                                                       |   | **2,931**   |   | **588**    |   | **470**    |   | **415**    |   | **290**    |   | **226**    |   | **942**     |
| **Asset        retirement obligations**(2)                                                                             |   | **9,071**   |   | **41**     |   | **42**     |   | **116**    |   | **146**    |   | **150**    |   | **8,576**   |
| **Environmental liabilities**                                                                                          |   | **2,211**   |   | **558**    |   | **471**    |   | **319**    |   | **132**    |   | **177**    |   | **554**     |
| **Purchase        obligations**(3)                                                                                     |   | **220,382** |   | **16,617** |   | **13,990** |   | **12,599** |   | **11,393** |   | **11,040** |   | **154,743** |
|      Natural gas to be        purchased in connection with take-or-pay contracts (4)          |   | 209,704     |   | 14,409     |   | 13,430     |   | 12,017     |   | 10,787     |   | 10,380     |   | 148,681     |
|      Natural        gas to be transported in connection with ship-or-pay        contracts (4) |   | 4,642       |   | 367        |   | 380        |   | 390        |   | 396        |   | 405        |   | 2,704       |
|      Crude oil and        products                                                            |   | 313         |   | 313        |   |       |   |       |   |       |   |       |   |        |
|      Other        take-or-pay and ship-or-pay obligations                                     |   | 1,878       |   | 133        |   | 136        |   | 133        |   | 136        |   | 135        |   | 1,205       |
|      Other purchase        obligations (5)                                                    |   | 3,845       |   | 1,395      |   | 44         |   | 59         |   | 74         |   | 120        |   | 2,153       |
| **Other        commitments**                                                                                           |   | **177**     |   | **13**     |   | **13**     |   | **13**     |   | **13**     |   | **13**     |   | **112**     |
|      *of which:*                                                                              |   |        |   |       |   |       |   |       |   |       |   |       |   |        |
|      *-        Memorandum of intent relating Val d’Agri*                                 |   | *177*       |   | *13*       |   | *13*       |   | *13*       |   | *13*       |   | *13*       |   | *112*       |
| **TOTAL**                                                                                                              |   | **257,920** |   | **26,922** |   | **16,592** |   | **15,346** |   | **12,760** |   | **16,120** |   | **170,180** |

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

----

| (1) |   | Minimum        commitments for operating leases, shown on an        undiscounted basis, regard mainly time charter and        long-term rentals, drilling and storage equipment and        vessels, lands, service stations and office buildings.        Such leases do not include renewal options. There are no        significant restrictions following operating leases        imposed to Eni for dividend distribution, availability of        assets and possibility to contract additional debt.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The present        value of upstream asset retirement obligations, primarily        asset removal costs at the completion date, shown on an        undiscounted basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (3) |   | Represents        any agreement to purchase goods or services that is        enforceable and legally binding and that specifies all        significant terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4) |   | These        contracts include noncancelable, long-term contractual        obligations to secure access to supply and transport of        natural gas, shown on an undiscounted basis. Future        obligations in connection with these contracts were        calculated by applying the forecasted prices of energy or        services included in the long-term and medium-term market        scenarios used by Eni for planning purposes to minimum        take and minimum ship quantities. See "Item 4 –        Gas & Power – Natural Gas Purchases" and        "Item 3 – Risk Factors – Liberalization of        the Italian Natural Gas Market" for a discussion of        the nature and importance of Eni's take-or-pay contracts        and the related risks from the evolving regulatory        environment that could negatively impact Eni’s        results. |
| (5) |   | Mainly refers        to arrangements to purchase capacity entitlements at        certain re-gasification facilities in the U.S..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

The table below summarizes Eni’s capital expenditurecommitments for property, plant and equipment and capitalprojects at December 31, 2007. Capital expenditures areconsidered to be committed when the project has received theappropriate level of internal management approval. Such costs areincluded in the amounts shown.

|   | **Total** |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **2012 and thereafter** |
|--------|-----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-------------------------|
|   |           |   |          |   |          |   |          |   |          |   |                         |

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

| **Capital expenditure commitments**                              |       |   |      |   |      |   |      |   |      |   |       |
|------------------------------------------------------------------|------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|------------|
|      Committed        on major projects | 21,024     |   | 4,127     |   | 4,233     |   | 3,861     |   | 3,660     |   | 5,143      |
|      Other committed        projects    | 19,907     |   | 5,291     |   | 3,872     |   | 2,210     |   | 1,114     |   | 7,420      |
|                                                             |            |   |           |   |           |   |           |   |           |   |            |
| **TOTAL**                                                        | **40,931** |   | **9,418** |   | **8,105** |   | **6,071** |   | **4,774** |   | **12,563** |
|                                                             |            |   |           |   |           |   |           |   |           |   |            |

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> 
***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 in the market place as to be unable to meetshort-term finance requirements and settle obligations causingmaterial financial losses in the case the Group is required toincur additional expenses to meet its obligations or under theworst of conditions a default. Eni manages liquidity risk bytargeting an optimal ratio between equity and total debtconsistent with management plans and business objectivesincluding prescribed limits in terms of maximum indebtedness rateand of minimum debt ratio between medium/long-term debt and totaldebt as well as between fixed-rate debt and totalmedium/long-term debt. This enables Eni to maintain anappropriate level of liquidity and financial capacity so as tominimize borrowing expenses and to achieve an optimal profile ofcomposition and duration of indebtedness. The Group has access toa wide range of funding at competitive rates through the capitalmarkets and banks and coordinates relationships with bankscentrally. At present, the Group believes it has access tosufficient funding and has also both committed and uncommittedborrowing facilities to meet currently foreseeable borrowingrequirements.

Effective management of liquidity risk has the objective ofensuring both availability of adequate funding to meet short-termrequirements and due obligations, and a sufficient level offlexibility in order to fund the development plans of the Groupbusinesses, maintaining an adequate finance structure in terms ofdebt composition and maturity. This implies the adoption of astrategy for pursuing an adequate structure of borrowingfacilities (particularly availability of committed borrowingsfacilities) and the maintenance of cash reserves.

 

> 
***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 lossesthat would be recognized if counterparties failed to perform orfailed to pay amounts due. The maximum exposure to credit risk isgiven by the carrying amount of financial assets. The credit riskarising from the Group’s normal commercial operations iscontrolled by each operating unit within Group-approvedprocedures for evaluating the reliability and solvency of eachcounterparty, including receivable collection and the managing ofcommercial litigation. The monitoring activity of credit riskexposure is performed at the Group level according to setguidelines and measurement techniques to quantify and monitorcounterparty risk. In particular, credit risk exposure to largeclients and multi business clients is monitored at the Grouplevel on the basis of score cards quantifying risk levels. Enihas established guidelines prior to entering into cash managementand derivative contracts to assess the counterparty’sfinancial soundness and its rating. Eni has never experiencedmaterial non-performance by any counterparty. As of December 31,2006 and 2007, Eni has no significant exposure to concentrationsof credit risk.

 

> 
***Market Risk***

In the normal course of its operations, Eni is exposed tomarket risks deriving from fluctuations in commodity prices andchanges in the euro vs. other currencies exchange rates,particularly the U.S. dollar, and in interest rates. For anin-depth analysis of market risks exposure and policies used byEni to manage its exposure to market risk see "Item 11– Qualitative and Quantitative Disclosures About MarketRisk".

 

> 
***Research and Development***

For a description of Eni’s research and developmentoperations in 2007, see "Item 4 – Research andDevelopment".

 

 

**Item 6. DIRECTORS, SENIOR MANAGEMENT ANDEMPLOYEES**

**Directors and Senior Management**

Eni’s Board of Directors was appointed by the OrdinaryShareholders’ Meeting held on May 27, 2005 for a three yearperiod. In accordance with Article 17 of Eni’s By-laws, theBoard of Directors is made up of 3 to 9 members. The OrdinaryShareholders’ Meeting determines the number within saidlimits. The table below sets forth the names of the nine membersof the Board of Directors appointed on that occasion, theirpositions, the year when each was initially appointed as aDirector and their ages. The Shareholders’ Meeting scheduledon June 9 and 10, 

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2008, on first and second call, respectively,will appoint a new Board. On April 29, 2008, the OrdinaryShareholders’ Meeting approved the parent company’sfinancial statements for fiscal year 2007 and the relevantdividend proposal (see "Item 5 – ExecutiveSummary"). It also authorized a share repurchase program(see "Item 16E – Purchases of Equity Securities by theIssuer and Affiliated Purchasers"). 

| **Name**           |   | **Position** |   | **Year first appointed to Board of Directors** |   | **Age** |
|--------------------|--------|--------------|--------|------------------------------------------------|--------|---------|
|                    |   |              |   |                                                |   |         |
| Roberto Poli       |   | Chairman     |   | 2002                                           |   | 70      |
| Paolo Scaroni      |   | CEO          |   | 2005                                           |   | 62      |
| Alberto Clô   |   | Director     |   | 1999                                           |   | 61      |
| Renzo Costi        |   | Director     |   | 1996                                           |   | 71      |
| Dario Fruscio (1)  |   | Director     |   | 2002                                           |   | 71      |
| Marco Pinto        |   | Director     |   | 2005                                           |   | 46      |
| Marco Reboa        |   | Director     |   | 2005                                           |   | 53      |
| Mario Resca        |   | Director     |   | 2002                                           |   | 63      |
| Pierluigi Scibetta |   | Director     |   | 2005                                           |   | 47      |

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

----

| (1) |   | Dario Fruscio        resigned from the Board of Directors on January 30, 2008.        The Board decided not to appoint a new director, due to        the upcoming 3 year review of the Board in charge. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

While it remains a significant shareholder, the Ministry ofEconomy and Finance intends to continue to participate in thenomination and election of Eni’s Board of Directors in orderto protect its investment as a shareholder. According to Italianlaw, the Corte dei conti (Court of Accountants) has the right andduty to exercise a role as financial controller of Eni’soperations in order to protect the interest of the State as ashareholder. In order for the Court of Accountants to exercisesuch control, a representative of the Court of Accountantsattends the meetings of the Board of Directors and the Board ofStatutory Auditors of Eni without the right to vote and Eni hasthe obligation to send to the Court of Accountants its financialstatements together with the reports of the Board of Directors,the Board of Statutory Auditors and its external auditors. Therepresentative of the Court of Accountants who attends themeetings of the Board of Directors and Board of StatutoryAuditors of Eni is Lucio Todaro Marescotti (alternate AngeloAntonio Parente).

On the basis of Italian laws regulating the special powers ofthe State, the Minister of Economy and Finance in agreement withthe Minister of Economic Development may appoint another memberof the Board of Directors, with no voting rights (see "Item10 – Limitations on Voting and Shareholdings"). On theoccasion of the last Board appointment, the Minister for Economyand Finance opted to not exercise that power.

The table below sets forth the composition of Eni’ssenior management, including the CEO who is also General Managerof the parent company Eni SpA, the General Managers of Eni’sthree divisions, and those senior managers who attended on apermanent basis the meetings of Eni’s Executive Committee.This table indicates their positions within Eni, the year theywere appointed to such positions, their total years of service atEni and their ages. General Managers are appointed by the Boardof Directors, upon proposal of the CEO in agreement with theChairman. The other members of Eni’s senior management areappointed by the CEO of Eni and may be removed without cause.

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| **Name** |   | **Management        position** |   | **Year first appointed         to current position** |   | **Total number        of year of service at Eni** |   | **Age** |
|----------|--------|--------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------------|--------|---------|
|          |   |                                |   |                                                      |   |                                                   |   |         |

| Paolo Scaroni     |   | CEO and General Manager        of Eni                                                     |   | 2005   |   | 3      |   | 62     |
|-------------------|--------|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|              |   |                                                                                      |   |   |   |   |   |   |
| Stefano Cao       |   | General Manager of the        Exploration & Production Division                       |   | 2000   |   | 32     |   | 57     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Domenico Dispenza |   | General Manager of the        Gas & Power Division                                    |   | 2005   |   | 34     |   | 62     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Angelo Caridi     |   | General Manager of the        Refining & Marketing Division (*)                       |   | 2007   |   | 38     |   | 61     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Marco Mangiagalli |   | Chief Financial Officer                                                                   |   | 2006   |   | 29     |   | 58     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Massimo Mantovani |   | The Group Senior Vice        President for Legal Affairs                                  |   | 2006   |   | 15     |   | 45     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Stefano Lucchini  |   | The Group Senior Vice        President         for Public Affairs and Communication       |   | 2005   |   | 3      |   | 46     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Leonardo Maugeri  |   | The Group Senior Vice        President         for Strategies and International Relations |   | 2000   |   | 13     |   | 43     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Salvatore Sardo   |   | The Group Senior Vice        President        for Human Resources & Business Services |   | 2005   |   | 3      |   | 56     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Roberto Ulissi    |   | The Group Senior Vice        President        for Corporate Affairs and Governance        |   | 2006   |   | 2      |   | 46     |
|              |   |                                                                                      |   |   |   |   |   |   |
| Raffaella Leone   |   | Executive Assistant to        the Chief Executive Officer                                 |   | 2005   |   | 3      |   | 46     |

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

----

| (*) |   | Appointed by        the Board of Directors on August 3, 2007. |
|-----|--------|---------------------------------------------------------------|

The biographies of Eni’s directors and senior managersare set out below.

Roberto Poli was appointed Chairman of Eni SpA in May 2002. Heis currently President of Poli e Associati SpA, a consulting firmfor corporate finance, mergers, acquisitions and reorganizations.From 1966 to 1998 he was Professor of Business Finance at theUniversità Cattolica of Milan. He is a partner of a leading firmfor corporate finance and legal affairs. He is director inimportant companies such as Fininvest SpA, Mondadori SpA, MerloniTermosanitari SpA, Coesia SpA, Maire Technimont SpA and PerenniusCapital Partners SGR SpA. He has been an advisor forextraordinary finance operations for some of the most importantcompanies in Italy. He has also been Chairman of Rizzoli-Corrieredella Sera SpA and Publitalia SpA.

Paolo Scaroni was appointed CEO of Eni SpA in June 2005. Heobtained an economics degree from Milan’s Bocconi Universityin 1969 and an MBA from Columbia Business School in 1973. For ayear following business school, he was an associate at McKinsey& Co. From 1973 until 1985, he held a series of positionswith Saint Gobain, culminating with his appointment as Presidentof the Saint Gobain flat glass division. In 1985, Paolo Scaronibecame CEO of Techint. During his time at Techint, he was alsoVice President of Falck and executive Vice President of SIV, ajoint venture between Techint and Pilkington plc. He joinedPilkington in 1996 and was group CEO until May 2002. From May2002 to May 2005 he was CEO of Enel, Italy’s leadingelectricity utility. Paolo Scaroni is a member of the Board ofAssicurazioni Generali SpA, of LSEG plc (London Stock ExchangeGroup), of Veolia Environment (Paris), of the Board of Overseersof Columbia Business School (New York) and of the Board ofFondazione Teatro alla Scala. He was Chairman of Alliance Unichemplc (UK) from 2005 to July 2006. In November 2007 he was made amember of the prestigious Légion d’honneur of France.

Alberto Clô graduated in Political Science. He is AssociateProfessor of Industrial Economics at the University of Bolognaand was Minister of Industry and Minister of Foreign Trade adinterim in 1995 and 1996. During the Italian presidency of theEuropean Union he was chairman of the Council of Ministers ofIndustry and Energy of the European Union. In 1996 he was awardedthe title of Cavaliere di Gran Croce al Merito of the Republic ofItaly. Until December 31, 2007 he was director of ASM BresciaSpA. Currently he is non-executive director of Atlantia SpA,Italcementi SpA and De Longhi SpA. He has been an independentdirector of Eni SpA since May 1999.

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Renzo Costi is a lawyer and served as a magistrate from 1964to 1968. He is currently Professor of Company Law at theUniversity of Bologna. He was founder, and is currentlyco-editor, of the magazines "GiurisprudenzaCommerciale", "Banca Impresa e Società" and"Banca, Borsa e titoli di credito". He is a member ofthe Board of Directors of Editrice Il Mulino SpA. He has been anindependent director of Eni SpA since May 1996.

Dario Fruscio is a chartered accountant, public auditor andconsultant; he is Professor of Economics and Management at theUniversity of Pavia and has taught at the Accademia Nazionaledella Guardia di Finanza of Bergamo. He has been Chairman ofItalia Turismo SpA since May 2004. He has been an independentdirector of Eni SpA since 2002. On January 30, 2008, he resignedfrom Eni’s Board of Directors.

Marco Pinto has a degree in law from the University LaSapienza, Rome. He is a magistrate and public notary. As amagistrate he has held various positions as a civil andadministrative judge. Since December 2004 he has been Professorof the Higher School of Economics and Finance. In 1994 he heldthe position of Legal Counsel and Head of Legislative Departmentof the Ministry of Foreign Trade and the Ministry of Economicsand Finance. From December 2004 to April 2005 he was head of thestaff of the Vice President of the Council of Ministers. SinceJune 2005 he has been Deputy Head of the staff of the Minister ofEconomics and Finance. He has been a non-executive director ofEni SpA since May 2005.

Marco Reboa has a degree in Business Administration from theBocconi University, Milan. He is a chartered accountant andpublic auditor. He is Professor of law at the Libero IstitutoUniversitario Carlo Cattaneo in Castellanza and author of essayson corporate governance, economic and legal issues. He is theeditor of "Rivista dei Dottori Commercialisti" and is aprofessional advisor in Milan. He is a member of the Board ofDirectors of Seat PG SpA, Interpump Group SpA, IMMSI SpA andIntesa Private Banking SpA. He is Chairman of the Board ofStatutory Auditors of Luxottica Group SpA. He has been anindependent director of Eni SpA since May 2005.

Mario Resca has a degree in economics from the BocconiUniversity, Milan. He is Chairman of Italia Zuccheri SpA(formerly Eridania SpA), Casinò di Campione SpA and Confimprese.He is Director of Mondadori SpA, ARFIN SpA (insurances) andFinance Leasing SpA. He is Vice Chairman and venture partner ofMcDonald’s Development Italia, Inc. As a graduate he workedfor the Chase Manhattan Bank. In 1974 he was appointed directorof Biondi Finanziaria (Fiat Group) and from 1976 to 1991 he waspartner of Egon Zehnder. In this period the was appointeddirector of Lancôme Italia and of companies belonging to theRizzoli-Corriere della Sera Group and Versace Group. He isChairman of the American Chamber of Commerce. He also served asChairman of Sambonet SpA, Kenwood Italia SpA and was a foundingpartner of Eric Salmon & Partners. He has been an independentdirector of Eni SpA since 2002.

Pierluigi Scibetta is a graduate in economics from theUniversity La Sapienza, Rome. He is a chartered accountant andauditor and has been appointed director and auditor of a numberof public bodies and companies. In 2003 he was appointed directorof the Istituto Superiore per la Previdenza e la Sicurezza sulLavoro - ISPESL (the State Agency for Employee Safety) and ofGestore del Mercato Elettrico SpA. He is a professor ofEnvironmental Economics at the University of Perugia. He has beenan independent director of Eni SpA since May 2005.

Stefano Cao graduated in Mechanical Engineering. He joined theEni Group in 1976 as a technical engineer active mainly inoffshore construction. He then became general manager, managingdirector and chairman of Saipem SpA, and is at present GeneralManager of Eni’s Exploration & Production Division. In2007, he has been appointed independent director of Telecom SpA.

Domenico Dispenza graduated in Aeronautical Sciences andobtained a Master’s Degree in Advanced Technologies. Hejoined Snam’s study department in 1974. He served in variousmanaging positions in Eni Group companies engaged in natural gasactivities. In 2004 he was elected Chairman of Snam Rete Gas SpAand in 2006 he was appointed General Manager of Eni’s Gas& Power Division.

Angelo Caridi graduated in civil engineering. He joinedSnamprogetti in 1970. He served in various managing positionswithin Eni’s Group companies. In 2002 he was appointedManaging Director of Snamprogetti. In August 2007 he wasappointed General Manager of Eni’s Refining & MarketingDivision. He is non-executive director of Saipem SpA.

Marco Mangiagalli worked for the Barclays Group and otherItalian merchant banks before joining the Eni Group in 1979. Heis a member of the Board of Directors of various Eni companies.He is responsible for Eni’s administration, financialreporting and accounting, planning and control, and treasuryoperations.

Massimo Mantovani is an attorney at law and worked as a legalcounsel for international activities before joining Snam’slegal office in 1993. He was responsible for legal affairs atEni’s Gas & Power Division until he was appointedEni’s Senior Vice President for legal affairs in 2005.

Stefano Lucchini graduated in economics and joined the studydepartment of Montedison. After a period in the United States,where he was assistant to the Chairman of the Energy and CommerceCommission of the U.S. 

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Congress, he was head of communications at Montedison USA. In1993 he returned to Italy and was head of the investor relationsdepartment for the Ferruzzi and Montedison Group. He was thenDirector for external relations at Enel and later atConfindustria and Banca Intesa. He joined Eni as Senior VicePresident for public affairs and communication in 2005. He isalso a professor at the School for Journalism of the UniversitàCattolica in Milan.

Leonardo Maugeri, after extensive academic experience acquiredin Italy and abroad, joined the Eni Group in 1994, holdingvarious positions mainly as counsel for strategic decisions. Heis a member of the executive council of Censis and of theCommission on international relations at Confindustria.

Salvatore Sardo graduated in economics and started his careeras an auditor for Coopers & Lybrand. He later joined TelecomItalia where, after the privatization of the company, he wasresponsible for administration and control. He was Chairman ofPagine Gialle from 1998 to 2001 and returned to Telecom Italia asmanager of the Group’s real estate and general services.From 2003 he was procurement and security manager at Enel until2005 when he joined Eni to become Senior Vice President for HumanResources & Business Services.

Roberto Ulissi is an attorney at law. After some years at theBanca d’Italia as a in-house legal counsel he becameDirector General of the Ministry of Economy and Finance, head ofthe legal affairs, banking and financial markets department. Hewas Director of State-owned companies, such as Telecom Italia,Ferrovie dello Stato, Alitalia, Fincantieri, and Governmentrepresentative in the Bank of Italy’s governing council. Hewas member of several national and European committees as arepresentative of the Italian Ministry of Economy. He wascontract Professor of banking law in Italian Universitiesdepartment. He was appointed Senior Vice President for corporateaffairs and governance of Eni on May 2006.

Raffaella Leone worked for Techint SpA, Pilkington Plc andEnel SpA before joining Eni in 2005. She is Vice President of EniFoundation and member of the Board of Fondazione Eni EnricoMattei, as well as member of the Board of other Eni companies.

 

 

**Board Practices**

Eni’s organizational structure follows the traditionalmodel of companies in which the Board of Directors is entrustedwith the fullest power to manage the company for the purpose ofimplementing the company’s purpose, thus representing thecentral element of Eni’s corporate governance system.

Monitoring functions are entrusted to the Board of StatutoryAuditors and accounting control is entrusted to external auditorsappointed by the Shareholders’ Meeting.

According to Article 25 of Eni’s By-laws, the Chairmanand the CEO represent the company. The Board of Directorsestablished committees with consulting and proposing functions.The Board of Directors also appointed three General Managersresponsible for the three operational divisions of Eni SpA.

> 
*Duties and Responsibilities*

A review of the Board’s duties and responsibilities isrepresented below. The following duties and responsibilities arein addition to those that cannot be delegated under applicablelaws.

| 1. |   | Establishes the Company and        Group Corporate Governance system and rules. In        particular, after consulting the Internal Control        Committee, the Board approves the rules that ensure the        substantial and procedural transparency and correctness        of the transactions carried out with related parties and        those in which a director holds an interest, on his        behalf or on behalf of third parties. The Board adopts a        procedure for the management and disclosure to third        parties of documents and information concerning the        Company, having special regard to price sensitive        information. |
|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2. |   | Establishes among its        members one or more committees with proposing and        consulting functions, appoints their members, establishes        their responsibilities, determines their compensation and        approves their regulations.                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3. |   | Appoints and revokes the        powers of the Chief Executive Officer and the Chairman;        establishes the terms, limits and operating methods of        the exercise of such powers and determines the        compensation related to the powers, on the basis of        proposals from the Compensation Committee and after        consulting the Board of Statutory Auditors. The Board may        issue instructions to the Chief Executive Officer and the        Chairman and reserves to itself any operations that        pertain to its powers.                                                                                                             |
| 4. |   | Establishes the guidelines        of the organizational, administrative and accounting        structure of the parent company, of the most important        subsidiaries and of the Group; evaluates the adequacy of        the organizational, administrative and accounting        structure set up by the Chief Executive Officer in        particular with regard to the management of conflicts of        interest.                                                                                                                                                                                                                                                 |
| 5. |   | Establishes, in particular,        based on the recommendations of the Internal Control        Committee, the guidelines of the internal control system,        in order to ensure the identification, measurement,        management and                                                                                                                                                                                                                                                                                                                                                                                                                                |

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|   |   | monitoring of the main risks        faced by the Company and its subsidiaries. Evaluates the        adequacy, effectiveness and effective functioning of the        internal control system managed by the Chief Executive        Officer on an annual basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.     |   | Establishes, based on the        recommendation of the Chief Executive Officer, Company        and Group strategies and objectives, including        Sustainability policies. Examines and approves the        Company’s and Group’s strategic, operational        and financial plans and the strategic agreements to be        signed by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 7.     |   | Examines and approves annual        budgets for Eni’s Divisions and the Company, as well        as the Group’s consolidated budget.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 8.     |   | Evaluates and approves        interim quarterly and half-yearly reports, as per current        regulations. Evaluates and approves the sustainability        report, submitted also to the Shareholders’ Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 9.     |   | Receives from Board members        with powers, at every Board meeting or at least every two        months, reports informing the Board of activities carried        out in exercising the powers attributed as well as        updates on activities carried out by the Group and on        atypical or unusual transactions or transactions with        related parties that were not previously submitted to the        evaluation and approval of the Board.                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.    |   | Receives half-year updates        on the Board Committees’ activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 11.    |   | Evaluates the general        performance of the Company and the Group, on the basis of        information received from Board members with powers, with        particular attention to situations of conflicts of        interest and compares results achieved – as        contained in the annual report and interim financial        statements, as per current regulations – with the        budget.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 12.    |   | Evaluates and approves any        transaction executed by the Company and its subsidiaries        that have a significant impact on the company’s        results of operations and liquidity. Particular attention        is paid to situations in which Board members hold an        interest on their own behalf or on behalf of third        parties, and to related parties transactions. The Board        ensures the principle of operational autonomy with        specific regard to the listed companies of the Eni Group.        It also ensures the confidentiality of trade relations        between said subsidiaries and Eni or third parties for        the protection of the subsidiaries’ interests.        Transactions with a significant impact on the        company’s results of operations and liquidity        include the following: |

|   |   | a) |   | acquisition and disposal of        shareholdings, investments, businesses and individual        properties, contributions in kind, mergers and de-mergers        exceeding euro 50 million, notwithstanding Article 23.2        of the By-laws; |
|--------|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | b) |   | investments in fixed assets        exceeding euro 200 million, or less if of particular        strategic importance or particularly risky;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | c) |   | any exploration initiatives        and portfolio operations in the E&P sector in new        areas;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   | d) |   | sale and purchase contracts        relating to goods and services other than investments,        for an amount exceeding euro 1 billion or a duration        exceeding twenty years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   | e) |   | financing to entities other        than subsidiaries: (i) for amounts exceeding euro 50        million or, (ii) in any case, if the amount is not        proportionate to the interest held; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   | f) |   | issuing by the Company of        personal and real guarantees to entities other than        subsidiaries: (i) for amounts exceeding euro 200 million,        if in the interest of the Company or of Eni subsidiaries,        or (ii) in any case, if the guarantees are issued in the        interest of non-controlled companies and the amount is        not proportionate to the interest held. In order to issue        the guarantees indicated in section (i) of letter f), if        the amount is between euro 100 million and euro 200        million, the Board confers powers to the Chief Executive        Officer and the Chairman, to be exercised jointly in case        of urgency. |

| 13. |   | Appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, the General Managers of        Divisions and attributes powers to them.                                                                                                                                                                                                                                                                                                   |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 14. |   | Appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, and with the approval of the        Board of Statutory Auditors, the Manager charged with        preparing the Company’s financial reports as per        Legislative Decree No. 58/1998 delegating to him adequate        powers and resources.                                                                                                                      |
| 15. |   | Appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, after consulting the        Internal Control Committee, the person in charge of        internal control and determines his/her compensation in        line with the Company’s remuneration policies.                                                                                                                                                                 |
| 16. |   | Ensures a person is        identified as responsible for handling the relationships        with the Shareholders.                                                                                                                                                                                                                                                                                                                                                                                  |
| 17. |   | Establishes, on the basis of        the proposals received from the Compensation Committee,        the criteria for top management compensation and        implements the stock incentive plans approved by the        Shareholders’ Meeting.                                                                                                                                                                                                                                                 |
| 18. |   | Examines and decides on        proposals submitted by the Chief Executive Officer with        respect to voting powers and to the appointment of        members of the management and control bodies of the most        important controlled subsidiaries. With specific regard        to the shareholders’ meetings of listed companies of        the Eni Group, the Board ensures the observance of the        Corporate Governance Rules regarding the        shareholders’ meetings. |
| 19. |   | Prepares the proposals to be        submitted to the Shareholders’ Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 20. |   | Examines and resolves on        other matters that the Chief Executive Officer deems        appropriate to submit to the Board because of their        importance and sensitivity.                                                                                                                                                                                                                                                                                                                 |

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On July 4, 2007 the Board of Directors determined the criteriaunder which the Board of Directors approves for a second timecertain projects the terms and conditions of which havesignificantly changed with respect to the first approval.

Pursuant to Article 23.2 of the By-laws, the Board resolveson: mergers by incorporation and proportional demergers of atleast 90% directly owned subsidiaries; establishment and windingup of branches; amendments to the By-laws in order to comply withapplicable legislation.

In accordance with Article 27 of Eni’s By-laws, theChairman chairs Shareholders’ Meeting and oversees theimplementation of decisions made by it.

> 
*Appointment*

See "Item 10 – Limitations on Voting andShareholdings – Minority protection provisions".

> 
*Directors’ independence, honorability and    obligations*

Legislative Decree No. 58 of February 24, 1998 (TUF), asamended by Legislative Decree No. 303 of December 29, 2006 statesthat at least one member, or two members if the Board is composedby more than seven members must possess the independencerequirements provided for Statutory Auditors of listed companies.

Article 17.3 of Eni’s By-laws states that at least onemember, if the Board is made up by up to five members, or threeBoard members, in case the Board is made up by more than fivemembers, shall have the independence requirement. This ruleactually increases the number of independent directors inEni’s Board, as compared to what is required by the law. Inaddition Eni’s By-laws provides for a substitution mechanismthat guarantees in any case the presence of the minimum number ofindependent directors in the Board.

Eni’s Code contemplates further independencerequirements, in line with those provided by the Borsa ItalianaCode. The TUF, as implemented by Article 17.3 of Eni’sBy-laws, requires that the persons acting as directors andmanagers of listed companies possess the honorabilityrequirements prescribed for a member of control entities oflisted companies. Directors must comply with additional specificrequirements.

In accordance with Article 17.3 of Eni’s By-laws, theBoard periodically evaluates independence and honorability ofdirectors and the absence of reasons for ineligibility andincompatibility. Eni Code also provides for the Board ofStatutory Auditors to verify the proper application of criteriaand procedures adopted by the Board to evaluate the independenceof its members.

In accordance with Article 17.3 of Eni’s By-laws, shouldthe independence and honorability requirements be impaired orcease or the minimum number of independent directors decreasebelow the threshold set by Eni’s By-laws, the Board mustdeclare the termination of office of the member lacking saidrequirements and provides for his substitution. Board members areexpected to inform the company if they lose their independenceand honorability requirements or any reasons for ineligibility orincompatibility that might arise.

On February 15, 2008, Eni’s Board of Directors, inaccordance with the provisions of Eni’s By-laws and Code,determined that five out of its eight members are independent,specifically: non-executive directors Alberto Clô, Renzo Costi,Marco Reboa, Mario Resca and Pierluigi Scibetta.

Renzo Costi was confirmed to be independent notwithstandinghis permanence as board member for a period longer than nineyears, due to the fact that he has been nominated by minorityshareholders (specifically institutional investors) and hasdemonstrated ethical and professional qualities and independencewhen expressing his opinion during this period.

The Board of Statutory Auditors verified the properapplication of criteria and procedures adopted by the Board toevaluate the independence of its members.

In the same meeting, based on the statements received, theBoard of Directors verified that all its members possess thehonorability requirements.

In its meeting of December 13, 2006, the Board of Directorsexpressed its opinion on the matter of the admissible number ofpositions held by directors in other companies, as required byEni’s Code, and following the resolution of the meeting heldon June 20, 2007:

| • |   | an executive director should        not hold: (i) the position of executive director in any        other Italian or foreign listed company, or in any        finance, banking or insurance company or any company with        a net equity exceeding euro 10 billion; and (ii) the        position of non executive director or statutory auditor        (or member of any other advisory committee) in more than        three of said companies; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | a non-executive director,        should not hold further positions than the one held in        Eni, as: (i) executive director in more than one of the        companies mentioned above and non-executive director or        statutory auditor (or member of any other control body)        in more than three of the mentioned companies, or as        (ii) non-executive director or statutory auditor in        more than six of the mentioned companies. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

All the positions held in Eni’s subsidiaries are excludedfor the purposes described above.

In case a director exceeds said limits in terms of positionsheld, he shall timely inform the Board, who shall judge thesituation taking into account the interest of the Company andcall upon the interested director to make a decision on thematter. In any case, before accepting the office of director orstatutory auditor (or member of any other control entity) of acompany not related to Eni, the executive director informs theBoard of Directors that evaluates its compatibility with hisoffice at Eni and the interests of Eni. This rule applies also tothe General Managers of Eni’s divisions.

Based on information available, in its meeting of February 15,2008, the Board of Directors verified that the number ofpositions held in other companies complies with these limits.

In accordance with the TUF and with Article 23.3 of Eni’sBy-laws, the Directors shall timely inform the Board of StatutoryAuditors on transactions in which they have an interest.

In accordance with Article 2391 of the Italian Civil Code,Directors inform other Directors and the Board of StatutoryAuditors of any interest they may have, directly or on behalf ofthird parties, in any transaction of Eni.

During each Board of Directors’ meeting, the Chairmanexpressly asks the Directors to declare any of their potentialinterest in transactions on the agenda.

The Eni Code, in accordance with the Borsa Italiana Code,foresees the adoption, by the Board of Directors, of measuresensuring that transactions in which a director has an interest,directly or on behalf of third parties, and all transactionscarried out with related parties, are performed in a transparentway and meet criteria of substantial and procedural fairness.

Preparation of a procedure regarding transactions with relatedparties is underway; however its finalization is stalling due tothe circumstance that Italian listed companies are awaiting theemission on part of Consob of certain guidelines as provided forby Article 2391-bis of the Civil Code. Pending the emission ofsuch guidelines, transactions with related parties are submittedto the Board of Directors, even though their amounts are lowerthan the materiality threshold set for the transactions to beapproved by the Board.

> 
*Functioning*

In its meeting of June 1, 2005, the Board of Directors definedthe rules for the calling of its meetings. In particular, theChairman convenes Board meetings, and, in agreement with the CEO,defines agenda items. Notice is sent to the Directors, StatutoryAuditors and the Magistrate of the Court of Accountants withinfive days of the meeting’s date, at least 24 hours inadvance in case of urgency. Eni’s By-laws allow meetings tobe held by video or teleconference.

Board members, Statutory Auditors and the Magistrate of theCourt of Accountant receive in advance adequate and thoroughinformation on all issues subject to Board evaluation andresolutions, except when confidentiality is deemed necessary.

During meetings, directors can meet managers of Eni and itssubsidiaries in order to obtain information on specific mattersof the agenda items.

In 2007, the Board of Directors met 25 times (of which 17ordinary meetings and 8 extraordinary meetings). The averageattendance rate to Board meetings was 91%, the attendance rate ofindependent non-executive Board members was 87%. The agendas forthese meetings included, among others, the followings issues:

| i)   |   | Group strategy and the        industrial plan for the four-year period 2007-2010;                                                                                                                      |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ii)  |   | 2007 budget;                                                                                                                                                                                           |
| iii) |   | review of quarterly accounts        for the first, second and third quarter of 2007, and of        preliminary full year results for 2006;                                                             |
| iv)  |   | approval of 2006        consolidated financial statements and 2007 semi-annual        consolidated accounts;                                                                                           |
| v)   |   | approval of an interim        dividend pertaining to fiscal year 2007 and of the        full-year dividend proposal for 2006 to be submitted to        the Annual Ordinary Shareholders’ Meeting; |
| vi)  |   | evaluation of the        independence of the Directors and evaluation of Board        practices; and                                                                                                   |
| vii) |   | approval of the most        significant transactions of the parent company and of        Group companies in the year.                                                                                  |

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> 
*Board self evaluation*

The Board of Directors performed its self assessment withrespect to size, composition and functioning for the second year,in accordance with Eni’s and Borsa Italiana Codes.

In accordance with Eni’s Code, the Board of Directors hasbeen supported by a specialized consulting firm, Egon Zehnder,the same company as in the preceding year, to guarantee not onlythe maximum objectivity of its assessment, but also continuityand homogeneity of analyses.

Egon Zehnder’s work was focused on:

| a) |   | the level of functioning and        efficiency of the Board;                                                                                        |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | identifying areas of        improvement or weakness in the functionality and efficacy        of the Board;                                          |
| c) |   | efficiency of improvement        actions decided after the previous board review and the        related level of satisfaction of Board members; and |
| d) |   | assessing Eni’s Board        efficiency by benchmarking it against national companies        of comparable size, complexity and scope.         |

Consultants performed an in-depth interview of each member andpresented the results to the Board of Directors, that discussedand confirmed them in its meeting of February 28, 2008. Thereview was substantially positive, even better than that of theprevious year.

As concerns the Board, whose size was considered adequate, themain items highlighted were: greater engagement of members; thesatisfying level of quantity and quality of information providedeven in the periods between meetings; the transparency inpresenting issues to the Board.

These factors and a proper and constructive climatecontributed to a more active participation and higher quality ofinterventions.

 

> 
***Board Committees***

The Board has instituted three committees with proposal andadvisory functions. Their composition, tasks and functioning aredefined by the Board of Directors in respect of the criteriaestablished by the Eni Code. They are: a) the InternalControl Committee, b) the Compensation Committee and c) theInternational Oil Committee. These Committees are composed almostexclusively of independent Directors.

The composition of the Board’s Committees is as follows:

*Internal Control Committee:* Marco Reboa (Chairman,independent), Alberto Clô (independent), Renzo Costi(independent) and Pierluigi Scibetta (independent). On June 7,2007 the number of directors in the Internal Control Committeedeclined from five to four due to the resignation of Marco Pinto,non executive director, in accordance with the provisions ofEni’s Code. All members of this committee are currentlyindependent and the chairman is a director elected by minorityshareholders.

*Compensation Committee:* Mario Resca (Chairman,independent), Renzo Costi (independent), Marco Pinto(non-executive) and Pierluigi Scibetta (independent).

*International Oil Committee:* Alberto Clô (Chairman,independent), Paolo Scaroni (CEO), Dario Fruscio (independent,until January 30, 2008) and Marco Reboa (independent).

The Code, in line with the Borsa Italiana Code, suggests thecreation of a "Nominating Committee". The Board ofDirectors has not formed this Committee due to the significantpresence of the Italian State in Eni’s shareholding (see"Item 7 – Major Shareholders").

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> 
*Internal Control Committee*

The Internal Control Committee is entrusted with advisory andconsulting tasks in respect of the Board in the area ofmonitoring general management issues. The Committee consists ofthree to four non-executive directors, the majority of whom mustmeet the independence requirements set out in the By-laws. Wheresuch members are included in the Board of Directors, at least twomembers of the Committee shall be adequately experienced inaccounting and financial matters as per the assessment made bythe Board of Directors at the time of their appointment.

The Committee shall:

| a) |   | assess, jointly with the        head of the office in charge of drawing up corporate        accounting documents and the external auditors, the        appropriate implementation of accounting principles and        their homogeneity with a view to drawing up the        consolidated financial statements;                                                                                                |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | upon the CEO’s request,        issue opinions on specific matters related to the        identification of the main business risks as well as to        planning, implementing, and managing the internal control        system;                                                                                                                                                                           |
| c) |   | evaluate the audit plan        prepared by the Internal Audit Manager and the activity        reports that the latter shall draw up at least quarterly;                                                                                                                                                                                                                                                        |
| d) |   | carry out such additional        tasks as are committed to it by the Board of Directors,        and in particular issue opinions on the rules relating to        substantive and procedural transparency and fairness of        the operations with related parties as well as of the        operations in which a director has a vested interest        whether on his own or on behalf of third parties;     |
| e) |   | report to the Board, at        least every six months, on the occasion of approving the        financial statement and the half year report, on its        activities and the adequacy of the internal control        system;                                                                                                                                                                                  |
| f) |   | issue an opinion on the        proposals to the Board for appointment and removal of the        Internal Audit Manager as put forward by the Chief        Executive Officer in agreement with the Chairman as well        as on the proposals concerning the Internal Audit        Manager’s salary in line with corporate policies;        and                                                           |
| g) |   | assess the findings from the        internal audit reports, the communications from the Board        of Statutory Auditors and the individual members thereof,        the reports and management letters by external auditors,        the annual report by the Guarantor for the Code of        Ethics, the reports of the Watch Structure, and the        enquiries and reviews carried out by third parties. |

Additionally, the Committee shall assist the Board ofDirectors with a view to:

| • |   | set out the main principles        for the internal control system so as to appropriately        identify and adequately evaluate, manage, and monitor the        main risks related to the Company and its subsidiaries,        by laying down the compatibility criteria between said        risks and sound corporate management; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | assess, at least annually,        the adequacy, effectiveness, and actual operations of the        internal control system.                                                                                                                                                                                                              |

In 2007, the Internal Control Committee convened 14 times,with an average attendance rate of 77%, and reviewed thefollowing items: (i) the 2006 activities report (operationalaudit, Watch Structure activity as required by Legislative DecreeNo. 231/2001, implementation of SOA activities and other nonrecurring activities) and the 2007 audit plan and its progress;(ii) the 2006 activities report and 2007 audit plan prepared bySaipem and Snam Rete Gas functions; (iii) outcomes of planned andunplanned Eni’s internal audit activities, as well asresults of monitoring activities on progresses made by operatingunits in implementing planned remedial actions in order toeliminate deficiencies highlighted by internal audit activities;(iv) outcomes from Eni’s internal auditing interventions asrequired by Eni’s control bodies; (v) the periodic reportsconcerning complaints collected; (vi) the Eni Internal Auditoperating handbook and the new procedure for evaluating auditingactivities (Risk Scoring Index); (vii) the new organizationstructure of Eni Internal Audit department; (viii) the proposalto entrust the Internal Audit Manager as manager delegated forinternal control; (ix) disclosures on certain inquiries conductedby both judicial and administrative authorities belonging toItaly and foreign states related to crimes which were allegedlycommitted by Eni or its subsidiaries and their managers; (x) theessential features of the 2006 financial statements, throughmeetings with top level representatives of administrativefunctions of main Eni subsidiaries, Chairmen of Boards ofStatutory auditors and responsible partners from independentaudit companies for each subsidiary; the draft 2007 half yearreport and the report on interim dividends; Eni’s policiesregarding risk management; (xi) change in the methodology forassessing the recoverability of the carrying amounts of tangibleand intangible assets; (xii) the report on the progress ofimplementation of SOA activities; (xiii) the essential featuresof Eni’s Annual Report on Form 20-F, updating on programsand controls to prevent and detect frauds and review ofinformation furnished by management in response to SEC commentletters; (xiv) the report on the administrative and accountingsetup of the parent company and the proposal to appoint the ChiefFinancial Officer as manager responsible for the preparation ofthe company’s financial report, in accordance with Italianlisting standards, the verification of the adequacy of his powersand means for the fulfillment of this task; (xv) therecommendations on the company’s internal control overfinancial reporting presented by Eni’s independent auditorsin coincidence with the auditing activity regarding 2005financial statements; (xvi) the report on the Internal ControlSystem, to be included in the Corporate Governance section of the2006 Annual Report; (xvii) reporting on the team work on thefulfillment as Article18-ter and 18-sexies of Consob RegulationNo. 11971; (xviii) the situation of appointments of externalauditors as per December 31, 2006 filed with Consob; (xix) thereport on audit reports for 2006 prepared by external auditors,their costs and the final report on the fees paid in 2006 toexternal 

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auditors and companies in their network; (xx) the reportpresented by the Watch Structure established as required byLegislative Decree No. 231/2001; (xxi) Eni’s policy onmanaging exposure to market risks; (xxii) the main aspects of thereorganization of the Group procurement activities and theprocedures for reviewing suppliers selection following detectionof illegal behaviors; (xxiii) the procedure for the"Ascertainment of alleged illicit behavior on the part ofEni employees"; and (xxiv) the issue of the recruiting ofpersonnel outside Italy in the E&P division.

The Internal Audit Manager is the secretary of the Committee.In its meeting of March 16, 2007, the Board of Directors, asproposed by the CEO, in agreement with the Chairman and afterasking the Internal Control Committee for its opinion, entrustedthe Internal Audit Manager as manager delegated for the internalcontrol.

> 
*Compensation Committee*

The Committee, established in 1996, is entrusted withproposing tasks on the matters of compensation of the Chairmanand CEO as well as of the Board Committees members, and followingthe indications of the CEO, on the following: (i) long-termincentive plans including stock-based compensation; (ii) criteriafor the compensation of top managers of the Group; and (iii) thesetting of objectives and the assessment of results ofperformance and incentive plans.

The Committee is composed of four Directors, the majority ofthem being non-executive independent directors. The Committeereports to the Board of Directors on activities performed atleast twice a year.

In 2007, the Compensation Committee met four times with anaverage attendance of 88%, and accomplished the following: (i)reviewed the chart of the Committee, in accordance with the SelfDiscipline code for listed companies approved by Borsa Italianaand the Eni Code. This new chart was approved by the Board ofDirectors in March 2007 (available on Eni’s website); (ii)examined the 2006 results and the objectives for 2007 in view ofdefining annual and long-term incentives; (iii) reviewed thebonuses of the Chairman and CEO based on 2006 performance; (iv)reviewed the benchmarks for top management remuneration and thecriteria of the annual remuneration policy; and (v) theimplementation of the long-term incentive plans for the year 2007and relevant grants to the CEO.

> 
*International Oil Committee*

The International Oil Committee established by the Board ofDirectors in 2002, is entrusted with the monitoring of trends inoil markets and the study of their aspects.

In 2007, the International Oil Committee met 4 times with a75% participation of its members.

In their meetings the members discussed Eni’s 2008-2020Master Plan – a key document in the planning processdefining Eni industrial strategies. The first meeting concernedthe analysis of worldwide energy market prospects to 2020, inparticular world demand of oil and the evolution of theworld’s refining system (as a conclusion of the work startedin late 2006). The other meetings concerned the main challengesof the energy industry, Eni’s position in this industry,Eni’s vision and long-term strategy and the possiblestrategic options to respond to these challenges.

> 
*Board of Statutory Auditors*

The Italian legislation requires Italian listed corporationsto have a board of statutory auditors composed of independentexperts in accounting matters and in matters specified in suchcorporations’ By-laws. Eni SpA’s Board of StatutoryAuditors were appointed by the same shareholders meeting, thatalso appointed the Chairman of the Board.

Eni SpA’s By-laws currently provide that the Board ofStatutory Auditors consists of five effective statutory auditorsand two alternate auditors (each of them automaticallysubstitutes an effective auditor who resigns or is otherwiseunable to serve as an auditor elected in the same list).

The following table sets forth the names, positions and yearof appointment of the members of the Board of Statutory Auditorsof Eni. Each current member was appointed by the OrdinaryShareholders’ Meeting held on May 27, 2005 for a three yearperiod. A new Board of Statutory Auditors will be appointed atthe date of the Shareholders’ Meeting renewing Eni’scorporate bodies, convened on June 9 and 10, 2008.

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| **Name**             |   | **Position**      |   | **Year first appointed to Board        of Statutory Auditors** |
|----------------------|--------|-------------------|--------|----------------------------------------------------------------|
|                      |   |                   |   |                                                                |
| Paolo Andrea Colombo |   | Chairman          |   | 2002                                                           |
| Filippo Duodo        |   | Auditor           |   | 1998                                                           |
| Edoardo Grisolia     |   | Auditor           |   | 2005                                                           |
| Riccardo Perotta     |   | Auditor           |   | 1999                                                           |
| Giorgio Silva        |   | Auditor           |   | 1999                                                           |
| Francesco Bilotti    |   | Alternate Auditor |   | 2005                                                           |
| Massimo Gentile      |   | Alternate Auditor |   | 2005                                                           |
|                      |   |                   |   |                                                                |

Paolo Andrea Colombo, Filippo Duodo, Edoardo Grisolia andFrancesco Bilotti were candidates in the list presented by theMinistry of Economy and Finance; Riccardo Perotta, Giorgio Silvaand Massimo Gentile were candidates in the list presented byinstitutional investors coordinated by Fineco Asset ManagementSpA.

The Board of Statutory Auditors, in accordance withLegislative Decree No. 58/1998 (TUF), monitors: (i) the respectof laws and of Eni’s memorandum of association; (ii) therespect of the principles of fair administration; (iii) theadequacy of the company’s organizational structure, for theparts covered by the Board’s responsibility, of its internalcontrol system and financial reporting system as well as thereliability of the latter in fairly representing theCompany’s transactions; (iv) the actual implementation ofcorporate governance rules foreseen by codes prepared by marketregulators and company associations to which the company publiclydeclares to adhere; and (v) the adequacy of instructionsconveyed by the parent company to its subsidiaries according toArticle 114, paragraph 2 of the above mentioned decree.

In accordance with the Eni Code, in line with the BorsaItaliana Code, the Board of Statutory Auditors monitors theindependence of the principal external auditors, verifying boththe compliance with the provisions of applicable laws andregulations governing the matter, and the nature and extent ofservices other than the audit services provided to Eni by theauditing firm and the entities belonging to its network.According to the TUF, the Board of Statutory Auditors drafts aproposal regarding the appointment of the principal externalauditors and their fee to be submitted to the Shareholders’Meeting for approval.

The Board of Directors in its meeting of March 22, 2005, inaccordance with SEC Rule 10A-3(c)(3) for foreign companies listedon the New York Stock Exchange, elected the Board of StatutoryAuditors to fulfill the role of the audit committee in U.S.companies under the Sarbanes-Oxley Act and SEC rules, within thelimits set by Italian legislation from June 1, 2005. On June 15,2005, the Board of Statutory Auditors approved the regulation forcarrying out the functions attributed to the audit committeeunder U.S. laws. This regulation is published on Eni’swebsite.

The key functions performed by the Board of Statutory Auditorsacting as an audit committee as provided for by SEC rules are asfollows:

| • |   | evaluating the proposals        presented by the external auditors for their appointment        and making its recommendation to the Board of Directors        about the proposal for the appointment or the retention        of the external auditor to be submitted to the        Shareholders’ Meeting;                                                                                                                                                                                                                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | performing the activities of        oversight of the work of the external auditor engaged for        the audit or performing other audit, review or attest        services;                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | making recommendations to        the Board of Directors on the resolution of disagreements        between management and the auditor regarding financial        reporting;                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • |   | approving the procedures        for: (a) the receipt, retention, and treatment of        complaints received by the Company regarding accounting,        internal accounting controls, or auditing matters; and        (b) the confidential, anonymous submission by employees        of the Company of concerns regarding questionable        accounting or auditing matters;                                                                                                                                                                                                                                             |
| • |   | approving the procedures for        the pre-approval of admissible non-audit services,        analytically identified, and examine the information on        the execution of the authorized services;                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • |   | evaluating any request to        have recourse to the external auditor engaged for the        audit for admissible non audit services and expresses its        opinion to the Board of Directors;                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | examining the periodical        communications from the external auditor relating to: (a)        all critical accounting policies and practices to be        used; (b) all alternative treatments of financial        information within generally accepted accounting        principles that have been discussed with management        officials of the Company, ramifications of the use of        such alternative disclosures and treatments, and the        treatment preferred by the external auditor; and (c)        other material written communication between the external        auditor and the management; |
| • |   | examining complaints        received by the CEO and the CFO concerning any        significant deficiency in the design or operation of        internal controls which could adversely affect the        Company’s ability to record, process, summarize and        report financial data and any material weakness in        internal controls; and                                                                                                                                                                                                                                                                   |

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| • |   | examining complaints        received by the CEO and the CFO concerning any fraud that        involves management or other employees who have a        significant role in the issuer’s internal controls. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Statutory Auditors are appointed in accordance with Eni’sBy-laws with a list vote; at least two auditors and onesubstitute are elected from minority candidates. According toArticle 28.2 of Eni’s By-laws, as revised by theShareholders’ Meeting of May 25, 2006, to implement theprovision of Law No. 262 of December 28, 2005 (law on theprotection of savings), the Shareholders’ Meeting shallelect Chairman of the Board of Statutory Auditors a memberelected from a list other than the one obtaining the majority ofvotes. The lists of candidates include declarations made by thecandidates on the possession of honorability, expertise andindependence requirements prescribed by applicable regulation anda professional resume of each candidate, must be filed at thecompany’s headquarters at least 10 days before the date ofthe Shareholders’ Meeting on first call and are published inthree national newspapers, two of which shall be economicnewspapers. Lists are also filed with Borsa Italiana andpublished on Eni’s website.

In accordance with the TUF, Statutory Auditors shall possessspecific requirements of independence, and the professional andhonorability requirements as prescribed by a regulation of theMinister of Justice. As for professional qualifications of thecandidates, Article 28 of Eni’s By-laws, in line with thesaid Decree of the Minister of Justice, foresees that theprofessional requirements can also be acquired with at leastthree years of professional experience or by teaching businesslaw, business administration and finance, as well as at least athree year experience in a managerial position in geological orengineering businesses. Eni’s auditors are all charteredauditors. Article 28 of Eni’s By-laws also allows statutoryauditors to assume other appointments in control entitiesaccording to the limits set by Consob coming in force on June 30,2008. Until that date Eni’s By-laws prohibits theappointment as statutory auditor of persons that are statutoryauditors or members of the supervisory board or members of themanagement control committee of at least five companies withregistered securities in regulated markets not subsidiaries ofEni SpA.

Statutory Auditors declared to possess independence andhonorability requirements as foreseen by the law.

In its meeting of March 12, 2008 the Board of StatutoryAuditors verified that all its members comply with theindependence criteria prescribed.

In 2007, the Board met 18 times with an average participationof 89% of its members.

> 
*External Auditors*

As provided for by Italian law, external auditors must be achartered company appointed by the Shareholders’ Meeting, upto a maximum of three engagements, each with a three year term.Eni’s external auditors, PricewaterhouseCoopers SpA, wereappointed by the Ordinary Shareholders’ Meeting on May 24,2007, for the three financial years ending December 31, 2007,2008 and 2009 in accordance with Italian law. At the end of thisengagement, PricewaterhouseCoopers SpA will cease to act asEni’s external auditors.

In 2007, Eni’s External Auditors met with Eni StatutoryAuditors in order to discuss: (i) critical accounting policiesand practices applied for the purpose of a proper representationof Eni’s results of operations and financial condition; (ii)alternative accounting treatments provided for by generallyaccepted accounting principles concerning material itemsdiscussed with management, including ramifications of the use of,the impact deriving from the application of said alternativedisclosures and treatments and relevant information, as well asthe treatments preferred by external auditors; and (iii) thecontents of any other material written communication betweenexternal auditors, and management.

For a description of the special powers of the State, see"Item 10 – Memorandum and Articles of Association– Limitations on Voting and Shareholdings – SpecialPowers of the State" below.

 

> 
***Significant Differences in Corporate Governance    Practices as per Section 303A.11 of the New York Stock    Exchange Listed Company Manual***

*Corporate governance*. As discussed above, Eni’sorganizational structure follows the traditional Italian model ofcompanies which provides for two main separate corporate bodies,the Board of Directors and the Board of Statutory Auditors towhom management and monitoring duties are respectively entrusted.

This model differs from the U.S. unitary model which providesfor the Board of Directors as the sole corporate body responsiblefor management and for audit committee established within thesame Board for monitoring.

Below is a description of the most significant differencesbetween corporate governance practices followed by U.S. domesticcompanies under the NYSE standards and those followed by Eni.

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INDEPENDENT DIRECTORS*NYSE standards.*Under NYSE standards listed U.S.companies’ Boards must have a majority of independentdirectors. A director qualifies as independent when the Boardaffirmatively determines that such director does not have amaterial relationship with the listed company (and itssubsidiaries), either directly, or indirectly. In particular, adirector may not be deemed independent if he/she or an immediatefamily member has a certain specific relationship with theissuer, its auditors or companies that have material businessrelationships with the issuer (e.g. he/she is an employee of theissuer or a partner of the auditor). In addition, a directorcannot be considered independent in the three-year"cooling-off" period following the termination of anyrelationship that compromised a director’s independence.

*Eni standards.* In Italy, the law for listed companiesstates that at least one member, or two members if the Board iscomposed by more than seven members, must possess theindependence requirements provided for Statutory Auditors oflisted companies. In particular, a director may not be deemedindependent if he/she or an immediate family member hasrelationships with the issuer that could influence theirautonomous judgment, with its directors or with the companies inthe same group of the issuer. Eni’s By-laws increases thenumber and states that at least one member, if the Board is madeup by up to five members, or three Board members, in case theBoard is made up by more than five members, shall have theindependence requirement. Eni’s Code foresees furtherindependence requirements, in line with the ones provided by theCode on Corporate Governance issued by the Italian authority forexchange (Borsa Italiana Code), that recommends that the Board ofDirectors includes an adequate number of independentnon-executive directors in the sense that they do not maintain,nor have recently maintained, directly or indirectly, anybusiness relationships with the issuer or persons linked to theissuer, of such a significance as to influence their autonomousjudgment.

In accordance with Eni’s By-laws, the Board of Directorsperiodically evaluates independence of directors. Eni’s Codealso provides for the Board of Statutory Auditors to verify theproper 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 becommunicated to 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 expected to inform the company ifthey lose their independence requirements or any reasons forineligibility or incompatibility that might arise.

MEETINGS OF NON EXECUTIVE DIRECTORS*NYSE standards.* Non-executive directors, including thosewho are not independent, must meet at regularly scheduledexecutive sessions without management. In addition, if the groupof non-executive directors includes directors who are notindependent, independent directors should meet separately atleast once a year.

*Eni standards.* Neither Eni’s non-executiveDirectors nor Eni’s independent Directors must meetseparately, under the Code’s corporate governance rules.

AUDIT COMMITTEE*NYSE standards.* Listed U.S. companies must have an auditcommittee that satisfies the requirements of Rule 10A-3 under theSecurities Exchange Act of 1934 and that complies with thefurther provisions of the Sarbanes-Oxley Act and of Section303A.07 of the NYSE Listed Company Manual.

*Eni standards.* In its meeting of March 22, 2005,Eni’s Board of Directors, making use of the exemptionprovided by Rule 10A-3 for non-U.S. private issuers, hasidentified the Board of Statutory Auditors as the body that,starting from June 1, 2005, is performing the functions requiredby the SEC rules and the Sarbanes-Oxley Act to be performed bythe audit committees of non-U.S. companies listed on the NYSE(see paragraph "Board of Statutory Auditors" earlier).Under Section 303A.07 of the NYSE listed Company Manual auditcommittees of U.S. companies have further functions andresponsibilities which are not mandatory for non-U.S. privateissuers and which therefore are not included in the list offunctions shown in the paragraph referenced above.

NOMINATING/CORPORATE GOVERNANCE COMMITTEE*NYSE standards.* U.S. listed companies must have anominating/corporate governance committee (or equivalent body)composed entirely of independent directors that are entrusted,among others, with the responsibility to identify individualsqualified to become board members and to select or recommenddirector nominees for submission to the Shareholders’Meeting, as well as to develop and recommend to the Board ofDirectors a set of corporate governance guidelines.

*Eni standards.*This provision is not applicable tonon-U.S. private issuers. The Corporate Governance Code backed byBorsa Italiana allows listed companies to have within the Boardof Directors a committee for directors’ nominees proposals,above all when the Board of Directors detects difficulties in theshareholders’ submission of 

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nominees proposals, as could happen in publicly ownedcompanies. Eni has not set up a nominating committee, consideringthe nature of its shareholding as well as the circumstance that,under Eni’s By-laws, directors are appointed by theShareholders’ Meeting based on lists presented byshareholders or by the Board of Directors.

 

 

**Compensation**

Board members’ emoluments are determined by theShareholders’ Meeting, while the emoluments of the Chairmanand CEO, in relation to the powers entrusted to them, aredetermined by the Board of Directors 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.

CHAIRMANThe compensation of the Chairman of the Board of Directors hasbeen resolved by Eni’s Shareholders’ Meeting on May 27,2005 and includes:

| 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        2006, Eni rated third and in 2007 a bonus of euro 40,000        was paid. |

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        2007, based on 2006 Eni’s results, a bonus equal to        116% 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 2007, this bonus amounted to euro 348,000. |

Compensation of the Chairman also includes an insuranceagainst death or permanent inability caused by injury or sicknessin the exercise of his duties or under certain othercircumstances as stipulated collectively for all managers ofItalian companies producing goods and services. In particular, aspecific insurance policy has been underwritten which guaranteeseuro 500,000 to survivors with an annual charge for Eni of euro16,000.

CEOCompensation for the CEO has been resolved by the Board ofDirectors of Eni in connection with his position both as CEO andas General Manager of the parent company Eni SpA. He wasappointed to both positions on June 1, 2005.

As General Manager of Eni SpA, his terms of employment areregulated by the "Contratto collettivo nazionale di lavoroper i dirigenti di aziende produttrici di beni e servizi"(the Italian national collective contract for managers 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 2006, said targets included a set level        of cash flow from operations (with a 40% weight),        divisional operating performances (30%), strategic        projects (20%) and corporate efficiency (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        maximum amount of this bonus corresponds to 100% of the        fixed amount under a) above. In 2007, based on 2006        Eni’s results, a bonus equal to 116% of the target        level was determined, within an interval ranging from 85%        to 130% and a bonus of euro 1,277,000 was paid; |
| c) |   | a long-term incentive under        a new incentive scheme as approved in March 2006 by the        Board of Directors as proposed by the Compensation        Committee. This new incentive scheme provides: (i) a        deferred monetary incentive, linked to the achievement of        certain Company’s financial performance annual        targets; and (ii) stock option awards linked to the        achievement of certain performance targets of the Eni        share measured                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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|   |   | in terms of total        shareholder return that considers both the stock        appreciation and the dividend (see below for a more        detailed description of Eni’s long-term incentive        schemes applicable to top and senior managers). Under        this scheme the CEO received: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | i)  |   | an annual award of a        deferred monetary bonus for the period 2006-2008. The        target level of this deferred bonus corresponds to 55% of        the fixed amount under a) above. In 2007, this award        amounted to euro 786,500 that will be paid after three        years in connection with the achievement of certain        preset Company annual targets in terms of EBITDA        (earnings before interest, taxes, depreciation and        amortization); and                                                                                                                                                                                                                            |
|--------|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ii) |   | an annual award of stock        options for the period 2005-2007 for a face value        corresponding to 11 times the fixed amounts under section        a) above. In 2007, a total of 573,000 options were        awarded with a vesting period of three years and an        exercise price of euro 27.451 corresponding to the        arithmetic average of official prices registered on the        Mercato Telematico Azionario in the month preceding the        award. The 2007 award also includes a deferred bonus        linked to the market performance of the Eni share and        corresponding to 80,500 options with a strike price of        euro 27.451 and a vesting period of three years; |

| d) |   | 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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| e) |   | as an integration to the        severance payment described above, should the employment        contract of Mr. Scaroni as General Manager of Eni SpA be        terminated upon expiry of the term of his office as CEO        or upon earlier termination of such office, he will be        entitled to receive a payment of euro 7 million 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 quality of        General Manager of the parent company is entitled to        receive an indemnity that is accrued along the service        period with an annual provision of euro 204,738. This        provision is determined by taking into account social        security contribution rates and post-retirement benefit        computations applied to the CEO annual emolument and 50%        of the bonuses earned as a Director; |
| f) |   | competition clause: the CEO        agrees not to be engaged, on his own account and        directly, in any business that may be in competition with        the businesses of Eni, as per its By-laws, in Italy,        Europe and North America for a year after termination of        office. Based on this arrangement, Eni will pay a fee        corresponding to the yearly fixed amounts under a)        section above. As a consequence of any breach of this        clause, the CEO would loose the right to such fee 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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| g) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS (the Italian state social security        entity) to all Italian workers. In addition, the CEO is        included in an additional pension scheme under the form        of an Eni Group pension fund agreed collectively by Eni        and Eni managers which provides 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 March 20, 2006, established that the        Company’s and the manager’s payment to this        Fund amounts to 3.5% 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);                                                                                                          |
| h) |   | like all other Eni managers,        Mr. Scaroni is entitled to participate in a health        insurance fund financed by Eni managers and Eni which        provides reimbursement of certain medical expenses on the        basis of rules and parameters as provided by the        Fund’s By-laws; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| i) |   | insurance against death or        permanent inability caused by injury or disease in the        exercise of his duties or under certain other        circumstances as stipulated collectively for all managers        of Italian manufacturing companies. In particular a        specific insurance policy has been underwritten on behalf        of Mr. Scaroni which guarantees euro 7.5 million to        survivors in case of death, however determined, with an        annual charge for Eni of euro 62,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

MEMBERS OF THE BOARD OF DIRECTORSThe compensation of members of the Board of Directors has beendetermined by Eni’s Shareholders’ Meeting of May 27,2005 and includes:

| a) |   | 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 a        given year as compared with the performance of the seven        largest international oil companies for market        capitalization, taking account of the dividend paid. Said        bonus amounts 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. In 2006, Eni rated third and in 2007 a        bonus of euro 10,000 was paid. |

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The Board of Directors in the meeting of July 27, 2006, asproposed by the Compensation Committee and advised by the Boardof Statutory Auditors, determined an additional element ofremuneration for the Board members holding positions inBoard’s committees, with the exclusion of the Chairman andCEO. Said fee amounts to euro 30,000, and euro 20,000 for theposition of chairman of a committee and of member of a committee,respectively. This amount decreases to euro 27,000 and euro18,000 in case a member holds positions in more than onecommittee.

GENERAL MANAGERSThe terms of employment of the General Managers of Eni’sDivisions are regulated by the "Contratto collettivonazionale di lavoro per i dirigenti di aziende produttrici dibeni e servizi" (the Italian national collective contractfor managers of companies producing goods and services), as wellas by any internal agreement stipulated by the representatives ofmanagers and Eni SpA. The General Managers of Divisions may beappointed as members of the Board of Directors of Enisubsidiaries and affiliates; compensation deriving from suchappointments as provided for by Article 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) |   | long-term incentives in the        form of a deferred monetary bonus and stock options        according to the same scheme as the CEO. Under this        scheme the three General Managers have received: |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | i)  |   | a yearly award of a deferred        monetary bonus at target level of 40% of the base salary.        In 2007, based on 2006 Eni results, the basic deferred        bonus awarded was equal to 100% of the target level,        within an interval ranging from 70% to 130%; and                                                                                                      |
|--------|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ii) |   | a yearly award of stock        options for a face value corresponding to 4.5 times the        base salary. Options awarded in 2007 have a vesting        period of three years and an exercise price of euro        27.451 corresponding to the arithmetic average of        official prices registered on the Mercato Telematico        Azionario in the month preceding the award; |

| d) |   | 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; |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| e) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS to all Italian workers. In addition, the        General Managers are included in the additional pension        scheme of Eni managers which provides an integration to        the public pension. For further details see section g) of        the description of compensation of the CEO;                                                             |
| f) |   | like all other Eni managers,        they are entitled to participate in a health insurance        Fund financed by Eni managers and Eni which provides        reimbursement of certain medical expenses on the basis of        rules and parameters as provided for by the Fund’s        By-laws. For further details see section h) of the        description of compensation of the CEO; and                                                            |
| g) |   | 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.

Remuneration earned for 2007 by members of the Board ofDirectors, including the CEO and the Chairman, the three GeneralManagers and Eni’s senior managers attending on a permanentbasis the meetings of the Steering Committee of Eni (totalamount) is reported in the table below. Emoluments earned by theStatutory Auditors of Eni are also included.

Follows a description of each column of the following table:

| • |   | "Emoluments for service        at Eni SpA" include emoluments paid to non-executive        and executive directors for service rendered, fixed fees        paid to Directors attending the Board’s Committees,        and fees paid to Statutory Auditors. Emoluments earned by        the Chairman and the CEO include also the portion awarded        for the powers entrusted to them by the Board; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | "Non cash        benefits" comprise amounts referring to all fringe        benefits, including insurance policies;                                                                                                                                                                                                                                                                                          |
| • |   | "Bonuses and other        incentives" include: (i) performance bonuses awarded        in the year to Directors and the Chairman of the Board        based on the performance of the Eni share; (ii)        performance bonuses awarded in the                                                                                                                                                               |

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|   |   | year to both the Chairman        and the CEO in connection with the power entrusted to        them by the Board, based on the achievement of specific        company targets; and (iii) performance bonuses awarded in        the year to the CEO, in his position as General Manager        of the parent company, the General Managers of Eni’s        divisions and other Eni’s senior managersbased on the achievement of specific        financial, operational and strategic targets and        individual performance targets pertaining to their        respective business or functional units; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | "Salaries and other        elements" report base salaries earned by the CEO in        his position as General Manager of the parent company,        the General Mangers of Eni’s divisions and other        Eni’s senior managers, and indemnities paid upon        termination of the employment contract.                                                                                                                                                                                                                                                                                        |

 

| **Name**                        |                | **Position**                 |   | **Emoluments for service at Eni SpA** |   | **Non-cash benefits** |   | **Bonus and other incentives**(1) |   | **Salaries and other        elements** |      | **Total** |
|---------------------------------|---------------------|------------------------------|--------|---------------------------------------|--------|-----------------------|--------|-----------------------------------|--------|----------------------------------------|-----------|-----------|
|                                 |                |                              |   |                                       |   |                       |   |                                   |   |                                        |      |           |
|                            | **(thousand euro)** |
| **Board of Directors**          |                |                         |   |                                  |   |                  |   |                              |   |                                   |      |      |   |
| Roberto        Poli             |                | Chairman                     |   | 765                                   |   | 16                    |   | 388                               |   |                                   |      |      | 1,169 |
| Paolo Scaroni                   |                | CEO                          |   | 430                                   |   | 62                    |   | 1,277                             |   | 1,016                                  |      |      | 2,785 |
| Alberto        Clô         |                | Director                     |   | 138                                   |   |                  |   | 10                                |   |                                   |      |      | 148 |
| Renzo Costi                     |                | Director                     |   | 134                                   |   |                  |   | 10                                |   |                                   |      |      | 144 |
| Dario        Fruscio (2)        |                | Director                     |   | 126                                   |   |                  |   | 10                                |   |                                   |      |      | 136 |
| Marco Pinto                     |                | Director                     |   | 133                                   |   |                  |   | 10                                |   |                                   |      |      | 143 |
| Mario        Resca              |                | Director                     |   | 130                                   |   |                  |   | 10                                |   |                                   |      |      | 140 |
| Marco Reboa                     |                | Director                     |   | 148                                   |   |                  |   | 10                                |   |                                   |      |      | 158 |
| Pierluigi        Scibetta       |                | Director                     |   | 134                                   |   |                  |   | 10                                |   |                                   |      |      | 144 |
| **Board of Statutory Auditors** |                |                         |   |                                  |   |                  |   |                              |   |                                   |      |      |   |
| Paolo        Andrea Colombo     |                | Chairman                     |   | 115                                   |   |                  |   |                              |   | 88                                     |  (3) |      | 203 |
| Filippo Duodo                   |                | Auditor                      |   | 80                                    |   |                  |   |                              |   | 72                                     |  (4) |      | 152 |
| Edoardo        Grisolia (5)     |                | Auditor                      |   | 80                                    |   |                  |   |                              |   |                                   |      |      | 80 |
| Riccardo Perotta                |                | Auditor                      |   | 80                                    |   |                  |   |                              |   | 38                                     |  (6) |      | 118 |
| Giorgio        Silva            |                | Auditor                      |   | 80                                    |   |                  |   |                              |   | 45                                     |  (7) |      | 125 |
| **General Managers**            |                |                         |   |                                  |   |                  |   |                              |   |                                   |      |      |   |
| Stefano        Cao              |                | Exploration & Production |   |                                  |   | 1                     |   | 551                               |   | 935                                    |      |      | 1,487 |
| Domenico Dispenza               |                | Gas & Power              |   |                                  |   | 1                     |   | 457                               |   | 654                                    |      |      | 1,112 |
| Angelo        Taraborrelli (8)  |                | Refining & Marketing     |   |                                  |   | 1                     |   | 386                               |   | 340                                    |      |      | 727 |
| Angelo Caridi (9)               |                | Refining & Marketing     |   |                                  |   | 1                     |   |                              |   | 210                                    |      |      | 211 |
|                            |                |                         |   |                                       |   |                       |   |                                   |   |                                        |           |      |  |
|                            |                |                         |   | **2,573**                             |   | **82**                |   | **3,129**                         |   | **3,398**                              |      |      | **9,182** |
|                            |                |                         |   |                                       |   |                       |   |                                   |   |                                        |           |      |  |
| **Senior managers**(10)         |                |                         |   |                                  |   | **10**                |   | **2,570**                         |   | **3,529**                              |      |      | **6,109** |
|                                 |                |                              |   |                                       |   |                       |   |                                   |   |                                        |           |      |  |

----

| (1)  |   | Based on        performance achieved in 2006.                                                                                                                                                                                   |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  |   | On January        30, 2008, Dario Fruscio resigned from the Board of        Directors.                                                                                                                                          |
| (3)  |   | Includes the        compensation obtained as Chairman of the Board of        Statutory Auditors of Saipem and EniServizi.                                                                                                       |
| (4)  |   | Includes the        compensation obtained as Statutory Auditor in        Snamprogetti SpA and in Polimeri Europa and as Chairman        of the Board of Statutory Auditors of CEPAV Uno and CEPAV        Due.                   |
| (5)  |   | Compensation        for the service is paid to the Ministry of Economy and        Finance.                                                                                                                                      |
| (6)  |   | Includes the        compensation obtained as Chairman of the Board of        Statutory Auditors of Snam Rete Gas SpA until April 26,        2007 and as Statutory Auditor in Snam Rete Gas SpA for        the following months. |
| (7)  |   | Includes the        compensation obtained as Statutory Auditor in        Snamprogetti SpA and as Chairman of the Board of        Statutory Auditors of TSKJ Italia Srl.                                                         |
| (8)  |   | In office        until August 2, 2007.                                                                                                                                                                                          |
| (9)  |   | Appointed by        the Board of Directors on August 3, 2007.                                                                                                                                                                   |
| (10) |   | Managers, who        during the year with the CEO and the General Managers of        Eni divisions, have been member of the Eni Directors        Committee (seven managers).                                                    |

For the year ended December 31, 2007, the overallcompensation of persons responsible of key positions in planning,direction and control functions of Eni Group companies, includingexecutive and non-executive directors, General Managers andEni’s senior managers amounted to euro 25 million. Thebreak-down is as follows:

|   | **2007**           |
|--------|--------------------|
|   |                    |
|   | **(million euro)** |

| Fees and salaries                      |   | 17     |
|----------------------------------------|--------|--------|
| Post        employment benefits        |   | 1      |
| Other long-term benefits               |   | 3      |
| Fair value        stock grants/options |   | 4      |
|                                   |   | **25** |

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

The above amounts include salaries, annualemoluments, 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. At December 31, 2007, the totalamount accrued to the reserve for employee terminationindemnities with respect to members of the Board of Directors who

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were also employees of Eni, the three general managers andEni’s senior managers was euro 2,780 thousand. Thebreak-down of this amount is presented in the table below:

| **Name** | **(thousand euro)** |
|----------|---------------------|

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

| Paolo Scaroni              |   | CEO and General Manager of Eni                     |   | 159   |
|----------------------------|--------|----------------------------------------------------|--------|-------|
| Stefano        Cao         |   | General        Manager of the E&P Division     |   | 641   |
| Domenico Dispenza          |   | General Manager of the G&P Division            |   | 407   |
| Angelo        Taraborrelli |   | General        Manager of the R&M Division (1) |   | 424   |
| Angelo Caridi              |   | General Manager of the R&M Division (2)        |   | 144   |
| Senior        Managers (3) |   |                                               |   | 1,004 |

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

|   |   |   |   | **2,780** |
|--------|--------|--------|--------|-----------|

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

----

| (1) |   | Position held        until August 2, 2007. |
|-----|--------|--------------------------------------------|
| (2) |   | Appointed on        August 3, 2007.        |
| (3) |   | No. 7        managers.                     |

> 
***Long-term Incentive Schemes***

In March 2006, the Board of Directors approved a new long-termincentive scheme for the managers of Eni and its subsidiaries(excluding listed subsidiaries), as proposed by the CompensationCommittee. This new scheme is designed to motivate moreeffectively and retain managers, linking incentives to targetsand performance achieved in a tighter way than previousincentives schemes. This new incentive scheme applies to the2006-2008 three year period and is composed of a deferredmonetary bonus, linked to the achievement of certain businessgrowth and operating efficiency targets, and stock option awardsbased on the achievement of certain targets in terms of totalshareholder return. This scheme has a structure intended tobalance monetary and stock-based components of the remuneration,as well as to link financial and operating performance to shareperformance in the long-term.

> 
*Deferred monetary bonus*

This leg of the long-term incentive scheme provides a basicbonus paid after three years from the award according to avariable amount equal to a percentage ranging from 0 to 170% ofthe amount established for the target performance in relation tothe performances achieved in a three-year period as approved bythe Board of Directors. Performances are measured in terms ofachievement of preset annual EBITDA targets, as assessed bycomparing actual results with set targets under a constanttrading environment.

The following table sets out the basic bonus awarded in theyear 2007 to the CEO and to the General Managers of Eni’sDivisions, and the total amount awarded to Eni’s seniormanagers.

| **Name** | **Deferred bonus awarded** |
|----------|----------------------------|
|     |                            |
|     | **(thousand euro)**        |

| Paolo Scaroni              |   | CEO and General Manager of Eni                     |   | 787   |      |
|----------------------------|--------|----------------------------------------------------|--------|-------|-----------|
| Stefano        Cao         |   | General        Manager of the E&P Division     |   | 380   |      |
| Domenico Dispenza          |   | General Manager of the G&P Division            |   | 268   |      |
| Angelo        Taraborrelli |   | General        Manager of the R&M Division (1) |   | 236   |      |
| Angelo Caridi              |   | General Manager of the R&M Division (2)        |   | 140   |  (3) |
| Senior        managers (4) |   |                                               |   | 1,126 |      |

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

----

| (1) |   | Position held        until August 2, 2007.                                                                                             |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Appointed on        August 3, 2007.                                                                                                    |
| (3) |   | Assigned by        Saipem on July 25, 2007, to Angelo Caridi who held the        position of CEO of Snamprogetti until August 2, 2007. |
| (4) |   | No. 7        managers.                                                                                                                 |

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> 
***Stock Options***

Eni can award share options to managers holding strategicpositions or positions of significant responsibility for theachievement of the Company’s results. This incentive schemeis designed to ensure that managers’ interests are alignedwith those of shareholders and to stimulate entrepreneurialbehavior on part of managers. Differently from previous schemes,the 2006-2008 stock option plan introduced a performancecondition upon which grants can be exercised. The Board ofDirectors determines the number of options to be exercised aftera three-year vesting period upon verification of performancesachieved. The amount of options is determined in a percentageranging from 0% to 100% of the amount underlying each year of theplan, depending on the performance of Eni shares measured interms of annual Total Shareholders Return as compared to thatachieved by a panel of major international oil companies in termsof market capitalization. Options can be exercised along a threeyear period. Under this plan, the Board resolved to award toEni’s managers 6,128,500 options pertaining to 2007 with astrike price equal to euro 27.451 and 7,050,000 options at astrike price of euro 23.119 pertaining to 2006.

At December 31, 2007, a total of 17,699,625 options wereoutstanding for the purchase of an equal amount of ordinaryshares nominal value euro 1 each, carrying an average strikeprice of euro 23.822. The weighted average remaining contractuallife of options outstanding at December 31, 2006 and 2007 was 4years and 7 months and 5 years and 7 months respectively.

The following is a summary of stock option activity for theyears 2006 and 2007:

|   | **2006** |   | **2007** |
|--------|----------|--------|----------|
|   |          |   |          |

|   | **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**                    |   | **13,379,600** |   |   | **17.705** |   | **23.460** |   | **15,290,400** |   |   | **21.022** |   | **25.520** |
|------------------------------------------------|--------|----------------|--------|--------|------------|--------|------------|--------|----------------|--------|--------|------------|--------|------------|
| New        options granted                     |   | 7,050,000      |   |   | 23.119     |   | 23.119     |   | 6,128,500      |   |   | 27.451     |   | 27.447     |
| Options exercised in the period                |   | (4,943,200     | )      |   | 15.111     |   | 23.511     |   | (3,028,200     | )      |   | 16.906     |   | 25.338     |
| Options        cancelled in the period         |   | (196,000       | )      |   | 19.119     |   | 23.797     |   | (691,075       | )      |   | 24.346     |   | 24.790     |
| **Options outstanding as of December 31**      |   | **15,290,400** |   |   | **21.022** |   | **25.520** |   | **17,699,625** |   |   | **23.822** |   | **25.120** |
| **of        which exercisable at December 31** |   | **1,622,900**  |   |   | **16.190** |   | **25.520** |   | **2,292,125**  |   |   | **18.440** |   | **25.120** |

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

----

| (a) |   | Market price        relating to new rights assigned, rights exercised in the        period and rights cancelled in the period corresponds to        the average market value (arithmetic average of official        prices recorded on Mercato Telematico Azionario in the        month preceding: (i) the date of assignment; (ii) the        date of the recording in the securities account of the        managers to whom the options have been assigned; (iii)        the date of the unilateral termination of employment for        rights cancelled). Market price of shares referring to        options as of the beginning and the end of the year, is        the price recorded at December 31. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The fair value of stock options granted during the years endedDecember 31, 2006 and 2007 of euro 2.89 and euro 2.98,respectively, was calculated applying the Black-Scholes methodand using the following assumptions:

|   |   |   | **2006** |   | **2007** |
|--------|--------|--------|----------|--------|----------|
|   |   |   |          |   |          |

| Risk-free interest rate   |   | (%)    |   | 4.0  |   | 4.7  |
|---------------------------|--------|--------|--------|------|--------|------|
| Expected        life      |   | (year) |   | 6    |   | 6    |
| Expected volatility       |   | (%)    |   | 16.8 |   | 16.3 |
| Expected        dividends |   | (%)    |   | 5.3  |   | 4.9  |

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

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The following table presents the amount of stock optionsawarded to Eni’s CEO, the three General Managers andEni’s senior managers.

 

|   | **CEO and General Manager of** **Eni** |   | **General Manager        E&P Division** |   | **General        Manager        G&P Division** |   | **General Manager        R&M Division** |   | **General         Manager        R&M Division** |   | **Senior managers**(1) |
|--------|---------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------|--------|-----------------------------------------------------|--------|------------------------|
|   |                                             |   |                                             |   |                                                    |   |                                             |   |                                                     |   |                        |
|   | Paolo        Scaroni (2)                    |   | Stefano        Cao                          |   | Domenico        Dispenza                           |   | Angelo Taraborrelli (3)                     |   | Angelo        Caridi (4)                            |   |                   |
|   |                                             |   |                                             |   |                                                    |   |                                             |   |                                                     |   |                        |

| Options outstanding at the beginning of the        period: |   |      |   |    |   |    |   |    |      |   |    |   |   |   |    |      |   |      |
|------------------------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|---------|-----------|--------|---------|--------|--------|--------|---------|-----------|--------|-----------|
| - number        of options                                 |   | 1,380,000 |   | 314,500 |   | 137,000 |   | 269,500 |  (5) |   | 238,000 |   | 54,500 |   | 73,500  |  (6) |   | 926,500   |
| - average exercise price                                   | (euro) | 22.801    |   | 21.641  |   | 22.244  |   | 3.988   |      |   | 20.624  |   | 19.896 |   | 17.519  |      |   | 21.709    |
| - average        maturity in months                        |   | 73        |   | 70      |   | 65      |   | 73      |      |   | 68      |   | 74     |   | 67      |      |   | 69        |
| Options granted during the period:                         |   |      |   |    |   |    |   |    |      |   |    |   |   |   |    |      |   |      |
| - number        of options                                 |   | 573,000   |   | 155,500 |   | 110,000 |   | -       |      |   | 96,500  |   | -      |   | 48,500  |  (6) |   | 472,500   |
| - average exercise price                                   | (euro) | 27.451    |   | 27.451  |   | 27.451  |   | -       |      |   | 27.451  |   | -      |   | 26.521  |      |   | 27.451    |
| - average        maturity in months                        |   | 72        |   | 72      |   | 72      |   | -       |      |   | 72      |   | -      |   | 72      |      |   | 72        |
| Options exercised at the end of the period:                |   |      |   |    |   |    |   |    |      |   |    |   |   |   |    |      |   |      |
| - number        of options                                 |   | -         |   | 63,500  |   | 14,500  |   | -       |      |   | 73,000  |   | 24,000 |   | -       |      |   | 46,000    |
| - average exercise price                                   | (euro) | -         |   | 16.576  |   | 15.013  |   | -       |      |   | 15.431  |   | 16.576 |   | -       |      |   | 13.743    |
| - average        market price at date of exercise          | (euro) | -         |   | 27.529  |   | 24.721  |   | -       |      |   | 25.774  |   | 25.306 |   | -       |      |   | 24.756    |
| Options outstanding at the end of the period:              |   |      |   |    |   |    |   |    |      |   |    |   |   |   |    |      |   |      |
| - number        of options                                 |   | 1,953,000 |   | 406,500 |   | 232,500 |   | 269,500 |  (5) |   | 261,500 |   | 30,500 |   | 122,000 |  (6) |   | 1,353,000 |
| - average exercise price                                   | (euro) | 24.165    |   | 24.655  |   | 25.159  |   | 3.988   |      |   | 24.593  |   | 22.509 |   | 21.098  |      |   | 23.985    |
| - average        maturity in months                        |   | 63        |   | 62      |   | 60      |   | 61      |      |   | 62      |   | 67     |   | 60      |      |   | 61        |

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

----

| (1) |   | No. 7        managers.                                                                                                                                                                                                                                                                                                                          |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The award to        the CEO has been integrated by a monetary incentive to be        paid after three-year in relation to the performance of        Eni shares, and is equal to 96,000 options granted in        2006, with a strike price of euro 23.100 and 80,500        options granted in 2007, with a strike price of euro        27.451. |
| (3) |   | In office        until August 2, 2007.                                                                                                                                                                                                                                                                                                          |
| (4) |   | Appointed on        August 3, 2007.                                                                                                                                                                                                                                                                                                             |
| (5) |   | Options on        Snam Rete Gas shares: awarded by the company to Domenico        Dispenza who held the position of Chairman of Snam Rete        Gas until December 23, 2005.                                                                                                                                                                   |
| (6) |   | Options on        Saipem shares: awarded by the company to Angelo Caridi        who held the position of CEO of Snamprogetti until August        2, 2007.                                                                                                                                                                                       |

> 
***Stock Grants***

In 2003 Eni implemented a stock-based incentive scheme basedon the awards of treasury shares for no consideration to thosemanagers of Eni who achieved corporate and individual targets.This scheme applied to the three-year period 2003-2005. Grantsvested within 45 days after the end of the third year from thedate of the award. This incentive scheme was discontinued in2006.

Under this plan, as of December 31, 2007, a total of 902,800grants were outstanding for the award of an equal amount oftreasury shares (equal to 0.05% of capital stock) pertaining to2003, 2004 and 2005 assignments as follows: (i) a total of 2,500grants (fair value euro 11.20 per share) related to 2003, (ii) atotal of 798,700 grants (fair value euro 14.57 per share) relatedto 2004 and (iii) a total of 1,072,400 grants (fair value euro20.08 per share) related to 2005. The following is a summary ofstock grant activity for the years 2006 and 2007:

|   |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

|   |   | **Number of shares** |   | **Market price        in euro**(a) |   | **Number of shares** |   | **Market price        in euro**(a) |
|--------|--------|----------------------|--------|------------------------------------|--------|----------------------|--------|------------------------------------|
|   |   |                      |   |                                    |   |                      |   |                                    |

| **Stock grants as of January 1**               |   | **3,127,200** |   |   | **23.460** |   |   | **1,873,600** |   |   | **25.520** |   |
|------------------------------------------------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|
| New rights        granted                      |   | -             |   |   | -          |   |   | -             |   |   | -          |   |
| Rights exercised in the period                 |   | (1,236,400    | )      |   | 23.933     |   |   | (966,000      | )      |   | 24.652     |   |
| Rights        cancelled in the period          |   | (17,200       | )      |   | 23.338     |   |   | (4,800        | )      |   | 26.972     |   |
| **Stock grants outstanding as of December 31** |   | **1,873,600** |   |   | **25.520** |   |   | **902,800**   |   |   | **25.120** |   |
| **of        which exercisable at December 31** |   | **156,700**   |   |   | **25.520** |   |   | **68,100**    |   |   | **25.120** |   |

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

----

| (a) |   | Market price        relating to new rights granted, rights exercised in the        period and rights cancelled in the period corresponds to        the average market value (arithmetic average of official        prices recorded on Mercato Telematico Azionario in the        month preceding: (i) the date of the resolution of the        Board of Directors regarding the stock grant assignment;        (ii) the date of the recording in the grantee’s        securities account of the emission/transfer of the shares        granted; (iii) the date of the unilateral termination of        employment for rights cancelled) weighted with the number        of shares. Market price of stock grants at the beginning        and at the end of the year is the price recorded at        December 31. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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The following table presents the amount of stock grantsawarded to Eni’s CEO, General Managers and Eni’s seniormanagers.

|   | **Grants outstanding        at beginning of the period** |   | **Grants exercised        during the period** |   | **Grants expired        during the period** |   | **Grants outstanding        at end of the period** |
|--------|----------------------------------------------------------|--------|-----------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------|
|   |                                                          |   |                                               |   |                                             |   |                                                    |

|   | **Number of grants** |   | **Average maturity in        months** |   | **Number of grants** |   | **Average market price at        date of exercise        (euro)** |   | **Number of grants** |   | **Number of grants** |   | **Average maturity in        months** |
|--------|----------------------|--------|---------------------------------------|--------|----------------------|--------|-------------------------------------------------------------------|--------|----------------------|--------|----------------------|--------|---------------------------------------|
|   |                      |   |                                       |   |                      |   |                                                                   |   |                      |   |                      |   |                                       |

| Paolo Scaroni                                  |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| CEO and General Manager of Eni                 |   | -      |      |   | -      |   | -      |   | -      |   |   |   | -      |   | -      |
| Stefano        Cao                             |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| General        Manager of the E&P Division |   | 29,000 |      |   | 15     |   | 13,000 |   | 24.447 |   |   |   | 16,000 |   | 8      |
| Domenico Dispenza                              |   | 5,800  |      |   | 8      |   | 5,800  |   | 24.447 |   |   |   | -      |   | -      |
| General Manager of the G&P Division        |   | 53,900 |  (1) |   | 13     |   | 15,300 |   | 4.554  |   | 10,200 |   | 28,400 |   | 7      |
| Angelo        Taraborrelli (2)                 |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| General        Manager of the R&M Division |   | 21,800 |      |   | 17     |   | 5,800  |   | 24.447 |   |   |   | 16,000 |   | 8      |
| Angelo Caridi (3)                              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| General Manager of the R&M Division        |   | 12,700 |      |   | 15     |   | 5,800  |   | 24.447 |   |   |   | 6,900  |   | 8      |
| Senior        managers (4)                     |   | 50,900 |      |   | 15     |   | 22,400 |   | 24.447 |   |   |   | 28,500 |   | 8      |

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

----

| (1) |   | Snam Rete        Gas’ shares. These grants have been assigned by Snam        Rete Gas to Domenico Dispenza who held the Snam Rete        Gas’ Chairman position till December 23, 2005. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Position held        until August 2, 2007                                                                                                                                                         |
| (3) |   | Appointed on        August 3, 2007.                                                                                                                                                               |
| (4) |   | No. 3        managers.                                                                                                                                                                            |

 

**Employees**

At December 31, 2007, Eni’s employees numbered 75,862representing an increase of 2,290 employees from December 31,2006, or 3.1%, reflecting a 2,628 increase in employees hired andworking outside Italy and a 338 decline in employees hired inItaly. Eni seeks to maintain constructive relationships with thelabor unions.

Employees hired in Italy were 39,427 (52% of all Groupemployees). Of these, 36,300 were working in Italy, 2,940 outsideItaly and 187 on board of vessels, with a 338 unit decline from2006; of these 40 persons left the group due to changes inconsolidation.

The process of improvement in the quality mix of employeescontinued in 2007 with the hiring of 2,632 persons, of which 726with open-end contracts. A total of 1,906 persons were hired withthis type of contract and with apprenticeship contracts, most ofthem with university qualifications (1,117 persons of which 759are engineers) and 733 persons with a high school diploma. Duringthe year 2,943 persons left their job at Eni, of these 2,189 hadan open-end contract and 754 a fixed-term contract.

Employees hired and working outside Italy at December 31, 2007were 36,435 (48% of all Group employees), with a 2,628 personsincrease due to the positive balance of new hires with fixed-termcontracts and persons leaving their job in the Engineering &Construction segment (approximately 1,800 employees) due mainlyto new contracts in Saudi Arabia and the sale of Camom SA and 736persons in the Exploration & Production segment, of theseapproximately 400 following the purchase of Dominion and Maurel& Prom.

| **Employees        at year end** |   | **2005** |   | **2006** |   | **2007** |
|----------------------------------|--------|----------|--------|----------|--------|----------|
|                             |   |          |   |          |   |          |

|   | **(units)** |
|--------|-------------|

| Exploration & Production      |   | 8,030      |   | 8,336      |   | 9,334      |
|-----------------------------------|--------|------------|--------|------------|--------|------------|
| Gas &        Power            |   | 12,324     |   | 12,074     |   | 11,582     |
| Refining & Marketing          |   | 8,894      |   | 9,437      |   | 9,428      |
| Petrochemicals                    |   | 6,462      |   | 6,025      |   | 6,534      |
| Engineering & Construction    |   | 28,684     |   | 30,902     |   | 33,111     |
| Other        activities           |   | 2,636      |   | 2,219      |   | 1,172      |
| Corporate and financial companies |   | 5,228      |   | 4,579      |   | 4,701      |
|                              |   |            |   |            |   |            |
|                              |   | **72,258** |   | **73,572** |   | **75,862** |
|                              |   |            |   |            |   |            |

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The table below sets forth Eni’s employees at December31, 2005, 2006 and 2007 in Italy and outside Italy:

| **Employees        at year end** |   | **2005** |   | **2006** |   | **2007** |
|----------------------------------|--------|----------|--------|----------|--------|----------|
|                             |   |          |   |          |   |          |

|   | **(units)** |
|--------|-------------|

| Exploration & Production      |   | Italy                |   | 5,027      |   | 5,273      |   | 5,535      |
|-----------------------------------|--------|----------------------|--------|------------|--------|------------|--------|------------|
|                              |   | Outside        Italy |   | 3,003      |   | 3,063      |   | 3,799      |
|                              |   |                 |   | 8,030      |   | 8,336      |   | 9,334      |
| Gas &        Power            |   | Italy                |   | 9,733      |   | 9,602      |   | 9,114      |
|                              |   | Outside Italy        |   | 2,591      |   | 2,472      |   | 2,468      |
|                              |   |                 |   | 12,324     |   | 12,074     |   | 11,582     |
| Refining & Marketing          |   | Italy                |   | 6,680      |   | 7,196      |   | 7,101      |
|                              |   | Outside        Italy |   | 2,214      |   | 2,241      |   | 2,327      |
|                              |   |                 |   | 8,894      |   | 9,437      |   | 9,428      |
| Petrochemicals                    |   | Italy                |   | 5,164      |   | 4,948      |   | 5,476      |
|                              |   | Outside Italy        |   | 1,298      |   | 1,077      |   | 1,058      |
|                              |   |                 |   | 6,462      |   | 6,025      |   | 6,534      |
| Engineering & Construction    |   | Italy                |   | 5,799      |   | 6,164      |   | 6,618      |
|                              |   | Outside        Italy |   | 22,885     |   | 24,738     |   | 26,493     |
|                              |   |                 |   | 28,684     |   | 30,902     |   | 33,111     |
| Other        activities           |   | Italy                |   | 2,636      |   | 2,219      |   | 1,172      |
|                              |   | Outside Italy        |   | -          |   | -          |   | -          |
|                              |   |                 |   | 2,636      |   | 2,219      |   | 1,172      |
| Corporate and financial companies |   | Italy                |   | 5,153      |   | 4,363      |   | 4,411      |
|                              |   | Outside        Italy |   | 75         |   | 216        |   | 290        |
|                              |   |                 |   | 5,228      |   | 4,579      |   | 4,701      |
| **Total**                         |   | Italy                |   | 40,192     |   | 39,765     |   | 39,427     |
| **Total**                         |   | Outside Italy        |   | 32,066     |   | 33,807     |   | 36,435     |
|                              |   |                 |   | **72,258** |   | **73,572** |   | **75,862** |
| of which senior managers          |   |                 |   | 1,748      |   | 1,604      |   | 1,585      |

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

 

**Share Ownership**

As of April 30, 2008, the cumulative number of shares owned bythe Eni’s directors, statutory auditors and senior managers,including the three General Managers, was 414,531 equal toapproximately 0.01% of Eni’s share capital outstanding asof the same data. In this time frame, no further options topurchase Eni shares were granted by the Company to those personsas compared to grants existing as of December 31, 2007 (seetables in the section "Stock Option Plans"). Eni issuesonly ordinary shares, each bearing one-vote right; thereforeshares held by those persons have no different voting rights. Thebreak-down of share ownership for each of those persons isprovided below.

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| **Name** | **Position** | **Number of shares owned** |
|----------|--------------|----------------------------|
|     |         |                            |

| **Board of Directors**                 |   |                                           |   |           |
|----------------------------------------|--------|------------------------------------------------|--------|----------------|
| Roberto        Poli                    |   | Chairman                                       |   | -              |
| Paolo Scaroni                          |   | CEO and General Manager of Eni                 |   |   42,299  |
| Alberto        Clô                |   | Director                                       |   | -              |
| Renzo Costi                            |   | Director                                       |   |   1,422   |
| Marco        Pinto                     |   | Director                                       |   | -              |
| Marco Reboa                            |   | Director                                       |   | -              |
| Mario        Resca                     |   | Director                                       |   | -              |
| Pierluigi Scibetta                     |   | Director                                       |   |   -       |
| **General        Managers**            |   |                                           |   |           |
| Stefano Cao                            |   | General Manager of the E&P Division        |   |   121,925 |
| Domenico        Dispenza               |   | General        Manager of the G&P Division |   | 99,715         |
| Angelo Caridi                          |   | General Manager of the R&M Division        |   | 31,695         |
| **Board        of Statutory Auditors** |   |                                           |   | **3,850**      |
| **Senior managers**                    |   |                                           |   | **113,625**    |

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

 

 

**Item 7. MAJOR SHAREHOLDERS AND RELATED PARTYTRANSACTIONS**

**Major Shareholders**

As of May 9, 2008, the Ministry of Economy and Finance andCassa Depositi e Prestiti SpA were the only persons known by Enito own more than 2% of any class of Eni SpA’s votingsecurities. At such date, the total amount of Eni SpA’svoting securities owned by these shareholders was:

| **Title        of class**        |   | **Number of shares owned** |   | **Percent of class** |
|----------------------------------|--------|----------------------------|--------|----------------------|
|                                  |   |                            |   |                      |
| Ministry of Economy and Finance  |   | 813,443,277                |   | 20.3%                |
| Cassa        Depositi e Prestiti |   | 400,288,338                |   | 10.0%                |
|                                  |   |                            |   |                      |

The Ministry of Economy and Finance, in agreement with theMinistry of Economic Development, retains certain special powersover Eni. See "Item 10 – Additional Information –Memorandum and Articles of Association – Limitations onVoting and Shareholdings – Special Powers of theState". For a discussion of the Eni share buy-back programsee "Item 16E – Purchases of Equity Securities by theIssuer and Affiliated Purchasers". As of May 9, 2008 therewere 43,128,072 ADRs, each representing two Eni ordinary sharesoutstanding corresponding to 2.1% of Eni’s share capital.See "Item 9 – The Offer and the Listing".

**Related Party Transactions**

In the ordinary course of its business, Eni enters intotransactions concerning the exchange of goods, provision ofservices and financing with non consolidated subsidiaries andaffiliates as well other companies owned or controlled by theItalian Government. All such transactions are conducted on anarm’s length basis and in the interest of Eni companies.

Amounts and types of trade and financial transactions withrelated parties and their impact on consolidated earnings andcash flow, and on the Group’s assets and financial conditionare reported in Note 36 to the Consolidated Financial Statements.

 

 

**Item 8. FINANCIAL INFORMATION**

**Consolidated Statements and Other Financial Information**

See Item 18 – Financial Statements.

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***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. The following is a descriptionof the most significant proceedings currently pending. Unlessotherwise indicated below, no provisions have been made for theselegal proceedings as Eni believes that negative outcomes are notprobable or because the amount of the provision cannot beestimated reliably.

 

> 
**Environment**

> 
*Criminal proceedings*

ENI SPA*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. The Courtdecided that the proceeding must be heard by the Court ofRavenna.

*Alleged damage.*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 hearing dismissed theaccusation of adulteration of food products, while the proceedingfor the other allegations regarding pollution and environmentaldamage remains underway.

*Alleged negligent fire in the refinery of Gela.*In June2002, 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.

*Investigation of the quality of ground water in the area ofthe refinery of Gela.*In 2002, the public prosecutor of Gelacommenced a criminal investigation concerning the refinery ofGela to ascertain the quality of ground water in the area of therefinery. Eni is charged of having breached environmental rulesconcerning the pollution of water and soil and of illegaldisposal of liquid and solid waste materials. The preliminaryhearing phase was closed for one employee who would stand trial,while for the other plaintiffs the preliminary hearing phase isnot yet completed.

*Alleged negligent fire (Priolo).*The public prosecutorof Siracusa commenced an investigation regarding certain Enimanagers who were previously in charge of conducting operationsat the Priolo refinery (Eni divested this asset in 2002) toascertain whether they acted with negligence in connection with afire that occurred at the Priolo plants on April 30 and May 1-2,2006. After preliminary investigations the public prosecutorrequested the opening of a proceeding against the mentionedmanagers for negligent behavior.

ENIPOWER SPA*Alleged unauthorized waste management activities.*In 2004,the public prosecutor of Rovigo commenced an investigation foralleged crimes related to unauthorized waste managementactivities in Loreo relating to the samples of soil used duringthe construction of the new EniPower power station in Mantova.The prosecutor requested the CEO of EniPower and the managingdirector of the Mantova plant at the time of the alleged crime tostand trial.

*Air emissions.*The public prosecutor of Mantovacommenced an investigation against two managers of the Mantovaplant in connection with air emissions by the new power plant.

SYNDIAL SPA (FORMER ENICHEM SPA)*Criminal action commenced by the public prosecutor ofBrindisi.* In 2000, the public prosecutor of Brindisicommenced a criminal action against 68 persons who are employeesor former employees of companies that owned and managed plantsfor the manufacture of dichloroethane, vinyl chloride monomer andvinyl polychloride from the early 1960s to date, some of whichwere managed by EniChem from 1983 to 1993. At the end of thepreliminary 

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investigation the public prosecutor asked for the dismissal ofthe case in respect of the employees and the managers of EniChem.Plaintiffs presented oppositions, but the prosecutor confirmedthe request to dismiss the case.

> 
*Civil and administrative proceedings*

SYNDIAL SPA (FORMER ENICHEM SPA)*Alleged pollution caused by the activity of the Mantova plant.*In 1992, the Ministry of Environment summoned EniChem SpA(now Syndial SpA) and Edison SpA before the Court of Brescia. TheMinistry requested, primarily, environmental remediation for thealleged pollution caused by the activity of the Mantova plantfrom 1976 until 1990, and provisionally, in case there was nopossibility to remediate, the payment of environmental damages.Edison agreed on a settlement with the Ministry whereby Edisonquantified compensation for environmental damage freeing from anyobligation Syndial, which purchased the plant in 1989. Syndialfailed to settle this dispute with the Ministry. The proceedingis still pending.

*Summon before the Court of Venice for environmental damagesallegedly caused to the lagoon of Venice by the Porto Margheraplants.*On December 13, 2002, EniChem SpA (now Syndial SpA),jointly with Ambiente SpA (now merged into Syndial SpA) andEuropean Vinyls Corporation Italia SpA, was summoned before theCourt of Venice by the Province of Venice. The province requestedcompensation for environmental damages that were not quantified,allegedly caused to the lagoon of Venice by the Porto Margheraplants, which were already the subject of two previous criminalproceedings against employees and managers of the defendants. EVCItalia and Ineos presented an action to be indemnified byEni’s Group companies in case the alleged pollution isproved. The environmental damage is being assessed by anindependent consultant.

*Claim of environmental damages, allegedly caused byindustrial activities in the area of Crotone, commenced by thePresident of the Regional Council of Calabria.*On April 14,2003, the President of the Regional Council of Calabria, asDelegated Commissioner for Environmental Emergency in theCalabria Region, commenced an action against EniChem SpA (nowSyndial SpA) with reference to environmental damages forapproximately euro 129 million and damages for euro 250 million(plus interest and compensation) in connection with loss ofincome and damage to property allegedly caused by industrialactivities in the area of Crotone. In addition, the Province ofCrotone is acting as plaintiff, claiming damage for euro 300million. With a decision in May 2007, the Court of Milan declaredthe invalidity of the power of proxy conferred to the DelegatedCommissioner to act on behalf of the Calabria Region with thenotice served to Syndial SpA and decided the liquidation ofexpenses born by the defendant. The Province of Crotone appealedthis decision. The second instance court accepted this appeal andSyndial repealed this determination. On October 21, 2004, Syndialwas convened before the Court of Milan by the Calabria Regionwhich is seeking to obtain a condemnation of Syndial for a damagepayment, should the office of the Delegated Commissioner forEnvironmental Emergency in the Calabria Region cease during thisproceeding. The Calabria Region requested a damage paymentamounting to euro 800 million as already requested by theDelegated Commissioner for Environmental Emergency in theCalabria Region in the proceeding commenced in 2003. This newproceeding is in the preliminary investigation stage. Thisproceeding was unified with the one opened by the Ministry of theEnvironment. In 2006, the Council of Ministers, Ministry for theEnvironment and the Delegated Commissioner for EnvironmentalEmergency in the Calabria Region represented by the State Lawyerrequested Syndial to appear before the Court of Milan to obtainthe ascertainment, quantification and payment of damage (in theform of land, air and water pollution and therefore of thegeneral condition of the population) caused by the operations ofPertusola Sud SpA in the Municipality of Crotone and insurrounding municipalities. The local authorities requested theascertainment of Syndial’s responsibility as concernsexpenses borne and to be borne for the cleanup and reclamation ofsites, currently quantified at euro 129 million. This proceedingconcerns the same matter and damage claim as the proceedingscommenced by the Delegated Commissioner for EnvironmentalEmergency in the Calabria Region and the Calabria Region againstSyndial in 2003 and 2004, respectively.

*Summon for alleged environmental damage caused by DDTpollution in the Lake Maggiore.*A proceeding is pendingbefore the Court of Turin by which the Minister of theEnvironment summoned Syndial SpA and requested environmentaldamage for euro 3,237 million as well as the additionalexpenditures needed for the reclamation and remediation of thesite in relation to alleged DDT pollution at Lake Maggioreallegedly caused by the Pieve Vergonte plant. An independentconsultant estimated the environmental damage and relatedreclamation expenditures to amount to euro 1,273 million. Thisestimate has been filed with the court. Syndial opposed thisestimate. Parties are waiting for a final determination by thecourt. The Italian Ministry enacted a ministerial decreeproviding for the: (i) upgrading of a hydraulic barrier toprotect the site; and (ii) presentation 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 of theEnvironment. Syndial expects to repeal this decision.

*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 certain environmental damage which cannot be 

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cleaned up as well as further damages of various types (e.g.damage to the natural beauty of this site). 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 of 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.

*Ministry for the Environment Augusta harbor.*TheItalian Ministry for the Environment with various administrativeacts ordered companies running plants in the petrochemical siteof Priolo to perform safety and environmental remediation worksin the Augusta harbor. Companies involved include Enisubsidiaries Polimeri Europa and Syndial. Pollution has beendetected in this area primarily due to a high mercuryconcentration which is allegedly attributed to the industrialactivity of the Priolo petrochemical site. Polimeri Europaopposed said administrative actions, objecting in particular tothe way in which remediation works have been designed andinformation on concentration of pollutants has been gathered. TheRegional Administrative Court of Catania with its decision ofJuly 2007 annulled the decision made by the Service Conference ofthe Ministry of the Environment concerning Priolo and the Augustaharbor. The Ministry and the municipalities of Augusta andMelilli filed a claim with an Administrative Court of the SicilyRegion which accepted the claim In January 2008 the RegionalCourt of Catania accepted two further claims on this matter,while the decision of the Administrative Court of Lazio is stillpending.

 

> 
**Other judicial or arbitration proceedings**

SYNDIAL SPA (FORMER ENICHEM SPA)*Serfactoring: disposal of receivables.*In 1991,Agrifactoring SpA commenced proceedings against Serfactoring SpA,a company 49% owned by Sofid SpA and which is controlled by EniSpA. The claim relates to an amount receivable of euro 182million for fertilizer sales (plus interest and compensation forinflation), originally owed by Federconsorzi to EniChemAgricoltura SpA (later Agricoltura SpA - in liquidation), andTerni Industrie Chimiche SpA (merged into Agricoltura SpA - inliquidation), that has been merged into EniChem SpA (now SyndialSpA). Such receivables were transferred by Agricoltura and TerniIndustrie Chimiche to Serfactoring, which appointed Agrifactoringas its agent to collect payments. Agrifactoring guaranteed to paythe amount of such receivables to Serfactoring, regardless ofwhether or not it received payment on the due date. Followingpayment by Agrifactoring to Serfactoring, Agrifactoring wasplaced in liquidation and the liquidator of Agrifactoringcommenced proceedings in 1991 against Serfactoring to recoversuch payments (equal to euro 182 million) made to Serfactoringbased on the claim that the foregoing guarantee became invalidwhen Federconsorzi was itself placed in liquidation. Agricolturaand Terni Industrie Chimiche brought counterclaims againstAgrifactoring (in liquidation) for damages amounting to euro 97million relating to acts carried out by Agrifactoring SpA asagent. The amount of these counterclaims has subsequently beenreduced to euro 46 million following partial payment of theoriginal receivables by the liquidator of Federconsorzi andvarious setoffs. These proceedings, which have all been joined,were decided with a partial judgment, deposited on February 24,2004; the request of Agrifactoring has been rejected and thecompany has been ordered to pay the sum requested by Serfactoringand damages in favor of Agricoltura, to be determined followingthe decision. Agrifactoring appealed this partial decision,requesting in particular the annulment of the first stepjudgment, the reimbursement of euro 180 million from Serfactoringalong with the rejection of all its claims and the payment of allproceeding expenses. The judge of the Court of Rome, responsiblefor the determination of the amount of damages to be paid toSerfactoring and Agricoltura, decided on May 18, 2005 to suspendthis determination until the publication of the decision of thecourt hearing the appeals. On argument, Serfactoring and Syndialrequested that the final decision Court return the case to itsoriginal court. The Court of Cassation accepted the appeal andthe return of the case to its original court.

ENI SPA*Fintermica.*Fintermica presented a claim against Eniconcerning the management of the Jacorossi joint venture withreference to an alleged abuse of key roles played by Eni SpA inthe joint venture, thus damaging the other partner’sinterest and the alleged dilatory behavior of Syndial in sellingits interest in the joint venture to Fintermica. The partiesdecided to commence arbitration on the matter. The examiningphase is ongoing and an independent assessment of this matter isbeing executed.

SNAMPROGETTI SPA*CEPAV Uno and CEPAV Due.*Eni holds interests in the CEPAVUno (50.36%) and CEPAV Due (52%) consortia that in 1991 signedtwo contracts with TAV SpA for the construction of two railwaytracks for high speed/high capacity trains from Milan to Bologna(under construction) and from Milan to Verona (in the designphase). With regard to the project for the construction of theline from Milan to Bologna, an Addendum to the contract betweenCEPAV Uno and TAV was signed on June 27, 2003, redefining certainterms and conditions of the contract. Subsequently, the CEPAV Unoconsortium requested a time extension for the completion of worksand a 

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claim amounting to euro 800 million. CEPAV Uno and TAV failedto solve this dispute amicably. CEPAV Uno opened an arbitrationprocedure as provided for under terms of the contract on April27, 2006.

With regard to the project for the construction of ahigh-speed railway from Milan to Verona, in December 2004, CEPAVDue presented the final project, prepared in accordance with LawNo. 443/2001 on the basis of the preliminary project approved byan Italian governmental authority (CIPE). As concerns thearbitration procedure requested by CEPAV Due against TAV for therecognition of costs incurred by the Consortium in the 1991-2000ten-year period plus suffered damage, in January 2007, thearbitration committee determined the Consortium’s right torecover the costs incurred in connection with the designactivities performed. A technical independent survey is underwayto assess the amount of compensation to be awarded to theConsortium as requested by the arbitration committee. TAVappealed the arbitration committee’s determination. In April2007, the Consortium filed with the second instance court of Romean appeal against Law Decree No. 7 of December 31, 2007 revokingthe concessions awarded to TAV which resulted in the annulment ofarrangements signed between TAV and the Consortium to build thehigh-speed railway section from Milan to Verona. The EuropeanCourt of Justice was requested to judge on this matter. In themeantime, TAV decided to not request the reimbursement ofadvances paid to the Consortium.

 

> 
**Antitrust, EU Proceedings, Actions of the Authority for    Electricity and Gas and of Other Regulatory Authorities**

*Antitrust*

ENI SPA*Abuse of dominant position of Snam 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 98/30/EC, this Court grantedthe suspension of the decision. The Authority did not appeal thisdecision. The decision on the merit of this dispute is stillpending before the same Administrative Court.

*Formal assessment commenced by the Commission of theEuropean Communities for the evaluation of alleged participationto activities limiting competition in the field of paraffin.*OnApril 28, 2005, the Commission of the European Communitiescommenced a formal assessment to evaluate the allegedparticipation of Eni and its subsidiaries in activities limitingcompetition in the field of paraffin. The alleged violation ofcompetition is for: (i) the determination of and increase inprices; (ii) the subdivision of customers; and (iii) exchange oftrade secrets, such as production capacity and sales volumes.After, the Commission requested information on Eni’sactivities in the field of paraffin and certain documentationacquired by the Commission during an inspection. Eni filed therequested information. This proceeding is at the preliminaryinvestigation stage following the communication of a statement ofobjections by the European Commission. Eni accrued a provisionagainst this proceeding. The final hearing was held in December2007.

*Ascertainment by the European Commission of the level ofcompetition in the European natural gas market.*As part ofits activities to ascertain the level of competition in theEuropean natural gas market, with Decision No. C(2006)1920/1of May 5, 2006, the European Commission informed Eni on May 16,2006 that Eni and its subsidiaries were subject to aninvestigation under Article 20, paragraph 4 of the EuropeanRegulation No. 1/2003 of the Council in order to verify thepossible existence of any business activities breaching Europeanrules in terms of competition and intention to prevent access tothe Italian natural gas wholesale market and to subdivide themarket among a few operators in the activity of supply andtransport of natural gas. Officials from the European Commissionconducted inspections at the headquarters of Eni and of certainEni subsidiaries and collected documents. Similar actions havebeen performed by the Commission also against the main operatorsin natural gas in Germany, France, Austria and Belgium. In April2007, the European Commission made known its decision to start afurther stage of inquiry, and stated that elements collected sofar induced in the Commission the suspicion that Eni adoptedbehaviors leading to "capacity hoarding and strategicunderinvestment in the transmission system leading to theforeclosure of competitors and harm to competition and customersin one or more supply markets in Italy". In the samedocument, the Commission states that "It is important tonote that the initiation of proceedings does not imply that theCommission has conclusive proof of an infringement. It onlysignifies that the Commission will conduct an in-depthinvestigation of the case as a matter of priority".

*TTPC.*In April 2006, Eni filed a claim before theRegional Administrative Court of Lazio against the decision ofthe Italian Antitrust Authority of February 15, 2006 stating thatEni’s behavior pertaining to implementations of plans forthe upgrading of the TTPC pipeline for importing natural gas fromAlgeria represented an abuse of dominant position under Article82 of the European Treaty and fined Eni. The initial fineamounted to euro 390 

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million and was reduced to euro 290 million in considerationof Eni’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. Eni iswaiting for the filing of the motivations of the Court decisionto ascertain the impact of said decision. Pending thisdevelopment, 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. Pending the finaloutcome, Eni awaits for the determination of the amount of thefine to be paid.

POLIMERI EUROPA SPA AND SYNDIAL SPA*Inquiries in relation to alleged anti-competitive agreementsin the area of elastomers.*In December 2002, inquiries werecommenced concerning alleged anti-competitive agreements in thefield of elastomers. These inquiries were commenced concurrentlyby European and U.S. authorities. At present, proceedings arepending before the European Commission regarding the CR and NBRproducts. In March 2007, the Commission sent to Eni, PolimeriEuropa and Syndial a statement of objections, thus opening thesecond phase of this proceeding. In December 2007, the EuropeanCommission dismissed Syndial’s position on CR and imposed onEni and Polimeri a fine amounting to euro 132.160 million. Thetwo companies have filed an appeal with the EU Court of FirstInstance against this decision and, at the same time, paid thefine in March 2008. Investigations relating to other elastomersproducts resulted in the ascertainment of Eni having infringedEuropean competition laws in the field of synthetic rubberproduction (BR and ESBR). On November 29, 2006, the Commissionfined Eni and its subsidiary Polimeri Europa for an amount ofeuro 272.25 million. Eni and its subsidiary filed claims againstthis decision before the European Court of First Instance inFebruary 2007. The Commission filed a counterappeal. Pending theoutcome, Polimeri Europa presented a bank guarantee for euro 200million and paid the residual amount of the fine. In August 2007,Eni submitted a request for a negative ascertainment with theCourt of Milan aimed at proving the non-existence of allegeddamages suffered by tire manufacturers. With regard to NBR, aninquiry is underway also in the U.S., where class actions havealso been commenced. On the federal level, the class action wasabandoned by the plaintiffs. However, the federal judge has yetto acknowledge this abandonment. With regard to other productsunder investigation in the U.S., settlements were reached withboth relevant U.S. antitrust authorities and the plaintiffsacting through a class action. Eni recorded a provision for thesematters.

 

> 
**Regulation**

*Inquiry of the Italian Authority for Electricity and Gasregarding information to clients about the right to pay amountsdue for natural gas sales in installments.*With Decision No.228/2007, the Italian Authority for Electricity and Gas commenceda formal inquiry regarding information to clients about the rightto pay amounts due for the natural gas sales in installments inorder to possibly put a stop to the alleged infringement of theclients’ rights and to impose a fine. In April 2008, theAuthority concluded its inquiry and fined the Company by euro 3.2million.

*Toscana Energia Clienti SpA.*Eni’s subsidiaryToscana Energia Clienti started an action against a customerregarding alleged lack of measurement of gas consumption due toinability to access a measurement facility at the customer’ssite, also in connection with the application of Resolution No.229/2001 of the Italian Authority for Electricity and Gas. Thiscustomer has annual consumption in excess of 5,000 CM. Thedefendant has filed a counter-claim in relation to thisproceeding. This proceeding is in a preliminary stage.

DISTRIBUIDORA DE GAS CUYANA SA*Formal investigation of the agency entrusted with theregulations for the natural gas market in Argentina.*Enargasstarted a formal investigation on some operators, among themDistribuidora de Gas Cuyana SA, a company controlled by Eni.Enargas stated that the company improperly applied conversionfactors to volumes of natural gas invoiced to customers andrequested the company to apply the conversion factors imposed bylocal regulations from the date of the default notification(March 31, 2004) without prejudice to any damage payment andfines that may be decided after closing the investigation. InApril 2004 the company filed a defensive memorandum. On April 28,2006, the company formally requested the acquisition of documentsfrom Enargas in order to have access to the documents on whichthe allegations are based.

 

> 
**Tax Proceedings**

ENI SPA*ICI Pineto.*With a formal assessment presented by theMunicipality of Pineto (Teramo) in December 1999, Eni SpA hasbeen accused of not having paid a municipal tax on real estatefor the period from 1993 to 1998 on four oil platforms located inthe Adriatic Sea which constitute territorial waters in front ofthe coast of Pineto. Eni was requested to pay a total ofapproximately euro 17 million including interest and a fine. Enifiled a claim against this request stating that the sea where theplatforms are located is not part of the municipal territory andthe tax application as requested by the municipality lackedobjective fundamentals. The claim has been accepted in the firsttwo 

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degrees of judgment at the Provincial and Regional TaxCommissions. However, the Court overturned both judgments,declaring that a municipality can consider requesting a tax onreal estate in the sea facing its territory and with the decisionof February 2005 sent the proceeding to another section of theRegional Tax Commission in order to judge on the matters of theproceeding. On February 22, 2007 the Commission held the hearing,and the filing of the judgment is pending. On December 28, 2005,the Municipality of Pineto presented the same request for thesame platforms for the years 1999 to 2004. The total amountrequested from Eni is euro 24 million including interest andpenalties. Eni filed a claim against this request which wasaccepted by the first degree judge with a decision of December 4,2007.

AGIP KARACHAGANAK BV*Claims concerning unpaid taxes and relevant payment ofinterest and penalties.*In July 2004, the relevant Kazakhauthorities informed Agip Karachaganak BV and Agip KarachaganakPetroleum Operating BV, shareholder and operator of theKarachaganak contract, respectively, on the final outcome of thetax audits performed for fiscal years 2000 to 2003. Claims by theKazakh authorities concern unpaid taxes for a total of $43million, net to Eni, and the anticipated offsetting of valueadded tax (VAT) credits for $140 million, net to Eni, as well asthe payment of interest and penalties for a total of $128million. Both companies filed a counterclaim. With an agreementreached on November 18, 2004, the original amounts were reducedto $26 million net to Eni that includes taxes, surcharges andinterest. Meetings continue regarding the residual matters. Enirecorded a provision for this matter.

AGIP KCO NVIn December 2007 the Kazakh tax authority filed a notice of taxassessment for fiscal years 2004 to 2006 to Agip KCO, operator ofthe Kashagan contract. Allegedly unpaid taxes, including interestand penalties, amount to approximately $235 million net to Eniand relate to unpaid amounts and inapplicable deductions on valueadded tax and the default in applying certain withholding taxeson payments to foreign suppliers. The same notice also informsthe companies which are parties to the Kashagan contract thatfurther assessments are pending on undeductible costs for $188million net to Eni and higher taxable income of Kazakhorganizations for $48 million net to Eni. The company filed anappeal. Eni recorded a provision on this matters.

 

> 
**Court Inquiries**

*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(contractor of engineering and procurement services) with noticesof process in accordance with existing laws regulating theadministrative responsibility of companies (Legislative DecreeNo. 231/2001). In its meeting of August 10, 2004, Eni’sBoard of Directors examined the aforementioned situation andEni’s CEO approved the creation of a task force in charge ofverifying the compliance with Group procedures regarding theterms and conditions for the signing of supply contracts byEniPower and Snamprogetti and the subsequent execution of works.The Board also advised divisions and departments of Eni tocooperate fully in every respect with the Court. From theinquiries performed, no default in the organization emerged, nordeficiency in internal control systems. External experts haveperformed inquiries with regard to certain specific aspects. Inaccordance with its transparency and firmness guidelines, Eniwill take the necessary steps in acting as plaintiff in theexpected legal action in order to recover any damage that couldhave been caused to Eni by the illicit behavior of its suppliersand of their and Eni employees. In the meantime, preliminaryinvestigations have found that both EniPower and Snamprogetti arenot to be considered defendants in accordance with existing lawsregulating the administrative responsibility of companies(Legislative Decree No. 231/2001). In August 2007, Eni wasnotified that the Public Prosecutor requested the dismissal ofEniPower SpA and Snamprogetti SpA, while the proceeding continuesagainst former employees of these companies and employees andmanagers of the suppliers under the provisions of LegislativeDecree No. 231/2001. Eni SpA, EniPower and Snamprogetti presentedthemselves as plaintiffs in the preliminary hearing.

*Trading.*An investigation is pending regarding twoformer Eni managers who were allegedly bribed by third parties tofavor 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. In spite of the fact that the PublicProsecutor filed a request for dismissing this proceeding, thejudge for preliminary investigations ordered to start the penalaction.

*TSKJ Consortium Investigations of the SEC and otherAuthorities.*The U.S. Securities and Exchange Commission(SEC) is currently investigating alleged improper payments madeby the TSKJ consortium to certain public officials in relation tothe construction of natural gas liquefaction facilities at BonnyIsland in Nigeria. The TSKJ consortium is formed by Eni’ssubsidiary Snamprogetti (Eni’s interest being 43.41%) with a25% interest and, for the remaining part, by subsidiaries ofHalliburton/KBR, Technip and JGC. Eni and its subsidiarySnamprogetti adhered to a request for voluntary collaborationnotified by the SEC in June 2004. The SEC request aimed at 

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obtaining information regarding the TSKJ consortium. Eni andSnamprogetti also adhered to other requests for voluntarycollaboration made by other authorities which are currentlyinvestigating this matter.

*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 Courts of Milan. The order was also served uponfive top managers of the Group companies in addition to thirdparty companies and their top managers. The investigation allegesbehavior which breaches Italian criminal law, starting from 2003,regarding the use of instruments for measuring gas, the relatedpayments of excise duties and the billing of clients as well asrelations with the Supervisory Authorities. The allegationregards, interalia, 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. The Group companies are cooperating with theSupervising Authorities in the investigations.

*Agip KCO NV.*In November 2007, the public prosecutor ofKazakhstan informed Agip KCO of the start of an inquiry for analleged fraud in the award of a contract to the OverseasInternational Constructors GmbH in 2005.

 

> 
**Settled Proceedings**

ENI SPA*Inquiry of the Italian Authority for Electricity and Gasregarding the use of storage capacity conferred in years2004-2005 and 2005-2006.*With Decision No. 37 of February 23,2006, the Italian Authority for Electricity and Gas commenced aninquiry on the activities of natural gas selling companies,including Eni, in order to potentially impose a fine or anadministrative sanction regarding the use of storage capacityconferred in years 2004-2005 and 2005-2006. For the 2004-2005thermal year and for the period from October 1, 2005 to December31, 2005, the Authority for Electricity and Gas supposed thatgiven the weather of the period, the use of modulation storagecapacity was featured by a higher volume of off takes withrespect to the volume which would have been necessary to satisfythe commercial requirements for which the storage companyentitled Eni to a priority in the conferral of storage capacity.According to the Authority for Electricity and Gas, suchsituation was in contrast with applicable regulation. WithDecision No. 281/2006 of December 6, 2006, the Authority forElectricity and Gas closed said inquiry and fined Eni by euro 90million of which euro 45 million pertaining to thermal year2004-2005 and euro 45 million to thermal year 2005-2006 as aconsequence of Eni having violated regulation in force pertainingto the priorities in the conferral of storage capacity. Enisettled the matter pertaining to thermal year 2004-2005 by payinga fractional amount of the fine imposed in accordance with LawNo. 689/1981 and filed an appeal before the RegionalAdministrative Court of Lombardy requesting the annulment of thefine pertaining to thermal year 2005-2006. On June 19, 2007, theRegional Administrative Court of Lombardy ruled in favor of Eniand annulled that section of Decision No. 281/2006 of theAuthority for Electricity and Gas imposing a fine on Eni forthermal year 2005-2006. Among other things, the Court’sruling established that the elements collected by the Authorityto fine Eni were lacking a sufficient degree of proof. The termsfor appealing this decision on part of the Authority expired.Consequently this proceeding closed without any further liabilityfor the Company. Unutilized provisions that were accrued for thisproceeding in 2006 were reversed in 2007.

*Inquiry of the Italian Antitrust Authority in relation tocollusive mechanisms for the pricing of automotive fuelsdistributed on the retail market.*With Decision of January18, 2007, the Italian Antitrust Authority opened an inquiry toascertain the existence of a possible agreement limit competitionin the field of pricing of automotive fuels distributed on theretail market in Italy in violation of Article 81 of the ECTreaty. This inquiry concerns eight oil companies, including Eni.According to the Authority, said companies would have beenputting in place collusive mechanisms intended to influence thepricing of automotive fuels distributed on the retail market byway of a continuing exchange of informative flows since 2004. InApril 2007, Eni filed with the Italian Antitrust Authority aproposal of initiatives, based on certain rules established bythe same Authority, enabling companies to reach the closure of aproceeding without sanctions or fines when they presentcounteractive measures designed to eliminate an infringingbehavior. In December 2007, the Antitrust Authority approved theinitiatives proposed by Eni and decided to close the inquirywithout ascertaining any violation and imposing any fine. Inparticular, Eni is engaged in initiatives designed to contain andpossibly reduce the retail prices of fuels in the hyper-selfselling mode until they are in line with European averages. Italso committed itself to pursue agreements with large chainstores.

STOCCAGGI GAS ITALIA SPA*Tariffs.*With Decision No. 26 of February 27, 2002, theItalian Authority for Electricity and Gas determined tariffcriteria for modulation, mineral and strategic storage servicesfor the period from April 1, 2002 to March 31, 2006 and effectiveretroactively from June 21, 2000. On March 18, 2002 Stoccaggi GasItalia SpA (Stogit) filed its proposal of tariff for modulation,mineral and strategic storage for the first regulated period.With Decision No. 49 of March 26, 2002, the Authority forElectricity and Gas repealed Stogit’s proposal and definedtariffs for the first regulated period. Stogit applied the tariffdetermined by the two decisions, but filed an appeal against bothdecisions with the Regional Administrative Court of Lombardyrequesting their cancellation. With a decision dated September 

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29, 2003, that court rejected the appeal presented by Stogit.Stogit filed an appeal to the Council of State against thesentence, which was rejected by the Council of State on January6, 2006.

POLIMERI EUROPA SPA*Violation of environmental regulations on waste management.*Beforethe Court of Gela a criminal action took place relating to thealleged violation of environmental regulations on wastemanagement concerning the ACN plant and the disposal of FOKresidue deriving from the steam cracking process. Defendants werefound guilty and a damage payment in first instance to anenvironmental association acting as plaintiff was required to bemade. The amount of said damage payment is immaterial. Thesentence was passed to the Civil Court for the quantification ofany further damage and claim. Eni appealed this sentence and wasacquitted by the Court of Appeal of Caltanissetta fornon-existence of the crime.

RAFFINERIA DI GELA SPA*Soil and sea pollution.*In 1999, the public prosecutor ofGela commenced an investigation in order to ascertain allegedsoil and sea pollution caused by the discharge of pollutants byEni’s Gela refinery. Three environmental organizations areacting as plaintiffs and have requested damage payment for euro551 million. With a Decision of February 20, 2007, the Court ofGela dismissed these allegations.

SYNDIAL SPA*Summon for the ascertainment of responsibility in thepollution of soil of Paderno Dugnano.* In 2004, SitindustrieSpA, which in 1996 purchased a plant in Paderno Dugnano fromEnirisorse (now merged into Syndial SpA), summoned Syndial SpAbefore the Court of Milan, requesting to establish the SyndialSpA’s responsibility in the alleged pollution of soil aroundthe plant and to require it to pay environmental damage necessaryfor remediation. The Tribunal of Milan rejected theplaintiff’s request with a sentence released on June 10,2006. The deadline to appeal the Tribunal sentence expired onNovember 1, 2007.

ENI SPA*Notification to Eni Petroleum Co Inc of a subpoena by theDepartment of Justice of the United States of America AntitrustDivision and request of information and documents relating toactivities in the field of wax and of a deposition.*On April28, 2005, the Department of Justice of the United States ofAmerica - Antitrust Division, notified Eni Petroleum Co Inc of asubpoena requesting information and documents relating toactivities in the field of wax to be filed before June 20, 2005and a deposition on the same date. The Company informed thedepartment that it does not produce nor import wax in the UnitedStates of America.

ENI SPA*Decree of the Lombardy Region.*With a decree datedDecember 6, 2000, the Lombardy Region decided that natural gasused for electricity generation is subject to an additionalregional excise tax in relation to which Snam SpA (merged intoEni SpA in 2002) should substitute for the tax authorities in itscollection from customers. Given interpretive uncertainties, thesame decree provides the terms within which distributingcompanies are expected to pay this excise tax without paying anypenalty. Snam SpA and the other distributing companies of Enibelieve that natural gas used for electricity generation is notsubject to this additional excise tax. For this reason, anofficial interpretation was requested from the Ministry ofFinance and Economy. With a Decision of May 29, 2001, theMinistry confirmed that this additional excise tax cannot beapplied. The Region decided not to revoke its decree and Snamtook appropriate legal action. On the basis of action carried outby Snam, the Council of State decided on March 18, 2002 that thejurisdiction of the Administrative Court did not apply to thiscase. In case the Region should request payment, Eni willchallenge this request in the relevant Court. The Lombardy Regiondecided with Regional Law No. 27/2001 that no additional tax isdue from January 1, 2002 onwards, but still requested the paymentof taxes due before that date. The action for the recognition ofsuch taxes bears a five-year term. Consequently, the exercise ofsuch action has expired.

SNAM RETE GAS*Environmental tax of Sicilia Region upon the owners of primarypipelines.*With Regional Law No. 2 of March 26, 2002, theSicilia Region introduced an environmental tax upon the owners ofprimary pipelines in Sicily (e.g. pipelines operating at amaximum pressure of over 24 bar). Snam Rete Gas paid eightinstallments for a total of euro 86.1 million and suspendedpayments in December 2002 based on a decision of the RegionalAdministrative Court of Lombardy. At the same time, Snam Rete Gaspromoted all actions required to protect its interests withItalian and European Authorities. On June 21, 2007, the EuropeanCourt of Justice declared the regional law to be contrary toEuropean rules and to the cooperation agreement between theEuropean Economic Community and the Peoples’ DemocraticRepublic of Algeria, under which certain products (includingnatural gas) imported from this country could not be subjected tocustoms or other duties. Following this ruling, the SiciliaRegion cancelled the law introducing the tax with Regional LawNo. 15 of August 21, 2007. With various the Regional TaxCommission and the Provincial Tax Commission of Palermo declaredthe environmental tax of the Sicilia Region illegitimate becauseit is contrary to European rules and condemned the Region torepay the cashed amounts. In its budget law for 2008, the Regionaccrued the necessary provisions for repaying Snam Rete Gas. OnFebruary 17, 2007 the Region and Snam Rete Gas signed anagreement that provides for the repayment in six annualinstallments starting from the first quarter of 2008. On March 1,2008 Snam Rete Gas received the first payment.

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ENI SPA*Inquiry of the Italian Antitrust Authority on jet fuel.*Witha Decision of December 9, 2004, the Italian Antitrust Authoritycommenced an inquiry on the distribution of jet fuel against sixoil companies operating in Italy, including Eni and certainentities jointly controlled by said oil companies engaged in thestoring and loading jet fuel in the Rome Fiumicino, Milan Linateand Milan Malpensa airports. The inquiry intends to ascertain theexistence of alleged restrictions to competition as said oilcompanies would agree to divide among themselves the supplies toairlines. On December 22, 2005, the Authority notified thepreliminary results of the inquiry concerning: (i) informationflows to said oil companies related to the functioning of thejointly-controlled entities engaging in the storage and uploadingof jet fuel; (ii) barriers to the entrance of new competitors inthe capital of such entities operating the activities of storingand loading; and (iii) the price of jet fuel which is deemed tobe higher than on other European markets. On June 20, 2006, theAuthority notified the final decision of this proceeding to Eniand fined Eni by an amount of euro 117 million. The Authorityfined other oil companies involved in this matter. Eni filed anopposition against this decision before an administrative courtand suspended the payment of this fine. On January 29, 2007, theRegional Administrative Court of Lazio accepted only partiallythe opposition made by Eni and annulled part of the decision ofthe Authority. In particular, a measure providing for theinvolved oil companies to cease their joint participation in thecapital of the entities operating the activities of storing andloading jet fuel was annulled. Eni accrued a provision withrespect to this proceeding. As a consequence of this decision,Eni paid a fine amounting to euro 117 million. Eni also decidedto appoint independent directors in the boards of those jointventures, replacing Eni managers acting as board members. Enifiled an appeal against this decision before an higheradministrative court requesting for its rejection or a reductionof the fine.

*Inquiry commenced by the Italian Antitrust Authorityconcerning an alleged abuse of dominant position in the use ofthe total continuous regasification capacity of GNL.*OnNovember 18, 2005, the Italian Antitrust Authority notified Eniand its subsidiary GNL Italia of the opening of an inquiry, inaccordance with Article 14 of Law No. 287/1990, concerning analleged abuse of dominant position in the assignment and use ofthe total continuous regasification capacity of the Panigagliaterminal (owned by GNL Italia) during thermal years 2002-2003 and2003-2004, as already reported by an inquiry of the ItalianAuthority for Electricity and Gas on the same matter. TheAuthority for Electricity and Gas concluded its inquiry bysignaling the fact to the Antitrust Authority. In a latercommunication Eni was informed that the inquiry has been extendedalso to thermal year 2004-2005 and to Snam Rete Gas which is theparent company of GNL Italia SpA. On September 25, 2006, theAntitrust Authority sent Eni the findings of its inquiry. Enithen presented the Antitrust Authority certain commitments basedon Article 14-ter of Law No. 287/1990. On November 23, 2006, theAntitrust Authority resolved to publish such commitmentseffective the following day. On March 9, 2007, the AntitrustAuthority resolved to accept Eni’s commitments and to closethe inquiry without charging or fining Eni. Eni is committed toperform a gas release amounting to 4 BCM in a two-year period,starting on October 1, 2007. Eni is implementing its obligationsunder the gas release agreement and providing timely informationto the Antitrust Authority on this activity.

*Alleged intentional poisoning (Priolo).*In March 2002,the public prosecutor of Siracusa commenced an investigationconcerning the activity of the refinery of Priolo to ascertainwhether infiltrations of refinery products into the deepwater-bearing stratum used for human consumption purposes in thePriolo area had occurred. In September 2007, the judge for thepreliminary investigation filed a request to dismiss thisproceeding.

 

> 
***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, in the next four-year period management plans to pay toshareholders yearly amounts of dividends in line with the levelof fiscal year 2007 in real terms. On April 29, 2008, Eni’sshareholders’ meeting approved a dividend, for fiscal year2007, of euro 1.30 per share, of which euro 0.60 per share waspaid in October 2007 as an interim dividend with the balance ofeuro 0.70 per share to be paid late in May 2008. Total cashoutlay for the 2007 dividend is expected at euro 4.58 billion(including the euro 2.20 billion already paid in October 2007).In future years, management expects to continue paying interimdividends for each fiscal year, with the balance to the full yeardividend to be paid in each following year.

 

 

**Significant Changes**

See "Item 5 – Recent developments" for adiscussion of significant events occurred after 2007 year-end upto the latest practicable date, including a review of Eni’sperformance in the first quarter of 2008, an agreement 

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regarding the Kashagan project and settlement of theCompany’s dispute with the Venezuelan authorities regardingthe Dación expropriation.

 

 

**Item 9. THE OFFER AND THE LISTING**

**Offer and Listing Details**

The principal trading market for the ordinary shares of EniSpA, of a nominal value of euro 1.00 each (the"Shares"), is the Mercato Telematico Azionario or MTA("Telematico"), the Italian screen-based dealer market,which is the principal trading market for shares in Italy. TheShares are traded on the Blue Chip segment of Telematico, whichincludes shares of the companies whose market capitalizationamounts to more than euro 1,000 million. American DepositaryReceipts ("ADRs"), each representing two shares, arelisted on the New York Stock Exchange. The ratio has changed fromone ADR per five Shares to one ADR per two Shares, effectiveJanuary 10, 2006.

The table below sets forth the reported high and low referenceprices of Shares on Telematico and of ADRs on the New York StockExchange, respectively. Due to the ratio change, the historicalprices of ADRs have been adjusted by an adjustment factor of 2.5.See "Item 3 – Key Information – ExchangeRates" regarding applicable exchange rates during theperiods indicated below.

|   | **Telematico** |   | **New York        Stock Exchange** |
|--------|----------------|--------|------------------------------------|
|   |                |   |                                    |

|   | **High** |   | **Low** |   | **High** |   | **Low** |
|--------|----------|--------|---------|--------|----------|--------|---------|
|   |          |   |         |   |          |   |         |

|   | **(euro per share)** |   | **(U.S. $ per ADR)** |
|--------|----------------------|--------|----------------------|

| 2002                                  |   | 17.145 |   | 12.938 |   | 32.844 |   | 24.360 |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2003                                  |   | 15.746 |   | 11.881 |   | 37.992 |   | 26.460 |
| 2004                                  |   | 18.748 |   | 14.723 |   | 50.580 |   | 36.940 |
| 2005                                  |   | 24.960 |   | 17.930 |   | 60.540 |   | 47.400 |
| 2006                                  |   | 25.730 |   | 21.820 |   | 67.690 |   | 54.650 |
| 2007                                  |   | 28.330 |   | 22.760 |   | 78.290 |   | 60.220 |
|                                  |   |   |   |   |   |   |   |   |
| **2006**                              |   |   |   |   |   |   |   |   |
| First quarter                         |   | 24.880 |   | 23.050 |   | 60.650 |   | 55.170 |
| Second        quarter                 |   | 24.810 |   | 21.820 |   | 62.630 |   | 54.650 |
| Third quarter                         |   | 24.430 |   | 22.590 |   | 62.900 |   | 57.080 |
| Fourth        quarter                 |   | 25.730 |   | 23.050 |   | 67.690 |   | 58.400 |
|                                  |   |   |   |   |   |   |   |   |
| **2007**                              |   |   |   |   |   |   |   |   |
| First quarter                         |   | 25.720 |   | 22.760 |   | 66.720 |   | 60.220 |
| Second        quarter                 |   | 27.150 |   | 24.130 |   | 72.840 |   | 64.710 |
| Third quarter                         |   | 28.330 |   | 23.310 |   | 78.290 |   | 63.160 |
| Fourth        quarter                 |   | 26.680 |   | 23.320 |   | 75.660 |   | 67.220 |
|                                  |   |   |   |   |   |   |   |   |
| **2008**                              |   |   |   |   |   |   |   |   |
| First quarter                         |   | 25.580 |   | 20.870 |   | 75.130 |   | 61.790 |
| January        2008                   |   | 25.580 |   | 20.880 |   | 75.130 |   | 62.840 |
| February 2008                         |   | 23.340 |   | 21.140 |   | 70.700 |   | 61.790 |
| March 2008                            |   | 23.350 |   | 20.870 |   | 71.630 |   | 65.000 |
| April 2008                            |   | 24.770 |   | 21.820 |   | 77.160 |   | 68.570 |
| May 2008        (through May 9, 2008) |   | 25.660 |   | 25.110 |   | 79.410 |   | 75.950 |

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

JPMorgan Chase Bank. N.A. (the "Depositary")functions as a depositary bank issuing ADRs pursuant to theDeposit Agreement between Eni, the Depositary and the beneficialowners ("Beneficial Owners") and sometimes registeredholders of ADRs issued thereunder.

At May 9, 2008 there were 43,128,072 ADRs outstanding,representing 86,256,144 ordinary shares, or 2.1% of allEni’s shares outstanding, held by 91 holders of record(including the Depository Trust Company) in the United States ofAmerica, 88 of which are U.S. residents. Since certain of suchADRs are held by nominees, the number of holders may not berepresentative of the number of Beneficial Owners in the UnitedStates or elsewhere.

The Shares are included in the S&P/MIB, the primaryItalian stock exchange index that measures the performance of the40 leading companies in leading industries listed on the marketsorganized and managed by 

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Borsa Italiana SpA ("Borsa Italiana"). Theconstituents of the S&P/MIB are selected according to thefollowing criteria: sector representation, market capitalizationof free-float shares and liquidity. Since September 20, 2004S&P/MIB is the principal indicator used to track theperformance of the Italian stock market and is the basis forfuture and option contracts traded in the Italian DerivativesMarket ("IDEM") managed by Borsa Italiana. Eni’sShares are the largest component of the S&P/MIB, with aweighting of approximately 14.6%. as established by Standard& Poor’s and Borsa Italiana after reviewing thecomposition of the S&P/MIB on March 25, 2008. In addition,future and option contracts on the Shares are traded on IDEM andsecuritized derivatives based on the Shares are traded on theItalian securitized Derivatives Market ("SeDeX"). IDEMfacilitates the trading of future and option contracts on indexand shares issued by companies that meet certain requiredcapitalization and liquidity thresholds. SeDeX is the BorsaItaliana electronic regulated market where it is possible totrade securitized derivatives (covered warrants andcertificates).

Since January 14, 2002, the rule imposing a minimum lot ofshares for transactions on the Telematico has been abolished.Outside Telematico, block trading is permitted for orders thatmeet certain minimum size requirements and must be notified toConsob and Borsa Italiana. Starting from May 15, 2000, the Shareshave been also trading on a special market, named After Hourstrading market or TAH ("After Hours"), after theclosing of the day time of Telematico under special rules. SinceMarch 28, 2000, a three-day rolling cash settlement has beenapplied to all trades of equity securities in Italy, instead ofthe previous five-day settlement.

 

 

**Markets**

Telematico is organized and administered by Borsa Italianawhich is subject to the supervision and control of theCommissione Nazionale per le Società e la Borsa (the NationalCommission for Companies and the Stock Exchange or"Consob"), the public authority charged, interalia,with regulating investment companies, securities markets andpublic offerings of securities in Italy to ensure thetransparency and regularity of the dealings and protectinvestors. Borsa Italiana is a joint-stock company (Società perAzioni) that was established to manage the Italian regulatedfinancial markets (including Telematico) as part of theimplementation in Italy of the EU Investment Services Directive("ISD"). Borsa Italiana has issued rules governing theorganization and the administration of the markets it regulates,which are Telematico (shares, convertible bonds, pre-emptiverights, warrants, and Funds), After Hours, Mercato Expandi (smallcompanies), ETFplus (Exchange Traded Funds and Exchange TradedCommodities market), IDEM (index and stock derivatives market),SeDeX (covered warrants and certificates), and MOT (bond market),as well as the admission to listing on and trading on thesemarkets.

If the opening price of a security (established each tradingday prior to the commencement of continuous trading based on bidsreceived) differs by more than 10% (or such other amountestablished by Borsa Italiana) from the previous day’sreference price, trading in that security will not be permitteduntil it is authorized by Borsa Italiana. The reference price iscalculated for each security as a weighted average of the last10% of volumes traded in a single day. If in the course of atrading day the price of a security fluctuates by more than 5%from the last reported sale price (or 10% from the openingprice), trading in that security will be automatically suspendedfor a certain period of time. In the event of such a suspension,effect is not given to trades agreed but not confirmed before thesuspension.

Effective November 1, 2007, following the nationalimplementation of the EU Markets in Financial InstrumentsDirective (2004/39/EC) ("MiFID"), the so called‘concentration rule’ has been superseded. The MiFID,that replaces the ISD, establishes the legal framework governinginvestment services and financial markets in Europe. With the newregulatory regime of MiFID, orders can be routed not only toRegulated Markets but also to either Multilateral TradingFacilities ("MTF"s) or Systematic Internalisers. An MTFis a multilateral system, operated by an investment firm or amarket operator, which brings together multiple third-partybuying and selling interests in financial instruments – inthe system and in accordance with non-discretionary rules –in a way that results in a contract. A Systematic Internaliser isan investment firm or a bank which deals on own account byexecuting client orders outside a Regulated Market or an MTF.Italian exchanges and securities are primarily regulated byLegislative Decree No. 58 of February 24, 1998 ("Decree No.58"). This decree requires that the provision of investmentservices and activities to the public on a professional basis isreserved to banks and investment firms, which are firmsauthorized to provide investment services or activities. Inaddition, banks and investment firms organized in a member nationof the EU are permitted to operate in Italy provided that theintent of the bank or investment firm to operate in Italy iscommunicated to Consob by the competent authority of the memberstate. Non-EU banks and non-EU investment firms may operate inItaly subject to the specific authorization of Consob, inagreement with the Bank of Italy. Pursuant to Decree No. 58 theBank of Italy, in agreement with Consob, is responsible forregulation, clearing and settlement of transactions involvingfinancial instruments. The regulations and measures of generalapplication adopted by the Bank of Italy and Consob are publishedin the Gazzetta Ufficiale.

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**Item 10. ADDITIONAL INFORMATION**

**Memorandum and Articles of Association**

The full text of the memorandum and articles of association ofEni as amended by Eni’s Extraordinary Shareholders’Meeting held on May 24, 2007, is attached as an exhibit to thisannual report. See "Exhibit 1".

Eni is incorporated under the name "Eni SpA"resulting from the transformation of Ente Nazionale Idrocarburi,a public law agency, established by Law No. 136 of February 10,1953. The company’s purpose is the direct and/or indirectmanagement, by way of shareholdings in companies, agencies orbusinesses, of activities in the field of hydrocarbons andnatural vapors, such as exploration and development ofhydrocarbon fields, construction and operation of pipelines fortransporting the same, processing, transformation, storage,utilization and trade of hydrocarbons and natural vapors, all incompliance with concessions required by law.

The Company also has the purpose of direct and/or indirectmanagement, by way of shareholdings in companies, agencies orbusinesses, of activities in the fields of chemicals, nuclearfuels, geothermy and renewable energy sources, in the sector ofengineering and construction of industrial plants, in the miningsector, in the metallurgy sector, in the textile machinerysector, in the water sector, including derivation, drinkingwater, purification, distribution and reuse of waters; in thesector of environmental protection and treatment and disposal ofwaste, as well as in every other business activity that isinstrumental, supplemental or complementary with theaforementioned activities.

The Company also has the purpose of managing the technical andfinancial co-ordination of subsidiaries and affiliated companiesas well as providing financial assistance on their behalf.

The Company may perform any operations necessary or useful forthe achievement of its purpose; by way of example, it mayinitiate operations involving real estate, moveable goods, tradeand commerce, industry, finance and banking asset and liabilityoperations, as well as any action that is in any way connectedwith the company purpose with the exception of public fundraising and the performance of investment services as regulatedby Decree No. 58 of February 24, 1998.

The Company may take shareholdings and interests in othercompanies or businesses with objects similar, comparable orcomplementary to its own or those of companies in which it hasholdings, either in Italy or abroad, and it may provide real andor personal bonds for its own and others’ obligations,especially guarantees.

 

> 
***Directors***

The Board of Directors is invested with the fullest powers forordinary and extraordinary management of the company and, inparticular, the Board has the power to perform all acts it deemsadvisable for the implementation and achievement of the Companypurpose, except for the acts that the law or Eni’s By-lawsreserve to the Shareholders’ Meeting.

For a complete description of the powers of the Board, the CEOand the Chairman, appointments, role of the Board and rules andprocedures of the meetings of the Board see "Item 6 –Board Practices".

The Chairman and the members of the Board are remunerated inan amount established by the ordinary Shareholders’ Meeting.Said resolution, once taken, will remain valid for subsequentbusiness years until the Shareholders’ Meeting decidesotherwise.

There are no provisions as to retirement based on age-limitrequirements, or requirement of share ownership for adirector’s qualification in Eni’s By-laws.

 

> 
***Limitations on Voting and Shareholdings***

*General*

There are no limitations imposed by Italian law or by theBy-laws of Eni SpA on the rights of non-residents of Italy orforeign persons to hold or vote the shares other than thelimitations described below (which are equally applicable toresidents and non-residents of Italy).

According to Article 6.1 under Eni’s By-laws, no person,in any capacity, may own shares amounting to more than 3% of EniSpA’s voting share capital. Such maximum limit is calculatedtaking into account the aggregate shareholding of a controllingentity, whether an individual or a legal entity (each a"person"); its directly or indirectly controlledentities, as well as entities controlled by the same controllingentity; affiliated entities, as well as relatives within thesecond degree by blood or marriage (except for a legallyseparated spouse). Affiliation exists 

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as set forth in applicable Italian legislation, as well asbetween entities that, directly or indirectly, through controlledentities (other than those managing investment funds) are bound,even with third parties, by agreements relating to the exerciseof voting rights or the transfer of shares or interests inthird-party companies or other agreements relating to third-partycompanies as specified by applicable Italian legislation if suchagreements relate to at least 10% of the voting share capital ofa listed company or 20% of the voting share capital of anon-listed company. For purposes of calculating the 3% limit,shares held through a fiduciary nominee or intermediary are takeninto account.

Any voting rights attributable to shares held or controlled inexcess of such 3% limit cannot be exercised, and the votingrights of each entity to whom such limit on shareholding appliesare reduced proportionately, unless otherwise jointly disposed ofin advance by the parties involved. In the event that shares heldor controlled in excess of the maximum limit are voted, anyshareholders’ resolution adopted pursuant to such a vote maybe challenged if the majority required to approve such resolutionwould not have been reached without the vote of the sharesexceeding such maximum limit. Shares not entitled to be voted arenevertheless counted for the purpose of determining the quorum ata shareholders’ meeting.

Under the provisions of Law No. 602 of November 27, 1996, the3% limit does not apply to shareholdings in Eni SpA held by theMinistry of Economy and Finance, state-owned entities controlledby other entities or by the State. The 3% limit does not apply,in the event that such limit is exceeded as a result of theacquisitions of shares pursuant to a mandatory tender offer or apreventative tender offer, each as provided for by TUF,regardless of whether a majority of the voting rights is acquiredthereby. The approval of the Ministers as described below in"– Special Powers of the State" is howeverrequested for shares acquired pursuant to tender offers.

For other limitations that may affect voting rights, see"– Reporting Requirements and Restrictions onAcquisitions of Shares".

> 
*Special Powers of the State*

Under Italian laws, the State, acting through the Minister ofEconomy and Finance in agreement with the Minister of EconomicDevelopment (the "Ministers"), holds certain specialpowers in connection with any transfer of a controlling interestin certain State-owned companies operating in public servicesectors, including Eni SpA. The law places no limit on theduration of such special powers. Such powers are to be exercisedin accordance with EU principles.

Regarding the Special Powers of the State, Eni’s By-lawsacknowledge in Article 6.2 that the Italian State holds certainspecial powers pursuant to Law No. 474 of July 30, 1994:

| a) |   | opposition with respect to        the acquisition of material shareholdings by entities        affected by the shareholding limit as set forth in        Article 3 of Law Decree No. 332 of May 31, 1994,        converted with amendments into Law No. 474 of July 30,        1994, which – as per Decree issued by the Minister        of Treasury on October 16, 1995 – include those        representing at least 3% of share capital with the right        to vote at the ordinary Shareholders’ Meeting. Any        opposition is required to be expressed within ten days as        of the date of the notice to be filed by the Board of        Directors at the time a request is made for registration        in the Shareholders’ Register if the Minister        considers that such an acquisition may prejudice the        vital interests of the Italian State. Until the ten-day        period has expired, the voting rights or any rights other        than the economic rights connected with the shares        representing a material shareholding may not be        exercised. If the opposition power is exercised on the        basis that prejudice may be caused by the operation to        the vital interests of the Italian State, the transferee        may not exercise the voting rights or any rights other        than the economic rights connected with the shares        representing a material shareholding and must sell said        shares within one year. If the shareholder fails to        comply, the law court, upon request of the Minister of        Economy and Finance, will order the sale of the shares        representing a material shareholding according to the        procedures set forth in Article 2359-ter of the Civil        Code. The act through which the opposition power is        exercised may be appealed by the transferee before the        Regional Administrative Court of Lazio within sixty days        as of its issue; |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | opposition with respect to        the subscription of shareholders’ pacts or        agreements as per Article 122 of Legislative Decree No.        58 of February 24, 1998, involving – as per Decree        issued by the Minister of Treasury on October 16, 1995        – at least 3% of the share capital with the right to        vote at ordinary Shareholders’ Meetings. In order to        allow the exercise of the above mentioned opposition        power, Consob notifies the Minister of Economy and        Finance of the relevant pacts or agreements communicated        to it pursuant to the aforementioned Article 122 of        Legislative Decree No. 58 of February 24, 1998. The        opposition power may be exercised within ten days as of        the date of the notice by Consob. Until the ten-day        period has expired, the voting rights or any rights other        than the economic rights connected with the shares held        by the shareholders who have subscribed the above        mentioned pacts or agreements may not be exercised. If        the opposition power is exercised on the basis that        prejudice may be caused by said pacts or agreements to        the vital interests of the Italian State, the        shareholders pacts or agreements shall be null and void.        If in the shareholders’ meetings the shareholders        who have signed shareholders’ pacts or agreements        behave as if those pacts or agreements disciplined by        Article 122 of Legislative Decree No. 58 of February                                                                                                                                                                                                                                                                                                                                                                                                             |

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|   |   | 24, 1998 were still in        effect, the resolutions approved with their vote, if        determining for the approval, may be sued. The act        through which the opposition power is exercised may be        sued by the shareholders who joined the above mentioned        pacts or agreements before the Regional Administrative        Court of Lazio within sixty days as of its issue;                                                                                                                                                                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| c)     |   | veto power with respect to        resolutions to dissolve the company, to transfer the        business, to merge, to demerge, to transfer the        company’s registered office abroad, to change the        company objects and to amend the By-laws canceling or        modifying the powers indicated in this Article. The act        through which the veto power is exercised shall be duly        motivated in consideration of the prejudice the related        resolution may cause to the vital interests of the        Italian State and may be sued by the dissenting        shareholders before the Regional Administrative Court of        Lazio within sixty days as of its issue; and |
| d)     |   | appointment of one Board        member with no voting rights. Should such appointed        Director lapse, the Minister of Economy and Finance, in        agreement with the Minister of Economic Development, will        appoint his substitute.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

With a decision published on May 23, 2000, the European Courtof Justice declared that Italy, in granting the Minister ofEconomy and Finance "special powers" and introducingthem in the By-laws of some privatized companies, violated theobligations imposed by Articles 43 (former Article 52, right ofestablishment), 49 (former 59, free provision of services) and 56(former 73b, free movement of capitals) of the European Treaty.

In accordance with past decisions, the Court analyzed Italianlegislation in force at the expiration of the terms defined inthe European Commission’s informed opinion. Therefore theCourt did not take into account DPCM of May 4, 1999, Article 66of Law No. 488/1999 and DPCM of June 10, 2004 and Law No. 350 ofDecember 24, 2003 which included provisions limiting those"special powers" of the Minister of Economy and Financeand the Minister of the Economic Development. These are currentlybeing analyzed by the European Commission.

Furthermore Law No. 266 of December 23, 2005 (Budget Law) inArticle 1, paragraphs from 381 to 384, in order to favor theprocess of privatization and the diffusion among the public ofshareholdings in companies in which the State holds significantstakes, introduced the option to include in the By-laws of listedcompanies formerly entirely owned by the State, as in the case ofEni SpA, provisions for the issuance of shares and securitiesbearing the same characteristics as shares which give to thespecial meeting of relevant holders the right to request theissuance on their behalf of new shares, also at par value, orsecurities bearing the right to vote at both ordinary andextraordinary meetings. The introduction of these norms inEni’s By-laws would entail the cancellation of the 3%threshold to individual shareholdings, except for the State, ascontained in Article 6.1 of Eni’s By-laws. To dateEni’s By-laws have not been modified to adopt thisprovision.

*Minority protection provisions*

Under Italian laws, the By-laws of companies such as Eni SpA,that impose a maximum limit on the number of shares that may beheld by any shareholder must provide for the election ofdirectors and statutory auditors through the voto di lista(voting list) system, to ensure that minority shareholders of acompany are represented on its Board of Directors and Board ofStatutory Auditors. Accordingly, Eni’s By-laws require thatthe members of the Board of Directors and the Board of StatutoryAuditors of Eni SpA not directly appointed by the Ministers (see"– Special Powers of the State") be elected on thebasis of candidate lists presented either by the Board ofDirectors or by one or more shareholders (including the Ministerof Economy and Finance) representing in the aggregate at least 1%of the share capital of Eni SpA having the right to vote atordinary shareholders’ meetings. Such candidate lists mustbe deposited at the registered office of Eni SpA and published inat least three Italian newspapers having general circulation inItaly (two of which must be business dailies). Publication of thecandidate list presented by the Board of Directors shall occur atleast 20 days before the first call (as defined below) of theShareholders’ Meeting. Such term is reduced to 10 days inthe case of candidate lists proposed by shareholders. Eachshareholder may present or participate in the presentation ofonly one candidate list and each candidate may appear on only onelist.

According to Article 17.3 of Eni’s By-laws Board membersare elected in the following manner:

| a) |   | seven tenths of the members        to be elected will be drawn out from the candidate list        that receives the majority of votes expressed by the        Shareholders in the numerical order in which they appear        on the list, rounded off in the event of a fractional        number to the next lower number;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | the remaining Board members        will be drawn out from the other candidate lists; said        lists shall not be linked in any way, even indirectly, to        the shareholders who have presented or voted the list        that has obtained the highest number of votes; to this        purpose the votes obtained by each candidate list will be        divided by one or two depending on the number of the        members to be elected. The quotients thus obtained will        be assigned progressively to candidates of each said list        in the order given in the lists themselves. Quotients        thus assigned to candidates of said lists will be set in        one decreasing numerical order. Those who obtain the        highest quotients will be elected. In the event that more        than one candidate obtains the same quotient, the        candidate elected will be the one of the list that has        not hitherto had a Board member elected or that has        elected the least number of Board members. In the event        that none of the lists has yet elected a Board member or        that all of them have elected the same number of Board        members, the candidate from all such lists who has        obtained the largest number of votes will be elected. In        the event of equal list votes and equal |

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|   |   | quotient, a new vote will be        taken by the entire Shareholders’ Meeting and the        candidate elected will be the one who obtains a simple        majority of the votes;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| c)     |   | if through the procedure        described above the minimum number of independent        Directors set by these By-laws is not elected, the        quotient is calculated according to letter b) above in        order to be assigned to the candidates present in each        list; the independent candidates not yet drawn from the        lists pursuant to letters a) and b) above, who have got        the highest quotients will be elected in order to meet        the provision of the By-laws on the number of the        independent Directors. The Directors so appointed will        replace the non independent Directors to whom the lowest        quotients have been assigned. If the number of        independent candidates is lower than the minimum limit        set by the By-laws, the shareholders’ meeting will        make a resolution with the majorities prescribed by the        law to substitute the not independent candidates who have        the lowest quotients; and |

| d) |   | to appoint Board members for        any reason not covered by the terms of the aforementioned        procedure, the Shareholders’ Meeting will make a        resolution with the majorities prescribed by the law in        order to assure that the Board composition complies with        the current legislation and the By-laws. |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The vote by list procedure shall apply only in case ofappointment of the entire Board of Directors.

Article 17.3 of Eni’s By-laws also provides thatcompanies that are controlling entities or under common control,as defined by Article 2359, first paragraph, of the Civil Code,or companies controlled by the same entity of the companypresenting a list shall not present nor take part in thepresentation of another candidate list.

Several provisions of Italian legislation are intended toincrease the protection of minority shareholders. In particular:(i) shareholders’ meetings must be called also upon requestof holders of at least 10% of the outstanding Shares (the Boardof Directors, however, may refuse to call the meeting whenconflicting with the company’s interests) (Article 2367Civil Code); (ii) the attendance quorum required for a validshareholder meeting at an Extraordinary Meeting is more than 50%of the outstanding shares on first call, while on second call theattendance quorum is more than 1/3 of the Shares outstanding andon third call the attendance quorum is more than 1/5 of theshares outstanding. On first, second and third call, resolutionsmay be approved by a majority of 2/3 of the Shares represented atthe Shareholders’ Meeting (Articles 2368-2369 Civil Code);(iii) shareholders’ actions against the Board of Directorsand the Statutory Auditors may be initiated by shareholdersholding at least 2.5% of the outstanding shares (Articles2393-bis and 2407 Civil Code); (iv) a single shareholder may suethe directors for individual damages (Article 2395 Civil Code) orcomplain to the Board of Statutory Auditors about directors’misconduct; if the complaint is filed by shareholdersrepresenting at least 2% of the share capital of a listedcompany, the Statutory Auditors are required to investigate withno delay and report to the shareholders’ meeting (Article2408 Civil Code); and (v) shareholders holding at least 5% of theoutstanding share may report to the Court directors’ seriousmisconduct. The Court may order the inspection of the management,adopt interim measures and replace directors with a judicialCommissioner (Article 2409 Civil Code). The company’sBy-laws may further lower the thresholds in (iii), (iv) and (v)and increase the voting quorums under (ii).

Law of December 28, 2005, the so called "Legge sullatutela del Risparmio" (protection of savings), containsfurther protections to Italian minority shareholders of listedcompanies; in particular, said law:

| • |   | sets new independence and        honorability requirements for directors of listed        companies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | introduces the list vote for        the election of directors. The law states that        shareholders may present lists of candidates to the        office of director if they hold a participation in the        share capital of the issuer not higher than one fortieth        of its share capital or the different entity set by        Consob, the Italian financial markets regulator, in        consideration of the market capitalization, the free        float and the shareholdings of the listed company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| • |   | delegates to Consob the        power to regulate the appointment of a statutory auditor        by minority shareholders. Consob states that shareholders        may present lists of candidates to the office of        Statutory Auditor if they hold a participation in the        share capital of the issuer not smaller than 0.5% and not        higher than 4.5% of its share capital; for each issuer        the entity of said shareholding shall be determined in        consideration of the entity of the free float and the        shareholdings of the listed company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| • |   | delegates to Consob the        determination of the limits to the number of memberships        of boards of directors and boards of statutory auditors        that statutory auditors of listed companies can hold in        other companies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| • |   | states that the chairman of        the Board of Statutory Auditors must be elected among the        candidates presented by minority lists; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | introduces the function of        the "Manager responsible for the preparation of        financial reporting documents" to be appointed in        accordance with rules set out in a company’s        By-laws, subject to a prior advice on part of the Board        of Statutory Auditors. The "Manager responsible for        the preparation of financial reporting documents":        (i) must possess the professional requirements set by the        By-laws; (ii) defines accounting and administrative        procedures and controls for the preparation of the        consolidated financial statements, the parent        company’s financial statements and any other        financial reporting information prepared and disclosed;        (iii) declares the coherence between accounting items,        accounting books and acts and financial information        disclosed to the financial market and investors; and (iv)        certificates the adequacy and the effective application        of accounting rules and procedures during the period of        preparation of the consolidated financial statements, the        parent company’s financial statements and the        semi-annual accounts. |

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|   |   | This certification is set        forth in a specific report attached to the annual and        semi-annual financial reports according to a format        established by Consob. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

These provisions are implemented in Eni’s By-laws. Theprovisions regarding the presentation, deposit and publication oflist of candidates for the office of director or statutoryauditor do not apply to Eni as, for the Company, the matter isdisciplined by the special legislation contained in Law No. 474issued on July 30, 1994, regarding the so called "privatizedcompanies".

Legislative Decree No. 303/2006 introduced changes to this lawon protection of savings; in particular:

| • |   | at least one Board member,        if their number is not higher than seven, or two Board        members, if their number is higher than seven, shall have        the independence requirements set forth by the current        legislation and the By-laws. If these requirements elapse        the Board member will be removed (Article 147-ter); and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the professional        requirements of the "Manager responsible for the        preparation of financial reporting documents"        (Article 154-bis).                                                                                                                                                                                       |

Eni’s By-laws was already in compliance with the abovementioned provisions regarding the appointment of directors andstatutory auditors and the qualification of the directors. Inparticular, Eni By-laws sets at three the number of independentDirectors if the Directors are more than five.

In accordance with Article 24 of Eni’s By-laws, asprovided for by the TUF, the Board of Directors under proposal ofthe CEO in agreement with the Chairman and with the approval ofthe Board of Statutory Auditors appoints a manager in charge ofthe preparation of financial reports. The appointed person mustbe chosen among persons who for at least three years:

| a) |   | have been in charge of        financial reporting or control activities or business        administration for listed Italian or European or OECD        companies with share capital of at least one million        euro, or |
|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | have acted as external        auditors of the same companies described above, or                                                                                                                                             |
| c) |   | have performed professional        activities or teaching at university level in accounting        and finance, or                                                                                                           |
| d) |   | have held managerial        positions in private or public entities engaged in        finance, accounting and control.                                                                                                       |

The Board of Directors verifies the adequacy of his powers andmeans in order to fulfill this task and the respect of relevantadministrative and accounting procedures.

> 
*Reporting requirements and restrictions on acquisitions    of shares*

Under Consob Regulation, any direct or indirect participationin excess of 2%, 5%, 7.5%, 10% and subsequent multiples of 5% inthe voting shares of a listed company must be notified to suchcompany and to Consob, within five open market days from theeffectiveness of the transaction triggering such obligation tonotify.

The obligation to notify also applies to any direct orindirect participation owned through ADRs.

For listed companies, whose By-laws impose a maximum limit onthe number of shares that may be held by any shareholder, Consobis entitled to fix different relevant thresholds by decree.

Further, the reduction of the foregoing interest below therelevant thresholds must be notified within the same terms.

Shares held in excess of any such threshold cannot be voted inthe event the above notices have not been provided. Anyresolution in violation of such limitation can be voided ifchallenged in court by shareholders and Consob, if the resolutionwould have not been adopted without the consent of the shares inquestion.

The relevant thresholds noted above shall be calculatedincluding: (i) shares registered in the name of the relevantreporting person whose underlying voting rights are attributed tothird parties, and vice versa; and (ii) shares held throughthird parties and shares whose voting rights are attributable tosuch third parties, excluding shares registered in the name of,or endorsed to, fiduciaries, as well as shares whose votingrights are attributed to intermediaries for purposes of themanagement of mutual or individual savings.

Furthermore, calculation of 5%, 10%, 25%, 50% and 75%thresholds shall also take into account shares outstanding whichthe relevant reporting person is entitled to purchase or to selldirectly or through third parties. Shares to be purchased throughthe exercise of conversion rights or warrants shall be calculatedonly in the event the acquisition can take place within a sixtydays period.

In the event the same relevant participation is directly orindirectly held by two or more entities, then the obligation tonotify may be satisfied by one of such person, provided thatcompleteness of information is guaranteed.

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Any participation exceeding 10% of the voting capital of anunlisted company, including any foreign company, owned by alisted company must be notified to such non-listed company withinseven days from reaching such threshold. Similarly, thenon-listed company must be notified about any subsequentreduction of such participation below the 10% threshold.

Listed companies are also required to notify Consob of theirparticipation exceeding 10% of the voting share capital ofnon-listed companies owned at the end of the first six months andof the full year. Such notification is due within 30 days fromthe date of approval of the Annual Report and the Report on theFirst Six Months, respectively.

In the event the same relevant participation is directly orindirectly held by two or more entities, then the obligation tonotify may be satisfied by one of such entities, provided thatcompleteness of information is guaranteed. 

The 10% threshold shall be calculated including: (i) sharesregistered in the name of the relevant listed company, even ifvoting rights are attributable to third parties; (ii) shareswhose voting rights are attributable to the relevant listedcompany, in the event such voting rights entitle such party toexercise a dominant or material influence at the ordinaryshareholder’s meeting; and (iii) shares registered in thename of third parties and shares whose voting rights areattributable to third parties.

In addition to the rules of Article 2359-bis of the Italiancivil code governing the acquisition of shares of the parentcompany by a controlled subsidiary, Decree No. 58/1998 regulatesadditional cross-ownership matters as follows.

Cross-ownership between listed and non-listed companies maynot exceed 2% of the shares of the listed company or 10% of theshares of the non-listed company. For calculating these ownershipthresholds, the rules for calculations of interests in listed andnon-listed companies apply.

The company ultimately exceeding the 2% or 10% interest in alisted or unlisted company respectively may not exercise thevoting rights on the shares held in excess of such thresholds;such shares must be sold within 12 months.

If anyone holds an interest exceeding 2% of the share capitalof a listed company, such listed company or any entitycontrolling such listed company may not acquire an interestexceeding 2% of the share capital of a listed company controlledby said holder. If the foregoing limit is exceeded, the holderwho last exceeded the foregoing limit or both the holders, if itis not possible to ascertain which holder exceeded such limitlast, may not exercise the voting right related to the sharesexceeding the foregoing limit. Such limits are not applicable incase of a tender offer for acquiring at least 60% of the ordinaryshares of a listed company. For a description of the limitationon cross-ownership between a company and its subsidiaries, see"Purchase by Eni SpA of its Own Shares".

Under Decree No. 58, any agreement, in whatever form, intendedto regulate the exercise of voting rights in a listed company orin the companies controlling a listed company, together with anyof its subsequent amendments, renewal or termination, must be:(i) notified to Consob, within five days from its execution; (ii)disclosed to the public through the publication, in summary form,in one Italian newspaper having general circulation, within tendays from its execution; and (iii) deposited in theCompanies’ Register of the place where such listed companyhas its registered office within 15 days from its execution.

The same requirements also apply to agreements, in whateverform, that: (a) impose an obligation of prior consultation forthe exercise of voting rights in a listed company and in itscontrolling companies; (b) contain undertakings limiting thetransferability of shares and other securities granting rightsfor the acquisition or subscription of shares; (c) provide forthe acquisition of the shares and securities; and (d) contemplateor cause the exercise, also in association with other persons, ofdominant influence over the listed company that issued the sharesand its controlled entities.

In the event the obligations set out above are not completelysatisfied, then the agreement is ineffective and the votingrights connected to the relevant shares may not be exercised. Incase of violation of such limitation imposed on the votingrights, a resolution can be challenged if such resolution wouldhave not been approved without the vote of such shares.

If the parties have agreed upon the duration of the agreement,such duration cannot exceed three years. In absence of agreement,each party to the agreement can withdraw from such an agreementby giving a six month notice.

In accordance with Law No. 287 of October 10, 1990, anyacquisition of sole or joint control over a company that wouldcreate or strengthen a dominant position in the domestic marketin a manner that eliminates or significantly reduces competitionis prohibited. However, if the acquiring party and the company tobe acquired 

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operate in more than one EU member state and together exceedcertain revenue thresholds, the antitrust approval of theacquisition falls within the exclusive jurisdiction of theEuropean Commission.

> 
*Shareholders’ meetings*

Shareholders’ meetings are convened through a notice tobe published on the Italian Official Gazette or the followingnewspapers: "Il Sole 24 Ore", "Corriere dellaSera" and "Financial Times", according to theBy-laws and in compliance with the rules in force regulating theexercise of the vote by mail.

Registered shareholders are entitled to attend and vote atordinary and extraordinary shareholders’ meetings. Eachholder is entitled to cast one vote for each share held. Votesmay be cast personally, by proxy or by mail, in accordance withapplicable regulations. Meetings are called by Eni SpA’sBoard of Directors when required or deemed necessary, or onrequest of shareholders representing at least 10% of outstandingshares, who must provide an agenda of the matters to be discussedto the Chairman of the Board of Directors. Meetings may also becalled, by the Board of Statutory Auditors or by two auditors,provided that such call has been notified in advance.Shareholders representing at least one fortieth of Eni sharecapital, both on an individual and a cumulative basis, may ask,within five days as of the date of publication of theshareholders’ meeting notice, to add other items in theagenda. The request shall contain the matters to be proposed tothe shareholders’ meeting. Said faculty may not be exercisedon the matters upon which, pursuant to the applicablelegislation, the shareholders’ meeting resolves on the basisof a proposal of the Board of Directors or on the basis of aproject or report of the Board. The integrations accepted by theBoard shall be published at least ten days before theshareholders’ meeting date, through a notice to be publishedas indicated above.

Ordinary Shareholders’ Meetings must be convened at leastonce a year within 180 days after the end of the fiscal year ofthe parent company Eni SpA. The notice convening the meeting isto be published at least 30 days before the date fixed for themeeting. At these ordinary meetings, shareholders approve thefinancial statements, resolve upon dividend distribution, if any,when necessary, may appoint Directors, Statutory Auditors and theexternal auditors, determine their remuneration and vote on theliability of Directors and Statutory Auditors and approveShareholders’ Meeting regulation. Under current legislation,the reports and proposals of the Board of Directors to theOrdinary Shareholders’ Meeting for any item on the agenda ofthe meeting and the financial statements to be submitted to theshareholders’ approval, shall be deposited at theshareholders’ disposal at the Company’s registeredoffice and at Borsa Italiana.

Extraordinary meetings of shareholders may be called to passupon proposed amendments to the By-laws, capital increases,mergers, consolidations, demerger, issuance of debentures,appointment of liquidators and similar extraordinary actions. Thenotice of a Shareholders’ Meeting generally specifies twomeeting dates ("calls") and because Eni SpA is listedsuch notice may specify three calls for ExtraordinaryShareholders’ Meetings.

The attendance quorum required for a valid shareholder actionat an ordinary meeting on first call is 50% or more of theoutstanding shares, while on second call there is no attendancequorum requirement. At a duly called ordinary meeting, in bothfirst and second calls, resolutions may be approved by a simplemajority of the shares represented at the meeting.

The attendance quorum required for a valid shareholder meetingat an Extraordinary Meeting is more than 50% of the outstandingshares on first call, while on second call the attendance quorumis more than 1/3 of the Shares outstanding and on third call theattendance quorum is more than 1/5 of the shares outstanding. Onfirst, second and third call, resolutions may be approved by amajority of 2/3 of the Shares represented at theShareholders’ Meeting.

Admission to the meeting is granted to shareholders whodeliver the communication issued by financial intermediariesunder applicable laws at least two business days prior to thedate of the meeting on first call. For a description of theprocedures to be followed by Beneficial Owners of ADRs to attendshareholders’ meetings and exercise voting rights withrespect to underlying Shares, see "Description of AmericanDepositary Receipts - Voting of Deposited Securities".Beneficial Owners of Shares held with Monte Titoli need only toinstruct the relevant banks associated with Monte Titoli whichholds their accounts to procure admission tickets and proxyforms.

Pursuant to Legislative Decree No. 213 dated June 24, 1998,Eni SpA’s shares have been "dematerialized" (theshares are not longer incorporated in a certificate). Thereforefor the exercise of the rights connected to outstanding Sharesnot yet dematerialized, Shareholders must first deliver suchshares to a financial intermediary associated with Monte Titoli.

Shareholders may appoint proxies by completing the formattached to the admission ticket. Directors, Statutory Auditors,auditors and employees of Eni SpA or of controlled companies, andthe External Auditors of Eni SpA, banks and Monte Titoli may notbe appointed proxies. Any one proxy may not represent more than200 shareholders of Eni SpA. A proxy may be appointed for asingle meeting, including the first, second and third callthereof unless the proxy is general or given to a company,association, foundation, other entities or institutions to anemployee. The By-laws of Eni SpA provide for voting by mail.There are no limitations arising under Italian law or the By-lawsof 

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Eni SpA on the right of non-resident or foreign persons tohold or vote the Shares other than limitations that applygenerally to all shareholders.

Rules relating to proxies are established by Decree No. 58 andthe related Consob Regulation No. 11971 dated May 14, 1999.Accordingly whereby: (i) proxies may be solicited, collected orexercised by banks, investment firms and shareholders’associations; (ii) proxies may be granted only in respect ofshareholders’ meetings that have been called; and (iii)proxies may be limited to voting on particular proposals. DecreeNo. 58 also allows companies to implement vote by mailprocedures.

Meetings of Eni’s shareholders are conducted according tothe "Eni SpA’s Shareholders’ MeetingRegulation" as approved by the Ordinary Shareholders’Meeting of Eni on December 4, 1998 and amended by the OrdinaryShareholders’ Meeting held on May 28, 2004 in order toadequate the provisions to the new rules contained in the CivilCode for the participation to the Shareholders’ Meetings.

> 
*Subscription rights*

New shares may be issued pursuant to a resolution ofshareholders at an extraordinary meeting. Under the Italian law,shareholders have a preemptive right to subscribe for new issuesof shares and debentures convertible into shares in proportion totheir respective shareholdings. Subject to certain conditions,principally designated to prevent dilution of the rights ofshareholders, this right may be waived or limited by resolutiontaken by an extraordinary shareholders’ meeting by theaffirmative vote of more than 50% of the shares outstanding. Suchpercentage applies to all calls of the meeting.

> 
*Liquidation rights*

Under the Italian law, subject to the satisfaction of theclaims of all other creditors, shareholders are entitled to thedistribution of the remaining liquidated assets of Eni SpA inproportion to the nominal value of their shares. Holders ofsavings shares and preferred shares, if foreseen by the By-laws,in the event such shares are issued by Eni SpA, are entitled to apreferred right to distribution from liquidation up to theirnominal value. Thereafter, if there are surplus assets, ordinaryshareholders rank equally in the distribution of such assets.Shares rank pari passu among ordinary shareholders in aliquidation.

 

 

**Material Contracts**

None.

 

 

**Documents on Display**

It is possible to read and copy documents referred to in thisannual report on Form 20-F that have been filed with the SEC atthe SEC’s public reference room located at 100 F Street, NE,Room 1580, Washington, DC 20549 and at the SEC’s otherpublic reference rooms in New York City and Chicago. Please callthe SEC at 1-800-SEC-0330 for further information on the publicreference rooms and their copy charges. The SEC filings are alsoavailable to the public from commercial document retrievalservices and in the website maintained by the SEC at www.sec.gov.It is also possible to read and copy documents referred to inthis annual report on Form 20-F at the New York Stock Exchange,20 Broad Street, 17th floor, New York.

 

 

**Exchange Controls**

There are no exchange controls in Italy. Residents andnon-residents of Italy may effect any investments, divestmentsand other transactions that entail a transfer of assets to orfrom Italy, subject only to the reporting, record-keeping anddisclosure requirements described below. In particular, residentsof Italy may hold foreign currency and foreign securities of anykind, within and outside Italy, while non-residents may invest inItalian securities without restriction and may export from Italycash, instruments of credit or payment and securities, whether inforeign currency or euro, representing interest, dividends, otherasset distributions and the proceeds of dispositions.

Updated reporting and record-keeping requirements arecontained in the Italian legislation which implements an EUdirective regarding the free movement of capital. Suchlegislation requires that transfers into or out of Italy of cashor securities in excess of euro 12.5 thousand be reported inwriting to the Ufficio Italiano Cambi (the Italian ExchangeOffice) by residents or non-residents that effect such transfersdirectly, or by banks, securities dealers or 

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Poste Italiane SpA (Italian Mail) that effect suchtransactions on their behalf. In addition, banks, securitiesdealers or Poste Italiane SpA effecting such transactions onbehalf of residents or non-residents of Italy are required tomaintain records of such transactions for five years, whichrecords may be inspected at any time by Italian tax and judicialauthorities.

Non-compliance with these reporting and record-keepingrequirements may result in administrative fines or, in the caseof false reporting and in certain cases of incomplete reporting,criminal penalties. The Ufficio Italiano Cambi will maintainreports for a period of ten years and may use them, directly orthrough other government offices, to police money laundering, taxevasion and any other crime or violation.

 

 

**Taxation**

*The information set forth below is a summary only, andItalian, the United States and other tax laws may change fromtime to time. Holders of shares and ADRs should consult withtheir professional advisors as to the tax consequences of theirownership and disposition of the shares and ADRs, including, inparticular, the effect of tax laws of any other jurisdiction.*

 

> 
***Italian Taxation***

The following is a summary of the material Italian taxconsequences of the ownership and disposition of shares or ADRsas at the date hereof and does not purport to be a completeanalysis of all potential tax effects relevant to the ownershipor disposition of shares or ADRs.

> 
*Income tax*

Dividends received by Italian resident individuals in relationto interest exceeding 2% of the voting rights or 5% of the sharecapital ("substantial interest") are included in thetaxable income subject to personal income tax to the extent of40% of their amount. Personal income tax applies at progressiverates ranging from 23% to 43% plus local surtaxes. Dividendsreceived by Italian resident individuals in relation tonon-substantial interest not related to the conduct of a businessare subject to a substitute tax of 12.5% withheld at the sourceby the dividend paying agent. This being the case, the dividendis not to be included in the individual’s tax return. If thenon-substantial interest is related to the conduct of a business,dividends received are included in the taxable business income tothe extent of 40% of their amount.

Dividends received by Italian pension funds are included inthe overall result of the pension funds subject to an 11%substitute tax. Dividends received by Italian collectiveinvestment funds are included in the overall result of thecollective investment funds subject to a 12.5% substitute tax.Dividends received by Italian real estate investment funds arenot subject to tax in the hands of the real estate investmentfunds. Entities exempt from IRES (company income tax) are subjectto the substitute tax at the rate of 27%.

Dividend paid to non-Italian residents are subject to the samesubstitute tax levied at source by the dividend paying agent atthe rate of 27%, provided that the interest is not connected toan Italian permanent establishment. Up to four-ninths of thesubstitute tax withheld might be recovered by the non-residentshareholder from the Italian Tax Authorities upon provision ofevidence of full payment of income tax on such dividend inhis/her country of residence in an amount at least equal to thetotal refund claimed.

The substitute tax may be reduced under the tax treaty inforce between Italy and the country of residence of theBeneficial Owner of the dividend. Italy has executed income taxtreaties with approximately 70 foreign countries, including allEU member states, Argentina, Australia, Brazil, Canada, Japan,New Zealand, Norway, Switzerland, the United States and somecountries in Africa, the Middle East and the Far East. Generallyspeaking, it should be noted that tax treaties are not applicablewhere the holder is a tax-exempt entity or, with few exceptions,a partnership or a trust.

In order to obtain the treaty benefit (reduced substitute taxrate) at the same time of payment, the Beneficial Owner must filean application to the dividend paying agent chosen by theDepositary stating the existence of the conditions for theapplicability of the treaty benefit, together with acertification issued by the foreign Tax Authorities stating thatthe shareholder is a resident of that country for treatypurposes.

Under the tax treaty between the United States and Italy,dividends derived and beneficially owned by a U.S. resident whoholds less than 10% of the Company’s shares are subject toan Italian withholding or substitute tax at a reduced rate of15%, provided that the interest is not effectively connected witha permanent establishment in Italy through which the U.S.resident carries on a business or a fixed establishment in Italythrough which such U.S. resident performs independent personalservices (for further details please refer to the relevantprovisions set forth in 

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the Italy-U.S. Tax Treaty). In the absence of such conditions,the dividend paying agent will deduct from the gross amount ofthe dividend the substitute tax at the statutory rate of 27%.

Based on the certification procedure required by the ItalianTax Authorities, to benefit from the direct application of the15% substitute tax the U.S. shareholder must provide the dividendpaying agent with a certificate obtained from the U.S. InternalRevenue Service (the "IRS") with respect to eachdividend payment. The request for that certificate must include astatement, signed under penalties for perjury, to the effect thatthe shareholder is a U.S. resident individual or corporation, anddoes not maintain a permanent establishment in Italy, and mustset forth other required information. The normal time forprocessing requests for certification by the IRS is normallyabout six to eight weeks.

Where the Beneficial Owner has not provided the abovementioned documentation, the dividend paying agent will deductfrom the gross amount of the dividend the substitute tax at thestatutory rate of 27%. The U.S. recipient will then be entitledto claim from the Italian Tax Authorities the difference("treaty refund") between the domestic rate and thetreaty one by filing specific forms (certificate) with theItalian Tax Authorities.

According to the Italian tax law as reflected in the DepositAgreement, the Company is not involved: (i) in withholdingamounts due by holders of ADRs to relevant taxing authorities inconnection with any distributions relating to ADRs; or (ii) inthe procedures through which certain holders of ADRs may obtaintax rebates, credits, refunds or other similar benefits. Pursuantto the Deposit Agreement, the custodian and the Depositary haveundertaken to use reasonable efforts to make and maintainarrangements to enable persons that are considered to be residentin United States for purposes of applicable law to receive anyrebates or tax credits (pursuant to treaty or otherwise) relatingto distributions on the ADRs to which such persons are entitled.In addition, 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 40% of their amount,while gains realized upon the sale of non substantial interest issubject to a substitute tax at a 12.5% rate.

For gains deriving from the sale of non substantial interest,two different systems may be applied at the option of theshareholder as an alternative to the filing of the tax return:

| • |   | the so-called        "administered savings" tax regime (risparmio        amministrato), based on which intermediaries acting as        shares depositaries shall apply a substitute tax (12.5%)        on each gain, on a cash basis. If the sale of shares        generated a loss, said loss may be carried forward up to        the fourth following year; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the so-called        "portfolio management" tax regime (risparmio        gestito) which is applicable when the shares form part of        a portfolio managed by an Italian asset management        company. The accrued net profit of the portfolio is        subject to a 12.5% substitute tax to be applied by the        portfolio.                           |

Gains realized by non-residents from non substantial interestin listed companies are deemed not to be realized in Italy andconsequently are not subject to the capital gains tax.

On the contrary, gains realized by non-residents fromsubstantial interest even in listed companies are deemed to berealized in Italy and consequently they are subject to thecapital gains tax.

However double taxation treaties may eliminate the capitalgains tax. Under the income tax convention between the UnitedStates and Italy, a U.S. resident will not be subject to thecapital gains tax unless the shares or ADRs form part of thebusiness property of a permanent establishment of the holder inItaly or pertain to a fixed establishment available to ashareholder in Italy for the purposes of performing independentpersonal services. U.S. residents who sell shares may be requiredto produce appropriate documentation establishing that theabove-mentioned conditions of non-taxability pursuant to theconvention have been satisfied.

> 
*Inheritance and gift tax*

Pursuant to Law Decree No. 262 of October 3, 2006, convertedwith amendments by Law No. 286 of November 24, 2006 effectivefrom November 29, 2006, and Law No. 296 of December 27, 2006, thetransfers of any valuable assets (including shares) as a resultof death or donation (or other transfers for no consideration)and the creation of liens on such assets for a specific purposeare taxed as follows:

| a) |   | 4 per cent: if the transfer        is made to spouses and direct descendants or ancestors;        in this case, the transfer is subject to tax on the value        exceeding euro 1,000,000 (per beneficiary); |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| b) |   | 6 per cent: if the transfer        if made to brothers and sisters; in this case, the        transfer is subject to the tax on the value exceeding        euro 100,000 (per beneficiary);                             |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| c) |   | 6 per cent: if the transfer        is made to relatives up to the fourth degree, to persons        related by direct affinity as well as to persons related        by collateral affinity up to the third degree; and |
| d) |   | 8 per cent: in all other        cases.                                                                                                                                                                                |

If the transfer is made in favor of persons with severedisabilities, the tax applies on the value exceeding euro1,500,000. Moreover, an anti-avoidance rule is provided for byLaw No. 383 of October 18, 2001 for any gift of assets (includingshares) which, if sold for consideration, would give rise tocapital gains subject to a substitute tax (imposta sostitutiva)provided for by Decree No. 461 of November 21, 1997. Inparticular, if the donee sells the shares for considerationwithin five years from the receipt thereof as a gift, the doneeis required to pay a relevant substitute tax on capital gains asif the gift had never taken place.

 

***United States Taxation***

The following is a summary of certain U.S. federal income taxconsequences to U.S. Holders (as defined below) of the ownershipand disposition of Shares or ADRs. This summary is addressed toU.S. Holders that hold Shares or ADRs as capital assets, and doesnot purport to address all material tax consequences of theownership of Shares or ADRs. The summary does not deal withspecial classes of investors, such as tax-exempt entities,dealers in securities, traders in securities that elect to markto market, certain insurance companies, broker-dealers, investorsliable for alternative minimum tax, investors that actually orconstructively own 10% or more of Eni SpA’s Shares,investors that hold Shares or ADRs as part of a straddle or ahedging or conversion transaction and investors whose"functional currency" is not the U.S. dollar.

This summary is based on the tax laws of the United States(including the Internal Revenue Code of 1986, as amended, (the"Code") its legislative history, existing and proposedregulations thereunder, published rulings and court decisions) asin effect on the date hereof, and which are subject to change (orchanges in interpretation), possibly with retroactive effect. Thesummary is based in part on representations of the Depositary andassumes that each obligation in the Deposit Agreement and anyrelated agreement will be performed in accordance with its terms.U.S. Holders should consult their own tax advisors to determinethe U.S. federal, state and local and foreign tax consequences tothem of the ownership and disposition of Shares or ADRs.

As used in this section, the term "U.S. Holder"means a beneficial owner of Shares or ADRs who or that is:(i) a citizen or resident of the United States; (ii) adomestic corporation; (iii) an estate the income of which issubject to the United States federal income tax without regard toits source; or (iv) a trust if a court within the United Statesis able to exercise primary supervision over the administrationof the trust and one or more United States persons have theauthority to control all substantial decisions of the trust.

The discussion does not address any aspects of the UnitedStates taxation other than federal income taxation. Inparticular, U.S. Holders are urged to confirm their eligibilityfor benefits under the income tax convention between the UnitedStates and Italy with their advisors and to discuss with theiradvisors any possible consequences of their failure to qualifyfor such benefits.

In general, and taking into account the earlier assumptions,for the United States federal income tax purposes, U.S. Holderswho own ADRs evidencing ADRs will be treated as owners of theunderlying Shares. Exchanges of Shares for ADRs and ADRs forshares generally will not be subject to the United States federalincome tax.

> 
*Dividends*

Distributions paid on the shares generally will be treated asdividends for U.S. federal income tax purposes to the extent paidout of Eni SpA’s current or accumulated earnings and profitsas determined for U.S. federal income tax purposes, but will notbe eligible for the dividends received-deduction generallyallowed to corporations. To the extent that a distributionexceeds Eni SpA’s earnings and profits, it will be treated,first, as a non-taxable return of capital to the extent of theU.S. Holder’s tax basis in the shares or ADRs, andthereafter as capital gain. A U.S. Holder will be subject to U.S.federal taxation, on the date of actual or constructive receiptby the U.S. Holder (in the case of Shares) or by the Depositary(in the case of ADRs) with respect to the gross amount of anydividends, including any Italian tax withheld therefrom, withoutregard to whether any portion of such tax may be refunded to theU.S. Holder by the Italian tax authorities. If you are anon-corporate U.S. Holder, dividends paid to you in taxable yearsbeginning before January 1, 2011 that constitute qualifieddividend income will be taxable to you at a maximum tax rate of15% provided that you hold the Shares or ADRs for more than 60days during the 121-day period beginning 60 days before theex-dividend date and meet other holding period requirements.Dividends we pay with respect to the shares or ADRs generallywill be qualified dividend income. The amount of the dividenddistribution that you must include in your income as a U.S.Holder will be the U.S. dollar value of the euro payments made,determined at the spot euro/U.S. dollar rate on the date thedividend distribution is includible in your income, regardless ofwhether the payment is in fact converted into U.S. dollars.Generally, any gain or loss 

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resulting from currency exchange fluctuations during theperiod from the date you include the dividend payment in incometo the date you convert the payment into U.S. dollars will betreated as ordinary income or loss and will not be eligible forthe special tax rate applicable to qualified dividend income. Thegain or loss generally will be income or loss from sources withinthe United States for 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 yourUnited States federal income tax liability. See "ItalianTaxation – Income Tax" above, for the procedures forobtaining a tax refund. Dividends paid on the Shares will betreated as income from sources outside the United States.Dividend paid in taxable years beginning before January 1, 2007generally will be of "passive" or "financialservices" income, and dividends paid in taxable yearsbeginning after December 31, 2006 will, depending on yourcircumstances, be "passive" or "general"income which, in either case, is treated separately from othertypes of income for purpose of computing the foreign tax creditallowable to you.

> 
*Sale or exchange of shares*

In general, a U.S. Holder will recognize gain or loss for U.S.federal income tax purposes on the sale or exchange of Shares orADRs equal to the difference between the U.S. Holder’sadjusted basis in the shares or ADRs (determined in U.S.dollars), as the case may be, and the amount realized on the saleor exchange (or if the amount realized is denominated in aforeign currency its U.S. dollar equivalent, determined at thespot rate on the date of disposition). Generally, such gain orloss will be treated as capital gain or loss if the Shares orADRs are held as capital assets and will be a long-term capitalgain or loss if the shares or ADRs have been held for more thanone year on the date of such sale or exchange. Long-term capitalgain of a non-corporate U.S. Holder that is recognized in taxableyears beginning before January 1, 2011 is generally subject to amaximum tax rate of 15%. In addition, any such gain or lossrealized by a U.S. Holder generally will be treated as U.S.source income or loss for U.S. foreign tax credit purposes.

 

 

**Item 11. QUALITATIVE AND QUANTITATIVEDISCLOSURES ABOUT MARKET RISK**

Market risk is the possibility that 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 dollar reduces the Group’s resultsfrom operations and liquidity, and vice versa.

Please refer to Note 28 to the Consolidated FinancialStatements for a qualitative and quantitative discussion of theCompany’s exposure to market risks. Please also refer toNotes 7 and 20 to the Consolidated Financial Statements fordetails of the different derivatives owned by the Company inthese markets.

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. TheCompany also enters commodity derivatives as part of its ordinarycommercial and trading activities and, from time to time, tohedge the exposure to variability in future cash flows due tomovements in commodity prices, in view of pursuing acquisitionsof oil and gas reserves as part of the Company’s ordinaryasset portfolio management or other strategic initiatives. Theseinstruments and their accounting treatment are detailed in Notes7 and 25 to the Financial Statements.

 

 

**Item 12. DESCRIPTION OF SECURITIES OTHERTHAN EQUITY SECURITIES**

Not applicable.

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**PART II**

**Item 13. DEFAULTS, DIVIDEND ARREARAGES ANDDELINQUENCIES**

None.

 

 

**Item 14. MATERIAL MODIFICATIONS TO THERIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

None.

 

 

**Item 15. CONTROLS AND PROCEDURES**

> 
*Disclosure controls and procedures*

In designing and evaluating the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the"Exchange Act")), the Company’s management,including the Chief Executive Officer and the Chief FinancialOfficer, recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and theCompany’s management necessarily was required to apply itsjudgment in evaluating the cost benefit relationship of possiblecontrols and procedures. Because of the inherent limitations inall control systems, no evaluation of controls can provideabsolute assurance that all control issues and instances offraud, if any, within the Company have been detected.

It should be noted that the Company has investments in certainunconsolidated entities. As the Company does not control ormanage these entities, its disclosure controls and procedureswith respect to such entities are necessarily more limited thanthose it maintains with respect to its consolidated subsidiaries.

The Company’s management, with the participation of theprincipal executive officer and principal financial officer, hasevaluated the effectiveness of the design and operation of itsdisclosure controls and procedures pursuant to Rule 13a-14(c)under the Exchange Act as of the end of the period covered bythis Annual Report on Form 20-F. Based on that evaluation, theprincipal executive officer and principal financial officer haveconcluded that these disclosure controls and procedures areeffective.

> 
*Management’s Annual Report on Internal Control    over Financial Reporting*

The Company’s management is responsible for establishingand maintaining adequate internal control over financialreporting as defined in Exchange Act Rules 13a-15(f). Because ofits inherent limitations, internal control over financialreporting may not prevent or detect misstatements and even whendetermined to be effective can only provide reasonable assurancewith respect to financial statement preparation and presentation.Also, the effectiveness of an internal control system may changeover time.

The Internal Control Committee assists the Board of Directorsin setting out the main principles for the internal controlsystem so as to appropriately identify and adequately evaluate,manage, and monitor the main risks related to the Company and itssubsidiaries, by laying down the compatibility criteria betweensaid risks and sound corporate management. In addition thisCommittee assesses, at least annually, the adequacy,effectiveness, and actual operations of the internal controlsystem.

The Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer, conducted an evaluationof the effectiveness of its internal control over financialreporting based on the Internal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of theTreadway Commission ("COSO"). Based on the results ofthis evaluation, the Group’s management concluded that itsinternal control over financial reporting was effective as ofDecember 31, 2007.

The effectiveness of the Company’s internal control overfinancial reporting as of December 31, 2007, has been audited byPricewaterhouseCoopers SpA, an independent registered publicaccounting firm, as stated in its report that is included onpages F-1 and F-2 of this Annual Report on Form 20-F.

> 
*Changes in Internal Control over Financial Reporting*

There have not been changes in the Company’s internalcontrol over financial reporting that occurred during the periodcovered by this Form 20-F that have materially affected, or arereasonably likely to materially affect, the Company’sinternal control over financial reporting.

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**Item 16A. Board of Statutory AuditorsFinancial Expert**

Eni’s Board of Statutory Auditors has determined thatfour members of Eni’s Board of Statutory Auditors qualify as"audit committee financial expert", as defined in Item16A of Form 20-F. These four members are: Paolo Andrea Colombo,who is the Chairman of the Board, and Filippo Duodo, RiccardoPerotta and Giorgio Silva. All members are independent.

 

 

**Item 16B. Code of Ethics**

Eni adopted a code of ethics that applies to Eni’s Boardof Directors and Board of Statutory Auditors, as well as allEni’s employees including Eni’s principal executiveofficer, principal financial officer and principal accountingofficer. The Company’s code of ethics is published onEni’s website. It is accessible at www.eni.it, under thesection "Sustainability – Corporate Governance andCorporate Ethics – Code of Ethics". A copy of this codeof ethics is included as an exhibit to this Annual Report on Form20-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**

PricewaterhouseCoopers SpA has served as Eni principalindependent public auditor for fiscal years 2005, 2006 and 2007for which audited Consolidated Financial Statements appear inthis Annual Report on Form 20-F.

The following table shows total fees paid by Eni, itsconsolidated and unconsolidated subsidiaries and Eni’s shareof fees incurred by joint ventures for services provided by Enipublic auditor PricewaterhouseCoopers and its member firms, withrespect to the years indicated:

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

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(thousand euro)** |
|--------|---------------------|

| Audit Fees                |   | 12,591     |   | 22,240     |   | 26,383     |
|---------------------------|--------|------------|--------|------------|--------|------------|
| Audit-Related        Fees |   | 190        |   | 166        |   | 169        |
| Tax Fees                  |   | 246        |   | 303        |   | 81         |
| All Other        Fees     |   | 38         |   | 6          |   | 120        |
| **Total**                 |   | **13,065** |   | **22,715** |   | **26,753** |

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

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, from 2006, theaudit on the Company’s internal control over financialreporting.

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.

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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’approval is required on a case by case basis for those requestsregarding: (i) audit-related services; and (ii) non-auditservices to be performed by the external auditors which arepermissible under applicable rules and regulations. In suchcases, the Company’s internal audit department is chargedwith performing an initial assessment of each request to besubmitted to the Board of Statutory Auditors for approval. Theinternal audit department periodically reports to Eni’sBoard of Statutory Auditors on the status of both pre-approvedservices and services approved on a case-by-case basis renderedby the external auditors.

During 2007, no Audit-Related Fees, Tax Fees or OtherNon-Audit Fees were approved by the Board of Statutory Auditorspursuant to the de minimis exception to the pre-approvalrequirement provided by paragraph (c)(7)(i) (c) of Rule 2-01 ofRegulation S-X.

 

 

**Item 16D. Exemptions from the ListingStandards for Audit Committees**

Making use of the exemption provided by Rule 10A-3(c)(3) fornon-U.S. private issuers, Eni has identified the Board ofStatutory Auditors as the body that, starting from June 1, 2005,is performing the functions required by the SEC rules and theSarbanes-Oxley Act to be performed by the audit committees ofnon-U.S. companies listed on the NYSE (see "Item 6 –Board of Statutory Auditors" above).

 

 

**Item 16E. Purchases of Equity Securities bythe Issuer and Affiliated Purchasers**

The following tables present purchases of own shares by Enifrom the beginning of the program through May 9, 2008:

| **Period** |   | **Number of shares        (million)** |   | **Average price        (euro per share)** |   | **Total cost        (million euro)** |   | **Share         capital %** |
|------------|--------|---------------------------------------|--------|-------------------------------------------|--------|--------------------------------------|--------|-----------------------------|
|       |   |                                       |   |                                           |   |                                      |   |                             |

| 2000 (since September 1)                                                                           |   | 44.38      |   |   | 12.92     |   |   | 574       |   |   | 1.11     |   |
|----------------------------------------------------------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|
| 2001                                                                                               |   | 110.00     |   |   | 13.58     |   |   | 1,494     |   |   | 2.75     |   |
| 2002                                                                                               |   | 52.26      |   |   | 14.74     |   |   | 771       |   |   | 1.30     |   |
| 2003                                                                                               |   | 23.94      |   |   | 13.76     |   |   | 329       |   |   | 0.60     |   |
| 2004                                                                                               |   | 4.23       |   |   | 16.60     |   |   | 70        |   |   | 0.10     |   |
| 2005                                                                                               |   | 47.06      |   |   | 21.97     |   |   | 1,034     |   |   | 1.18     |   |
| 2006                                                                                               |   | 53.13      |   |   | 23.35     |   |   | 1,241     |   |   | 1.33     |   |
| 2007                                                                                               |   | 27.56      |   |   | 24.69     |   |   | 680       |   |   | 0.68     |   |
| 2008,        through May 9, 2008                                                                   |   | 11.76      |   |   | 22.61     |   |   | 266       |   |   | 0.28     |   |
| **Total purchased as of May 9, 2008**                                                              |   | **374.32** |   |   | **17.26** |   |   | **6,459** |   |   | **9.35** |   |
| minus:                                                                                             |   |       |   |   |      |   |   |      |   |   |     |   |
| - stock options exercised and shares granted        pursuant to stock option and stock grant plans |   | (14.32     | )      |   |      |   |   |      |   |   |     |   |
| **Total        shares held in treasury**                                                           |   | **360.00** |   |   |      |   |   |      |   |   | **8.99** |   |

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

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|   | **Total number of shares        purchased** |   | **Average price paid per        share (euro)** |   | **Total number of shares        purchased, as part of publicly announced plans or        programs** |   | **Maximum number of shares        that may yet be purchased under the plans or programs**.(2) |
|--------|---------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|   |                                             |   |                                                |   |                                                                                                     |   |                                                                                               |

| At December 31, 2006 (1)              |   | 335,002,779 |   | 16.46 |   | 335,002,779 |   | 75,040,134 |
|---------------------------------------|--------|-------------|--------|-------|--------|-------------|--------|------------|
| January        2007                   |   | 2,172,700   |   | 24.71 |   | 337,175,479 |   | 73,246,534 |
| February 2007                         |   | 2,241,350   |   | 24.08 |   | 339,416,829 |   | 71,090,284 |
| March 2007                            |   | 4,103,431   |   | 23.26 |   | 343,520,260 |   | 67,174,803 |
| April 2007                            |   | 1,739,600   |   | 24.43 |   | 345,259,860 |   | 65,528,803 |
| May 2007                              |   | 1,229,950   |   | 25.52 |   | 346,489,810 |   | 64,682,203 |
| June 2007                             |   | 2,344,600   |   | 26.42 |   | 348,834,410 |   | 62,629,203 |
| July 2007                             |   | 1,239,070   |   | 26.61 |   | 350,073,480 |   | 61,605,133 |
| August 2007                           |   | 2,333,300   |   | 24.85 |   | 352,406,780 |   | 59,387,133 |
| September        2007                 |   | 2,214,800   |   | 25.34 |   | 354,621,580 |   | 58,578,533 |
| October 2007                          |   | 2,881,625   |   | 25.15 |   | 357,503,205 |   | 56,472,408 |
| November        2007                  |   | 3,895,400   |   | 23.99 |   | 361,398,605 |   | 52,592,508 |
| December 2007                         |   | 1,163,513   |   | 24.60 |   | 362,562,118 |   | 51,474,995 |
| January        2008                   |   | 2,709,130   |   | 22.13 |   | 365,271,248 |   | 48,873,565 |
| February 2008                         |   | 3,380,161   |   | 22.25 |   | 368,651,409 |   | 45,504,204 |
| March 2008                            |   | 2,606,938   |   | 22.01 |   | 371,258,347 |   | 42,908,766 |
| April 2008 (3)                        |   | 2,242,200   |   | 23.41 |   | 373,500,547 |   | 40,678,566 |
| May 2008        (through May 9, 2008) |   | 819,500     |   | 25.48 |   | 374,320,047 |   | 39,859,066 |

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

----

| (1) |   | From May        2000, Eni’s Ordinary Shareholders’ Meeting has        authorized Eni’s Board of Directors to carry out a        program for the repurchase of own shares within such        limits as established by the Shareholders’ Meeting        itself. The shares are to be purchased on the Telematico        at a price no lower than their nominal value and no        higher than 5% over the reference price recorded on the        business day preceding each purchase. According to        applicable regulations, the nominal value of shares so        purchased, including shares held by subsidiaries cannot        exceed 10% of a company’s share capital. Shares        purchased in excess of such 10% limit must be resold        within one year from the date of their purchase. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Based on the        authorized purchase ceiling, deducting the total number        of shares purchased and adding back the number of stock        options exercised by and shares granted to Eni’s        managers pursuant to stock option and stock grant plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (3) |   | On April 29,        2008, Eni’s Ordinary Shareholders’ Meeting        authorized the continuation of the program for the        repurchase of own shares for a further 18-month period        and up to 400 million ordinary shares, nominal value euro        1 each, corresponding approximately to 10% of Eni’s        share capital, for an aggregate amount not exceeding euro        7.4 billion. The 400 million shares and the euro 7.4        billion thresholds take into account the number and        amount of Eni shares held in treasury as of April 29,        2008. As of April 29, 2008, Eni held in treasury 359.08        million own shares at a cost of euro 6,236 million.                                                                                                                    |

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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        at December 31, 2007 and 2006                                                                    |   | F-3      |
|                                                                                                                               |   |     |
| Consolidated profit and loss        account for the years ended December 31, 2007, 2006 and        2005                            |   | F-4      |
|                                                                                                                               |   |     |
| Consolidated Statements of        changes in shareholder’s equity for the years ended        December 31, 2007, 2006 and 2005 |   | F-5      |
|                                                                                                                               |   |     |
| Consolidated Statement of        cash flows for the years ended December 31, 2007, 2006        and 2005                            |   | F-8      |
|                                                                                                                               |   |     |
| Supplemental cash flow        information for the years ended December 31, 2007, 2006        and 2005                              |   | F-10     |
|                                                                                                                               |   |     |
| Notes to the Consolidated        Financial Statements                                                                              |   | F-25     |

 

 

**Item 19. EXHIBITS**

1. By-laws as amended as of May 24, 2007

8. List of subsidiaries

11. Code of Ethics

Certifications:

12.1. Certification pursuant to Rule13a-14(a) of the Securities Exchange Act

12.2. Certification pursuant to Rule13a-14(a) of the Securities Exchange Act

13.1. Certification furnished pursuant toRule 13a-14(b) of the Securities Exchange Act (such certificateis not deemed filed for purpose of Section 18 of the Exchange Actand not incorporated by reference with any filing under theSecurities Act)

13.2. Certification furnished pursuant toRule 13a-14(b) of the Securities Exchange Act (such certificateis not deemed filed for purpose of Section 18 of the Exchange Actand not incorporated by reference with any filing under theSecurities Act)

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**SIGNATURES**

The registrant certifies that it meets all of the requirementsfor filing on Form 20-F and has duly caused this annual report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

Date: May 21, 2008

 

 

 

 

 

 

 

| Eni SpA                           |
|-----------------------------------|
|                              |
| /s/FABRIZIO COSCO                 |
|                                   |
|                              |
| Fabrizio Cosco                    |
| Title: Deputy Corporate Secretary |

 

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**REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

 

 

> 
To the Board of Directors and Shareholders of Eni            SpA

In our opinion, the accompanying consolidated            balance sheets and the related consolidated profit            and loss accounts, consolidated statements of changes            in shareholders’ equity and consolidated            statements of cash flows present fairly, in all            material respects, the financial position of Eni SpA            and its subsidiaries at December 31, 2007 and            December 31, 2006, and the results of their            operations and their cash flows for each of the three            years in the period ended December 31, 2007 in            conformity with International Financial Reporting            Standards as issued by the International Accounting            Standards Board and in conformity with International            Financial Reporting Standards as adopted by the            European Union. Also in our opinion, the Company            maintained, in all material respects, effective            internal control over financial reporting as of            December 31, 2007, based on criteria established in *Internal            Control - Integrated Framework* issued by the            Committee of Sponsoring Organizations of the Treadway            Commission (COSO). The Company’s management is            responsible for these financial statements, for            maintaining effective internal control over financial            reporting and for its assessment of the effectiveness            of internal control over financial reporting,            included in Management’s Annual Report on            Internal Control over Financial Reporting appearing            in Item 15 Controls and Procedures of the 2007 Annual            Report to Shareholders. Our responsibility is to            express opinions on these financial statements and on            the Company’s internal control over financial            reporting based on our audits (which were integrated            audits in 2007 and 2006). We conducted our audits in            accordance with the standards of the Public Company            Accounting Oversight Board (United States). Those            standards require that we plan and perform the audits            to obtain reasonable assurance about whether the            financial statements are free of material            misstatement and whether effective internal control            over financial reporting was maintained in all            material respects. Our audits of the financial            statements included 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. Our audit of internal control            over financial reporting included obtaining an            understanding of internal control over financial            reporting, assessing the risk that a material            weakness exists, and testing and evaluating the            design and operating effectiveness of internal            control based on the assessed risk. Our audits also            included performing such other procedures as we            considered necessary in the circumstances. We believe            that our audits provide a reasonable basis for our            opinions.

> 
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 (i) pertain to the            maintenance of records that, in reasonable detail,            accurately and fairly reflect the transactions and            dispositions of the assets of the company; (ii)            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 (iii) 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.

 

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> 
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.

 

**PricewaterhouseCoopers SpA**

Rome, 21 May 2008

 

 

 

 

 

 

 

 

 

 

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**CONSOLIDATED****BALANCESHEET****(million euro)**

|   |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

|    |   | Note   |   | Total amount |   | *of which with related parties* |   | Total amount |   | *of which with related parties* |
|--------------|--------|--------|--------|--------------|--------|---------------------------------|--------|--------------|--------|---------------------------------|
|         |   |   |   |              |   |                                 |   |              |   |                                 |

| **ASSETS**                                                                             |   |   |   |       |   |   |    |   |        |   |   |    |
|----------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|---------|--------|-------------|--------|--------|---------|
| **Current        assets**                                                              |   |   |   |       |   |   |    |   |        |   |   |    |
| Cash and cash equivalents                                                              |   | (1)    |   | 3,985      |   |   |    |   | 2,114       |   |   |    |
| Other        financial assets held for trading or available for sale:                  |   | (2)    |   |       |   |   |    |   |        |   |   |    |
| *- equity instruments*                                                                 |   |   |   |       |   |   |    |   | *2,476*     |   |   |    |
| *- other        securities*                                                            |   |   |   | *972*      |   |   |    |   | *433*       |   |   |    |
|                                                                                   |   |   |   | 972        |   |   |    |   | 2,909       |   |   |    |
| Trade and        other receivables                                                     |   | (3)    |   | 18,799     |   |   | *1,027* |   | 20,676      |   |   | *1,616* |
| Inventories                                                                            |   | (4)    |   | 4,752      |   |   |    |   | 5,499       |   |   |    |
| Current        tax assets                                                              |   | (5)    |   | 116        |   |   |    |   | 703         |   |   |    |
| Other current tax assets                                                               |   | (6)    |   | 542        |   |   |    |   | 833         |   |   |    |
| Other        current assets                                                            |   | (7)    |   | 855        |   |   |    |   | 1,080       |   |   |    |
| **Total current assets**                                                               |   |   |   | **30,021** |   |   |    |   | **33,814**  |   |   |    |
| **Non-current        assets**                                                          |   |   |   |       |   |   |    |   |        |   |   |    |
| Property, plant and equipment                                                          |   | (8)    |   | 44,312     |   |   |    |   | 50,137      |   |   |    |
| Other        assets                                                                    |   | (9)    |   | 629        |   |   |    |   | 563         |   |   |    |
| Inventory - compulsory stock                                                           |   | (10)   |   | 1,827      |   |   |    |   | 2,171       |   |   |    |
| Intangible        assets                                                               |   | (11)   |   | 3,753      |   |   |    |   | 4,333       |   |   |    |
| Equity-accounted investments                                                           |   | (12)   |   | 3,886      |   |   |    |   | 5,639       |   |   |    |
| Other        investments                                                               |   | (12)   |   | 360        |   |   |    |   | 472         |   |   |    |
| Other financial assets                                                                 |   | (13)   |   | 805        |   |   | *136*   |   | 923         |   |   | *87*    |
| Deferred        tax assets                                                             |   | (14)   |   | 1,725      |   |   |    |   | 1,915       |   |   |    |
| Other non-current receivables                                                          |   | (15)   |   | 994        |   |   |    |   | 1,110       |   |   |    |
| **Total        non-current assets**                                                    |   |   |   | **58,291** |   |   |    |   | **67,263**  |   |   |    |
| **Assets classified as held for sale**                                                 |   | (26)   |   |       |   |   |    |   | **383**     |   |   |    |
| **TOTAL        ASSETS**                                                                |   |   |   | **88,312** |   |   |    |   | **101,460** |   |   |    |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                          |   |   |   |       |   |   |    |   |        |   |   |    |
| **Current        liabilities**                                                         |   |   |   |       |   |   |    |   |        |   |   |    |
| Short-term debt                                                                        |   | (16)   |   | 3,400      |   |   | *92*    |   | 7,763       |   |   | *131*   |
| Current        portion of long-term debt                                               |   | (21)   |   | 890        |   |   |    |   | 737         |   |   |    |
| Trade and other payables                                                               |   | (17)   |   | 15,995     |   |   | *961*   |   | 17,116      |   |   | *1,021* |
| Income        taxes payable                                                            |   | (18)   |   | 1,640      |   |   |    |   | 1,688       |   |   |    |
| Other taxes payable                                                                    |   | (19)   |   | 1,190      |   |   |    |   | 1,383       |   |   |    |
| Other        current liabilities                                                       |   | (20)   |   | 634        |   |   |    |   | 1,556       |   |   |    |
| **Total current liabilities**                                                          |   |   |   | **23,749** |   |   |    |   | **30,243**  |   |   |    |
| **Non-current        liabilities**                                                     |   |   |   |       |   |   |    |   |        |   |   |    |
| Long-term debt                                                                         |   | (21)   |   | 7,409      |   |   |    |   | 11,330      |   |   |    |
| Provisions        for contingencies                                                    |   | (22)   |   | 8,614      |   |   |    |   | 8,486       |   |   |    |
| Provisions for employee benefits                                                       |   | (23)   |   | 1,071      |   |   |    |   | 935         |   |   |    |
| Deferred        tax liabilities                                                        |   | (24)   |   | 5,852      |   |   |    |   | 5,471       |   |   |    |
| Other non-current liabilities                                                          |   | (25)   |   | 418        |   |   | *56*    |   | 2,031       |   |   | *57*    |
| **Total        non-current liabilities**                                               |   |   |   | **23,364** |   |   |    |   | **28,253**  |   |   |    |
| **Liabilities directly associated with the        assets classified as held for sale** |   | (26)   |   |       |   |   |    |   | **97**      |   |   |    |
| **TOTAL        LIABILITIES**                                                           |   |   |   | **47,113** |   |   |    |   | **58,593**  |   |   |    |
| **SHAREHOLDERS’ EQUITY**                                                          |   | (27)   |   |       |   |   |    |   |        |   |   |    |
| **Minority        interest**                                                           |   |   |   | **2,170**  |   |   |    |   | **2,439**   |   |   |    |
| **Eni shareholders’ equity**                                                      |   |   |   |       |   |   |    |   |        |   |   |    |
| Share        capital                                                                   |   |   |   | 4,005      |   |   |    |   | 4,005       |   |   |    |
| Reserves                                                                               |   |   |   | 33,391     |   |   |    |   | 34,610      |   |   |    |
| Treasury        shares                                                                 |   |   |   | (5,374     | )      |   |    |   | (5,999      | )      |   |    |
| Interim dividend                                                                       |   |   |   | (2,210     | )      |   |    |   | (2,199      | )      |   |    |
| Net profit                                                                             |   |   |   | 9,217      |   |   |    |   | 10,011      |   |   |    |
| **Total Eni shareholders’ equity**                                                |   |   |   | **39,029** |   |   |    |   | **40,428**  |   |   |    |
| **TOTAL        SHAREHOLDERS’ EQUITY**                                             |   |   |   | **41,199** |   |   |    |   | **42,867**  |   |   |    |
| **TOTAL LIABILITIES AND SHAREHOLDERS’        EQUITY**                             |   |   |   | **88,312** |   |   |    |   | **101,460** |   |   |    |

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

F-3

----

##### Table of Contents

**CONSOLIDATED****PROFITAND LOSS ACCOUNT****(million euro except asotherwise stated)**

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|    |   | Note   |   | Total amount |   | *of which with related parties* |   | Total amount |   | *of which with related parties* |   | Total amount |   | *of which with related parties* |
|--------------|--------|--------|--------|--------------|--------|---------------------------------|--------|--------------|--------|---------------------------------|--------|--------------|--------|---------------------------------|
|         |   |   |   |              |   |                                 |   |              |   |                                 |   |              |   |                                 |

| **REVENUES**                                                  |   | (29)   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
|---------------------------------------------------------------|--------|--------|--------|------------|--------|--------|---------|--------|------------|--------|--------|---------|--------|------------|--------|--------|---------|
| Net sales        from operations                              |   |   |   | 73,728     |   |   | *4,535* |   | 86,105     |   |   | *3,974* |   | 87,256     |   |   | *4,198* |
| Other income and revenues                                     |   |   |   | 798        |   |   |    |   | 783        |   |   |    |   | 827        |   |   |    |
| **Total        revenues**                                     |   |   |   | **74,526** |   |   |    |   | **86,888** |   |   |    |   | **88,083** |   |   |    |
| **OPERATING EXPENSES**                                        |   | (30)   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
| Purchases,        services and other                          |   |   |   | 48,567     |   |   | *3,429* |   | 57,490     |   |   | *2,720* |   | 58,179     |   |   | *3,777* |
| *- of which non-recurring charge*                             |   |   |   | *290*      |   |   |    |   | *239*      |   |   |    |   | *91*       |   |   |    |
| Payroll        and related costs                              |   |   |   | 3,351      |   |   |    |   | 3,650      |   |   |    |   | 3,800      |   |   |    |
| *- of which non-recurring income*                             |   |   |   |       |   |   |    |   |       |   |   |    |   | *(83*      | *)*    |   |    |
| Depreciation,        depletion, amortization and impairments  |   |   |   | 5,781      |   |   |    |   | 6,421      |   |   |    |   | 7,236      |   |   |    |
| **OPERATING PROFIT**                                          |   |   |   | **16,827** |   |   |    |   | **19,327** |   |   |    |   | **18,868** |   |   |    |
| **FINANCE        INCOME (EXPENSE)**                           |   | (31)   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
| Finance income                                                |   |   |   | 3,131      |   |   | *72*    |   | 4,132      |   |   | *58*    |   | 4,600      |   |   | *98*    |
| Finance        expense                                        |   |   |   | (3,497     | )      |   |    |   | (3,971     | )      |   |    |   | (4,683     | )      |   | *59*    |
|                                                          |   |   |   | **(366**   | **)**  |   |    |   | **161**    |   |   |    |   | **(83**    | **)**  |   |    |
| **INCOME        FROM INVESTMENTS**                            |   | (32)   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
| Share of profit (loss) of equity-accounted        investments |   |   |   | 737        |   |   |    |   | 795        |   |   |    |   | 773        |   |   |    |
| Other gain        (loss) from investments                     |   |   |   | 177        |   |   |    |   | 108        |   |   |    |   | 470        |   |   |    |
|                                                          |   |   |   | **914**    |   |   |    |   | **903**    |   |   |    |   | **1,243**  |   |   |    |
| **PROFIT        BEFORE INCOME TAXES**                         |   |   |   | **17,375** |   |   |    |   | **20,391** |   |   |    |   | **20,028** |   |   |    |
| Income taxes                                                  |   | (33)   |   | (8,128     | )      |   |    |   | (10,568    | )      |   |    |   | (9,219     | )      |   |    |
| **Net        profit**                                         |   |   |   | **9,247**  |   |   |    |   | **9,823**  |   |   |    |   | **10,809** |   |   |    |
| **Attributable to**                                           |   |   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
| Eni                                                           |   |   |   | 8,788      |   |   |    |   | 9,217      |   |   |    |   | 10,011     |   |   |    |
| Minority interest                                             |   | (27)   |   | 459        |   |   |    |   | 606        |   |   |    |   | 798        |   |   |    |
|                                                          |   |   |   | **9,247**  |   |   |    |   | **9,823**  |   |   |    |   | **10,809** |   |   |    |
| **Earnings per share attributable to Eni**(euro per share)    |   | (34)   |   |       |   |   |    |   |       |   |   |    |   |       |   |   |    |
| Basic                                                         |   |   |   | 2.34       |   |   |    |   | 2.49       |   |   |    |   | 2.73       |   |   |    |
| Diluted                                                       |   |   |   | 2.34       |   |   |    |   | 2.49       |   |   |    |   | 2.73       |   |   |    |

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

F-4

----

##### 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 |   | Other reserves |   | Cumulative         currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Minority interest |   | Total shareholders’ equity |
|--------------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|----------------|--------|------------------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|-------------------|--------|---------------------------------|
|         |   |               |   |                          |   |                             |   |                |   |                                                            |   |                 |   |                   |   |                  |   |                         |   |       |   |                   |   |                                 |

| **Balance at December 31, 2004**                                                                   |   | **4,004** |   |   | **959** |   |   | **5,392** |   |   | **3,965** |   |   | **(687**  | **)**  |   | **(3,229** | **)**  |   | **14,911** |   |   |       |   |   | **7,059**  |   |   | **32,374** |   |   | **3,166**  |   |   | **35,540** |   |
|----------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Effect of        change in accounting policy - adoption of IAS 32 and IAS        39                |   |      |   |   |    |   |   |      |   |   | 13        |   |   |      |   |   |       |   |   | (40        | )      |   |       |   |   |       |   |   | (27        | )      |   | 12         |   |   | (15        | )      |
| **Adjusted balance at January 1, 2005**                                                            |   | **4,004** |   |   | **959** |   |   | **5,392** |   |   | **3,978** |   |   | **(687**  | **)**  |   | **(3,229** | **)**  |   | **14,871** |   |   |       |   |   | **7,059**  |   |   | **32,347** |   |   | **3,178**  |   |   | **35,525** |   |
| **Net        profit for the year**                                                                 |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   | **8,788**  |   |   | **8,788**  |   |   | **459**    |   |   | **9,247**  |   |
| **Gains (losses) recognized directly        in equity**                                       |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Change in        the fair value of available-for-sale securities                                   |   |      |   |   |    |   |   |      |   |   | 6         |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 6          |   |   |       |   |   | 6          |   |
| Change in the fair value of cash flow hedge        derivatives                                     |   |      |   |   |    |   |   |      |   |   | 16        |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 16         |   |   |       |   |   | 16         |   |
| Foreign        currency translation differences                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   | 1,497     |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,497      |   |   | 15         |   |   | 1,512      |   |
|                                                                                               |   |      |   |   |    |   |   |      |   |   | **22**    |   |   | **1,497** |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **1,519**  |   |   | **15**     |   |   | **1,534**  |   |
| **Total        recognized income and (expense) for the year**                                      |   |      |   |   |    |   |   |      |   |   | **22**    |   |   | **1,497** |   |   |       |   |   |       |   |   |       |   |   | **8,788**  |   |   | **10,307** |   |   | **474**    |   |   | **10,781** |   |
| **Transactions with shareholders**                                                                 |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.90 per share)                                      |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   | (3,384     | )      |   | (3,384     | )      |   |       |   |   | (3,384     | )      |
| Interim dividend (euro 0.45 per share)                                                             |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   | (1,686     | )      |   |       |   |   | (1,686     | )      |   |       |   |   | (1,686     | )      |
| Dividend        distribution of other companies                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,218     | )      |   | (1,218     | )      |
| Allocation of 2004 net profit                                                                      |   |      |   |   |    |   |   |      |   |   | 1,300     |   |   |      |   |   |       |   |   | 2,375      |   |   |       |   |   | (3,675     | )      |   |       |   |   |       |   |   |       |   |
| Shares        repurchased                                                                          |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   | (1,034     | )      |   |       |   |   |       |   |   |       |   |   | (1,034     | )      |   |       |   |   | (1,034     | )      |
| Shares issued under stock grant plans                                                              |   | 1         |   |   |    |   |   |      |   |   | (1        | )      |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Treasury        shares sold under incentive plans for Eni managers                                 |   |      |   |   |    |   |   | (47       | )      |   | 47        |   |   |      |   |   | 47         |   |   |       |   |   |       |   |   |       |   |   | 47         |   |   |       |   |   | 47         |   |
|                                                                                               |   | **1**     |   |   |    |   |   | **(47**   | **)**  |   | **1,346** |   |   |      |   |   | **(987**   | **)**  |   | **2,375**  |   |   | **(1,686** | **)**  |   | **(7,059** | **)**  |   | **(6,057** | **)**  |   | **(1,218** | **)**  |   | **(7,275** | **)**  |
| **Other        changes in shareholders’ equity**                                              |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Cost related to stock options                                                                      |   |      |   |   |    |   |   |      |   |   | 5         |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 5          |   |   |       |   |   | 5          |   |
| Sale of        consolidated subsidiaries                                                           |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (40        | )      |   | (40        | )      |
| Foreign currency translation differences on the        distribution of dividends and other changes |   |      |   |   |    |   |   |      |   |   |      |   |   | 131       |   |   |       |   |   | 135        |   |   |       |   |   |       |   |   | 266        |   |   | (45        | )      |   | 221        |   |
|                                                                                               |   |      |   |   |    |   |   |      |   |   | **5**     |   |   | **131**   |   |   |       |   |   | **135**    |   |   |       |   |   |       |   |   | **271**    |   |   | **(85**    | **)**  |   | **186**    |   |
|                                                                                               |   |           |        |   |         |        |   |           |        |   |           |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |
| **Balance at December 31, 2005**(Note 27)                                                          |   | **4,005** |   |   | **959** |   |   | **5,345** |   |   | **5,351** |   |   | **941**   |   |   | **(4,216** | **)**  |   | **17,381** |   |   | **(1,686** | **)**  |   | **8,788**  |   |   | **36,868** |   |   | **2,349**  |   |   | **39,217** |   |
|                                                                                               |   |           |        |   |         |        |   |           |        |   |           |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |

F-5

----

##### 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 |   | Other reserves |   | Cumulative         currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Minority interest |   | Total shareholders’ equity |
|--------------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|----------------|--------|------------------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|-------------------|--------|---------------------------------|
|         |   |               |   |                          |   |                             |   |                |   |                                                            |   |                 |   |                   |   |                  |   |                         |   |       |   |                   |   |                                 |

| **Balance at December 31, 2005**(Note 27)                                                                                                            |   | **4,005** |   |   | **959** |   |   | **5,345** |   |   | **5,351**  |   |   | **941**    |   |   | **(4,216** | **)**  |   | **17,381** |   |   | **(1,686** | **)**  |   | **8,788**  |   |   | **36,868** |   |   | **2,349** |   |   | **39,217** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit for the year**(Note 27)                                                                                                          |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **9,217**  |   |   | **9,217**  |   |   | **606**   |   |   | **9,823**  |   |
| **Gains (losses) recognized directly        in equity**                                                                                         |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Change in        the fair value of available-for-sale securities (Note 27)                                                                           |   |      |   |   |    |   |   |      |   |   | (13        | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (13        | )      |   |      |   |   | (13        | )      |
| Change in the fair value of cash flow hedge        derivatives (Note 27)                                                                             |   |      |   |   |    |   |   |      |   |   | (15        | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (15        | )      |   |      |   |   | (15        | )      |
| Foreign        currency translation differences                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   | (1,266     | )      |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,266     | )      |   | (29       | )      |   | (1,295     | )      |
|                                                                                                                                                 |   |      |   |   |    |   |   |      |   |   | **(28**    | **)**  |   | **(1,266** | **)**  |   |       |   |   |       |   |   |       |   |   |       |   |   | **(1,294** | **)**  |   | **(29**   | **)**  |   | **(1,323** | **)**  |
| **Total        recognized income and (expense) for the year**                                                                                        |   |      |   |   |    |   |   |      |   |   | **(28**    | **)**  |   | **(1,266** | **)**  |   |       |   |   |       |   |   |       |   |   | **9,217**  |   |   | **7,923**  |   |   | **577**   |   |   | **8,500**  |   |
| **Transactions with shareholders**                                                                                                                   |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.65 per share) in        settlement of 2005) interim dividend of euro 0.45 per        share (Note 27) |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,686      |   |   | (4,086     | )      |   | (2,400     | )      |   |      |   |   | (2,400     | )      |
| Dividend distribution of Eni SpA (euro 0.60 per        share) (Note 27)                                                                              |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (2,210     | )      |   |       |   |   | (2,210     | )      |   |      |   |   | (2,210     | )      |
| Dividend        distribution of other companies                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (222      | )      |   | (222       | )      |
| Payments by minority shareholders                                                                                                                    |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 22        |   |   | 22         |   |
| Allocation        of 2005 net profit                                                                                                                 |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 4,702      |   |   |       |   |   | (4,702     | )      |   |       |   |   |      |   |   |       |   |
| Authorization of shares repurchase (Note 27)                                                                                                         |   |      |   |   |    |   |   | 2,000     |   |   |       |   |   |       |   |   |       |   |   | (2,000     | )      |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Shares        repurchased (Note 27)                                                                                                                  |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   | (1,241     | )      |   |       |   |   |       |   |   |       |   |   | (1,241     | )      |   |      |   |   | (1,241     | )      |
| Treasury shares sold under incentive plans for        Eni managers (Note 27)                                                                         |   |      |   |   |    |   |   | (85       | )      |   | 54         |   |   |       |   |   | 85         |   |   | 21         |   |   |       |   |   |       |   |   | 75         |   |   |      |   |   | 75         |   |
| Difference        between the carrying amount and strike price of stock        options exercised by Eni managers                                     |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 7          |   |   |       |   |   |       |   |   | 7          |   |   |      |   |   | 7          |   |
|                                                                                                                                                 |   |      |   |   |    |   |   | **1,915** |   |   | **54**     |   |   |       |   |   | **(1,156** | **)**  |   | **2,730**  |   |   | **(524**   | **)**  |   | **(8,788** | **)**  |   | **(5,769** | **)**  |   | **(200**  | **)**  |   | **(5,969** | **)**  |
| **Other        changes in shareholders’ equity**                                                                                                |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Sale to Saipem Projects SpA of Snamprogetti SpA        (Note 27)                                                                                     |   |      |   |   |    |   |   |      |   |   | 247        |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 247        |   |   | (247      | )      |   |       |   |
| Net effect        related to the purchase of treasury shares by Saipem SpA        and Snam Rete Gas SpA                                              |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (306      | )      |   | (306       | )      |
| Purchase and sale to third parties of        consolidated subsidiaries                                                                               |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (5        | )      |   | (5         | )      |
| Cost        related to stock options                                                                                                                 |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 14         |   |   |       |   |   |       |   |   | 14         |   |   |      |   |   | 14         |   |
| Reclassification of reserves of Eni SpA                                                                                                              |   |      |   |   |    |   |   | 2         |   |   | (5,224     | )      |   |       |   |   | (2         | )      |   | 5,224      |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Foreign        currency translation differences on the distribution of        dividends and other changes                                            |   |      |   |   |    |   |   |      |   |   |       |   |   | (73        | )      |   |       |   |   | (181       | )      |   |       |   |   |       |   |   | (254       | )      |   | 2         |   |   | (252       | )      |
|                                                                                                                                                 |   |      |   |   |    |   |   | **2**     |   |   | **(4,977** | **)**  |   | **(73**    | **)**  |   | **(2**     | **)**  |   | **5,057**  |   |   |       |   |   |       |   |   | **7**      |   |   | **(556**  | **)**  |   | **(549**   | **)**  |
|                                                                                                                                                 |   |           |        |   |         |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |            |        |
| **Balance        at December 31, 2006**(Note 27)                                                                                                     |   | **4,005** |   |   | **959** |   |   | **7,262** |   |   | **400**    |   |   | **(398**   | **)**  |   | **(5,374** | **)**  |   | **25,168** |   |   | **(2,210** | **)**  |   | **9,217**  |   |   | **39,029** |   |   | **2,170** |   |   | **41,199** |   |
|                                                                                                                                                 |   |           |        |   |         |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |            |        |

F-6

----

##### 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 |   | Other reserves |   | Cumulative         currency translation        differences |   | Treasury shares |   | Retained earnings |   | Interim dividend |   | Net profit for the year |   | Total |   | Minority interest |   | Total shareholders’ equity |
|--------------|--------|---------------|--------|--------------------------|--------|-----------------------------|--------|----------------|--------|------------------------------------------------------------|--------|-----------------|--------|-------------------|--------|------------------|--------|-------------------------|--------|-------|--------|-------------------|--------|---------------------------------|
|         |   |               |   |                          |   |                             |   |                |   |                                                            |   |                 |   |                   |   |                  |   |                         |   |       |   |                   |   |                                 |

| **Balance at December 31, 2006**(Note 27)                                                                                                           |   | **4,005** |   |   | **959** |   |   | **7,262** |   |   | **400**    |   |   | **(398**   | **)**  |   | **(5,374** | **)**  |   | **25,168** |   |   | **(2,210** | **)**  |   | **9,217**  |   |   | **39,029** |   |   | **2,170** |   |   | **41,199** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit for the year**(Note 27)                                                                                                         |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **10,011** |   |   | **10,011** |   |   | **798**   |   |   | **10,809** |   |
| **Gains (losses) recognized directly in equity**                                                                                                    |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Change in        the fair value of available-for-sale securities (Note 27)                                                                          |   |      |   |   |    |   |   |      |   |   | (4         | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (4         | )      |   |      |   |   | (4         | )      |
| Change in the fair value of cash flow hedge        derivatives (Note 27)                                                                            |   |      |   |   |    |   |   |      |   |   | (1,370     | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,370     | )      |   |      |   |   | (1,370     | )      |
| Foreign        currency translation differences                                                                                                     |   |      |   |   |    |   |   |      |   |   | 25         |   |   | (1,954     | )      |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,929     | )      |   | (51       | )      |   | (1,980     | )      |
|                                                                                                                                                |   |      |   |   |    |   |   |      |   |   | **(1,349** | **)**  |   | **(1,954** | **)**  |   |       |   |   |       |   |   |       |   |   |       |   |   | **(3,303** | **)**  |   | **(51**   | **)**  |   | **(3,354** | **)**  |
| **Total        recognized income and (expense) for the year**                                                                                       |   |      |   |   |    |   |   |      |   |   | **(1,349** | **)**  |   | **(1,954** | **)**  |   |       |   |   |       |   |   |       |   |   | **10,011** |   |   | **6,708**  |   |   | **747**   |   |   | **7,455**  |   |
| **Transactions with shareholders**                                                                                                                  |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.65 per share) in        settlement of 2006 interim dividend of euro 0.60 per        share (Note 27) |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 2,210      |   |   | (4,594     | )      |   | (2,384     | )      |   |      |   |   | (2,384     | )      |
| Dividend distribution of Eni SpA (euro 0.60 per        share) (Note 27)                                                                             |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (2,199     | )      |   |       |   |   | (2,199     | )      |   |      |   |   | (2,199     | )      |
| Dividend        distribution of other companies                                                                                                     |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (289      | )      |   | (289       | )      |
| Payments by minority shareholders                                                                                                                   |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1         |   |   | 1          |   |
| Allocation        of 2006 net profit                                                                                                                |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 4,623      |   |   |       |   |   | (4,623     | )      |   |       |   |   |      |   |   |       |   |
| Shares repurchased (Note 27)                                                                                                                        |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   | (680       | )      |   |       |   |   |       |   |   |       |   |   | (680       | )      |   |      |   |   | (680       | )      |
| Treasury        shares sold under incentive plans for Eni managers (Note        27)                                                                 |   |      |   |   |    |   |   | (55       | )      |   | 35         |   |   |       |   |   | 55         |   |   | 11         |   |   |       |   |   |       |   |   | 46         |   |   |      |   |   | 46         |   |
| Difference between the carrying amount and        strike price of stock options exercised by Eni managers                                           |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 9          |   |   |       |   |   |       |   |   | 9          |   |   |      |   |   | 9          |   |
|                                                                                                                                                |   |      |   |   |    |   |   | **(55**   | **)**  |   | **35**     |   |   |       |   |   | **(625**   | **)**  |   | **4,643**  |   |   | **11**     |   |   | **(9,217** | **)**  |   | **(5,208** | **)**  |   | **(288**  | **)**  |   | **(5,496** | **)**  |
| **Other changes in shareholders’ equity**                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Net effect        related to the purchase of treasury shares by Saipem SpA        and Snam Rete Gas SpA                                             |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (201      | )      |   | (201       | )      |
| Cost related to stock options                                                                                                                       |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 18         |   |   |       |   |   |       |   |   | 18         |   |   |      |   |   | 18         |   |
| Foreign        currency translation differences on the distribution of        dividends and other changes                                           |   |      |   |   |    |   |   |      |   |   |       |   |   | 119        |   |   |       |   |   | (238       | )      |   |       |   |   |       |   |   | (119       | )      |   | 11        |   |   | (108       | )      |
|                                                                                                                                                |   |      |   |   |    |   |   |      |   |   |       |   |   | **119**    |   |   |       |   |   | **(220**   | **)**  |   |       |   |   |       |   |   | **(101**   | **)**  |   | **(190**  | **)**  |   | **(291**   | **)**  |
|                                                                                                                                                |   |           |        |   |         |        |   |           |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |            |        |   |           |        |   |            |        |
| **Balance        at December 31, 2007**(Note 27)                                                                                                    |   | **4,005** |   |   | **959** |   |   | **7,207** |   |   | **(914**   | **)**  |   | **(2,233** | **)**  |   | **(5,999** | **)**  |   | **29,591** |   |   | **(2,199** | **)**  |   | **10,011** |   |   | **40,428** |   |   | **2,439** |   |   | **42,867** |   |

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

F-7

----

##### Table of Contents

**CONSOLIDATED****STATEMENTOF CASH FLOWS****(million euro)**

|    |   |    ** ****Note**** ** |   | **2005** |   | **2006** |   | **2007** |
|--------------|--------|------------------------------------------------|--------|----------|--------|----------|--------|----------|
|         |   |                                           |   |          |   |          |   |          |

| Net profit of the year                                                                              |   |   |   | 9,247      |   |   | 9,823      |   |   | 10,809      |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
| Depreciation,        depletion and amortization                                                     |   | (30)   |   | 5,509      |   |   | 6,153      |   |   | 7,029       |   |
| Revaluations, net                                                                                   |   |   |   | (288       | )      |   | (386       | )      |   | (494        | )      |
| Net change        in provisions for contingencies                                                   |   |   |   | 1,279      |   |   | (86        | )      |   | (122        | )      |
| Net change in the provisions for employee        benefits                                           |   |   |   | 18         |   |   | 72         |   |   | (67         | )      |
| Gain on        disposal of assets, net                                                              |   |   |   | (220       | )      |   | (59        | )      |   | (309        | )      |
| Dividend income                                                                                     |   | (32)   |   | (33        | )      |   | (98        | )      |   | (170        | )      |
| Interest        income                                                                              |   |   |   | (214       | )      |   | (387       | )      |   | (603        | )      |
| Interest expense                                                                                    |   |   |   | 654        |   |   | 346        |   |   | 523         |   |
| Exchange        differences                                                                         |   |   |   | (64        | )      |   | 6          |   |   | (119        | )      |
| Income taxes                                                                                        |   | (33)   |   | 8,128      |   |   | 10,568     |   |   | 9,219       |   |
| **Cash        generated from operating profit before changes in working        capital**            |   |   |   | **24,016** |   |   | **25,952** |   |   | **25,696**  |   |
| (Increase) decrease:                                                                                |   |   |   |       |   |   |       |   |   |        |   |
| -        inventories                                                                                |   |   |   | (1,402     | )      |   | (953       | )      |   | (1,117      | )      |
| - trade and other receivables                                                                       |   |   |   | (4,413     | )      |   | (1,952     | )      |   | (655        | )      |
| - other        assets                                                                               |   |   |   | 351        |   |   | (315       | )      |   | (362        | )      |
| - trade and other payables                                                                          |   |   |   | 3,030      |   |   | 2,146      |   |   | 360         |   |
| - other        liabilities                                                                          |   |   |   | 12         |   |   | 50         |   |   | 107         |   |
| **Cash from operations**                                                                            |   |   |   | **21,594** |   |   | **24,928** |   |   | **24,029**  |   |
| Dividends        received                                                                           |   |   |   | 366        |   |   | 848        |   |   | 658         |   |
| Interest received                                                                                   |   |   |   | 214        |   |   | 395        |   |   | 333         |   |
| Interest        paid                                                                                |   |   |   | (619       | )      |   | (294       | )      |   | (555        | )      |
| Income taxes paid                                                                                   |   |   |   | (6,619     | )      |   | (8,876     | )      |   | (8,948      | )      |
| **Net        cash provided from operating activities**                                              |   |   |   | **14,936** |   |   | **17,001** |   |   | **15,517**  |   |
| *- of which with related parties*                                                                   |   | (36)   |   | *1,230*    |   |   | *2,206*    |   |   | *549*       |   |
| Investing        activities:                                                                        |   |   |   |       |   |   |       |   |   |        |   |
| - tangible assets                                                                                   |   | (8)    |   | (6,558     | )      |   | (6,138     | )      |   | (8,532      | )      |
| -        intangible assets                                                                          |   | (11)   |   | (856       | )      |   | (1,695     | )      |   | (2,061      | )      |
| - consolidated subsidiaries and businesses                                                          |   |   |   | (73        | )      |   | (46        | )      |   | (4,759      | )      |
| -        investments                                                                                |   | (12)   |   | (54        | )      |   | (42        | )      |   | (4,890      | )      |
| - securities                                                                                        |   |   |   | (464       | )      |   | (49        | )      |   | (76         | )      |
| -        financing receivables                                                                      |   |   |   | (683       | )      |   | (516       | )      |   | (1,646      | )      |
| - change in payables and receivables in relation        to investments and capitalized depreciation |   |   |   | 149        |   |   | (26        | )      |   | 185         |   |
| **Cash        flow from investments**                                                               |   |   |   | **(8,539** | **)**  |   | **(8,512** | **)**  |   | **(21,779** | **)**  |
| Disposals:                                                                                          |   |   |   |       |   |   |       |   |   |        |   |
| - tangible        assets                                                                            |   |   |   | 99         |   |   | 237        |   |   | 172         |   |
| - intangible assets                                                                                 |   |   |   | 13         |   |   | 12         |   |   | 28          |   |
| -        consolidated subsidiaries and businesses                                                   |   |   |   | 252        |   |   | 8          |   |   | 56          |   |
| - investments                                                                                       |   |   |   | 178        |   |   | 36         |   |   | 403         |   |
| -        securities                                                                                 |   |   |   | 369        |   |   | 382        |   |   | 491         |   |
| - financing receivables                                                                             |   |   |   | 804        |   |   | 794        |   |   | 545         |   |
| - change        in payables and receivables in relation to disposals                                |   |   |   | 9          |   |   | (8         | )      |   | (13         | )      |
| **Cash flow from disposals**                                                                        |   |   |   | **1,724**  |   |   | **1,461**  |   |   | **1,682**   |   |
| **Net        cash used in investing activities******(*)                                             |   |   |   | **(6,815** | **)**  |   | **(7,051** | **)**  |   | **(20,097** | **)**  |
| *- of which with related parties*                                                                   |   | (36)   |   | *(160*     | *)*    |   | *(686*     | *)*    |   | *(822*      | *)*    |

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

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**CONSOLIDATED****STATEMENTOF CASH FLOWS*****continued*****(million euro)**

|    |   |    ** ****Note**** ** |   | **2005** |   | **2006** |   | **2007** |
|--------------|--------|------------------------------------------------|--------|----------|--------|----------|--------|----------|
|         |   |                                           |   |          |   |          |   |          |

| Proceeds from long-term debt                                                                                                             |   |   |   | 2,755      |   |   | 2,888      |   |   | 6,589      |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Repayments        of long-term debt                                                                                                      |   |   |   | (2,978     | )      |   | (2,621     | )      |   | (2,295     | )      |
| Increase (decrease) in short-term debt                                                                                                   |   |   |   | (317       | )      |   | (949       | )      |   | 4,467      |   |
|                                                                                                                                     |   |   |   | **(540**   | **)**  |   | **(682**   | **)**  |   | **8,761**  |   |
| Net capital contributions by minority        shareholders                                                                                |   |   |   | 24         |   |   | 22         |   |   | 1          |   |
| Net        acquisition of treasury shares different from Eni SpA                                                                         |   |   |   | (30        | )      |   | (477       | )      |   | (340       | )      |
| Acquisition of additional interests in        consolidated subsidiaries                                                                  |   |   |   | (3         | )      |   | (7         | )      |   | (16        | )      |
| Sale of        additional interests in consolidated subsidiaries                                                                         |   |   |   |       |   |   | 35         |   |   |       |   |
| Dividends paid to:                                                                                                                       |   |   |   |       |   |   |       |   |   |       |   |
| Eni’s        shareholders                                                                                                           |   |   |   | (5,070     | )      |   | (4,610     | )      |   | (4,583     | )      |
| Minority interest                                                                                                                        |   |   |   | (1,218     | )      |   | (222       | )      |   | (289       | )      |
| Net        purchase of treasury shares                                                                                                   |   |   |   | (987       | )      |   | (1,156     | )      |   | (625       | )      |
| **Net cash used in financing activities**                                                                                                |   |   |   | **(7,824** | **)**  |   | **(7,097** | **)**  |   | **2,909**  |   |
| *- of        which with related parties*                                                                                                 |   | (36)   |   | *23*       |   |   | *(57*      | *)*    |   | *20*       |   |
| **Changes in cash and cash equivalents not        related to inflows/outflows from operating, investing or        financing activities** |   |   |   |       |   |   |       |   |   |       |   |
| *Effect        of change in consolidation (inclusion/exclusion of        significant/insignificant subsidiaries)*                        |   |   |   | *(38*      | *)*    |   | *(4*       | *)*    |   | *(40*      | *)*    |
| *Effect of exchange rate changes on cash and        cash equivalents*                                                                    |   |   |   | *71*       |   |   | *(197*     | *)*    |   | *(160*     | *)*    |
| **Net        cash flow for the period**                                                                                                  |   |   |   | **330**    |   |   | **2,652**  |   |   | **(1,871** | **)**  |
| **Cash and cash equivalents - beginning of year**                                                                                        |   | (1)    |   | **1,003**  |   |   | **1,333**  |   |   | **3,985**  |   |
| **Cash        and cash equivalents - end of year**                                                                                       |   | (1)    |   | **1,333**  |   |   | **3,985**  |   |   | **2,114**  |   |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (*)          |    | 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 "Item 5 –        Operating and Financial Review and Prospects".        Cash flows of such investments were as follows: |
|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

| (million euro) |   |    ** ** |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|------------------------------|--------|----------|--------|----------|--------|----------|
|           |   |                         |   |          |   |          |   |          |

| Financing investments:                       |   |     |   |   |     |   |   |       |   |
|----------------------------------------------|--------|----------|--------|--------|----------|--------|--------|------------|--------|
| -        securities                          |   | (186     | )      |   | (44      | )      |   | (75        | )      |
| - financing receivables                      |   | (45      | )      |   | (134     | )      |   | (970       | )      |
|                                         |   | **(231** | **)**  |   | **(178** | **)**  |   | **(1,045** | **)**  |
| Disposal of financing investments:           |   |     |   |   |     |   |   |       |   |
| -        securities                          |   | 60       |   |   | 340      |   |   | 419        |   |
| - financing receivables                      |   | 62       |   |   | 54       |   |   | 147        |   |
|                                         |   | **122**  |   |   | **394**  |   |   | **566**    |   |
| **Net cash flows from financing activities** |   | **(109** | **)**  |   | **216**  |   |   | **(479**   | **)**  |
|                                         |   |          |        |   |          |        |   |            |        |

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**SUPPLEMENTAL CASH FLOWINFORMATION****(million euro)**

|    |   |    **** |   | **2005** |   | **2006** |   | **2007** |
|--------------|--------|------------------------|--------|----------|--------|----------|--------|----------|
|         |   |                   |   |          |   |          |   |          |

| **Effect of investment of companies included in        consolidation and businesses** |   |    |   |   |    |   |   |         |         |
|---------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|--------------|--------------|
| Current        assets                                                                 |   |    |   |   | 68      |   |   | 398          |         |
| Non-current assets                                                                    |   | 122     |   |   | 130     |   |   | 5,590        |         |
| Net        borrowings                                                                 |   | (19     | )      |   | 53      |   |   | 1            |         |
| Current and non-current liabilities                                                   |   | (22     | )      |   | (92     | )      |   | (972         | )            |
| **Net        effect of investments**                                                  |   | **81**  |   |   | **159** |   |   | **5,017**    |         |
| Sale of unconsolidated entities controlled by        Eni                              |   |    |   |   | (60     | )      |   |    |    |
| Fair value        of investments held before the acquisition of control               |   | (8      | )      |   |    |   |   | (13          | )            |
| **Purchase price**                                                                    |   | **73**  |   |   | **99**  |   |   | **5,004**    |         |
| less:                                                                                 |   |    |   |   |    |   |   |         |         |
| *Cash and cash equivalents*                                                           |   |    |   |   | (53     | )      |   | (245         | )            |
| **Cash        flow on investments**                                                   |   | **73**  |   |   | **46**  |   |   | **4,759**    |         |
| **Effect of disposal of consolidated        subsidiaries and businesses**             |   |    |   |   |    |   |   |         |         |
| Current        assets                                                                 |   | 204     |   |   | 9       |   |   | 73           |         |
| Non-current assets                                                                    |   | 189     |   |   | 1       |   |   | 20           |         |
| Net        borrowings                                                                 |   | 42      |   |   | (1      | )      |   | 26           |         |
| Current and non-current liabilities                                                   |   | (217    | )      |   | (4      | )      |   | (94          | )            |
| **Net        effect of disposals**                                                    |   | **218** |   |   | **5**   |   |   | **25**       |         |
| Gain on disposal                                                                      |   | 140     |   |   | 3       |   |   | 33           |         |
| Minority        interest                                                              |   | (43     | )      |   |    |   |   |         |         |
| **Selling price**                                                                     |   | **315** |   |   | **8**   |   |   | **58**       |         |
| less:                                                                                 |   |    |   |   |    |   |   |         |         |
| *Cash and cash equivalents*                                                           |   | (63     | )      |   |    |   |   | (2           | )            |
| **Cash        flow on disposals**                                                     |   | **252** |   |   | **8**   |   |   | **56**       |         |
|                                                                                  |   |         |        |   |         |        |   |              |              |

 

**Transactions that did not produce cashflows**Acquisition of equity investments in exchange of businessescontribution:

| (million euro) |   |    **** |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|------------------------|--------|----------|--------|----------|--------|----------|
|           |   |                   |   |          |   |          |   |          |

| **Effect of the businesses contribution** |   |   |   |   |    |   |   |         |   |
|-------------------------------------------|--------|--------|--------|--------|---------|--------|--------|--------------|--------|
| Current        assets                     |   | 2      |   |   | 23      |   |   |    |   |
| Non-current assets                        |   | 17     |   |   | 213     |   |   | 38           |   |
| Net        borrowings                     |   |   |   |   | (44     | )      |   | (4           | )      |
| Long-term and short-term liabilities      |   | (1     | )      |   | (53     | )      |   |    |   |
| **Net        effect of contribution**     |   | **18** |   |   | **139** |   |   | **34**       |   |
| Minority interest                         |   |   |   |   | (36     | )      |   |         |   |
| Gain on        contribution               |   |   |   |   | 18      |   |   |         |   |
| **Acquisition of investments**            |   | **18** |   |   | **121** |   |   | **34**       |   |
|                                      |   |        |        |   |         |        |   |              |        |

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The Consolidated Financial Statements of Eni Group for theyear ended December 31, 2007 were authorized for issuance by theBoard of Directors on March 14, 2008.

**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) and adopted by the European Union (EU)pursuant to Article 6 of the EC Regulation No. 1606/2002 of theEuropean Parliament and Council of July 19, 2002 and inaccordance with Article 9 of Legislative Decree No. 38/2005.Differences in certain respects between IFRS as endorsed by theEU and IFRS as issued by IASB are on matters that do not relateto Eni. On this basis, Eni’s financial statements are fullyin compliance with IFRS as issued by the IASB.

Oil and natural gas exploration and production activity isaccounted for in conformity with internationally acceptedaccounting principles. Specifically, this concerns thedetermination of the amortization expenses using theunit-of-production method and the recognition of theproduction-sharing agreements and buy-back contracts. TheConsolidated Financial Statements have been prepared on ahistorical cost basis 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 controlled subsidiarycompanies where the company holds the right to directly orindirectly exercise control, determine financial and managementdecisions and obtain economic and financial benefits.

Immaterial1 subsidiaries are not consolidated. Asubsidiary is generally considered to be immaterial when it doesnot exceed two of the following three limits: (i) total assets orliabilities: euro 3,125 thousand; (ii) total revenues: euro 6,250thousand; and (iii) average number of employees: 50 units.Moreover, companies for which consolidation does not producesignificant economic and financial effects are not consolidated.These are usually entities acting as sole-operator in themanagement of oil and gas contracts on behalf of companiesparticipating in a joint venture. These are financedproportionately based on a budget approved by the participatingcompanies upon presentation periodical reports of proceeds andexpenses. Costs and revenues and other operating data(production, reserves, etc.) of the project, as well as theobligations arising from the project, are recognizedproportionally in the financial statements of the companiesinvolved. The effects of these exclusions are immaterial.

Immaterial subsidiaries excluded from consolidation, jointlycontrolled entities, associates and other interests are accountedfor as described below under the item "Financial fixedassets".

2007 Consolidated Financial Statements approved by Eni’sBoard of Directors on March 14, 2008 were audited by theindependent auditor PricewaterhouseCoopers SpA (PwC) who revieweddisclosed information. The independent auditor of Eni SpA, as themain auditor of the Group, is in charge of the auditingactivities of the subsidiaries, unless this is incompatible withlocal laws, and, to the extent allowed under Italian legislation,of the work of other independent auditors.

Amounts in the notes to these financialstatements are expressed in millions of euros (euro million).**Principles of consolidation****Interest in consolidated companies**Assets and liabilities, revenues and expenses related to fullyconsolidated 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.

When acquired, the net equity of controlled subsidiaries isinitially recognized at fair value. The excess of the purchaseprice of an acquired entity over the total fair value assigned toassets acquired and liabilities assumed is recognized asgoodwill; negative goodwill is recognized in profit and lossaccount.

The purchase of additional ownership interests insubsidiaries from minority shareholders is recognised as goodwilland represents the excess of the amount paid over the carryingvalue of the minority interest acquired.

 

----

| (1) |    | According to        the requirements of the framework of international        accounting standards, information is material if its        omission or misstatement could influence the economic        decisions that users make on the basis of the financial        statements. |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Gains or losses associated with the sale ofinterests in consolidated subsidiaries are reflected in profitand loss account for the difference between proceeds from thesale and the divested portion of net equity.

Equity and net profit of minority shareholdersare included in specific lines of the financial statements; thisshare of equity is determined using the value of assets andliabilities, excluding any related goodwill, at the time whencontrol is acquired.

**Inter-company transactions**Inter-company transactions, balances and unrealized gains ontransactions between group companies are eliminated. Unrealizedlosses are not eliminated since they are considered an impairmentindicator of the asset transferred.

**Foreign currencytranslation**Financial statements of foreign companies having a functionalcurrency other than euro 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 differences resulting fromthis translation are recognized in shareholders’ equityunder “Other reserves” in proportion to thegroup’s interest and under “Minority interest” forthe portion related to minority shareholders. Cumulative exchangedifferences are charged to the profit and loss account when theinvestments are sold or the capital employed is repaid.

Financial statements of foreign subsidiarieswhich are translated into euro are denominated in the functionalcurrencies of the countries where the entities operate. The U.S.dollar is the prevalent functional currency for the entities thatdo not adopt euro.**Summary of significant accounting policies**The most significant accounting policies used in the preparationof the Consolidated Financial Statements are described 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)" and as a component of equity within"Other reserves", respectively.

In the latter case, changes in fair value recognized undershareholders’ equity are charged to the profit and lossaccount when they are impaired or realized. The objectiveevidence that an impairment loss has occurred is verifiedconsidering, interalia, significant breaches of contracts,serious financial difficulties or the high probability ofinsolvency of the counterparty.

Available-for-sale financial assets include financial assetsother than derivative financial instruments, loans andreceivables, held for trading financial assets, held-to-maturityfinancial assets and investments associated with a derivativefinancial instrument. The latter are stated at fair value witheffects of changes in fair value recognized to the profit andloss account rather than shareholders’ equity, the so-called"fair value option", in order to ensure a match withthe recognition in the profit and loss account of the changes infair value of the derivative instrument.

The fair value of financial instruments is determined bymarket quotations or, in their absence, by the value resultingfrom the adoption of suitable financial valuation models whichtake into account all the factors adopted by market operators andprices obtained in similar recent transactions in the market.Interest and dividends on financial assets stated at fair valuewith gains or losses reflected in profit and loss account areaccounted for on an accrual basis as "Financial income(expense)" and "Income (expense) frominvestments", respectively.

When the purchase or sale of a financial asset under acontract whose terms require delivery of the asset within thetime frame established generally by regulation or convention inthe market place concerned, the transaction is accounted for onthe settlement date.

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Receivables are carried at amortized cost (seeitem "Financial fixed assets" below).

Transferred financial assets are derecognizedwhen the contractual rights to receive the cash flows of thefinancial assets are transferred together with the risks andrewards of the ownership.

Inventories, including compulsory stocks andexcluding contract work in progress, are stated at the lower ofpurchase or production cost and net realizable value. Netrealizable value is the estimated selling price less the costs tosell.

The cost for inventories of hydrocarbons (crudeoil, condensates and natural gas) and petroleum products isdetermined by applying the weighted-average cost method on athree-month basis; the cost for inventories of the Petrochemicalsegment is determined by applying the weighted-average cost on anannual basis.

Contract work in progress is measured using thecost-to-cost method whereby contract revenue is recognized basedon the stage of completion as determined by the cost sustained.Advances are deducted from inventories within the limits ofcontractual considerations; any excess of such advances over thevalue of the inventories is recorded as a liability. Lossesrelated to construction contracts are accrued for once thecompany becomes aware of such losses. Contract work in progressnot yet invoiced, whose payment will be made in a foreigncurrency, is translated to euro using the current exchange ratesat year end and the effect of rate changes is reflected in profitand loss account.

Hedging instruments are described in the section“Derivative Instruments”.

**Non-current assets****Property, plant and equipment**2Tangible assets, including investment properties, are recognizedusing 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 thedismantling and removal of assets and the restoration of sites,the carrying value includes, with a corresponding entry to aspecific provision, the estimated (discounted) costs to be borneat the moment the asset is retired. Changes in estimate of thecarrying amounts of provisions due to the passage of time andchanges in discount rates are recognized under “Provisionsfor contingencies”. 

The company recognizes material provisions forthe retirement of assets in the Exploration & Productionbusiness. No significant asset retirement obligations associatedwith any legal obligations to retire refining, marketing andtransportation (downstream) and chemical long-lived assets aregenerally recognized, as undetermined settlement dates for assetretirements do not allow a reasonable estimate of the fair valueof the associated retirement obligation. The company performsperiodic reviews of its downstream and chemical long-lived assetsfor any changes in facts and circumstances that might requirerecognition of a retirement obligation.

Property, plant and equipment is not revalued forfinancial reporting purposes.

Assets carried under financial leasing orconcerning arrangements that do not take the legal form of afinance lease but substantially transfer all the risks andrewards of ownership of the leased asset are recognized at fairvalue, net of taxes due from the lessor or, if lower, at thepresent value of the minimum lease payments. Leased assets areincluded within property, plant and equipment. A correspondingfinancial debt payable to the lessor is recognized as financialliability. These assets are depreciated using the criteriadescribed below.

When the renewal is not reasonably certain,leased assets are depreciated over the shorter of the lease termand the estimated useful life of the asset. Expenditures onrenewals, improvements and transformations that extend the usefullives of the related asset are capitalized to property, plant andequipment.

Tangible assets, from the moment they begin orshould begin to be used, are depreciated systematically using astraight-line method over their useful life which is an estimateof the period over which the assets will be used by the company.When tangible assets are composed of more than one significantelement with different useful lives, each component isdepreciated separately. The amount to be depreciated isrepresented by the book value reduced 

----

| (2) |    | Recognition        and evaluation criteria of exploration and production        activities are described in the section “Exploration        and production activities” below. |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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by the estimated net realizable value at the endof the useful life, if it is significant and can be reasonablydetermined. Land is not depreciated, even when purchased with abuilding. Tangible assets held for sale are not depreciated butare valued at the lower of book value and fair value less costsof disposal.

Assets that can be used free of charge by third parties aredepreciated over the shorter term of the duration of theconcession and the useful life of the asset.

Replacement costs of identifiable components in complex assetsare capitalized and depreciated over their useful life; theresidual book value of the component that has been substituted ischarged to the profit and loss account. Expenditures for ordinarymaintenance and repairs are expensed as incurred.

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 represented by the higher offair value less costs to sell and value in use.

If there is no binding sales agreement, fair value isestimated on the basis of market values, recent transactions, orthe best available information that shows the proceeds that thecompany could reasonably expect to collect from the disposal ofthe 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 therefrom) 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 takes into accountthe implicit risk in the sectors where the entity operates.Valuation is carried out for each single asset or, if therealizable value of a single asset cannot be determined, for thesmallest identifiable group of assets that generates independentcash inflows from their continuous use, the so-called "cashgenerating unit". When the reasons for their impairmentcease to exist, Eni makes a reversal that is recognized in profitor loss account as income from asset revaluation. This reversedamount cannot exceed the carrying amount that would have beendetermined, net of depreciation, had no impairment loss beenrecognized 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 asset arises from contractual orlegal rights, or (ii) the asset is separable, i.e. can be sold,transferred, licensed, rented or exchanged, either individuallyor as an integral part of other assets. An entity controls anasset if it has the power to obtain the future economic benefitsgenerated by the underlying asset and to restrict the access ofothers to those cash flows.

Intangible assets are initially stated at cost asdetermined by the criteria used for tangible assets and they arenot revalued for financial reporting purposes. 

Intangible assets with a definite useful life areamortized systematically over their useful life estimated as theperiod over which the assets will be used by the company; therecoverability of their carrying amount is verified in accordancewith the criteria described in the section “Property, plantand equipment”.

Goodwill and other intangible assets with anindefinite useful life are not amortized. The recoverability oftheir carrying value is reviewed at least annually and wheneverevents or changes in circumstances indicate that the carryingvalue may not be recoverable. Goodwill is tested for impairmentat the level of the smallest aggregate on which the company,directly or indirectly, evaluates the return on the capitalexpenditure to which goodwill relates. When the carrying amountof the cash generating unit, including goodwill allocatedthereto, exceeds the cash generating unit’s recoverableamount, the excess is recognized as impairment. The impairmentloss is first allocated to reduce the carrying amount ofgoodwill; any remaining excess to be allocated to the assets ofthe unit is applied 

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##### Table of Contents

pro-rata on the basis of the carrying amount ofeach asset in the unit. Impairment charges against goodwill arenot reversed3. Negative goodwill is recognized in theprofit and loss account.

Costs of technological development activities arecapitalized when: (i) the cost attributable to the developmentactivity can be reasonably determined; (ii) there is theintention, availability of funding and technical capacity to makethe asset available for use or sale; and (iii) it can bedemonstrated that the asset is able to generate future economicbenefits.

**Exploration and production activities**4*Acquisition of mineral rights*Costs associated with the acquisition of mineral rights arecapitalized in connection with the assets acquired (such asexploratory potential, probable and possible reserves and provedreserves). When the acquisition is related to a set ofexploratory potential and reserves, the cost is allocated to thedifferent assets acquired on the basis of the value of therelevant discounted cash flows.

Expenditure for the exploratory potential,represented by the costs for the acquisition of the explorationpermits and for the extension of existing permits, is recognizedunder “Intangible assets” and is amortized on astraight-line basis over the period of the exploration ascontractually established. If the exploration is abandoned, theresidual expenditure is charged to the profit and loss account.

Acquisition costs for proved reserves and forpossible and probable reserves are recognized in the balancesheet as assets. Costs associated with proved reserves areamortized on a UOP basis, as detailed in the section“Development”, considering both developed andundeveloped reserves. Expenditures associated with possible andprobable reserves are not amortized until classified as provedreserves; in case of a negative result, the costs are charged tothe profit and loss account.

*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 access toproved 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 unsuccessful development wellsor damaged wells are expensed immediately as losses on disposal.

Impairments and reversal of impairments ofdevelopment costs are made on the same basis as those fortangible assets.

*Production*Production costs are those costs incurred to operate and maintainwells and field equipment and are expensed as incurred.

*Production-sharing agreements and buy-backcontracts*Oil and gas reserves related to production-sharing agreements andbuy-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 

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| (3) |    | Impairment        charges 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. |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) |   | IFRS do not        establish specific criteria for hydrocarbon exploration        and production activities. Eni continues to use existing        accounting policies for exploration and evaluation assets        previously applied before the introduction of IFRS 6        “Exploration for and evaluation of mineral        resources”. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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production entitlements against both cost oil andprofit oil are accounted for on an accrual basis whilstexploration, development and production costs are accounted foraccording to the policies mentioned above.*Retirement*Costs expected to be incurred with respect to the retirement of awell, 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 of purchaseprice or production cost of the related assets when there isreasonable assurance that all the required conditions attached tothem, agreed upon with government entities, have been met. Grantsnot related to capital expenditure are recognized in the profitand loss account.

**Financial fixed assets***Investments*Investments in subsidiaries excluded from consolidation, jointlycontrolled entities and associates may be accounted for using theequity method5. Subsidiaries, joint ventures andassociates excluded from consolidation may be accounted for atcost, adjusted for impairment losses if this does not result in amisrepresentation of the company’s financial condition. Whenthe reasons for their impairment cease to exist, investmentsaccounted for at cost are re-valued within the limit of theimpairment made and their effects are included in “Otherincome (expense) from investments”.

Other investments, included in non currentassets, are recognized at their fair value and their effects areincluded in shareholders’ equity under “Otherreserves”; this reserve is charged to the profit and lossaccount when it is impaired or realized. When fair value cannotbe reasonably determined, investments are accounted for at cost,adjusted for impairment losses; impairment losses may not bereversed6.

The risk deriving from losses exceedingshareholders’ equity is recognized in a specific provisionto the extent the parent company is required to fulfill legal orimplicit obligations towards the subsidiary or to cover itslosses.

*Receivables and financial assets to be held tomaturity*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 internal rate of return represented bythe rate that equalizes, at the moment of the initialrevaluation, the current value of expected cash flows to theinitial carrying value (so-called amortized cost method). Anyimpairment is recognized by comparing the carrying value with thepresent value of the expected cash flows discounted at theeffective interest rate defined at the initial recognition.Changes to the carrying amount of receivables or financial assetsin accordance with the amortized cost method are recognized as“Financial income (expense)”.

**Financial liabilities**Debt is carried at amortized cost (see item “Financial fixedassets” above).

**Provisions forcontingencies**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 

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| (5) |    | 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. |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) |    | Impairment        charges 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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(iii) the amount of the obligation can bereliably estimated. The amount recognized as a provision is thebest estimate of the expenditure required to settle the presentobligation at the balance sheet date or to transfer it to thirdparties at that time.

If the effect of the time value is material, andthe payment date of the obligations can be reasonably estimated,provisions to be accrued are the present value of theexpenditures expected to be required to settle the obligation ata discount rate that reflects the company’s averageborrowing rate taking into account the risks associated with theobligation. The increase in the provision due to the passage oftime 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; profit andloss account charge is made with the amortization process. Coststhat 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 consolidatedfinancial statements the following potential liabilities aredescribed: (i) possible, but not probable obligations derivingfrom past events, whose existence will be confirmed only when oneor more future events beyond the company’s control occur;and (ii) current obligations deriving from past events whoseamount cannot be reasonably estimated or whose fulfillment willprobably not result in an outflow of resources embodying economicbenefits.

**Employee benefits******Post-employment benefit plans, includingconstructive obligations, are classified as either definedcontribution plans or defined benefit plans depending on theeconomic substance of the plan as derived from its principalterms and conditions. In the first case, the company’sobligation, which consists of making payments to the State or atrust or a fund, is determined on the basis of contributions due.The liabilities related to defined benefit plans7, netof any plan assets, are determined on the basis of actuarialassumptions8 and charged on an accrual basis duringthe employment period required to obtain the benefits. Theactuarial 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 actuarial gains and losses unrecognized at the end ofthe previous reporting period exceed the greater of 10% of thepresent value of the defined benefit obligation and 10% of thefair value of the plan assets, over the expected averageremaining working lives of the employees participating to 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 profit or loss in their entirety.

**Treasury shares******Treasury shares are recorded at cost and as areduction of equity. Gains resulting from subsequent sales arerecorded in equity.

**Revenues and costs******Revenues associated with sales of products andservices are recorded when significant risks and rewards ofownership pass to the customer or when the transaction can beconsidered settled and associated revenue can be reliablymeasured. In particular, 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 are generally recognized upon shipment;
- chemical products and other products, generally upon        shipment.

Revenues are recognized upon shipment when, atthat 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 other 

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| (7) |    | Given the        uncertainties related to their payment date, employee        termination indemnities are considered as a defined        benefit plan.                                                                                                                                                                                                                                                                                                 |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8) |    | Actuarial        assumptions relate to, interalia, the following        variables: (i) future salary levels; (ii) the mortality        rate of employees; (iii) personnel turnover; (iv) the        percentage of plan participants with dependents who are        eligible to receive benefits (e.g. spouses and dependent        children); (v) for medical plans, the frequency of claims        and future medical costs; and (vi) interest rates. |

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producers are recognized on the basis ofEni’s net working interest in those properties (entitlementmethod). Differences between Eni’s net working interestvolume and actual production volumes are recognized at currentprices at period 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 collectibility 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 in the period 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. Requests of additional revenues,deriving from a change in the scope of work, are 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 counterpart will accept them.

Revenues are stated net of returns, discounts, rebates,bonuses and direct taxation. The exchange of goods and servicesof a similar nature and value do not give rise to revenues andcosts as they do not represent 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, determinedon the basis of the average prices of the main European marketsat period end, are reported in relation to the amount of thecarbon dioxide emissions that exceed the amount assigned; relatedrevenues are recognized upon sale.

Operating lease payments are recognized in the profit and lossaccount over the length of the contract.

Labor costs include stock grants and stock options granted tomanagers, consistent with their actual remunerative nature. Theinstruments granted are recorded at fair value on the vestingdate and are not subject to subsequent adjustments; the currentportion is calculated pro-rata over the vesting period9.The fair value of stock grants is represented by the currentvalue of the shares on the vesting date, reduced by the currentvalue of the expected dividends in the vesting period.

Fair value of stock options is determined usingvaluation techniques which consider conditions related to theexercise of options, current share prices, expected volatilityand the risk-free interest rate. The fair value of the stockgrants and stock options is recorded as a counter-balance of“Other reserves”.

The costs for the acquisition of new knowledge ordiscoveries, the study of products or alternative processes, newtechniques or models, the planning and construction of prototypesor, in any case, costs borne for other scientific researchactivities or technological development, which cannot becapitalized, are included in profit and loss account.

**Accounting for buy/sell contracts**In January and February 2005, the Securities and ExchangeCommission ("SEC") issued comment letters to Eni andother companies in the oil and gas industry requesting disclosureof information related to the accounting for buy/sell contracts.Eni routinely enters into buy/sell contracts, principally in thedownstream business in Italy, associated mainly with refinedproducts. For refined products, buy/sell arrangements are used tosupport the company’s refined products marketing activity,which includes the production, purchase and sale of refinedproducts in order to fulfill the company’s marketing needsand supply agreements to customer locations and specifications.

Eni accounts for buy/sell transactions in the consolidatedprofit and loss account on a net basis, regardless of whetherterms of the buy/sell agreements were established jointly, in asingle contract, or separately, in individual contracts that areentered into concurrently or in contemplation of one another witha single counterparty. This accounting is consistent with themost recent guidance of the SEC staff who considers that theaccounting for buy/sell contracts should be shown net in theprofit and loss account.

The topic was under deliberation by the Emerging Issues TaskForce (EITF) of the FASB as Issue No. 04-13, "Accounting forPurchases and Sales Inventory with the Same Counterparty".At its September 2005 meeting, the EITF reached consensus thattwo or more legally separate exchange transactions with the samecounterparty, 

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| (9) |    | For stock        grants, the period between the date of the award and the        date of assignation of stock; for stock options, the        period between the date of the award and the date at        which the option can be exercised. |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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including buy/sell transactions, should be combined andconsidered as a single arrangement when the transactions wereentered into "in contemplation" of one another. EITF04-13 was ratified by the FASB in September 2005 and is effectivefor new arrangements, or modifications or renewals of existingarrangements, entered into beginning on or after April 1, 2006,which was the effective date for the company’s adoption ofthis standard. Upon adoption, the company reported the net effectof buy/sell transactions in its Consolidated profit and lossaccount as "Purchased crude oil and products" insteadof reporting the revenues associated with these arrangements as"Sales and other operating revenues" and the costs as"Purchased crude oil and products." While this issuewas under deliberation, the SEC staff directed Eni and other oilcompanies in a comment letter to disclose on the face of theprofit and loss account the amounts associated with buy/sellcontracts and to discuss in a footnote to the ConsolidatedFinancial Statements the basis for the underlying accounting.

In Eni’s consolidated profit and loss account, "Netsales from operations" and "Purchases, services andother" for the December 31, 2005, 2006 and 2007 were nettedof euro 2,595 million, euro 2,877 million and euro 2,849 millionrespectively, for the above described buy/sell contracts.

**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 in currenciesother than functional currency are converted by applying the yearend exchange rate and the effect is stated in the profit and lossaccount. Non-monetary assets and liabilities in currencies otherthan the functional currency valued at cost are translated at theinitial exchange rate; non-monetary assets that are remeasured tofair value, recoverable amount or realizable value, aretranslated at the exchange rate applicable to the date ofremeasurement.

**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 tax payables”. Current 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 at the balance sheet dateand the tax rates estimated on annual basis. Deferred tax assetsor liabilities are provided on temporary differences arisingbetween the carrying amounts of the assets and liabilities andtheir tax bases, based on tax rates (tax laws) that have beenenacted or substantively enacted for future years. Deferred taxassets are recognized when their realization is consideredprobable. 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 are separatedfrom the host contract, are assets and liabilities recognized attheir fair value which is estimated by using the criteriadescribed in the section "Current assets".

Derivatives are classified as hedging instrumentswhen the relationship between the derivative and the subject ofthe hedge is formally documented and the effectiveness of thehedge is high and is checked periodically. When hedginginstruments cover the risk of variation of the fair value of thehedged item (fair value hedge, e.g. hedging of the variability onthe fair value of fixed interest rate assets/liabilities) thederivatives are stated at fair value and the effects charged tothe profit and loss account. Hedged items are consistentlyadjusted to reflect the variability of fair value associated withthe hedged risk. When derivatives hedge the cash flow variationrisk of the hedged item (cash flow hedge, e.g. hedging thevariability on the cash flows of assets/liabilities as a resultof the fluctuations of exchange rate), changes in the fair valueof the derivatives, considered effective are initially stated inequity and then recognized in the profit and loss accountconsistent with the economic effects produced by the hedgedtransaction. 

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The changes in the fair value of derivatives that do not meetthe conditions required to qualify for hedge accounting are shownin 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**Assets and liabilities of the balance sheet are classified ascurrent10 and non-current. Items of the profit andloss account are presented by nature11.

The statement of changes in shareholders’equity includes profit and loss for the year, transactions withshareholders and other changes in shareholders’ equity.

The statement of cash flows is presented usingthe indirect method, whereby net profit is adjusted for theeffects of noncash transactions.

 

**Use of accountingestimates**The company’s Consolidated Financial Statements are preparedin accordance with IFRS. These require the use of estimates andassumptions that affect the assets, liabilities, revenues andexpenses reported in the financial statements, as well as amountsincluded in the notes thereto, including discussion anddisclosure of contingent liabilities. Estimates made are based oncomplex or subjective judgments and past experience of otherassumptions deemed reasonable in consideration of the informationavailable at the time. The accounting policies and areas thatrequire the most significant judgments and estimates to be usedin the preparation of the Consolidated Financial Statements arein relation to the accounting for oil and natural gas activities,specifically in the determination of proved and proved developedreserves, impairment of fixed assets, intangible assets andgoodwill, asset retirement obligations, business combinations,pensions and other post-retirement benefits, recognition ofenvironmental liabilities and recognition of revenues in theoilfield services construction and engineering businesses.Although the company uses its best estimates and judgments,actual results could differ from the estimates and assumptionsused. A summary of significant estimates follows.

**Oil and gas activities**Engineering estimates of the Company’s oil and gas reservesare inherently uncertain. Proved reserves are the estimatedvolumes of crude oil, natural gas and gas condensates, liquidsand associated substances which geological and engineering datademonstrate can be produced with reasonable certainty to berecoverable in future years from known reservoirs under existingeconomic and operating conditions. Although there areauthoritative guidelines regarding the engineering criteria thatmust be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data andengineering and geological interpretation and judgment.

Field reserves will only be categorized as provedwhen all the criteria for attribution of proved status have beenmet. At this stage, all booked reserves will be classified asproved undeveloped. Volumes will subsequently be reclassifiedfrom proved undeveloped to proved developed as a consequence ofdevelopment activity. The first proved developed bookings willoccur at the point of first oil or gas production. Majordevelopment projects typically take one to four years from thetime of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revision may be madeto the initial booking of reserves due to production, reservoirperformance, commercial factors, acquisition and divestmentactivity and additional reservoir development activity. Inparticular, changes in oil and natural gas prices could impactthe amount of Eni’s proved reserves as regards the initialestimate and, in the case of Production-sharing agreements andbuy-back contracts, the share of 

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| (10) |    | Starting from        2007, current tax receivable/payable has been grouped        into the item “current tax receivable/payable on        income” and other current tax receivable/payable.        Comparative data for 2006 data has been restated        accordingly. In prior years information on current tax        receivable/payable on income and other current taxes was        given in the Notes on financial statements. |
|------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (11) |    | Further        information on financial instruments as classified in        accordance with IFRS is provided in Note 28 - Guarantees,        commitments and risks "Other information about        financial instruments".                                                                                                                                                                                                           |

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production and reserves to which Eni is entitled.Accordingly, the estimated reserves could be materially differentfrom the quantities of oil and natural gas that ultimately willbe recovered. 

Oil and natural gas reserves have a direct impacton certain amounts reported in the Consolidated FinancialStatements. Estimated proved reserves are used in determiningdepreciation and depletion expenses and impairment expense.Depreciation rates on oil and gas assets using the UOP basis aredetermined from the ratio between the amount of hydrocarbonsextracted in the quarter and proved developed reserves existingat the end of the quarter increased by the amounts extractedduring the quarter. 

Assuming all other variables are held constant,an increase in estimated proved developed reserves for each fielddecreases depreciation, depletion and amortization expense.Conversely, a decrease in estimated proved developed reservesincreases depreciation, depletion and amortization expense. Inaddition, estimated proved reserves are used to calculate futurecash flows from oil and gas properties, which serve as anindicator in determining whether or not property impairment is tobe carried out. The larger the volumes of estimated reserves, thelower is the likelihood of asset impairment.

**Impairment of assets**Eni assesses its tangible assets and intangible assets, includinggoodwill, for possible impairment if there are events or changesin circumstances that indicate the carrying values of the assetsare not recoverable. Such indicators include changes in theGroup’s business plans, changes in commodity prices leadingto unprofitable performance and, for oil and gas properties,significant downward revisions of estimated proved reservequantities. Determination as to whether and how much an asset isimpaired involves management estimates on highly uncertainmatters such as future commodity prices, the effects of inflationand technology improvements on operating expenses, productionprofiles and the outlook for global or regional market supply anddemand conditions for crude oil, natural gas, commodity chemicalsand refined products.

The amount of an impairment loss is determined bycomparing the book value of an asset with its recoverable amount.The recoverable amount is the greater of fair value net ofdisposal costs and value in use. The estimated value in use isbased on the present values of expected future cash flows net ofdisposal costs. The expected future cash flows used forimpairment reviews are based on judgmental assessments of futureproduction volumes, prices and costs, considering availableinformation at the date of review and are discounted by using arate related to the activity involved.

For oil and natural gas properties, the expectedfuture cash flows are estimated principally based on developedand non-developed proved reserves including, among otherelements, production taxes and the costs to be incurred for thereserves yet to be developed. The estimated future level ofproduction is based on assumptions concerning: future commodityprices, lifting and development costs, field decline rates,market demand and supply, economic regulatory climates and otherfactors. 

Oil, natural gas and petroleum products pricesused to quantify the expected future cash flows are estimatedbased on forward prices prevailing in the marketplace for thefirst four years and management’s long-term planningassumptions thereafter. Previously, our expected future cash flowestimates were entirely based upon management’s planningassumptions.

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.

A cash generating unit is the smallest aggregateon which the company, directly or indirectly, evaluates thereturn on the capital 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 

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financial statements. Estimating future asset retirementobligations is complex. It requires management to make estimatesand judgments with respect to removal obligations that will cometo term many years into the future and contracts and regulationsare often unclear as to what constitutes removal.

In addition, the ultimate financial impact of environmentallaws and regulations is not always clearly known as asset removaltechnologies and costs constantly evolve in the countries whereEni operates, as do political, environmental, safety and publicexpectations.

The subjectivity of these estimates is also increased by theaccounting method used that requires entities to record the fairvalue of a liability for an asset retirement obligation in theperiod when it is incurred (typically, at the time the asset isinstalled at the production location).

When liabilities are initially recorded, the related fixedassets 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.

The recognized asset retirement obligations are based onfuture retirement cost estimates and incorporate many assumptionssuch as: expected recoverable quantities of crude oil and naturalgas, abandonment time, future inflation rates and the risk-freerate of interest adjusted for the Company’s credit costs.

**Business combinations**Accounting for business combinations requires the allocation ofthe purchase price to the various assets and liabilities of theacquired business at their respective fair values. Any positiveresidual difference is recognized as "Goodwill".Negative residual differences are credited to the profit and lossaccount. Management uses all available information to make thesefair value determinations and, for major business acquisitions,typically engages an independent appraisal firm to assist in thefair value determination of the acquired assets and liabilities.

**Environmental liabilities**Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, 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 already taken, insurancepolicies to cover environmental risks and provision for risksaccrued, does not expect any material adverse effect onEni’s consolidated results of operations and financialposition as a result of such laws and regulations. However, therecan be no assurance that there will not be a material adverseimpact on Eni’s consolidated results of operations andfinancial position due to: (i) the possibility of an unknowncontamination; (ii) the results of the ongoing surveys and otherpossible effects of statements required by Decree No. 471/1999 ofthe Ministry of Environment concerning the remediation ofcontaminated sites; (iii) the possible effects of futureenvironmental 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, as against otherpotentially responsible parties with respect to such litigationsand the possible insurance recoveries.

**Employee benefits**Defined benefit plans and other long-term benefits are evaluatedwith reference to uncertain events and based upon actuarialassumptions including among others discount rates, expected ratesof return on plan assets, expected rates of salary increases,medical cost trends, estimated retirement dates and mortalityrates. The significant assumptions used to account for pensionsand other post-retirement benefits are determined as follows:

| (i)  |   | discount and inflation rates        reflect the rates at which benefits could be effectively        settled, taking into account the duration of the        obligation. Indicators used in selecting the discount        rate include rates of annuity contracts and rates of        return on high quality fixed-income investments (such as        government bonds). The inflation rates reflect market        conditions observed country by country; |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | the future salary levels of        the individual employees are determined including an        estimate of future changes attributed to general price        levels (consistent with inflation rate assumptions),        productivity, seniority and promotion;                                                                                                                                                                                           |

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| (iii) |   | healthcare cost trend        assumptions reflect an estimate of the actual future        changes in the cost of the healthcare related benefits        provided to the plan participants and are based on past        and current healthcare cost trends including healthcare        inflation, changes in healthcare utilization and changes        in health status of the participants; |
|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv) |   | demographic assumptions such        as mortality, disability and turnover reflect the best        estimate of these future events for individual employees        involved, based principally on available actuarial data;        and |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v) |   | determination of the        expected rates of return on assets is made through        compound averaging. For each plan, the distribution of        investments among bonds, equities and cash and their        specific average expected rate of return is taken into        account. Differences between expected and actual costs        and between the expected return and the actual return on        plan assets routinely occur and are called actuarial        gains and losses. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni applies the corridor method to amortize itsactuarial losses and gains. This method amortizes on a pro-ratabasis the net cumulative unrecognized actuarial gains and lossesat the end of the previous reporting period that exceed 10% ofthe greater of: (i) the present value of the defined benefitobligation; and (ii) the fair value of plan assets, over theaverage expected remaining working lives of the employeesparticipating in the plan.

Additionally, obligations for other long-termbenefits are determined by adopting actuarial assumptions. Theeffect of changes in actuarial assumptions or a change in thecharacteristics of the benefit are taken to profit or loss intheir entirety.

**Contingencies**In addition to accruing the estimated costs for environmentalliabilities, asset retirement obligation and employee benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining appropriate amounts foraccrual is a complex estimation process that includes subjectivejudgments.

**Revenue recognition in the Engineering& Construction segment**Revenue recognition in the Engineering &Construction segment is based on the stage of completion of acontract as measured on the cost-to-cost basis applied tocontractual revenues. Use of the stage of completion methodrequires estimates of future gross profit on a contract bycontract basis. The future gross profit represents the profitremaining after deducting costs attributable to the contract fromrevenues provided for in the contract. The estimate of futuregross profit is based on a complex estimation process thatincludes identification of risks related to the geographicalregion, market conditions in that region and any assessment thatis necessary to estimate with sufficient precision the totalfuture costs as well as the expected timetable. Requests ofadditional income, deriving from a change in the scope of work,are included in the total amount of revenues when it is probablethat the customer will approve the variation and the relatedamount. Claims deriving from additional costs incurred forreasons attributable to the client are included in the totalamount of revenues when it is probable that the counterparty willaccept them.

 

**Recent accountingprinciples****Accounting standards and interpretations issued by IASB/IFRIC and endorsed by EU**By Commission Regulation No. 1358/2007 of November 21, 2007, IFRS8 “Operating Segments” replaced IAS 14 “SegmentReporting”. IFRS 8 sets out requirements for disclosure ofinformation about the group segments that management uses to makedecisions about operating matters. The identification ofoperating segments is based on internal reports that areregularly reviewed by the chief operating decision maker in orderto allocate resources to the segments and assess theirperformances. IFRS 8 shall be applied for annual periodsbeginning on or after January 1, 2009. 

By Commission Regulation No. 611/2007 of June 1,2007, IFRIC interpretation 11 “IFRS 2 - Group and TreasuryShare Transactions” was issued. This interpretation givesguidance, interalia, on how the share-based payment arrangementsinvolving parent company equity instruments should be accountedfor in the separate financial statements of each groupsubsidiary. IFRIC 11 shall be applied for annual periodsbeginning on or after March 1, 2007 (for Eni: 2008 financialstatements).

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**Accounting standards and interpretationsissued by IASB/IFRIC and not yet been endorsed by EU**On March 29, 2007, IASB issued a revised IAS 23 “BorrowingCosts”. The main change from the previous version is theremoval of the option of immediately recognizing as an expenseborrowing costs that are directly attributable to theacquisition, construction or production of a qualifying assetthat take a substantial period of time to get ready for use orsale. The Company is required to capitalize such borrowing costsas part of the cost of the asset. The revised Standard shall beapplied for annual periods beginning on or after January 1, 2009.

On September 6, 2007, IASB issued a revised IAS 1“Presentation of Financial Statements”. The revisionsrequire, among other things, a statement of comprehensive incomethat begins with the amount of net profit for the year adjustedwith all items of income and expense directly recognized inequity, but excluded from net income, in accordance with IFRS.The revised standard will come into effect for annual periodsbeginning on or after January 1, 2009.

On January 10, 2008, IASB issued a revised IFRS 3“Business Combinations” and an amended version of IAS27 “Consolidated and Separate Financial Statements”.The revisions to IFRS 3 require, among other things, theacquisition-related costs to be accounted for separately from thebusiness combination and then recognized as expenses rather thanincluded in goodwill. The revised IFRS 3 also allows the choiceof the full goodwill method which means to treat the full valueof the goodwill of the business combination including the shareattributable to minority interest. In the case of stepacquisitions, the revisions also relate to the recognition in theprofit and loss account of the difference between the fair valueat the acquisition date of the net assets previously held andtheir carrying amounts.

The amendments of IAS 27 require, among otherthings, that acquisitions or disposals of non-controllinginterests in a subsidiary that do not result in the loss ofcontrol, shall be accounted for as equity transactions. 

By contrast, disposal of any interests that theparent retains in a former subsidiary may result in a loss ofcontrol. In this case, at the date when control is lost theremaining investment retained is increased/decreased to fairvalue with gains or losses arising from the difference betweenthe fair value and carrying amount of the held investmentrecognized in the profit or loss account. The revised Standardsshall be applied for annual periods beginning on or after July 1,2009 (for Eni: 2010 financial statements).

On January 17, 2008, IASB issued a revised IFRS 2“Share-based payment”. The amendment specifies theaccounting treatment of all cancellations of a grant of equityinstruments to employees. It also imposes that vesting conditionsare only service and performance conditions required in returnfor the equity instruments issued.

The amendment shall be applied for annual periodsbeginning on or after January 1, 2009.

On November 30, 2006, IFRIC issued IFRIC 12“Service Concession Arrangements” which providesguidance on the accounting by operators for public-to-privateservice concession arrangements. An arrangement within the scopeof this interpretation involves for a specified period of time anoperator constructing, upgrading, operating and maintaining theinfrastructure used to provide the public service. Thisinterpretation shall be applied for annual periods beginning onor after January 1, 2008.

On June 28, 2007, IFRIC issued IFRIC 13“Customer Loyalty Programmes” which addresses howcompanies, which grant their customers loyalty, award creditswhen buying goods or services, should account for theirobligation to provide free or discounted goods or services if andwhen the customers redeem the credits. In particular IFRIC 13requires companies to allocate some of the consideration receivedfrom the sales transaction to the award credits and theirrecognition at fair value. This interpretation shall be appliedfor annual periods beginning on or after July 1, 2008 (for Eni:2009 financial statements).

On July 5, 2007, IFRIC issued IFRIC 14 “Thelimit on a Defined Benefit Asset, Minimum Funding Requirementsand their Interaction” which provides guidance on howcompanies should determine the limit on the amount of a surplusin an employee benefit plan that they can recognize as an asset.The interpretation also gives guidance on the amounts thatcompanies can recover from the plan, either as refunds orreductions in contribution. The interpretation shall be appliedfor annual periods beginning on or after January 1, 2008.

Eni is currently reviewing these new IFRS andinterpretations to determine the likely impact on theGroup’s results.

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**Notes to the ConsolidatedFinancial Statements****Current activities****1 Cash and cash equivalents**Cash and cash equivalents of euro 2,114 million (euro3,985 million at December 31, 2006) included financingreceivables originally due within 90 days for euro 415 million(euro 240 million at December 31, 2006). The latter were relatedto amounts on deposit with financial institutions accessible onlyon a 48-hour notice. The decrease of euro 1,871 million primarilyrelated to Eni Coordination Center SA (euro 2,686 million) andwas partially offset by the increase of Banque Eni SA (euro 526million).

**2 Other financial assets held for tradingor available for sale**Other financial assets held for trading oravailable for sale are set out below:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Investments**                                                                      |   |    |   |   | **2,476** |   |
|--------------------------------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|
| **Securities        held for operating purposes**                                    |   |    |   |   |      |   |
| Listed Italian treasury bonds                                                        |   | 329     |   |   | 229       |   |
| Listed        securities issued by Italian and foreign financial        institutions |   | 80      |   |   | 27        |   |
| Non-quoted securities                                                                |   | 11      |   |   | 3         |   |
|                                                                                 |   | **420** |   |   | **259**   |   |
| **Securities held for non-operating        purposes**                                |   |    |   |   |      |   |
| Listed        Italian treasury bonds                                                 |   | 508     |   |   | 168       |   |
| Listed securities issued by Italian and foreign        financial institutions        |   | 40      |   |   | 5         |   |
| Non-quoted        securities                                                         |   | 4       |   |   | 1         |   |
|                                                                                 |   | **552** |   |   | **174**   |   |
| **Total        securities**                                                          |   | **972** |   |   | **433**   |   |
|                                                                                 |   | **972** |   |   | **2,909** |   |

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

Equity instruments of euro 2,476 million included the carryingamount of a 20% interest in OAO Gazprom Neft which is listed onthe London Stock Exchange and was acquired on April 4, 2007through a bid on the liquidation of the second lot of ex-Yukosassets. The classification of this transaction in this linereflects the call option granted by Eni to Gazprom on the entireownership interest. This option is exercisable within 24 monthsstarting on the date of acquisition. If exercised, the price ofthe ownership interest will be set at the acquisition price ofeuro 3.7 billion, less dividends, plus share capital increases,contractually agreed financial remuneration and additionalfinancing costs. In application of the IAS 39 fair value option,the OAO Gazprom Neft investment was carried at fair value andchanges were reflected in the profit and loss account rather thanin a reserve of shareholders’ equity so as to maintainalignment with the inclusion in profit and loss of the derivativecall option. Consequently, the carrying amount of this equityinstrument was equal to its fair value as quoted on the stockmarket, less the fair value of the call option; this was theequivalent of the option strike price at December 31, 2007.

Available-for-sale securities decreased by euro 539 million toeuro 433 million (euro 972 million at December 31, 2006) becausesecurities owned by Eni SpA (euro 235 million) and the groupinsurance company Padana Assicurazioni SpA (euro 213 million)reached maturity. In addition, a euro 125 million amount ofsecurities owned by Padana Assicurazioni SpA was classifiedwithin assets held for sale. At December 31, 2006 and December31, 2007, Eni did not own financial assets held for trading.

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The effects of the valuation at fair value of securities areset out below:

| (million        euro) |   | **Value at****Dec. 31, 2006** |   | **Realization to the profit and loss account** |   | **Value at****Dec. 31, 2007** |
|-----------------------|--------|-------------------------------|--------|------------------------------------------------|--------|-------------------------------|
|                  |   |                               |   |                                                |   |                               |

| Fair value                                  |   | 8 |   | (6 | ) |   | 2      |
|---------------------------------------------|--------|---|--------|----|---|--------|--------|
| Deferred        tax liabilities             |   | 2 |   | (2 | ) |   |   |
| Other reserves of shareholders’ equity |   | 6 |   | (4 | ) |   | 2      |

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

On disposal of securities owned primarily by EniSpA, the cumulative changes in fair value of euro 6 millionderiving from the recognition of such assets at fair value andthe related deferred tax liabilities of euro 2 million, have beenrecognized in the profit and loss account as finance income andincome taxes, respectively (see Note 27 - Shareholders’equity).

Securities held for operating purposes of euro259 million (euro 420 million at December 31, 2006) were designedto provide coverage of technical reserves of Eni’s insurancecompanies for euro 256 million (euro 417 million at December 31,2006). The fair value of securities was determined by referenceto quoted market prices. 

**3 Trade and other receivables**Trade and other receivables were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Trade receivables                                                                 |   | 15,230     |   |   | 15,609     |   |
|-----------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| Financing        receivables:                                                     |   |       |   |   |       |   |
| - for operating purposes - short-term                                             |   | 242        |   |   | 357        |   |
| - for        operating purposes - current portion of long-term        receivables |   | 4          |   |   | 27         |   |
| - for non-operating purposes                                                      |   | 143        |   |   | 990        |   |
|                                                                              |   | **389**    |   |   | **1,374**  |   |
| Other receivables:                                                                |   |       |   |   |       |   |
| - from        disposals                                                           |   | 100        |   |   | 125        |   |
| - other                                                                           |   | 3,080      |   |   | 3,568      |   |
|                                                                              |   | **3,180**  |   |   | **3,693**  |   |
|                                                                              |   | **18,799** |   |   | **20,676** |   |

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

Receivables are stated net of the allowance forimpairment losses of euro 935 million (euro 874 million atDecember 31, 2006):

| (million        euro) |   | **Value at****Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at****Dec. 31, 2007** |
|-----------------------|--------|-------------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|-------------------------------|
|                  |   |                               |   |               |   |                |   |                   |   |                               |

| Trade receivables        |   | 587     |   | 98      |   | (38     | )     |   | (52      | )     |   | 595     |
|--------------------------|--------|---------|--------|---------|--------|---------|-------|--------|----------|-------|--------|---------|
| Other        receivables |   | 287     |   | 109     |   | (7      | )     |   | (49      | )     |   | 340     |
|                     |   | **874** |   | **207** |   | **(45** | **)** |   | **(101** | **)** |   | **935** |

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

Included in 2007 trade receivables was the contractuallyagreed set off of trade payables and receivables between EniNorth Africa BV and the National Oil Co (the Libyan statecompany) for euro 1,798 million.

Advances of euro 156 million (euro 70 million at December 31,2006) were paid as a guarantee of contract work in progress.

Trade receivables included euro 1,844 million of receivablesnot impaired that became due but were not provided for. Of these,euro 999 million were 1-90 days overdue, euro 145 million were3-6 months overdue, euro 329 million were 6-12 months overdue andeuro 371 million were overdue for more than 12 months. These 

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##### Table of Contents

receivables were primarily due from high credit quality publicadministrations and other highly reliable counterparties for oil,natural gas and chemicals products supplies.

Receivables for financing operating activities of euro 384million (euro 246 million at December 31, 2006) included euro 246million due from unconsolidated entities under Eni’scontrol, joint ventures and affiliates (euro 241 million atDecember 31, 2006) and a euro 112 million cash deposit to providecoverage of Eni Insurance Ltd technical reserves.

Receivables for financing non-operating activities amounted toeuro 990 million (euro 143 million at December 31, 2006) of whicheuro 898 million related to a collateral cash deposit made by EniSpA to guarantee certain cash flow hedging derivatives. Furtherinformation is provided in Note 20 - Other current liabilitiesand 25 - Other non-current liabilities.

Other receivables were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Accounts receivable from:                                      |   |      |   |   |      |   |
|----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| - joint        venture operators in exploration and production |   | 1,376     |   |   | 1,699     |   |
| - Italian government entities                                  |   | 266       |   |   | 386       |   |
| -        insurance companies                                   |   | 223       |   |   | 253       |   |
|                                                           |   | **1,865** |   |   | **2,338** |   |
| Prepayments        for services                                |   | 440       |   |   | 194       |   |
| Receivables relating to factoring operations                   |   | 191       |   |   | 182       |   |
| Other        receivables                                       |   | 684       |   |   | 979       |   |
|                                                           |   | **3,180** |   |   | **3,693** |   |

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

Receivables deriving from factoring operations of euro 182million (euro 191 million at December 31, 2006) were related toSerfactoring SpA and consisted primarily of advances forfactoring operations with recourse and receivables for factoringoperations without recourse.

Other receivables included euro 537 million of receivables notimpaired that became due but were not provided for. Of these,euro 160 million were 1-90 days overdue, euro 19 million were 3-6months overdue, euro 97 million were 6-12 months overdue and euro261 million were overdue for more than 12 months. Thesereceivables were mainly due from public administrations.

Receivables with related parties are described in Note 36 -Transactions with related parties.

Because of the short-term maturity of trade receivables, thefair value approximated their carrying amount.

 

**4 Inventories**Inventories were as follows:

|   |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (million euro) |   | 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                |   | 436       |   | 258     |   |    |   | 682     |   | 1,376     |   | 861       |   | 299       |   |    |   | 809     |   | 1,969     |
|------------------------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|-----------|
| Products        being processed and semi finished products |   | 43        |   | 20      |   |    |   | 8       |   | 71        |   | 74        |   | 27        |   |    |   | 15      |   | 116       |
| Work in progress                                           |   |      |   |    |   | 353     |   |    |   | 353       |   |      |   |      |   | 553     |   |    |   | 553       |
| Finished        products and goods                         |   | 2,063     |   | 536     |   |    |   | 62      |   | 2,661     |   | 1,962     |   | 703       |   |    |   | 17      |   | 2,682     |
| Advances                                                   |   | 1         |   |    |   | 287     |   | 3       |   | 291       |   |      |   |      |   | 179     |   |    |   | 179       |
|                                                       |   | **2,543** |   | **814** |   | **640** |   | **755** |   | **4,752** |   | **2,897** |   | **1,029** |   | **732** |   | **841** |   | **5,499** |

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

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##### Table of Contents

Inventories are stated net of the valuation allowance of euro75 million (euro 92 million at December 31, 2006):

| (million        euro) |   | **Value at****Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at****Dec. 31, 2007** |
|-----------------------|--------|-------------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|-------------------------------|
|                  |   |                               |   |               |   |                |   |                   |   |                               |

|   |   |   |   |   | **92** |   |   | 9 |   |   | (23 | ) |   | (3 | ) |   | **75** |   |
|--------|--------|--------|--------|--------|--------|--------|--------|---|--------|--------|-----|---|--------|----|---|--------|--------|--------|

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

**5 Current tax assets**Current tax assets were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Italian subsidiaries        |   | 44      |   |   | 634     |   |
|-----------------------------|--------|---------|--------|--------|---------|--------|
| Foreign        subsidiaries |   | 72      |   |   | 69      |   |
|                        |   | **116** |   |   | **703** |   |

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

The euro 590 million increase in the currentincome tax assets of Italian subsidiaries primarily related toreceivables for interim tax payments exceeding full-year taxationpayable (euro 557 million) made by Eni SpA.

**6 Other current tax assets**Other current tax assets were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| VAT                              |   | 303     |   |   | 376     |   |
|----------------------------------|--------|---------|--------|--------|---------|--------|
| Excise and        customs duties |   | 86      |   |   | 316     |   |
| Other taxes and duties           |   | 153     |   |   | 141     |   |
|                             |   | **542** |   |   | **833** |   |

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

The euro 230 million increase in excise andcustom duties primarily related to receivables for interim taxpayments exceeding full-year taxation payable (euro 235 million)made by Eni SpA.

**7 Other assets**Other assets were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 569     |   |   | 629       |   |
|--------------------------------------------------|--------|---------|--------|--------|-----------|--------|
| Fair value        of cash flow hedge derivatives |   | 37      |   |   | 10        |   |
| Fair value of fair value hedge derivatives       |   | 1       |   |   |      |   |
| Other        assets                              |   | 248     |   |   | 441       |   |
|                                             |   | **855** |   |   | **1,080** |   |

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

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##### Table of Contents

The fair value of derivative contracts which donot meet the criteria to be classified as hedges under IFRS wasas follows:

|   |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (million        euro) |   | Fair value |   | Purchase commitments |   | Sale commitments |   | Fair value |   | Purchase commitments |   | Sale commitments |
|-----------------------|--------|------------|--------|----------------------|--------|------------------|--------|------------|--------|----------------------|--------|------------------|
|                  |   |            |   |                      |   |                  |   |            |   |                      |   |                  |

| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |      |   |    |   |      |   |      |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|
| Interest        Currency Swap                       |   | 137     |   | 1,075     |   | 325       |   | 170     |   | 821       |   | 291       |
| Currency swap                                       |   | 46      |   | 4,068     |   | 1,434     |   | 69      |   | 1,596     |   | 2,881     |
| Other                                               |   |    |   | 38        |   | 4         |   | 3       |   | 18        |   | 11        |
|                                                |   | **183** |   | **5,181** |   | **1,763** |   | **242** |   | **2,435** |   | **3,183** |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |      |   |    |   |      |   |      |
| Interest rate swap                                  |   | 66      |   | 127       |   | 3,266     |   | 91      |   | 248       |   | 3,466     |
|                                                |   | **66**  |   | **127**   |   | **3,266** |   | **91**  |   | **248**   |   | **3,466** |
| **Non-hedging derivatives on commodities**          |   |    |   |      |   |      |   |    |   |      |   |      |
| Over the        counter                             |   | 35      |   | 85        |   | 177       |   | 12      |   | 75        |   | 22        |
| Other                                               |   | 285     |   | 1         |   | 850       |   | 284     |   | 2         |   | 1,218     |
|                                                |   | **320** |   | **86**    |   | **1,027** |   | **296** |   | **77**    |   | **1,240** |
|                                                |   | **569** |   | **5,394** |   | **6,056** |   | **629** |   | **2,760** |   | **7,889** |

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

The fair value of these derivative contracts was determinedusing an appropriate valuation method based on market data atyear-end. 

At December 31, 2007 cash flow hedging derivatives with a fairvalue of euro 10 million were entered into to manage foreigncurrency exposures of the Engineering & Construction segment.The nominal value of euro 48 million and euro 132 millionreferred to purchase and sale commitments, respectively. AtDecember 31, 2006 cash flow hedging derivatives with a fair valueof euro 37 million were related to the future marketing ofcertain crude volumes produced by the Exploration &Production segment. The nominal value of euro 421 million wasrelated to sale commitments (further information is given in Note20 - Other current liabilities and Note 25 - Other non-currentliabilities). Changes in fair value of the effective hedginginstruments were recognized in equity for euro 27 million.

Information on the hedged risks and the hedging policies isgiven in Note 28 - Guarantees, commitments and risks.

Other assets amounted to euro 441 million (euro 248 million atDecember 31, 2006) and included prepayments and accrued incomefor euro 297 million (euro 65 million at December 31, 2006),rentals for euro 21 million (euro 20 million at December 31,2006), and insurance premiums for euro 10 million (same amount atDecember 31, 2006).

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**Non-current assets****8 Property, plant and equipment**Analysis of tangible assets is set out below:

| (million        euro) |   | **Net value at the beginning of the year** |   | **Investments** |   | **Depreciation** |   | **Impairments** |   | **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, 2006**                        |   |       |   |   |      |   |   |       |   |   |     |   |   |       |   |   |      |   |   |       |   |   |        |   |   |       |   |
|------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|----------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|
| Land                                     |   | 373        |   |   | 16        |   |   |       |   |   | (3       | )      |   |       |   |   | 57        |   |   | 443        |   |   | 483         |   |   | 40         |   |
| Buildings                                |   | 1,453      |   |   | 81        |   |   | (113       | )      |   | (12      | )      |   | (5         | )      |   | 38        |   |   | 1,442      |   |   | 3,236       |   |   | 1,794      |   |
| Plant and        machinery               |   | 36,568     |   |   | 1,858     |   |   | (4,510     | )      |   | (197     | )      |   | (1,586     | )      |   | 3,240     |   |   | 35,373     |   |   | 79,873      |   |   | 44,500     |   |
| Industrial and commercial equipment      |   | 372        |   |   | 130       |   |   | (120       | )      |   |     |   |   | (6         | )      |   | 50        |   |   | 426        |   |   | 1,659       |   |   | 1,233      |   |
| Other        assets                      |   | 318        |   |   | 82        |   |   | (78        | )      |   | (1       | )      |   | (9         | )      |   | 16        |   |   | 328        |   |   | 1,382       |   |   | 1,054      |   |
| Tangible assets in progress and advances |   | 5,929      |   |   | 3,971     |   |   |       |   |   | (18      | )      |   | (364       | )      |   | (3,218    | )      |   | 6,300      |   |   | 6,822       |   |   | 522        |   |
|                                     |   | **45,013** |   |   | **6,138** |   |   | **(4,821** | **)**  |   | **(231** | **)**  |   | **(1,970** | **)**  |   | **183**   |   |   | **44,312** |   |   | **93,455**  |   |   | **49,143** |   |
| **Dec. 31, 2007**                        |   |       |   |   |      |   |   |       |   |   |     |   |   |       |   |   |      |   |   |       |   |   |        |   |   |       |   |
| Land                                     |   | 443        |   |   | 4         |   |   |       |   |   |     |   |   |       |   |   | 151       |   |   | 598        |   |   | 628         |   |   | 30         |   |
| Buildings                                |   | 1,442      |   |   | 76        |   |   | (99        | )      |   | (3       | )      |   | (3         | )      |   | (37       | )      |   | 1,376      |   |   | 3,203       |   |   | 1,827      |   |
| Plant and        machinery               |   | 35,373     |   |   | 1,882     |   |   | (4,724     | )      |   | (41      | )      |   | (1,535     | )      |   | 4,925     |   |   | 35,880     |   |   | 83,123      |   |   | 47,243     |   |
| Industrial and commercial equipment      |   | 426        |   |   | 185       |   |   | (125       | )      |   | (1       | )      |   | (8         | )      |   | 73        |   |   | 550        |   |   | 1,884       |   |   | 1,334      |   |
| Other        assets                      |   | 328        |   |   | 86        |   |   | (83        | )      |   | (3       | )      |   | (11        | )      |   | 24        |   |   | 341        |   |   | 1,361       |   |   | 1,020      |   |
| Tangible assets in progress and advances |   | 6,300      |   |   | 6,299     |   |   |       |   |   | (97      | )      |   | (646       | )      |   | (464      | )      |   | 11,392     |   |   | 12,044      |   |   | 652        |   |
|                                     |   | **44,312** |   |   | **8,532** |   |   | **(5,031** | **)**  |   | **(145** | **)**  |   | **(2,203** | **)**  |   | **4,672** |   |   | **50,137** |   |   | **102,243** |   |   | **52,106** |   |

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

Capital expenditures of euro 8,532 million (euro 6,138 millionat December 31, 2006) primarily related to the Exploration &Production segment (euro 4,925 million), the Engineering &Construction segment (euro 1,401 million), the Gas & Powersegment (euro 1,084 million) and the Refining & Marketingsegment (euro 944 million). Capital expenditures includedcapitalized finance expenses of euro 180 million (euro 116million at December 31, 2006) essentially related to theExploration & Production segment (euro 105 million), the Gas& Power segment (euro 30 million) and the Refining &Marketing segment (euro 26 million). The interest rate used forthe capitalization of finance expense ranged from 4.4% to 5.2%(3.3% and 5.4% at December 31, 2006). 

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     |   |

Impairments of euro 145 million were primarily related toproducing oil and gas properties of the Exploration &Production segment (euro 86 million) and a refining plant of theRefining & Marketing segment (euro 52 million). Therecoverable amount used in assessing the impairments charges wasdetermined by discounting the expected future cash flows beforetaxation at discount rates ranging from 11.2% to 12.2% derivedfrom the weighted average cost of capital and that took intoaccount the sector-specific risk. 

Foreign currency translation differences of euro 2,203 millionwere primarily related to translation of entities accountsdenominated in U.S. dollar (euro 2,125 million).

Other changes in the net book value of tangible assets (euro4,672 million) were primarily due to the acquisition of oil andgas upstream properties in the Gulf of Mexico (euro 3,050million) from the U.S. Company Dominion Resources and in Congo(euro 1,464 million) from the French company Maurel & Prom.The change from prior year was also due to the consolidation ofFrigstad Discover Invest Ltd acquired by the Engineering &Construction segment (euro 232 million) and the initialrecognition and changes in the estimated decommissioning andrestoration costs of euro 158 million related to the Exploration& Production segment.

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These increases were partially offset by asset disposals ofeuro 172 million, of which euro 141 million related to theExploration & Production segment. The accumulated impairmentsamounted to euro 3,295 million and euro 3,328 million at December31, 2006 and 2007, respectively.

At December 31, 2007, Eni pledged tangible assets of euro 54million primarily as collateral against certain borrowings (sameamount at December 31, 2006). 

Government grants recorded as a decrease of property, plantand equipment amounted to euro 1,195 million (euro 1,067 millionat December 31, 2006).

Assets acquired under financial lease agreements amounted toeuro 42 million, of which euro 29 million related to FPSO shipsused by the Exploration & Production segment to support oilproduction and treatment activities and euro 13 million relatedto service stations in the Refining & Marketing segment.

**Property, plant and equipment by segment**

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Property, plant and equipment, gross**                                |   |       |   |   |        |   |
|-------------------------------------------------------------------------|--------|------------|--------|--------|-------------|--------|
| Exploration        & Production                                     |   | 49,002     |   |   | 54,284      |   |
| Gas & Power                                                         |   | 22,277     |   |   | 23,137      |   |
| Refining        & Marketing                                         |   | 11,273     |   |   | 12,421      |   |
| Petrochemicals                                                          |   | 4,380      |   |   | 4,918       |   |
| Engineering        & Construction                                   |   | 4,363      |   |   | 5,823       |   |
| Other activities                                                        |   | 1,967      |   |   | 1,543       |   |
| Corporate        and financial companies                                |   | 321        |   |   | 344         |   |
| Elimination of intra-group profits                                      |   | (128       | )      |   | (227        | )      |
|                                                                    |   | **93,455** |   |   | **102,243** |   |
| **Accumulated depreciation, amortization and        impairment losses** |   |       |   |   |        |   |
| Exploration        & Production                                     |   | 26,000     |   |   | 27,806      |   |
| Gas & Power                                                         |   | 8,210      |   |   | 8,660       |   |
| Refining        & Marketing                                         |   | 7,482      |   |   | 7,926       |   |
| Petrochemicals                                                          |   | 3,308      |   |   | 3,819       |   |
| Engineering        & Construction                                   |   | 2,138      |   |   | 2,310       |   |
| Other activities                                                        |   | 1,874      |   |   | 1,461       |   |
| Corporate        and financial companies                                |   | 145        |   |   | 148         |   |
| Elimination of intra-group profits                                      |   | (14        | )      |   | (24         | )      |
|                                                                    |   | **49,143** |   |   | **52,106**  |   |
| **Property, plant and equipment, net**                                  |   |       |   |   |        |   |
| Exploration        & Production                                     |   | 23,002     |   |   | 26,478      |   |
| Gas & Power                                                         |   | 14,067     |   |   | 14,477      |   |
| Refining        & Marketing                                         |   | 3,791      |   |   | 4,495       |   |
| Petrochemicals                                                          |   | 1,072      |   |   | 1,099       |   |
| Engineering        & Construction                                   |   | 2,225      |   |   | 3,513       |   |
| Other activities                                                        |   | 93         |   |   | 82          |   |
| Corporate        and financial companies                                |   | 176        |   |   | 196         |   |
| Elimination of intra-group profits                                      |   | (114       | )      |   | (203        | )      |
|                                                                    |   | **44,312** |   |   | **50,137**  |   |

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

**9 Other assets**Other assets of euro 563 million related to the servicecontract governing mineral activities in the Dación area ownedby the Venezuelan branch of the Eni Dación BV subsidiary.Effective April 1, 2006, the Venezuelan State oil companyPetróleos de Venezuela SA (PDVSA) unilaterally terminated theOperating Service Agreement (OSA) governing activities at theDación oil field where Eni acted as a contractor. Since thenoperations at the Dación oil field are conducted by PDVSA. InFebruary 2008 Eni reached a settlement agreement with theRepublic of Venezuela thus terminating the dispute for theDación field. Under the terms of the settlement agreement, Eniwill 

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receive a cash compensation to be paid in seven annualinstallments. This cash compensation is not subject to taxationand yields interest income from the date of the settlement. Thenet present value of the compensation corresponds to the carryingvalue of expropriated assets, net of provisions. Consequently,Eni dropped the international arbitration proceeding commenced in2006 against PDVSA.

 

**10 Inventory - compulsory stock**Inventory - compulsory stock was as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Crude oil and petroleum products |   | 1,670     |   |   | 2,015     |   |
|----------------------------------|--------|-----------|--------|--------|-----------|--------|
| Natural        gas               |   | 157       |   |   | 156       |   |
|                             |   | **1,827** |   |   | **2,171** |   |

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

Compulsory stock was primarily held by Italian companies (euro1,688 million and euro 2,008 million at December 31, 2006 and2007, respectively) in accordance with minimum stock requirementsset forth by applicable laws.

**11 Intangible assets**Intangible assets were as follows: 

| (million        euro) |   | **Net value at the beginning of the year** |   | **Investments** |   | **Amortization** |   | **Other changes** |   | **Net value at the end of the year** |   | **Gross value at the end of the year** |   | **Provisions for amortization        and writedowns** |
|-----------------------|--------|--------------------------------------------|--------|-----------------|--------|------------------|--------|-------------------|--------|--------------------------------------|--------|----------------------------------------|--------|-------------------------------------------------------|
|                  |   |                                            |   |                 |   |                  |   |                   |   |                                      |   |                                        |   |                                                       |

| **Dec. 31, 2006**                                          |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| **Intangible        assets with finite useful lives**      |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Exploration expenditures                                   |   | 164       |   |   | 1,337     |   |   | (1,102     | )      |   | 10      |   |   | 409       |   |   | 1,290     |   |   | 881       |   |
| Industrial        patents and intellectual property rights |   | 137       |   |   | 31        |   |   | (97        | )      |   | 41      |   |   | 112       |   |   | 1,113     |   |   | 1,001     |   |
| Concessions, licenses, trademarks and similar        items |   | 746       |   |   | 168       |   |   | (110       | )      |   | 52      |   |   | 856       |   |   | 2,417     |   |   | 1,561     |   |
| Intangible        assets in progress and advances          |   | 76        |   |   | 146       |   |   |       |   |   | (71     | )      |   | 151       |   |   | 156       |   |   | 5         |   |
| Other intangible assets                                    |   | 157       |   |   | 13        |   |   | (26        | )      |   | (3      | )      |   | 141       |   |   | 457       |   |   | 316       |   |
|                                                       |   | **1,280** |   |   | **1,695** |   |   | **(1,335** | **)**  |   | **29**  |   |   | **1,669** |   |   | **5,433** |   |   | **3,764** |   |
| **Intangible assets with indefinite useful        lives**  |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Goodwill                                                   |   | 1,914     |   |   |      |   |   |       |   |   | 170     |   |   | 2,084     |   |   |      |   |   |      |   |
|                                                       |   | **3,194** |   |   | **1,695** |   |   | **(1,335** | **)**  |   | **199** |   |   | **3,753** |   |   |      |   |   |      |   |
| **Dec.        31, 2007**                                   |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| **Intangible assets with finite useful lives**             |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Exploration        expenditures                            |   | 409       |   |   | 1,682     |   |   | (1,812     | )      |   | 470     |   |   | 749       |   |   | 1,509     |   |   | 760       |   |
| Industrial patents and intellectual property        rights |   | 112       |   |   | 40        |   |   | (81        | )      |   | 77      |   |   | 148       |   |   | 1,179     |   |   | 1,031     |   |
| Concessions,        licenses, trademarks and similar items |   | 856       |   |   | 12        |   |   | (83        | )      |   | 1       |   |   | 786       |   |   | 2,449     |   |   | 1,663     |   |
| Intangible assets in progress and advances                 |   | 151       |   |   | 312       |   |   |       |   |   | (86     | )      |   | 377       |   |   | 381       |   |   | 4         |   |
| Other        intangible assets                             |   | 141       |   |   | 15        |   |   | (24        | )      |   | 26      |   |   | 158       |   |   | 572       |   |   | 414       |   |
|                                                       |   | **1,669** |   |   | **2,061** |   |   | **(2,000** | **)**  |   | **488** |   |   | **2,218** |   |   | **6,090** |   |   | **3,872** |   |
| **Intangible        assets with indefinite useful lives**  |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Goodwill                                                   |   | 2,084     |   |   |      |   |   |       |   |   | 31      |   |   | 2,115     |   |   |      |   |   |      |   |
|                                                       |   | **3,753** |   |   | **2,061** |   |   | **(2,000** | **)**  |   | **519** |   |   | **4,333** |   |   |      |   |   |      |   |

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

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Exploration expenditures of euro 749 million related toacquisition costs of unproved reserves included in businesscombinations and the purchase of mining rights. Main additions inthe year included exploration drilling expenditures which werefully amortized as incurred for euro 1,610 million includedwithin “investments” (euro 1,028 million at December31, 2006).

Concessions, licenses, trademarks and similar items for euro786 million primarily comprised transmission rights for naturalgas imported from Algeria (euro 544 million) and concessions formineral exploration (euro 204 million).

Other intangible assets with finite useful lives of euro 158million included royalties for the use of licenses by PolimeriEuropa SpA (euro 76 million) and estimated costs for Eni’ssocial responsibility projects in relation to mineral developmentprograms in Val d’Agri (euro 22 million) followingcommitments made with the Basilicata Region. 

The depreciation rates used were as follows:

|                                                       |   |   |   |   |   |   | (%) |   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|-----|--------|--------|
| Exploration expenditures                                   |   |   |   |   | 10     |   | -   | 33     |   |
| Industrial patents and        intellectual property rights |   |   |   |   | 20     |   | -   | 33     |   |
| Concessions, licenses, trademarks and similar        items |   |   |   |   | 7      |   | -   | 33     |   |
| Other intangible assets                                    |   |   |   |   | 4      |   | -   | 25     |   |

Other changes in intangible assets with finite useful livesamounted to euro 488 million primarily related to the acquisitionof unproved reserves in the Gulf of Mexico from the U.S. companyDominion Resources (euro 470 million) and in Congo from theFrench company Maurel & Prom (euro 58 million). This increasewas partially offset by negative exchange differences of euro 71million.

Goodwill of euro 2,115 million primarily related to the Gas& Power segment (euro 1,125 million, of which euro 756million related to the purchase of minorities in Italgas SpA in2003 through a public offering), the Engineering &Construction segment (euro 746 million, of which euro 711 millionwas in respect of the purchase of Bouygues Offshore SA, nowSaipem SA), the Exploration & Production segment (euro 158million, of which euro 153 million was in respect of the purchaseof Lasmo Plc, now Eni Lasmo Plc) and the Refining & Marketingsegment (euro 86 million).

For impairment purposes, goodwill related to the acquisitionof Bouygues Offshore SA and Italgas SpA has been allocated to thefollowing cash-generating units:

| (million euro) |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|
|           |   |                   |

| **Italgas SpA**              |   |   |   |   |    |   |
|------------------------------|--------|--------|--------|--------|---------|--------|
| Domestic        gas market   |   |   |   |   | 706     |   |
| Foreign gas market           |   |   |   |   | 50      |   |
|                         |   |   |   |   | **756** |   |
| **Bouygues Offshore SA**     |   |   |   |   |    |   |
| Onshore        constructions |   |   |   |   | 296     |   |
| Offshore constructions       |   |   |   |   | 415     |   |
|                         |   |   |   |   | **711** |   |

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

Goodwill is assessed by comparing the carrying amount of eachcash-generating unit (comprehensive of goodwill) with its fairvalue. In the absence of data allowing the determination of thefair value of a unit, the recoverable amount is the value-in-use.Value-in-use was determined by computing, for the first fouryears, the discounted cash flows expected assuming current marketassessments, and management’s long-term planning assumptionsthereafter.

The expected future cash flows before taxation have beendiscounted at rates ranging from 4.9% to 13.1% derived from theweighted average cost of capital for the Group and that take intoaccount the sector-specific risk. Thereafter, Eni has used growthrate assumptions ranging from 0% to 2%. Key assumptions are basedon past experience and reflect current market assessment of thetime value of money.

Other changes in goodwill of euro 31 million included thedifference between the cost of acquisition of own shares by SnamRete Gas SpA over the corresponding share of net equity (euro 139million). Such increase was 

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partially offset by the classification of the associatedgoodwill allocated on Gaztransport et Technigaz SA (euro 81million) as asset held for sale and the derecognition upondisposal of the associated goodwill allocated on Camom SA (euro13 million). Goodwill allocated to these investments derived fromthe acquisition of Bouygues Offshore SA. Negative foreigncurrency translation differences amounted to euro 14 million.

 

**12 Investments****Investments accounted for using the equity method**Equity-accounted investments were as follows:

| (million        euro) |   | **Value at the beginning of the year** |   | **Acquisitions and subscriptions** |   | **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, 2006**                                               |   |      |   |   |      |   |   |    |   |   |     |   |   |     |   |   |     |   |   |     |   |   |      |   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|-----------|--------|
| Investments        in unconsolidated entities controlled by Eni |   | 146       |   |   | 4         |   |   | 15      |   |   | (8       | )      |   | (8       | )      |   | (6       | )      |   | 1        |   |   | 144       |   |
| Investments in joint ventures                                   |   | 2,322     |   |   | 33        |   |   | 516     |   |   | (26      | )      |   | (302     | )      |   | (79      | )      |   | 42       |   |   | 2,506     |   |
| Investments        in affiliates                                |   | 1,422     |   |   | 1         |   |   | 356     |   |   | (2       | )      |   | (440     | )      |   | (31      | )      |   | (70      | )      |   | 1,236     |   |
|                                                            |   | **3,890** |   |   | **38**    |   |   | **887** |   |   | **(36**  | **)**  |   | **(750** | **)**  |   | **(116** | **)**  |   | **(27**  | **)**  |   | **3,886** |   |
| **Dec.        31, 2007**                                        |   |      |   |   |      |   |   |    |   |   |     |   |   |     |   |   |     |   |   |     |   |   |      |   |
| Investments in unconsolidated entities        controlled by Eni |   | 144       |   |   | 4         |   |   | 10      |   |   | (2       | )      |   | (9       | )      |   | (6       | )      |   |     |   |   | 141       |   |
| Investments        in joint ventures                            |   | 2,506     |   |   | 1,109     |   |   | 481     |   |   | (130     | )      |   | (351     | )      |   | (173     | )      |   | (132     | )      |   | 3,310     |   |
| Investments in affiliates                                       |   | 1,236     |   |   | 813       |   |   | 415     |   |   | (3       | )      |   | (220     | )      |   | (42      | )      |   | (11      | )      |   | 2,188     |   |
|                                                            |   | **3,886** |   |   | **1,926** |   |   | **906** |   |   | **(135** | **)**  |   | **(580** | **)**  |   | **(221** | **)**  |   | **(143** | **)**  |   | **5,639** |   |

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

Acquisitions and subscriptions for euro 1,926 million mainlyrelated to the: (i) subscription of capital increase of ArticRussia BV (euro 1,041 million; Eni 60%) following the acquisitionof the three Russian gas companies – OAO Arctic Gas, OAOUrengoil and OAO Neftegaztechnologia – by OOO SeverEnergia(Artic Russia BV 100%) as part of a bid procedure for assets ofbankrupt Yukos; (ii) acquisition of 24.9% of Burren Energy Plc(euro 601 million); (iii) acquisition of 16.1% of CeskaRafinerska AS (euro 211 million), and (iv) subscription ofcapital increase of Enirepsa Gas Ltd (euro 42 million).

Share of profit of equity-accounted investments of euro 906million primarily related to Galp Energia SGPS SA (euro 255million), Unión Fenosa Gas SA (euro 181 million), United GasDerivatives Co (euro 79 million), EnBW - EniVerwaltungsgesellschaft mbH (euro 64 million), Trans AustriaGasleitung GmbH (euro 43 million), Blue Stream Pipeline Co BV(euro 39 million), Supermetanol CA (euro 34 million) andGaztransport et Technigaz SAS (euro 31 million).

Share of loss of equity-accounted investments of euro 135million primarily related to Artic Russia BV (euro 63 million),Enirepsa Gas Ltd (euro 35 million) and Starstroi Llc (euro 15million).

Deduction following the distribution of dividends of euro 580million primarily related to Unión Fenosa Gas SA (euro 173million), Galp Energia SGPS SA (euro 126 million), EnBW - EniVerwaltungsgesellschaft mbH (euro 42 million), United GasDerivatives Co (euro 40 million), Supermetanol CA (euro 36million), Trans Austria Gasleitung GmbH (euro 28 million),Gaztransport et Technigaz SAS (euro 28 million) and AziendaEnergia e Servizi Torino SpA (euro 17 million).

Other changes of euro 143 million were primarily related to:(i) the exclusion from the scope of consolidation of HaldorTopsøe AS (euro 69 million); (ii) the classification as held forsale of interests in Fertlizantes Nitrogenados de Oriente (euro89 million) and Gaztransport et Technigaz SAS (euro 33 million).

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The following table sets out the net carryingamount of euro 5,639 million relating to equity-accountedinvestments (euro 3,886 million at December 31, 2006):

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Net carrying amount |   | Eni’s interest % |   | Net carrying amount |   | Eni’s interest % |
|--------|--------|---------------------|--------|-----------------------|--------|---------------------|--------|-----------------------|
|   |   |                     |   |                       |   |                     |   |                       |

| Unconsolidated entities controlled by Eni:                      |   |      |   |   |   |      |   |   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| - Eni Btc        Ltd                                            |   | 46        |   | 100.00 |   | 42        |   | 100.00 |
| - Others (*)                                                    |   | 98        |   |   |   | 99        |   |   |
|                                                            |   | **144**   |   |   |   | **141**   |   |   |
| Joint ventures:                                                 |   |      |   |   |   |      |   |   |
| - Artic        Russia BV                                        |   |      |   |   |   | 925       |   | 60.00  |
| - Unión Fenosa Gas SA                                      |   | 503       |   | 50.00  |   | 507       |   | 50.00  |
| - Blue        Stream Pipeline Co BV                             |   | 293       |   | 50.00  |   | 298       |   | 50.00  |
| - EnBW - Eni Verwaltungsgesellschaft mbH                        |   | 234       |   | 50.00  |   | 256       |   | 50.00  |
| - Azienda        Energia e Servizi Torino SpA                   |   | 165       |   | 49.00  |   | 162       |   | 49.00  |
| - Eteria Parohis Aeriou Thessalonikis AE                        |   | 157       |   | 49.00  |   | 154       |   | 49.00  |
| - Toscana        Energia SpA                                    |   | 111       |   | 48.72  |   | 133       |   | 49.38  |
| - Raffineria di Milazzo ScpA                                    |   | 171       |   | 50.00  |   | 126       |   | 50.00  |
| - Trans        Austria Gasleitung GmbH                          |   | 81        |   | 89.00  |   | 96        |   | 89.00  |
| - Super Octanos CA                                              |   | 97        |   | 49.00  |   | 90        |   | 49.00  |
| - Lipardiz        - Construçao de Estruturas Maritimas Lda |   | 97        |   | 50.00  |   | 88        |   | 50.00  |
| - Supermetanol CA                                               |   | 90        |   | 34.51  |   | 78        |   | 34.51  |
| - Unimar        Llc                                             |   | 70        |   | 50.00  |   | 71        |   | 50.00  |
| - FPSO Mystras - Produçao de Petroleo Lda                  |   | 63        |   | 50.00  |   | 58        |   | 50.00  |
| -        Transmediterranean Pipeline Co Ltd                     |   | 50        |   | 50.00  |   | 47        |   | 50.00  |
| - Eteria Parohis Aeriou Thessalias AE                           |   | 46        |   | 49.00  |   | 41        |   | 49.00  |
| -        Transitgas AG                                          |   | 31        |   | 46.00  |   | 30        |   | 46.00  |
| - CMS&A Wll                                                 |   | 27        |   | 20.00  |   | 22        |   | 20.00  |
| - Altergaz        SA                                            |   |      |   |   |   | 18        |   | 27.80  |
| - Saibos Akogep Snc                                             |   | 38        |   | 70.00  |   | 5         |   | 70.00  |
| - Haldor        Topsøe AS                                  |   | 71        |   | 50.00  |   |      |   |   |
| - Others (*)                                                    |   | 111       |   |   |   | 105       |   |   |
|                                                            |   | **2,506** |   |   |   | **3,310** |   |   |
| Affiliates:                                                     |   |      |   |   |   |      |   |   |
| - Galp        Energia SGPS SA                                   |   | 782       |   | 33.34  |   | 911       |   | 33.34  |
| - Burren Energy Plc                                             |   |      |   |   |   | 592       |   | 24.90  |
| - Ceska        Rafinerska AS                                    |   |      |   |   |   | 325       |   | 32.44  |
| - United Gas Derivatives Co                                     |   | 117       |   | 33.33  |   | 140       |   | 33.33  |
| - ACAM Gas        SpA                                           |   | 45        |   | 49.00  |   | 45        |   | 49.00  |
| - Distribuidora de Gas del Centro SA                            |   | 37        |   | 31.35  |   | 33        |   | 31.35  |
| -        Fertlizantes Nitrogenados de Oriente CEC               |   | 88        |   | 20.00  |   |      |   |   |
| - Gaztransport et Technigaz SAS                                 |   | 29        |   | 30.00  |   |      |   |   |
| - Others (*)                                                    |   | 138       |   |   |   | 142       |   |   |
|                                                            |   | **1,236** |   |   |   | **2,188** |   |   |
|                                                            |   | **3,886** |   |   |   | **5,639** |   |   |

|    |    |                                                                            |
|--------------|--------------|--------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein did not exceed euro 25        million. |

The net carrying amount of investments in unconsolidatedentities controlled by Eni, joint ventures and affiliatesincluded the differences between purchase price and Eni’sequity in investments of euro 661 million. Such differencesprimarily related to Unión Fenosa Gas SA (euro 195 million),EnBW - Eni Verwaltungsgesellschaft mbH (euro 193 million), GalpEnergia SGPS SA (euro 106 million), Ceska Rafinerska AS (euro 97million) and Azienda Energia e Servizi Torino SpA (euro 69million).

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The fair value of listed investments was as follows:

|         |         | **Shares** |         | **Ownership**        (%) |         | **Price        per share**        (euro) |         | **Fair        value**        (million euro) |
|--------------|--------------|------------|--------------|--------------------------|--------------|------------------------------------------|--------------|---------------------------------------------|
|    |    |            |    |                          |    |                                          |    |                                             |

| Galp Energia SGPS SA     |   | 276,472,160 |   | 33.34 |   | 18.39 |   | 5,084 |
|--------------------------|--------|-------------|--------|-------|--------|-------|--------|-------|
| Burren        Energy Plc |   | 35,136,033  |   | 24.90 |   | 16.60 |   | 583   |
| Altergaz SA              |   | 750,892     |   | 27.80 |   | 24.00 |   | 18    |

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

The table below sets out the provisions forlosses included in the provisions for contingencies of euro 135million (euro 154 million at December 31, 2006), primarilyrelated to the following equity-accounted investments:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Polimeri Europa Elastomères France SA (under        liquidation)       |   | 50      |   |   | 50      |   |
|-----------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Charville        - Consultores e Serviços Lda                          |   | 37      |   |   | 31      |   |
| Industria Siciliana Acido Fosforico - ISAF - SpA        (under liquidation) |   | 31      |   |   | 28      |   |
| Southern        Gas Constructors Ltd                                        |   | 9       |   |   | 14      |   |
| Geopromtrans Llc                                                            |   | 19      |   |   |    |   |
| Others                                                                      |   | 8       |   |   | 12      |   |
|                                                                        |   | **154** |   |   | **135** |   |

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

**Other investments**Other investments were as follows:

| (million        euro) |   | **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, 2006**                                               |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Investments        in unconsolidated entities controlled by Eni |   | 41      |   |   |    |   |   |    |   |   | (20     | )      |   | 21      |   |   | 49      |   |   | 28     |   |
| Investments in affiliates                                       |   | 9       |   |   |    |   |   |    |   |   |    |   |   | 9       |   |   | 10      |   |   | 1      |   |
| Other        investments                                        |   | 371     |   |   | 4       |   |   | (31     | )      |   | (14     | )      |   | 330     |   |   | 332     |   |   | 2      |   |
|                                                            |   | **421** |   |   | **4**   |   |   | **(31** | **)**  |   | **(34** | **)**  |   | **360** |   |   | **391** |   |   | **31** |   |
| **Dec.        31, 2007**                                        |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Investments in unconsolidated entities        controlled by Eni |   | 21      |   |   | 3       |   |   | (1      | )      |   | 2       |   |   | 25      |   |   | 36      |   |   | 11     |   |
| Investments        in affiliates                                |   | 9       |   |   |    |   |   |    |   |   | 1       |   |   | 10      |   |   | 11      |   |   | 1      |   |
| Other investments                                               |   | 330     |   |   | 190     |   |   | (36     | )      |   | (47     | )      |   | 437     |   |   | 443     |   |   | 6      |   |
|                                                            |   | **360** |   |   | **193** |   |   | **(37** | **)**  |   | **(44** | **)**  |   | **472** |   |   | **490** |   |   | **18** |   |

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

Investments in unconsolidated entities controlled by Eni andaffiliates 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.

Acquisitions and subscriptions for euro 193 million mainlyrelated to the acquisition of 13.6% of Angola LNG Ltd and AngolaLNG Supply Services Llc (euro 190 million).

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The net carrying amount of other investments ofeuro 472 million (euro 360 million at December 31, 2006) wasrelated to the following entities:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Net carrying amount |   | Eni’s interest % |   | Net carrying amount |   | Eni’s interest % |
|--------|--------|---------------------|--------|-----------------------|--------|---------------------|--------|-----------------------|
|   |   |                     |   |                       |   |                     |   |                       |

| Investments in unconsolidated entities        controlled by Eni |   | 21      |   |   |   | 25      |   |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Affiliates                                                      |   | 9       |   |   |   | 10      |   |   |
| Other investments:                                              |   |    |   |   |   |    |   |   |
| - Angola        LNG Ltd                                         |   |    |   |   |   | 175     |   | 13.60  |
| - Darwin LNG Pty Ltd                                            |   | 108     |   | 12.04  |   | 87      |   | 10.99  |
| - Nigeria        LNG Ltd                                        |   | 90      |   | 10.40  |   | 80      |   | 10.40  |
| - Ceska Rafinerska AS                                           |   | 31      |   | 16.33  |   |    |   |   |
| - Others (*)                                                    |   | 101     |   |   |   | 95      |   |   |
|                                                            |   | **330** |   |   |   | **437** |   |   |
|                                                            |   | **360** |   |   |   | **472** |   |   |

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

|    |    |                                                                            |
|--------------|--------------|--------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein did not exceed euro 25        million. |

Provisions for losses related to otherinvestments, included within the provisions for contingencies,amounted to euro 28 million (euro 30 million at December 31,2006) and were primarily in relation to the following entities:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Caspian Pipeline Consortium R - Closed Joint        Stock Co |   | 27     |   |   | 25     |   |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Other        investments                                     |   | 3      |   |   | 3      |   |
|                                                         |   | **30** |   |   | **28** |   |

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

**Other information about investments**The following table summarizes key financial data, netto Eni, as disclosed in the latest available financial statementsof unconsolidated entities controlled by Eni, joint ventures andaffiliates:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Unconsolidated entities controlled by Eni |   | Joint ventures |   | Affiliates |   | Unconsolidated entities controlled by Eni |   | Joint ventures |   | Affiliates |
|--------|--------|-------------------------------------------|--------|----------------|--------|------------|--------|-------------------------------------------|--------|----------------|--------|------------|
|   |   |                                           |   |                |   |            |   |                                           |   |                |   |            |

| Total        assets              |   | 1,315 |   |   | 7,906 |   |   | 2,998 |   |   | 1,247 |   |   | 7,781 |   |   | 4,252 |   |
|----------------------------------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|
| Total liabilities                |   | 1,182 |   |   | 5,466 |   |   | 1,753 |   |   | 1,111 |   |   | 4,526 |   |   | 2,061 |   |
| Net sales        from operations |   | 71    |   |   | 5,536 |   |   | 4,905 |   |   | 99    |   |   | 4,667 |   |   | 5,134 |   |
| Operating profit                 |   | (1    | )      |   | 790   |   |   | 454   |   |   | 14    |   |   | 674   |   |   | 502   |   |
| Net profit                       |   | 3     |   |   | 465   |   |   | 351   |   |   | 14    |   |   | 318   |   |   | 410   |   |

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

The total assets and liabilities ofunconsolidated controlled entities of euro 1,247 million and euro1,111 million respectively, (euro 1,315 million and euro 1,182million at December 31, 2006) concerned for euro 873 million andeuro 873 million (euro 900 million and euro 900 million atDecember 31, 2006) entities for which the consolidation does notproduce significant effects.

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**13 Other financial assets**Other financing receivables were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Financing receivables:                                      |   |    |   |   |    |   |
|-------------------------------------------------------------|--------|---------|--------|--------|---------|--------|
| -        receivables for financing operating activities     |   | 532     |   |   | 677     |   |
| - receivables for financing non-operating        activities |   | 252     |   |   | 225     |   |
|                                                        |   | **784** |   |   | **902** |   |
| Securities:                                                 |   |    |   |   |    |   |
| -        securities held for operating purposes             |   | 21      |   |   | 21      |   |
|                                                        |   | **21**  |   |   | **21**  |   |
|                                                        |   | **805** |   |   | **923** |   |

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

Financing receivables are presented net of the allowance forimpairment losses of euro 24 million (same amount at December 31,2006).

Operating financing receivables of euro 677 million (euro 532million at December 31, 2006) primarily concerned loans made bythe Exploration & Production segment (euro 512 million) andGas & Power segment (euro 87 million). The euro 145 millionincrease was primarily related to the Exploration &Production segment for euro 157 million and was offset bynegative exchange differences of euro 82 million.

Non-operating financing receivables of euro 225 million (euro252 million at December 31, 2006) concerned a restricted depositheld by Eni Lasmo Plc as a guarantee of a debenture (euro 246million at December 31, 2006).

Receivables in currencies other than euro amounted to euro 821million (euro 693 million at December 31, 2006).

Receivables due beyond five years amounted to euro 509 million(euro 396 million at December 31, 2006).

Securities euro 21 million (same amount as at December 31,2006) designated as held-to-maturity investments were issued bythe Italian Government.

Securities have a maturity beyond five years.

The fair value of financing receivables has been determinedbased on the present value of expected future cash flowsdiscounted at rates ranging from 3.8% to 6.0% (3.6% and 5.6% atDecember 31, 2006).

The fair value of securities was derived from quoted marketprices. The fair value of financing receivables and securitiesdid not differ significantly from their carrying amount.

 

**14 Deferred tax assets**Deferred tax assets were recognized net of offsettable deferredtax liabilities for euro 3,526 million (euro 4,028 million atDecember 31, 2006).

| (million        euro) |   | **Value at         Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2007** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

|   |   | **1,725** |   |   | 1,273 |   |   | (1,724 | ) |   | (219 | ) |   | 860 |   |   | **1,915** |   |
|--------|--------|-----------|--------|--------|-------|--------|--------|--------|---|--------|------|---|--------|-----|--------|--------|-----------|--------|

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

Other changes of euro 860 million were primarily related toadditions reflecting: (i) a limited right for each subsidiariesto offset deferred tax assets against deferred tax liabilities(euro 502 million); (ii) the recognition of the deferred taxeffect against equity on the fair value valuation of derivativesdesignated as cash flow hedge for euro 378 million. 

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Further information is provided in Note 20 - Other currentliabilities and Note 25 - Other non-current liabilities. 

Deferred tax assets are described in Note 24 - Deferred taxliabilities.

 

**15 Other non-current********receivables**The following table provides an analysis of other non-currentreceivables:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Tax receivables from:                        |   |    |   |   |      |   |
|----------------------------------------------|--------|---------|--------|--------|-----------|--------|
| - Italian        tax authorities             |   |    |   |   |      |   |
|   . income tax                     |   | 501     |   |   | 486       |   |
|   .        interest on tax credits |   | 322     |   |   | 325       |   |
|   . Value Added Tax (VAT)          |   | 37      |   |   | 42        |   |
|   .        other                   |   | 13      |   |   | 11        |   |
|                                         |   | **873** |   |   | **864**   |   |
| - foreign        tax authorities             |   | 30      |   |   | 30        |   |
|                                         |   | **903** |   |   | **894**   |   |
| Other        receivables:                    |   |    |   |   |      |   |
| - in relation to disposals                   |   | 2       |   |   | 7         |   |
| - others                                     |   | 83      |   |   | 197       |   |
|                                         |   | **85**  |   |   | **204**   |   |
| Other        non-current receivables         |   | 6       |   |   | 12        |   |
|                                         |   | **994** |   |   | **1,110** |   |

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

 

**Current liabilities****16 Short-term debt**Short-term debt was as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Banks                        |   | 3,178     |   |   | 4,070     |   |
|------------------------------|--------|-----------|--------|--------|-----------|--------|
| Ordinary        bonds        |   |      |   |   | 3,176     |   |
| Other financial institutions |   | 222       |   |   | 517       |   |
|                         |   | **3,400** |   |   | **7,763** |   |

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

Short-term debt increased by euro 4,363 million primarily dueto the balance of repayments and new proceeds (euro 4,850million) and to changes in the scope of consolidation (euro 98million), offset by negative currency translation differences(euro 583 million). Debt comprised commercial paper of euro 3,176million mainly issued by the financial company Eni CoordinationCenter SA.

Short-term debt per currency is shown in the table below:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Euro               |   | 3,119     |   |   | 5,453     |   |
|--------------------|--------|-----------|--------|--------|-----------|--------|
| U.S.        dollar |   | 161       |   |   | 1,591     |   |
| Other currencies   |   | 120       |   |   | 719       |   |
|               |   | **3,400** |   |   | **7,763** |   |

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

In 2007, the weighted average interest rate on short-term debtwas 4.9% (3.9% in 2006).

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At December 31, 2007 Eni had undrawn committed and uncommittedborrowing facilities available of euro 5,006 million and euro6,298 million, respectively (euro 5,896 million and euro 6,523million at December 31, 2006).

These facilities were under interest rates that reflectedmarket conditions. Charges in unutilized facilities were notsignificant.

 

**17 Trade and other payables******Trade and other payables were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Trade payables                      |   | 10,528     |   |   | 11,092     |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|
| Advances                            |   | 1,362      |   |   | 1,483      |   |
| Other payables:                     |   |       |   |   |       |   |
| - in        relation to investments |   | 1,166      |   |   | 1,301      |   |
| - others                            |   | 2,939      |   |   | 3,240      |   |
|                                |   | **4,105**  |   |   | **4,541**  |   |
|                                |   | **15,995** |   |   | **17,116** |   |

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

Included in 2007 trade payables was the contractually agreedset off of receivables and payables between Eni North Africa BVand the National Oil Company (the Libyan state company) for euro1,798 million.

Advances of euro 1,483 million (euro 1,362 million at December31, 2006) were related to payments received in excess of thevalue of the work in progress performed for euro 772 million(euro 884 million at December 31, 2006), advances on contractwork in progress for euro 324 million (euro 197 million atDecember 31, 2006) and other advances for euro 487 million (euro281 million at December 31, 2006). Advances on contract work inprogress were in respect of the Engineering & Constructionsegment.

Other payables were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Payables due to:                                                                 |   |      |   |   |      |   |
|----------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| - joint        venture operators in exploration and production        activities |   | 1,146     |   |   | 1,624     |   |
| - suppliers in relation to investments                                           |   | 923       |   |   | 1,015     |   |
| -        non-financial government entities                                       |   | 274       |   |   | 397       |   |
| - employees                                                                      |   | 336       |   |   | 257       |   |
| - social        security entities                                                |   | 339       |   |   | 226       |   |
|                                                                             |   | **3,018** |   |   | **3,519** |   |
| Other        payables                                                            |   | 1,087     |   |   | 1,022     |   |
|                                                                             |   | **4,105** |   |   | **4,541** |   |

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

Payables with related parties are described inNote 36 - Transactions with related parties.

The fair value of trade and other payables didnot differ significantly from their carrying amount consideringthe short-term maturity of trade payables.

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**18 Income taxes payable**Income taxes payable were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Italian subsidiaries        |   | 158       |   |   | 247       |   |
|-----------------------------|--------|-----------|--------|--------|-----------|--------|
| Foreign        subsidiaries |   | 1,482     |   |   | 1,441     |   |
|                        |   | **1,640** |   |   | **1,688** |   |

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

Income taxes payable of Italian subsidiaries were positivelyaffected by the fair value valuation of cash flow hedgingderivatives (euro 492 million). This effect was recorded in therelevant provision within equity. Further information is providedin Note 20 - Other current liabilities and Note 25 - Othernon-current liabilities. 

 

**19 Other taxes payable**Other taxes payable were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Excise and customs duties     |   | 683       |   |   | 804       |   |
|-------------------------------|--------|-----------|--------|--------|-----------|--------|
| Other        taxes and duties |   | 507       |   |   | 579       |   |
|                          |   | **1,190** |   |   | **1,383** |   |

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

 

**20 Other current liabilities******Other current liabilities were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 395     |   |   | 412       |   |
|--------------------------------------------------|--------|---------|--------|--------|-----------|--------|
| Fair value        of cash flow hedge derivatives |   | 40      |   |   | 911       |   |
| Other liabilities                                |   | 199     |   |   | 233       |   |
|                                             |   | **634** |   |   | **1,556** |   |

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

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Fair value of derivative contracts which do notmeet the formal criteria to be recognized as hedges in accordancewith IFRS was as follows:

|   |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (million        euro) |   | Fair value |   | Purchase commitments |   | Sale commitments |   | Fair value |   | Purchase commitments |   | Sale commitments |
|-----------------------|--------|------------|--------|----------------------|--------|------------------|--------|------------|--------|----------------------|--------|------------------|
|                  |   |            |   |                      |   |                  |   |            |   |                      |   |                  |

| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |      |   |    |   |      |   |    |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|---------|
| Currency        swap                                |   | 11      |   | 928       |   | 363       |   | 63      |   | 2,096     |   | 296     |
| Interest currency swap                              |   | 19      |   | 133       |   | 124       |   | 5       |   | 140       |   |    |
| Other                                               |   | 2       |   | 69        |   | 1         |   | 7       |   | 76        |   | 1       |
|                                                |   | **32**  |   | **1,130** |   | **488**   |   | **75**  |   | **2,312** |   | **297** |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |      |   |    |   |      |   |    |
| Interest rate swap                                  |   | 30      |   | 1,077     |   | 1,045     |   | 24      |   | 722       |   | 401     |
|                                                |   | **30**  |   | **1,077** |   | **1,045** |   | **24**  |   | **722**   |   | **401** |
| **Non-hedging derivatives on commodities**          |   |    |   |      |   |      |   |    |   |      |   |    |
| Over the        counter                             |   | 52      |   | 568       |   | 67        |   | 12      |   | 49        |   | 58      |
| Other                                               |   | 281     |   | 855       |   | 75        |   | 301     |   | 1,187     |   | 28      |
|                                                |   | **333** |   | **1,423** |   | **142**   |   | **313** |   | **1,236** |   | **86**  |
|                                                |   | **395** |   | **3,630** |   | **1,675** |   | **412** |   | **4,270** |   | **784** |

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

The fair value of these derivative contracts was determinedusing an appropriate valuation method based on market data atyear-end. The fair value of cash flow hedging derivativesamounted to euro 911 million (euro 40 million at December 31,2006) related to contracts expiring in 2008 entered into by theExploration & Production segment in order to hedge theexposure to variability in future cash flows expected in the2008-2011 period deriving from marketing an amount of Eni’sproved hydrocarbon reserves equal to 2% of proved reserves as ofDecember 31, 2006 in connection with the acquisition in 2007 ofproduction, development and exploration upstream propertiesonshore Congo from the French company Maurel & Prom and inthe Gulf of Mexico from the U.S. company Dominion Resources.Change in fair value (euro 871 million) of the hedging instrumentdirectly recognized in equity was euro 878 million for theeffective portion whilst the ineffective portion of euro 16million was recognized in the profit and loss as finance expense(the time value component). Cumulative currency translationdifferences increased by euro 23 million. Further information onthe fair value recognition in the consolidated balance sheet andprofit and loss account of contracts with a maturity in 2009-2011is given in Note 25 - Other liabilities under the section othernon-current liabilities. The nominal value of these cash flowhedging derivatives referred to purchase and sale commitments foreuro 1,399 million and euro 1,977 million, respectively (euro 4million and euro 525 million at December 31, 2006). Informationon the hedged risks and the hedging policies is given in Note 28- Guarantees, commitments and risks.

 

**Non-current liabilities****21 Long-term debt and current maturitiesof long-term debt**Long-term debt included the current portion maturingduring the year following the balance sheet date (currentmaturity). The table below analyzes debt by year of forecastrepayment:

| (million euro) |   | **December 31,** |   |   |   | **Long-term maturity** |
|----------------|--------|------------------|--------|--------|--------|------------------------|
|           |   |                  |   |   |   |                        |

| Type of debt instrument |   | Maturity range |   | 2006 |   | 2007 |   | Current maturity 2008 |   | 2009 |   | 2010 |   | 2011 |   | 2012 |   | After |   | Total |
|-------------------------|--------|----------------|--------|------|--------|------|--------|-----------------------|--------|------|--------|------|--------|------|--------|------|--------|-------|--------|-------|
|                    |   |                |   |      |   |      |   |                       |   |      |   |      |   |      |   |      |   |       |   |       |

| Bank loans                                 |   | **2008-2022** |   | 2,298     |   | 6,073      |   | 159     |   | 607       |   | 423       |   | 121     |   | 4,106     |   | 657       |   | 5,914      |
|--------------------------------------------|--------|---------------|--------|-----------|--------|------------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|------------|
| Other bank        loans at favorable rates |   | **2008-2013** |   | 13        |   | 9          |   | 2       |   | 1         |   | 2         |   | 2       |   | 1         |   | 1         |   | 7          |
|                                       |   |          |   | **2,311** |   | **6,082**  |   | **161** |   | **608**   |   | **425**   |   | **123** |   | **4,107** |   | **658**   |   | **5,921**  |
| Ordinary        bonds                      |   | **2008-2037** |   | 5,097     |   | 5,386      |   | 263     |   | 324       |   | 919       |   | 167     |   | 30        |   | 3,683     |   | 5,123      |
| Other financial institutions               |   | **2008-2020** |   | 891       |   | 599        |   | 313     |   | 118       |   | 12        |   | 28      |   | 12        |   | 116       |   | 286        |
|                                       |   |          |   | **8,299** |   | **12,067** |   | **737** |   | **1,050** |   | **1,356** |   | **318** |   | **4,149** |   | **4,457** |   | **11,330** |

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

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Long-term debt, including the current portion of long-termdebt, increased by euro 3,768 million to euro 12,067 million(euro 8,299 million at December 31, 2006). Such increase was dueto the balance of payments and new proceeds of euro 3,885 millionas well as the consolidation of Frigstad Discover Invest Ltd thataccounts for euro 170 million. This was offset by: (i) thenegative impact of foreign currency translation differences; (ii)translation differences arising on debt taken on byeuro-reporting subsidiaries denominated in foreign currency whichare translated into euro at year-end exchange rates (euro 312million).

Debt from other financial institutions of euro 599 millionincluded euro 37 million of finance lease transactions. Thefollowing table shows residual debt by maturity date, which wasobtained by summing future lease payments discounted at theeffective interest rate, interest and the nominal value of futurelease payments:

|   |   | **Maturity range** |   |
|--------|--------|--------------------|--------|
|   |   |                    |   |

| (million        euro) |   | Within 12 months |   | Between one and five years |   | Beyond five years |   | Total |
|-----------------------|--------|------------------|--------|----------------------------|--------|-------------------|--------|-------|
|                  |   |                  |   |                            |   |                   |   |       |

| Residual debt                               |   | 7  |   | 25 |   | 5 |   | 37 |
|---------------------------------------------|--------|----|--------|----|--------|---|--------|----|
| Interests                                   |   | 4  |   | 7  |   | 4 |   | 15 |
| Undiscounted value of future lease payments |   | 11 |   | 32 |   | 9 |   | 52 |

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

Eni entered into long-term borrowing facilities with theEuropean Investment Bank which were subordinated to themaintenance of certain performance indicators based on Eni’sconsolidated financial statements or a rating not inferior to A-(S&P) and A3 (Moody’s). At December 31, 2006 and 2007,the amount of short and long-term debt subject to restrictivecovenants was euro 1,131 million and euro 1,429 million,respectively. Furthermore, Saipem SpA and Saipem SA entered intocertain borrowing facilities for euro 75 million and euro 34million, respectively, with a number of financial institutionssubordinated to the maintenance of certain performance indicatorsbased on the consolidated financial statements of Saipem andseparate financial statements of Saipem SA. Eni and Saipem are incompliance with the covenants contained in their respectivefinancing arrangements.

Bonds of euro 5,386 million consisted of bonds issued withinthe Euro Medium Term Notes Program for a total of euro 4,916million and other bonds for a total of euro 470 million.

The following table analyses bonds per issuing entity,maturity date, interest rate and currency as at December 31,2007:

|   |   | **Amount** |   | **Discount on bond issue and accrued        expense** |   | **Total** |   | **Currency** |   | **Maturity** |   | **% rate** |
|--------|--------|------------|--------|-------------------------------------------------------|--------|-----------|--------|--------------|--------|--------------|--------|------------|
|   |   |       |   |                                                  |   |      |   |         |   |              |   |            |

| (million        euro) |   |   |   |   |   |   |   |   |   | from |   | to |   | from |   | to |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|----|--------|------|--------|----|
|                  |   |        |   |        |   |        |   |        |   |      |   |    |   |      |   |    |

| **Issuing entity**                  |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |   |   |     |
|-------------------------------------|--------|-----------|--------|--------|--------|--------|-----------|--------|----------------------|--------|--------|--------|--------|--------|--------|--------|----------|
| Euro        Medium Term Notes:      |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |   |   |     |
| - Eni SpA                           |   | 1,500     |   | 43     |   |   | 1,543     |   | Euro                 |   |   |   | 2013   |   |   |   | 4.625    |
| - Eni SpA                           |   | 1,000     |   | (3     | )      |   | 997       |   | Euro                 |   |   |   | 2017   |   |   |   | 4.750    |
| - Eni Coordination Center SA        |   | 683       |   | 4      |   |   | 687       |   | British pound        |   | 2010   |   | 2019   |   | 4.875  |   | 5.125    |
| - Eni SpA                           |   | 500       |   | 16     |   |   | 516       |   | Euro                 |   |   |   | 2010   |   |   |   | 6.125    |
| - Eni Coordination Center SA        |   | 367       |   | 8      |   |   | 375       |   | Euro                 |   | 2008   |   | 2015   |   |   |   | variable |
| - Eni        Coordination Center SA |   | 277       |   | 5      |   |   | 282       |   | Euro                 |   | 2008   |   | 2024   |   | 2.876  |   | 5.050    |
| - Eni Coordination Center SA        |   | 277       |   | 2      |   |   | 279       |   | Japanese yen         |   | 2008   |   | 2037   |   | 0.810  |   | 2.810    |
| - Eni        Coordination Center SA |   | 173       |   | 2      |   |   | 175       |   | U.S. dollar          |   | 2013   |   | 2015   |   | 4.450  |   | 4.800    |
| - Eni Coordination Center SA        |   | 31        |   |   |   |   | 31        |   | U.S. dollar          |   |   |   | 2013   |   |   |   | variable |
| - Eni        Coordination Center SA |   | 30        |   | 1      |   |   | 31        |   | Swiss franc          |   |   |   | 2010   |   |   |   | 2.043    |
|                                |   | **4,838** |   | **78** |   |   | **4,916** |   |                 |   |   |   |   |   |   |   |     |
| Other        bonds:                 |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |   |   |     |
| - Eni USA Inc                       |   | 271       |   | 3      |   |   | 274       |   | U.S. dollar          |   |   |   | 2027   |   |   |   | 7.300    |
| - Eni        Lasmo Plc (*)          |   | 205       |   | (9     | )      |   | 196       |   | British        pound |   |   |   | 2009   |   |   |   | 10.375   |
|                                |   | **476**   |   | **(6** | **)**  |   | **470**   |   |                 |   |   |   |   |   |   |   |     |
|                                |   | **5,314** |   | **72** |   |   | **5,386** |   |                 |   |   |   |   |   |   |   |     |

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

|    |    |                                                                                                                              |
|--------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
| (*)          |    | The bond is        guaranteed by a restricted cash deposit recorded under        non-current financial assets (euro 225 million). |

As at December 31, 2007 bonds maturing within 18 months (euro584 million) were issued by Eni Coordination Center SA for euro388 million and by Eni Lasmo Plc for euro 196 million. During2007, Eni SpA and Eni Coordination Center SA issued bonds foreuro 997 million and euro 121 million, respectively. 

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The following table analyses the currency composition oflong-term debt and its current portion, and the related weightedaverage interest rates on total borrowings:

|   |   | **Dec. 31, 2006******(million euro) |   | **Average rate**        (%) |   | **Dec. 31, 2007******(million euro) |   | **Average rate**        (%) |
|--------|--------|-------------------------------------|--------|-----------------------------|--------|-------------------------------------|--------|-----------------------------|
|   |   |                                     |   |                             |   |                                     |   |                             |

| Euro                |   | 5,566     |   | 4.0    |   | 9,973      |   | 4.4    |
|---------------------|--------|-----------|--------|--------|--------|------------|--------|--------|
| U.S.        dollar  |   | 1,261     |   | 7.8    |   | 900        |   | 8.6    |
| British pound       |   | 1,259     |   | 5.9    |   | 882        |   | 6.2    |
| Japanese        yen |   | 167       |   | 1.4    |   | 281        |   | 1.9    |
| Swiss franc         |   | 46        |   | 2.0    |   | 31         |   | 2.0    |
|                |   | **8,299** |   |   |   | **12,067** |   |   |

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

At December 31, 2007 Eni had undrawn committed long-termborrowing facilities of euro 1,400 million (euro 520 million atDecember 31, 2006). Interest rates on these contracts were atmarket conditions. Charges for unutilized facilities were notsignificant.

Fair value of long-term debt, including the current portion oflong-term debt, consisted of the following:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Ordinary bonds               |   | 5,239     |   |   | 5,523      |   |
|------------------------------|--------|-----------|--------|--------|------------|--------|
| Banks                        |   | 2,311     |   |   | 6,148      |   |
| Other financial institutions |   | 865       |   |   | 719        |   |
|                         |   | **8,415** |   |   | **12,390** |   |

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

Fair value was calculated by discounting the expected futurecash flows at rates ranging from 3.8% to 6.0% (3.6% and 5.6% atDecember 31, 2006).

At December 31, 2007 Eni mortgaged certain tangible assets andpledged restricted deposits as collateral against its borrowingsfor euro 198 million (euro 231 million at December 31, 2006).

Analysis of net borrowings, as defined in the “Item 5– Operating and Financial Review and Prospects”, was asfollows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

|   |   | Current |   | Non-current |   | Total |   | Current |   | Non-current |   | Total |
|--------|--------|---------|--------|-------------|--------|-------|--------|---------|--------|-------------|--------|-------|
|   |   |         |   |             |   |       |   |         |   |             |   |       |

| A. Cash                                          |   | 3,745     |   |   |      |   | 3,745      |   | 1,699     |   |       |   | 1,699      |
|--------------------------------------------------|--------|-----------|--------|--------|-----------|--------|------------|--------|-----------|--------|------------|--------|------------|
| B. Cash        equivalents                       |   | 240       |   |   |      |   | 240        |   | 415       |   |       |   | 415        |
| C. Available-for-sale securities                 |   | 552       |   |   |      |   | 552        |   | 174       |   |       |   | 174        |
| **D.        Liquidity (A+B+C)**                  |   | **4,537** |   |   |      |   | **4,537**  |   | **2,288** |   |       |   | **2,288**  |
| **E. Financing receivables**                     |   | **143**   |   |   | **252**   |   | **395**    |   | **990**   |   | **225**    |   | **1,215**  |
| F.        Short-term debt towards banks          |   | 3,178     |   |   |      |   | 3,178      |   | 4,070     |   |       |   | 4,070      |
| G. Long-term debt towards banks                  |   | 131       |   |   | 2,180     |   | 2,311      |   | 161       |   | 5,921      |   | 6,082      |
| H. Bonds                                         |   | 685       |   |   | 4,412     |   | 5,097      |   | 263       |   | 5,123      |   | 5,386      |
| I. Short-term debt towards related parties       |   | 92        |   |   |      |   | 92         |   | 131       |   |       |   | 131        |
| L.        Long-term debt towards related parties |   |      |   |   | 16        |   | 16         |   |      |   | 16         |   | 16         |
| M. Other short-term debt                         |   | 130       |   |   |      |   | 130        |   | 3,562     |   |       |   | 3,562      |
| N. Other        long-term debt                   |   | 74        |   |   | 801       |   | 875        |   | 313       |   | 270        |   | 583        |
| **O. Total borrowings (F+G+H+I+L+M+N)**          |   | **4,290** |   |   | **7,409** |   | **11,699** |   | **8,500** |   | **11,330** |   | **19,830** |
| **P.        Net borrowings (O-D-E)**             |   | **(390**  | **)**  |   | **7,157** |   | **6,767**  |   | **5,222** |   | **11,105** |   | **16,327** |

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

Available-for-sale securities of euro 174 million (euro 552million at December 31, 2006) are held for non-operatingpurposes. Not included in the calculation above wereheld-to-maturity and available-for-sale securities held foroperating purposes amounting to euro 280 million (euro 441million at December 31, 2006), of which euro 256 million (euro417 million at December 31, 2006) were held to provide coverageof technical reserves for Eni’s insurance companies.

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Financing receivables of euro 1,215 million (euro 395 millionat December 31, 2006) were held for non-operating purposes. Notincluded in the calculation above were financing receivables heldfor operating purposes amounting to euro 384 million (euro 246million at December 31, 2006), of which euro 246 million (euro241 million at December 31, 2006) were in respect of securitiesgranted to unconsolidated entities controlled by Eni, jointventures and affiliates primarily in relation to theimplementation of certain capital projects and a euro 112 millioncash deposit to provide coverage of Eni Insurance Ltd technicalreserves.

Non current financial receivables of euro 225 million (euro252 million at December 31, 2006) were related to a restricteddeposit held by Eni Lasmo Plc as a guarantee of a debenture (euro246 million at December 31, 2006).

 

**22 Provisions for contingencies**Provisions for contingencies were as follows:

| (million        euro) |   | **Value at****Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Other change** |   | **Value at****Dec. 31, 2007** |
|-----------------------|--------|-------------------------------|--------|---------------|--------|----------------|--------|------------------|--------|-------------------------------|
|                  |   |                               |   |               |   |                |   |                  |   |                               |

| Provision for site restoration and abandonment                                             |   | 3,724     |   | 550       |   | (315       | )     |   | 15       |   |   | 3,974     |
|--------------------------------------------------------------------------------------------|--------|-----------|--------|-----------|--------|------------|-------|--------|----------|--------|--------|-----------|
| Provision        for environmental risks                                                   |   | 1,905     |   | 356       |   | (353       | )     |   | (50      | )      |   | 1,858     |
| Provision for legal and other proceedings                                                  |   | 654       |   | 146       |   | (77        | )     |   | (7       | )      |   | 716       |
| Loss        adjustments and actuarial provisions for Eni’s        insurance companies |   | 565       |   |      |   | (81        | )     |   | (66      | )      |   | 418       |
| Provision for taxes                                                                        |   | 221       |   | 37        |   | (20        | )     |   | (25      | )      |   | 213       |
| Provision        for losses on investments                                                 |   | 184       |   | 13        |   | (20        | )     |   | (14      | )      |   | 163       |
| Provision for restructuring or decommissioning                                             |   | 157       |   | 17        |   | (18        | )     |   | (26      | )      |   | 130       |
| Provision        for OIL insurance                                                         |   | 108       |   |      |   | (27        | )     |   | (1       | )      |   | 80        |
| Provision for marketing and promotion        initiatives                                   |   | 50        |   | 62        |   | (47        | )     |   |     |   |   | 65        |
| Provision        for onerous contracts                                                     |   | 100       |   |      |   | (50        | )     |   |     |   |   | 50        |
| Provision for revision of selling prices                                                   |   | 172       |   | 24        |   | (172       | )     |   |     |   |   | 24        |
| Other (*)                                                                                  |   | 774       |   | 408       |   | (359       | )     |   | (28      | )      |   | 795       |
|                                                                                       |   | **8,614** |   | **1,613** |   | **(1,539** | **)** |   | **(202** | **)**  |   | **8,486** |

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

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 50        million. |

The provision for site restoration and abandonment of euro3,974 million, is mainly composed of provisions for the estimatedfuture costs for the decommissioning of oil and natural gasproduction facilities at the end of the producing lives offields, well-plugging, abandonment and site restoration (euro3,884 million). The increases in the provision for the yearamounted to euro 550 million due to the initial recognition andchanges in the present value of estimated expenditures creating acorresponding item of property, plant and equipment of an amountequivalent to the provision or change in estimates (euro 60million and euro 317 million, respectively) and the passage oftime recognized in the profit and loss account as finance expense(euro 173 million). The discount rates used ranged from 4.2% to6.2%. Decreases in the provision amounted to euro 315 million, ofwhich euro 207 million in connection with lowered estimatedexpenditures and euro 108 million related to the reversal ofutilized provisions. Other changes of euro 15 million related toacquired oil & gas properties in Congo and in the Gulf ofMexico (euro 130 million). Offsetting these effects were negativeforeign currency translation differences for euro 155 million.

Provision for environmental risks of euro 1,858 millionprimarily related to the estimated costs of remediation inaccordance with existing laws and regulations recognized bySyndial SpA (euro 1,362 million), the Refining & Marketingsegment (euro 339 million) and the Gas & Power segment (euro92 million). The increases in the provision of euro 356 millionwere primarily related to Syndial SpA (euro 223 million) and theRefining & Marketing segment (euro 95 million) including theeffect due to the passage of time for euro 11 million recognizedas finance expense. Decreases for euro 353 million were relatedto the reversal of utilized provisions 

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primarily by Syndial SpA (euro 211 million) and the Refining& Marketing segment (euro 100 million) including the reversalof unutilized provisions of euro 18 million no longer required.

Provision for legal and other proceedings of euro 716 millionprimarily included charges expected on failure to perform certaincontractual obligations and proceeding on legal andadministrative matters. These provisions are stated on the basisof Eni’s best estimate of the expected probable liability.The increase in the provision of euro 146 million was primarilyrelated to Syndial SpA (euro 79 million). Decreases in theprovision of euro 77 million included the reversal of unutilizedprovisions of euro 67 million, of which euro 46 million relatedto the cancellation by the Regional Administrative Court ofLombardy of a fine imposed by the Authority for Electricity andGas.

Loss adjustments and actuarial provisions for Eni’sinsurance companies of euro 418 million represented theliabilities accrued for claims on insurance policies underwrittenby Eni’s insurance companies. Changes in the provision ofeuro 66 million were primarily in respect of liabilities directlyassociated with assets classified as held for sale of Eni’sinsurance subsidiary Padana Assicurazioni SpA for euro 64million.

Provision for taxes of euro 213 million primarily includedcharges for unsettled tax claims in connection with uncertainapplications of the tax regulation for foreign subsidiaries ofthe Exploration & Production segment (euro 158 million).

Provision for losses on investments of euro 163 million wasmade with respect of losses from investments in entities incurredto date, where the losses exceeded the carrying amount of theinvestments.

Provision for restructuring or decommissioning unusedproduction facilities of euro 130 million was primarily made forthe estimated future costs for site restoration and remediationin connection with divestments and facilities closures of theRefining & Marketing segment (euro 124 million). Decreases inthe provision of euro 18 million included the reversal ofunutilized provisions of euro 2 million.

Provision for OIL insurance cover of euro 80 million includedmutual insurance provision related to future increase ofinsurance charges that will be paid in the next 5 years by Enifor participating in the mutual insurance of Oil Insurance Ltd,following the increased number of accidents that occurred in 2004and 2005. 

Provision for marketing and promotional initiatives amountedto euro 65 million and was made in respect of marketinginitiatives envisaging awards and prizes to clients in theRefining & Marketing segment. Decreases in the provision ofeuro 47 million included the reversal of unutilized provisionsfor euro 3 million.

Provision for onerous contracts of euro 50 million primarilyrelated to Syndial SpA and contracts for which the termination orexecution costs exceed the relevant benefits.

Provision for the revision of selling prices of euro 24million primarily related to the Gas & Power segment.Decreases in the provision of euro 172 million included thereversal of unutilized provisions of euro 122 million primarilyrelated to the adoption of the new tariffs’ regimeintroduced by Decision 134/2006 by the Italian Authority forElectricity and Gas.

Utilization of other provisions of euro 359 million includedthe reversal of unutilized provisions for euro 159 million nolonger required.

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**23 Provisions for employee benefits**Provisions for employee benefits were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| TFR                                                                                           |   | 608       |   |   | 499     |   |
|-----------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|
| Foreign        pension plans                                                                  |   | 268       |   |   | 219     |   |
| Supplementary medical reserve for Eni managers        (FISDE) and other foreign medical plans |   | 100       |   |   | 99      |   |
| Other        benefits                                                                         |   | 95        |   |   | 118     |   |
|                                                                                          |   | **1,071** |   |   | **935** |   |

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

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 uponretirement as a lump sum payment the amount of which correspondsto the total of the provisions accrued during the employees’service period based on payroll costs as revalued untilretirement according to the Italian legal scheme. Provisions forItalian post-retirement indemnities, considered for thedetermination of relevant liabilities and expenses, are reducedby the amounts drawn by employees and funded to pension funds.

Following the enactment of the Italian Budget Law for 2007,employees had until June 30, 2007 to decide whether to transfertheir future provisions and any amounts accrued from January 1,2007 for post-retirement indemnities under the Italian TFR regimeto pension funds or the treasury fund held by the Italianadministration for post-retirement benefits (INPS). Companieswith less than 50 employees were allowed to continue recognizingthe provision as in previous years. The choice appliedretrospectively from January 1, 2007. Therefore, the allocationof future TFR provisions to pension funds or the INPS treasuryfund determines that these amounts will be classified as costs toprovide benefits under a defined contribution plan. Pastprovisions accrued for post-retirement indemnities under theItalian TFR regime continue to represent costs to providebenefits under a defined benefit plan and must be assessed basedon actuarial assumptions.

Following this change in regime, the existing provision forItalian employees was reassessed to take account of thecurtailment due to reduced future obligations reflecting theexclusion of future salaries and relevant increases fromactuarial calculations. As a result of this a non-recurring gainof euro 83 million was recognized in profit or loss.

Pension funds are defined benefit plans provided by foreignsubsidiaries located mainly in the United Kingdom, Nigeria andGermany. Benefits under these plans consisted of payments basedon seniority and the salary paid in the last year of service, oralternatively, the average annual salary over a defined periodprior to retirement. Group companies provide healthcare benefitsto retired managers. Liability to these plans and the currentcost are limited to the contributions made by the company. Otherbenefits primarily related for a deferred cash incentive schemeto managers and certain Jubilee awards. The provision for thedeferred cash incentive scheme is assessed based on theprobability of the company reaching planned targets and employeereaching individual performance goals. Jubilee awards arebenefits due following the attainment of a minimum period ofservice and, for the Italian companies, consist of an in-kindremuneration.

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The value of employee benefits, estimated by applyingactuarial techniques, consisted of the following:

|   | **Foreign pension plans** |   |
|--------|---------------------------|--------|
|   |                           |   |

| (million        euro) |   | TFR |   | Gross liability |   | Plan assets |   | FISDE        and other foreign medical plans |   | Other benefits |   | Total |
|-----------------------|--------|-----|--------|-----------------|--------|-------------|--------|----------------------------------------------|--------|----------------|--------|-------|
|                  |   |     |   |                 |   |             |   |                                              |   |                |   |       |

| **2006**                                                                                    |   |    |   |   |    |   |   |     |   |   |   |   |   |    |   |   |      |   |
|---------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|----------|--------|--------|--------|--------|--------|---------|--------|--------|-----------|--------|
| **Current        value of benefit liabilities and plan assets at beginning        of year** |   | **653** |   |   | **757** |   |   | **(359** | **)**  |   | **96** |   |   | **37**  |   |   | **1,184** |   |
| Current cost                                                                                |   | 99      |   |   | 18      |   |   |     |   |   | 2      |   |   | 48      |   |   | 167       |   |
| Interest        cost                                                                        |   | 22      |   |   | 28      |   |   |     |   |   | 3      |   |   | 6       |   |   | 59        |   |
| Expected return on plan assets                                                              |   |    |   |   |    |   |   | (24      | )      |   |   |   |   |    |   |   | (24       | )      |
| Employees        contributions                                                              |   |    |   |   | (3      | )      |   | (88      | )      |   |   |   |   |    |   |   | (91       | )      |
| Actuarial gains (losses)                                                                    |   | (67     | )      |   | (2      | )      |   | (3       | )      |   | (5     | )      |   | 6       |   |   | (71       | )      |
| Benefits        paid                                                                        |   | (94     | )      |   | (16     | )      |   | 12       |   |   | (5     | )      |   | (2      | )      |   | (105      | )      |
| Amendments                                                                                  |   |    |   |   | 2       |   |   |     |   |   |   |   |   |    |   |   | 2         |   |
| Curtailments        and settlements                                                         |   |    |   |   | (7      | )      |   | 6        |   |   |   |   |   |    |   |   | (1        | )      |
| Currency translation differences                                                            |   | 1       |   |   | (6      | )      |   | 16       |   |   |   |   |   |    |   |   | 11        |   |
| **Current        value of benefit liabilities and plan assets at end of        year**       |   | **614** |   |   | **771** |   |   | **(440** | **)**  |   | **91** |   |   | **95**  |   |   | **1,131** |   |
| **2007**                                                                                    |   |    |   |   |    |   |   |     |   |   |   |   |   |    |   |   |      |   |
| **Current        value of benefit liabilities and plan assets at beginning        of year** |   | **614** |   |   | **771** |   |   | **(440** | **)**  |   | **91** |   |   | **95**  |   |   | **1,131** |   |
| Current cost                                                                                |   | 13      |   |   | 13      |   |   |     |   |   | 1      |   |   | 38      |   |   | 65        |   |
| Interest        cost                                                                        |   | 23      |   |   | 32      |   |   |     |   |   | 4      |   |   | 2       |   |   | 61        |   |
| Expected return on plan assets                                                              |   |    |   |   |    |   |   | (23      | )      |   |   |   |   |    |   |   | (23       | )      |
| Employees        contributions                                                              |   |    |   |   |    |   |   | (126     | )      |   |   |   |   |    |   |   | (126      | )      |
| Actuarial gains (losses)                                                                    |   | (52     | )      |   | 3       |   |   | 12       |   |   | 1      |   |   | (1      | )      |   | (37       | )      |
| Benefits        paid                                                                        |   | (64     | )      |   | (35     | )      |   | 18       |   |   | (6     | )      |   | (7      | )      |   | (94       | )      |
| Amendments                                                                                  |   | 1       |   |   | 2       |   |   |     |   |   |   |   |   |    |   |   | 3         |   |
| Curtailments        and settlements                                                         |   | (62     | )      |   | (201    | )      |   | 201      |   |   |   |   |   |    |   |   | (62       | )      |
| Currency translation differences                                                            |   | 3       |   |   | 36      |   |   | (4       | )      |   | 1      |   |   | (9      | )      |   | 27        |   |
| **Current        value of benefit liabilities and plan assets at end of        year**       |   | **476** |   |   | **621** |   |   | **(362** | **)**  |   | **92** |   |   | **118** |   |   | **945**   |   |

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

The gross liability for foreign employee pension plans of euro621 million (euro 771 million at December 31, 2006) included theliabilities related to joint ventures operating in explorationand production activities for euro 112 million and euro 67million at December 31, 2006 and 2007, respectively. A receivableof an amount equivalent to such liability was recorded. Otherbenefits of euro 118 million (euro 95 million at December 31,2006) primarily concerned the deferred monetary incentive planfor euro 69 million (euro 37 million at December 31, 2006) andjubilee awards for euro 40 million (euro 44 million at December31, 2006).

The reconciliation analysis of benefit obligations and planassets was as follows:

|   |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|--------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|   |   |         |   |                           |   |                                           |   |                    |

| (million        euro) |   | Dec. 31, 2006 |   | Dec. 31, 2007 |   | Dec. 31, 2006 |   | Dec. 31, 2007 |   | Dec. 31, 2006 |   | Dec. 31, 2007 |   | Dec. 31, 2006 |   | Dec. 31, 2007 |
|-----------------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|
|                  |   |               |   |               |   |               |   |               |   |               |   |               |   |               |   |               |

| Present value of benefit obligations with plan        assets              |   |    |   |   |    |   |   | 605     |   |   | 439     |   |   |    |   |   |   |   |   |    |
|---------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|---------|
| Present        value of plan assets                                       |   |    |   |   |    |   |   | (440    | )      |   | (362    | )      |   |    |   |   |   |   |   |    |
| **Net present value of benefit obligations with        plan assets**      |   |    |   |   |    |   |   | **165** |   |   | **77**  |   |   |    |   |   |   |   |   |    |
| **Present        value of benefit obligations without plan assets**       |   | **614** |   |   | **476** |   |   | **166** |   |   | **182** |   |   | **91**  |   | **92** |   | **95** |   | **118** |
| Actuarial gains (losses) not recognized                                   |   | (6      | )      |   | 23      |   |   | (63     | )      |   | (33     | )      |   | 9       |   | 7      |   |   |   |    |
| Past        service cost not recognized                                   |   |    |   |   |    |   |   |    |   |   | (7      | )      |   |    |   |   |   |   |   |    |
| **Net liabilities recognized in provisions for        employee benefits** |   | **608** |   |   | **499** |   |   | **268** |   |   | **219** |   |   | **100** |   | **99** |   | **95** |   | **118** |

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

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Costs charged to the profit and loss account were as follows:

| (million        euro) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |   | **Total** |
|-----------------------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|--------|-----------|
|                  |   |         |   |                           |   |                                           |   |                    |   |           |

| **2006**                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
|-----------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Current        cost                           |   | 99      |   |   | 18     |   |   | 2      |   |   | 48     |   |   | 167     |   |
| Interest cost                                 |   | 22      |   |   | 28     |   |   | 3      |   |   | 6      |   |   | 59      |   |
| Expected        return on plan assets         |   |    |   |   | (24    | )      |   |   |   |   |   |   |   | (24     | )      |
| Amortization of actuarial gains (losses)      |   | 2       |   |   | 21     |   |   |   |   |   | 5      |   |   | 28      |   |
| Effect of        curtailments and settlements |   |    |   |   | (1     | )      |   |   |   |   |   |   |   | (1      | )      |
| Other costs                                   |   | 1       |   |   |   |   |   |   |   |   |   |   |   | 1       |   |
|                                          |   | **124** |   |   | **42** |   |   | **5**  |   |   | **59** |   |   | **230** |   |
| **2007**                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Current        cost                           |   | 13      |   |   | 13     |   |   | 1      |   |   | 38     |   |   | 65      |   |
| Interest cost                                 |   | 23      |   |   | 32     |   |   | 4      |   |   | 2      |   |   | 61      |   |
| Expected        return on plan assets         |   |    |   |   | (23    | )      |   |   |   |   |   |   |   | (23     | )      |
| Amortization of actuarial gains (losses)      |   | 1       |   |   | 3      |   |   |   |   |   |   |   |   | 4       |   |
| Effect of        curtailments and settlements |   | (83     | )      |   | 41     |   |   |   |   |   |   |   |   | (42     | )      |
|                                          |   | **(46** | **)**  |   | **66** |   |   | **5**  |   |   | **40** |   |   | **65**  |   |

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

The main actuarial assumptions used in the evaluation ofpost-retirement benefit obligations at end of year and in theestimate of costs expected for 2008 were as follows:

| (%)    |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|--------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|   |   |         |   |                           |   |                                           |   |                    |

| **2006**                                   |   |    |   |     |   |   |   |    |
|--------------------------------------------|--------|---------|--------|----------|--------|--------|--------|---------|
| Discount        rate                       |   | 4.3     |   | 3.0-13.0 |   | 4.5    |   | 4.0-4.3 |
| Expected return rate on plan assets        |   |    |   | 3.5-13.0 |   |   |   |    |
| Rate of        compensation increase       |   | 2.7-4.0 |   | 2.0-12.0 |   |   |   | 2.7-4.5 |
| Rate of price inflation                    |   | 2.0     |   | 1.0-10.0 |   | 2.0    |   | 2.0-2.5 |
| **2007**                                   |   |    |   |     |   |   |   |    |
| Discount rate                              |   | 5.35    |   | 3.5-13.0 |   | 5.5    |   | 4.8-5.4 |
| Expected        return rate on plan assets |   |    |   | 4.0-13.0 |   |   |   |    |
| Rate of compensation increase              |   | 2.7-3.0 |   | 2.0-12.0 |   |   |   | 2.7-4.0 |
| Rate of        price inflation             |   | 2.0     |   | 1.0-10.0 |   | 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  |   | 23.3      |   |   | 6.8-8.4            |   |
|-------------|--------|-----------|--------|--------|--------------------|--------|
| Bonds       |   | 27.1      |   |   | 3.1-10.0           |   |
| Real estate |   | 1.7       |   |   | 5.8-15.0           |   |
| Other       |   | 47.9      |   |   | 2.8-13.0           |   |
|        |   | **100.0** |   |   |     |   |

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

The effective return of the plan assets amounted to euro 11million (euro 27 million at December 31, 2006).

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With reference to healthcare plans, the effects deriving froma 1% change of the actuarial assumptions of medical costs were asfollows:

| (million euro) |   | **1% Increase** |   | **1% Decrease** |
|----------------|--------|-----------------|--------|-----------------|
|           |   |                 |   |                 |

| Impact on the current costs and interest costs |   | 1  |   |   | (1 | ) |
|------------------------------------------------|--------|----|--------|--------|----|---|
| Impact on        net benefit obligation        |   | 11 |   |   | (9 | ) |

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

The amount expected to be accrued to defined benefit plans for2008 amounted to euro 48 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: 

| (million        euro) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE and other foreign medical plans** |   | **Other benefits** |
|-----------------------|--------|---------|--------|---------------------------|--------|-------------------------------------------|--------|--------------------|
|                  |   |         |   |                           |   |                                           |   |                    |

| **2006**                                |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Impact on        net benefit obligation |   | (19    | )      |   | 13     |   |   | (4     | )      |   | 4      |   |
| Impact on plan assets                   |   |   |   |   | 3      |   |   |   |   |   |   |   |
| **2007**                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on net benefit obligation        |   | (8     | )      |   | 6      |   |   |   |   |   |   |   |
| Impact on        plan assets            |   |   |   |   | 3      |   |   |   |   |   |   |   |

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

 

 

**24 Deferred taxliabilities**Deferred tax liabilities were recognized net of offsettabledeferred tax assets for euro 3,526 million (euro 4,028 million atDecember 31, 2006).

| (million        euro) |   | **Value at         Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2007** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

|   |   | **5,852** |   |   | 1,210 |   |   | (1,999 | ) |   | (490 | ) |   | 898 |   |   | **5,471** |   |
|--------|--------|-----------|--------|--------|-------|--------|--------|--------|---|--------|------|---|--------|-----|--------|--------|-----------|--------|

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

Other changes of euro 898 million were primarily in respectof: (i) the deferred tax effect of the valuation at fair value ofcertain oil assets acquired by the Exploration & Productionsegment in Congo (euro 507 million); (ii) a limited right ofsubsidiaries to offset deferred tax assets against deferred taxliabilities (euro 502 million); (iii) the recognition of thedeferred tax effect against equity on the fair value evaluationof derivatives designated as cash flow hedge for euro 3 million.

Deferred tax liabilities consisted of the following:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Deferred income taxes                                 |   | 9,880     |   |   | 8,997     |   |
|-------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Deferred        income taxes available for offset     |   | (4,028    | )      |   | (3,526    | )      |
|                                                  |   | **5,852** |   |   | **5,471** |   |
| Deferred        income taxes not available for offset |   | (1,725    | )      |   | (1,915    | )      |
|                                                  |   | **4,127** |   |   | **3,556** |   |

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

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The most significant temporary differences giving rise to netdeferred tax liabilities were as follows:

| (million        euro) |   | **Value at         Dec. 31, 2006** |   | **Additions** |   | **Deductions** |   | **Currency translation differences** |   | **Other changes** |   | **Value at         Dec. 31, 2007** |
|-----------------------|--------|------------------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|------------------------------------|
|                  |   |                                    |   |               |   |                |   |                                      |   |                   |   |                                    |

| Deferred tax liabilities:                                                             |   |       |   |   |       |   |   |       |   |   |     |   |   |     |   |   |       |   |
|---------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|
| -        accelerated tax depreciation                                                 |   | 6,851      |   |   | 582        |   |   | (1,246     | )      |   | (423     | )      |   | 493      |   |   | 6,257      |   |
| - application of the weighted average cost        method in evaluation of inventories |   | 649        |   |   | 263        |   |   | (177       | )      |   |     |   |   | (4       | )      |   | 731        |   |
| - site        restoration and abandonment (tangible assets)                           |   | 683        |   |   | 40         |   |   | (115       | )      |   | (14      | )      |   | (55      | )      |   | 539        |   |
| - capitalized interest expense                                                        |   | 232        |   |   | 3          |   |   | (51        | )      |   |     |   |   | (7       | )      |   | 177        |   |
| - other                                                                               |   | 1,465      |   |   | 322        |   |   | (410       | )      |   | (53      | )      |   | (31      | )      |   | 1,293      |   |
|                                                                                  |   | **9,880**  |   |   | **1,210**  |   |   | **(1,999** | **)**  |   | **(490** | **)**  |   | **396**  |   |   | **8,997**  |   |
| Deferred        tax assets:                                                           |   |       |   |   |       |   |   |       |   |   |     |   |   |     |   |   |       |   |
| - assets revaluation as per Laws No. 342/2000        and No. 448/2001                 |   | (1,017     | )      |   |       |   |   | 218        |   |   |     |   |   | 11       |   |   | (788       | )      |
| - site        restoration and abandonment (provisions for        contingencies)       |   | (1,496     | )      |   | (176       | )      |   | 129        |   |   | 72       |   |   | 108      |   |   | (1,363     | )      |
| - depreciation and amortization                                                       |   | (744       | )      |   | (129       | )      |   | 236        |   |   | 62       |   |   | (47      | )      |   | (622       | )      |
| - accruals        for impairment losses and provisions for contingencies              |   | (1,000     | )      |   | (396       | )      |   | 522        |   |   | 1        |   |   | (40      | )      |   | (913       | )      |
| - carry-forward tax losses                                                            |   | (83        | )      |   | (44        | )      |   | 41         |   |   | 6        |   |   | 1        |   |   | (79        | )      |
| - other                                                                               |   | (1,413     | )      |   | (528       | )      |   | 578        |   |   | 78       |   |   | (391     | )      |   | (1,676     | )      |
|                                                                                  |   | **(5,753** | **)**  |   | **(1,273** | **)**  |   | **1,724**  |   |   | **219**  |   |   | **(358** | **)**  |   | **(5,441** | **)**  |
| **Net        deferred tax liabilities**                                               |   | **4,127**  |   |   | **(63**    | **)**  |   | **(275**   | **)**  |   | **(271** | **)**  |   | **38**   |   |   | **3,556**  |   |

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

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. In the casefuture taxable profit is no longer deemed to be sufficient toabsorb all existing deferred tax assets, any surplus is writtenoff.

In May 2007 the Government of Libya issued an amended tax lawregarding profit taxation for foreign oil companies operatingunder PSA scheme. In line with past practice the Libya’sNational Oil Co (NOC) was designated as the tax agent on behalfof foreign oil companies operating under PSA. The new tax regimeis expected to become effective from 2008, after having agreedbeforehand with NOC the recognized tax base of the assets atJanuary 1, 2008, and the consequent possibility to re-determinedeferred taxation and the detailed recognition criteria applied.Pending the issuance of the new guidance, deferred taxation wasdetermined by using the recognition criteria applied in prioryears. The adoption of the new legislation is not expected tohave any significant impact on the agreed oil profit share underPSA currently existing between the Libyan state company and Eni.Italian taxation law allows the carry-forward of tax losses overthe five subsequent years. Losses suffered in the first threeyears of the company’s life can however be, for most part,carried forward indefinitely. The tax rate applied by the Italiansubsidiaries to determine the portion of carry-forwards taxlosses to be utilized equalled 27.5%; this rate equalled onaverage to 29.8% for foreign entities.

Carry-forward tax losses of euro 1,261 million can be used inthe following periods:

| (million euro) |   | **Italian        subsidiaries** |   | **Foreign        subsidiaries** |
|----------------|--------|---------------------------------|--------|---------------------------------|
|           |   |                                 |   |                                 |

| 2008               |   | 9      |   |   | 2         |   |
|--------------------|--------|--------|--------|--------|-----------|--------|
| 2009               |   | 3      |   |   | 22        |   |
| 2010               |   |   |   |   | 14        |   |
| 2011               |   |   |   |   | 36        |   |
| 2012               |   | 72     |   |   | 3         |   |
| Beyond        2012 |   |   |   |   | 2         |   |
| Without limit      |   |   |   |   | 1,098     |   |
|               |   | **84** |   |   | **1,177** |   |

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

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Carry-forward tax losses of euro 270 millionexpected to be offset against future taxable profit and were inrespect of foreign subsidiaries for euro 198 million. At the endof 2007, euro 79 million of deferred tax assets were recognizedon these losses, of which euro 59 million were in respect offoreign subsidiaries.

No deferred tax liabilities have been recognizedin relation to certain taxable reserves of unconsolidatedentities under Eni’s control because such reserves are notexpected to be distributed (euro 135 million).

 

**25 Other non-current liabilities**Other non-current liabilities were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| Fair value of cash flow hedge derivatives |   |    |   |   | 1,340     |   |
|-------------------------------------------|--------|---------|--------|--------|-----------|--------|
| Current        income tax liabilities     |   |    |   |   | 215       |   |
| Payables related to capital expenditures  |   | 26      |   |   | 22        |   |
| Other        payables                     |   | 207     |   |   | 295       |   |
| Other liabilities                         |   | 185     |   |   | 159       |   |
|                                      |   | **418** |   |   | **2,031** |   |

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

The fair value of cash flow hedge derivativesamounted to euro 1,340 million related to contracts expiringwithin 2009-2011 entered into by the Exploration & Productionsegment in order to hedge the exposure to variability in futurecash flows expected in the 2008-2011 period deriving frommarketing an amount of Eni’s proved hydrocarbon reservesequal to 2% of proved reserves as of December 31, 2006 inconnection with the acquisition in 2007 of production,development and exploration assets upstream properties onshoreCongo from the French company Maurel & Prom and in the Gulfof Mexico from the U.S. company Dominion Resources. The effectiveportion of the change in fair value of the hedging instrumentdirectly recognized in equity was euro 1,332 million whilst theineffective portion of euro 36 million was recognized in theprofit and loss as finance expenses (the time value component).Cumulative currency translation differences increased by euro 28million. Further information on the fair value recognition in theconsolidated balance sheet and profit and loss account ofcontracts with a maturity in 2008 is given in Note 20 - Othercurrent liabilities.

The nominal value of these derivatives referredto purchase and sale commitments for euro 2,804 million and euro3,404 million, respectively.

The fair value of derivative contracts wasdetermined by using valuation models that take into accountrelevant market data at the balance sheet date.

Information on the hedged risks and the hedgingpolicies is shown in Note 28 - Guarantees, commitments and risks.

The group’s liability for current incometaxes of euro 215 million was due as special tax (with a ratelower than the statutory tax rate), relating to the option toincrease the deductible tax bases of certain tangible and otherassets to their carrying amounts as permitted by the 2008 BudgetLaw.

 

**26 Assets held for saleand liabilities directly associated with assets held for sale**Non-current assets held for sale and liabilities directlyassociated with non-current assets held for sale of euro 383million and euro 97 million related to the disposal of PadanaAssicurazioni SpA (the related assets and liabilities amounted toeuro 180 million and euro 97 million, respectively) and inGaztransport et Technigaz SAS (the investment amounted to euro114 million) and in Fertlizantes Nitrogenados de Oriente (theinvestment amounted to euro 89 million). Gaztransport etTechnigaz SAS is a company owning a patent for the constructionof tanks to transport LNG. Fertlizantes Nitrogenados de Orienteis specialized in the production of fertilizers.

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**27 Shareholders’equity****Minority interest**Profit attributable to minority interest and theminority interest in certain consolidated subsidiaries relatedto:

| (million euro) |   | **Net profit** |   | **Shareholders’        equity** |
|----------------|--------|----------------|--------|--------------------------------------|
|           |   |                |   |                                      |

|   |   | 2006 |   | 2007 |   | Dec. 31, 2006 |   | Dec. 31, 2007 |
|--------|--------|------|--------|------|--------|---------------|--------|---------------|
|   |   |      |   |      |   |               |   |               |

| Saipem SpA                                                                                                |   | 303     |   | 514     |   | 879       |   | 1,299     |
|-----------------------------------------------------------------------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|-----------|
| Snam Rete        Gas SpA                                                                                  |   | 287     |   | 268     |   | 1,004     |   | 865       |
| Tigáz Tiszántúli Gázszolgáltató        Részvénytársaság |   |    |   | 1       |   | 79        |   | 79        |
| Others                                                                                                    |   | 16      |   | 15      |   | 208       |   | 196       |
|                                                                                                      |   | **606** |   | **798** |   | **2,170** |   | **2,439** |

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

**Eni shareholders’ equity**Eni’s net equity at December 31 was as follows:

| (million euro) |   | **Value at         Dec. 31, 2006** |   | **Value at        Dec. 31, 2007** |
|----------------|--------|------------------------------------|--------|-----------------------------------|
|           |   |                                    |   |                                   |

| Share capital                                              |   | 4,005      |   |   | 4,005      |   |
|------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| Legal        reserve                                       |   | 959        |   |   | 959        |   |
| Reserve for treasury shares                                |   | 7,262      |   |   | 7,207      |   |
| Cumulative        foreign currency translation differences |   | (398       | )      |   | (2,233     | )      |
| Other reserves                                             |   | 400        |   |   | (914       | )      |
| Retained        earnings                                   |   | 25,168     |   |   | 29,591     |   |
| Treasury shares                                            |   | (5,374     | )      |   | (5,999     | )      |
| Interim        dividend                                    |   | (2,210     | )      |   | (2,199     | )      |
| Net profit for the period                                  |   | 9,217      |   |   | 10,011     |   |
|                                                       |   | **39,029** |   |   | **40,428** |   |

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

**Share capital**At December 31, 2007 the parent company’s issuedshare capital consisted of 4,005,358,876 shares (nominal valueeuro 1 each) fully paid-up (the same amount at December 31,2006).

On May 24, 2007 Eni’s Shareholders’ Meeting declareda dividend distribution of euro 0.65 per share, with theexclusion of treasury shares held at the ex-dividend date, infull settlement of the 2006 dividend of euro 1.25 per share, ofwhich euro 0.60 per share paid as interim dividend in October2006. The balance was payable on June 21, 2007 to shareholders onthe register on June 18, 2007.

**Legal reserve**This reserve represents earnings restricted from the payment ofdividends pursuant to Article 2430 of the Italian Civil Code. 

**Reserve for treasury shares**The reserve for treasury shares represents the reserve destinedto purchase own shares in accordance with the decisions ofEni’s Shareholders’ Meetings. The amount of euro 7,207million (euro 7,262 million at December 31, 2006) includedtreasury shares purchased. The decrease of euro 55 millionprimarily concerned the sale and grant of treasury shares toGroup managers following stock option and stock grants incentiveschemes.

**Cumulative foreign currency translation differences**The cumulative foreign currency translation differences arosefrom the translation of financial statements denominated incurrencies other than euro.

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**Other reserves**Other reserves of negative amount were euro 914 million (atDecember 31, 2006 other reserves of positive amount were euro 400million) and included:

- a reserve of euro 247 million constituted following the        sale by Eni SpA of Snamprogetti SpA to Saipem Projects        SpA (same amount at December 31, 2006);
- a reserve of euro 181 million (euro 146 million at        December 31, 2006) deriving from Eni SpA’s equity;
- a reserve of euro 1,342 million (euro 7 million at        December 31, 2006) including the related tax, for the        valuation at fair value of available-for-sale securities        and cash flow hedge derivatives. Further information is        given in Note 2 - Other financial assets held for trading        or available for sale, Note 7 - Other assets, Note 20 -        Other current liabilities and Note 25 - Other non current        liabilities.

The valuation at fair value of securities available for saleand cash flow hedge derivatives, net of the related tax effect,consisted of the following:

|   |   | **Available-for-sale securities** |   | **Cash flow hedge derivatives** |   | **Total** |
|--------|--------|-----------------------------------|--------|---------------------------------|--------|-----------|
|   |   |                                   |   |                                 |   |           |

| (million        euro) |   | 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, 2005**              |   | **27** |   |   | **(8** | **)**  |   | **19** |   |   | **27**     |   |   | **(11** | **)**  |   | **16**     |   |   | **54**     |   |   | **(19** | **)**  |   | **35**     |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|---------|--------|--------|------------|--------|--------|------------|--------|--------|---------|--------|--------|------------|--------|
| Changes of        the year 2006                  |   | 2      |   |   |   |   |   | 2      |   |   | 1          |   |   |    |   |   | 1          |   |   | 3          |   |   |    |   |   | 3          |   |
| Amount recognized in the profit and loss account |   | (21    | )      |   | 6      |   |   | (15    | )      |   | (27        | )      |   | 11      |   |   | (16        | )      |   | (48        | )      |   | 17      |   |   | (31        | )      |
| **Reserve        as of December 31, 2006**       |   | **8**  |   |   | **(2** | **)**  |   | **6**  |   |   | **1**      |   |   |    |   |   | **1**      |   |   | **9**      |   |   | **(2**  | **)**  |   | **7**      |   |
| Changes of the year 2007                         |   |   |   |   |   |   |   |   |   |   | (2,237     | )      |   | 867     |   |   | (1,370     | )      |   | (2,237     | )      |   | 867     |   |   | (1,370     | )      |
| Foreign        currency translation differences  |   |   |   |   |   |   |   |   |   |   | 51         |   |   | (26     | )      |   | 25         |   |   | 51         |   |   | (26     | )      |   | 25         |   |
| Amount recognized in the profit and loss account |   | (6     | )      |   | 2      |   |   | (4     | )      |   |       |   |   |    |   |   |       |   |   | (6         | )      |   | 2       |   |   | (4         | )      |
| **Reserve        as of December 31, 2007**       |   | **2**  |   |   |   |   |   | **2**  |   |   | **(2,185** | **)**  |   | **841** |   |   | **(1,344** | **)**  |   | **(2,183** | **)**  |   | **841** |   |   | **(1,342** | **)**  |

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

**Treasury shares purchased**A total of 348,525,005 ordinary shares (324,959,866 at December31, 2006) with nominal value of euro 1 each, were held intreasury, for a total cost of euro 5,999 million (euro 5,374million at December 31, 2006). 35,423,925 treasury shares(40,114,000 at December 31, 2006) at a cost of euro 768 million(euro 839 million at December 31, 2006) were available for2002-2005 and 2006-2008 stock option plans (34,521,125 shares)and 2003-2005 stock grant plans (902,800 shares).

The decrease of 4,690,075 shares consisted of the following:

|   |   | **Stock option** |   | **Stock grant** |   | **Total** |
|--------|--------|------------------|--------|-----------------|--------|-----------|
|   |   |                  |   |                 |   |           |

| **Number of shares at December 31, 2006** |   | **38,240,400** |   |   | **1,873,600** |   |   | **40,114,000** |   |
|-------------------------------------------|--------|----------------|--------|--------|---------------|--------|--------|----------------|--------|
| Rights        exercised                   |   | (3,028,200     | )      |   | (966,000      | )      |   | (3,994,200     | )      |
| Rights cancelled                          |   | (691,075       | )      |   | (4,800        | )      |   | (695,875       | )      |
|                                      |   | **(3,719,275** | **)**  |   | **(970,800**  | **)**  |   | **(4,690,075** | **)**  |
| **Number of shares at December 31, 2007** |   | **34,521,125** |   |   | **902,800**   |   |   | **35,423,925** |   |

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

At December 31, 2007, options and grants outstanding were17,699,625 shares and 902,800 shares, respectively. Options referto the 2002 stock plan for 107,500 shares with an exercise priceof euro 15.216 per share, to the 2003 stock plan for 281,400shares with an exercise price of euro 13.743 per share, to the2004 stock plan for 1,124,000 shares with an exercise price ofeuro 16.576 per share, to the 2005 stock plan for 3,812,000shares with an exercise price of euro 22.512 per share, to the2006 stock plan for 6,467,775 shares with an weighted averageexercise price of euro 23.119 per share and to the 2007 stockplan for 5,906,950 with an weighted average exercise price ofeuro 27.451 per share.

Information about commitments related to stock grant and stockoption plans is included in Note 30 - Operating expenses.

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**Interim dividend**Interim dividend for the year 2007 amounted of euro 2,199 millioncorresponding to euro 0.60 per share, as decided by the Board ofDirectors on September 20, 2007 in accordance with Article 2433-*bis*,paragraph 5 of the Italian Civil Code; the dividend was paid onOctober 25, 2007.

**Distributable reserves**At December 31, 2007 Eni shareholders’ equity includeddistributable reserves for euro 34,000 million, a portion ofwhich was subject to taxation upon distribution. Deferred taxliabilities have been recorded in relation to the share of profitrecognized on equity-accounted affiliates and joint ventures(euro 32 million). 

**Reconciliation of net profit and shareholders’equity of the parent company Eni SpA to consolidated net profitand shareholders’ equity**

|    |    | **Net profit** |    | **Shareholders’        equity** |
|--------------|--------------|----------------|--------------|--------------------------------------|
|    |    |                |    |                                      |

| (million        euro) |    | 2006 |    | 2007 |    | Dec. 31, 2006 |    | Dec. 31, 2007 |
|-----------------------|--------------|------|--------------|------|--------------|---------------|--------------|---------------|
|             |    |      |    |      |    |               |    |               |

| **As recorded in Eni SpA’s Financial        Statements**                                                                                                                                                         |   | **5,821** |   |   | **6,600**  |   |   | **26,935** |   |   | **28,926** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Difference        between the equity value of individual accounts of        consolidated subsidiaries with respect to the        corresponding carrying amount in the statutory accounts        of the parent company |   | 3,823     |   |   | 4,122      |   |   | 16,136     |   |   | 16,320     |   |
| Consolidation adjustments:                                                                                                                                                                                            |   |      |   |   |       |   |   |       |   |   |       |   |
| -        difference between cost and underlying value of equity                                                                                                                                                       |   | (52       | )      |   | (1         | )      |   | 1,138      |   |   | 1,245      |   |
| - elimination of tax adjustments and compliance        with accounting policies                                                                                                                                       |   | 627       |   |   | 649        |   |   | (1,435     | )      |   | (1,235     | )      |
| -        elimination of unrealized intercompany profits                                                                                                                                                               |   | (237      | )      |   | (435       | )      |   | (2,907     | )      |   | (3,383     | )      |
| - deferred taxation                                                                                                                                                                                                   |   | (195      | )      |   | (97        | )      |   | 1,244      |   |   | 711        |   |
| - other        adjustments                                                                                                                                                                                            |   | 36        |   |   | (29        | )      |   | 88         |   |   | 283        |   |
|                                                                                                                                                                                                                  |   | **9,823** |   |   | **10,809** |   |   | **41,199** |   |   | **42,867** |   |
| Minority        interest                                                                                                                                                                                              |   | (606      | )      |   | (798       | )      |   | (2,170     | )      |   | (2,439     | )      |
| **As recorded in Consolidated Financial        Statements**                                                                                                                                                           |   | **9,217** |   |   | **10,011** |   |   | **39,029** |   |   | **40,428** |   |

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

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**28 Guarantees, commitmentsand risks****Guarantees**Guarantees were as follows:

|   |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |

| (million euro) |   | Unsecured guarantees |   | Other guarantees |   | Total |   | Unsecured guarantees |   | Other guarantees |   | Total |
|----------------|--------|----------------------|--------|------------------|--------|-------|--------|----------------------|--------|------------------|--------|-------|
|           |   |                      |   |                  |   |       |   |                      |   |                  |   |       |

| Consolidated subsidiaries                        |   |      |   | 6,539     |   | 6,539      |   |      |   | 6,388     |   | 6,388      |
|--------------------------------------------------|--------|-----------|--------|-----------|--------|------------|--------|-----------|--------|-----------|--------|------------|
| Unconsolidated        entities controlled by Eni |   | 3         |   | 294       |   | 297        |   |      |   | 150       |   | 150        |
| Affiliates and joint ventures                    |   | 5,682     |   | 1,735     |   | 7,417      |   | 5,896     |   | 1,099     |   | 6,995      |
| Others                                           |   | 79        |   | 52        |   | 131        |   | 12        |   | 279       |   | 291        |
|                                             |   | **5,764** |   | **8,620** |   | **14,384** |   | **5,908** |   | **7,916** |   | **13,824** |

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

Other guarantees issued on behalf of consolidated subsidiariesof euro 6,388 million (euro 6,539 million at December 31, 2006)primarily consisted of: (i) guarantees given to third partiesrelating to bid bonds and performance bonds for euro 3,244million (euro 3,467 million at December 31, 2006), of which euro2,351 million related to the Engineering & Constructionsegment (euro 2,726 million at December 31, 2006); (ii) VATrecoverable from tax authorities for euro 1,286 million (euro1,393 million at December 31, 2006); (iii) insurance risk foreuro 259 million reinsured by Eni (euro 246 million at December31, 2006). At December 31, 2007 the underlying commitment coveredby such guarantees was euro 6,050 million (euro 6,160 million atDecember 31, 2006). 

Other guarantees issued on behalf of unconsolidatedsubsidiaries of euro 150 million (euro 297 million at December31, 2006) consisted of letters of patronage and other guaranteesissued to commissioning entities relating to bid bonds andperformance bonds for euro 144 million (euro 288 million atDecember 31, 2006). At December 31, 2007, the underlyingcommitment covered by such guarantees was euro 19 million (euro204 million at December 31, 2006).

Unsecured guarantees and other guarantees issued on behalf ofjoint ventures and affiliated companies of euro 6,995 million(euro 7,417 million at December 31, 2006) primarily concerned:(i) an unsecured guarantee of euro 5,870 million (euro 5,654million at December 31, 2006) given by Eni SpA to Treno AltaVelocità - TAV - SpA for the proper and timely completion of aproject relating to the Milan-Bologna train link by CEPAV(Consorzio Eni per l’Alta Velocità) Uno; consortiummembers, excluding unconsolidated entities controlled by Eni,gave Eni liability of surety letters and bank guaranteesamounting to 10% of their respective portion of the work; (ii)unsecured guarantees, letters of patronage and other guaranteesgiven to banks in relation to loans and lines of credit receivedfor euro 824 million (euro 1,214 million at December 31, 2006),of which euro 677 million related to a contract released by SnamSpA (now merged into Eni SpA) on behalf of Blue Stream PipelineCo BV (Eni 50%) to a consortium of international financialinstitutions (euro 756 million at December 31, 2006); (iii)unsecured guarantees and other guarantees given to commissioningentities relating to bid bonds and performance bonds for euro 119million (euro 251 million at December 31, 2006).

At December 31, 2007, the underlying commitment covered bysuch guarantees was euro 1,562 million (euro 2,470 million atDecember 31, 2006).

Unsecured and other guarantees given on behalf of thirdparties of euro 291 million (euro 131 million at December 31,2006) 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 regasificationactivity for euro 204 million; (ii) guarantees issued by Eni SpAto banks and other financial institutions in relation to loansand lines of credit for euro 20 million on behalf of minorinvestments or companies sold (euro 87 million at December 31,2006). At December 31, 2007 the underlying commitment covered bysuch guarantees was euro 281 million (euro 121 million atDecember 31, 2006).

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**Commitments and contingencies**Commitments and contingencies were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|----------------|--------|-------------------|--------|-------------------|
|           |   |                   |   |                   |

| **Commitments**           |   |      |   |      |
|---------------------------|--------|-----------|--------|-----------|
| Purchase        of assets |   | 9         |   |      |
| Other                     |   | 207       |   | 200       |
|                      |   | **216**   |   | **200**   |
| **Risks**                 |   | **1,329** |   | **1,520** |
|                      |   | **1,545** |   | **1,720** |

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

Other commitments of euro 200 million (euro 207 million atDecember 31, 2006) were essentially related to a memorandum ofintent signed with the Basilicata Region, whereby Eni has agreedto invest euro 177 million in the future, also on account ofShell Italia E&P SpA, in connection with Eni’sdevelopment plan of oil fields in Val d’Agri (euro 181million at December 31, 2006). 

Risks of euro 1,520 million (euro 1,329 million at December31, 2006) primarily concerned potential risks associated with thevalue of assets of third parties under the custody of Eni foreuro 1,126 million (euro 918 million at December 31, 2006) andcontractual assurances given to acquirers of certain investmentsand businesses of Eni for euro 376 million (euro 393 million atDecember 31, 2006).

**Risk factors**The main company risks identified, monitored and, as describedbelow, managed by Eni are the following: (i) the market riskderiving from the exposure to fluctuations in interest rates,foreign currency exchange rates and commodity prices; (ii) thecredit risk deriving from the possible default of a counterparty;(iii) the liquidity risk deriving from the risk that suitablesources of funding for the Group’s business activities maynot be available; (iv) the country risk in oil & gasactivities; (v) the operational risk; (vi) the possible evolutionof the Italian gas market; (vii) the specific risks deriving fromthe exploration and production activities. 

In 2007 Eni’s management reviewed and revised policiesand guidelines regarding standards to identify, assess, controland manage market risks of significance to Eni. The purpose wasto issue a reference book on policies to be handily consulted andupdated as appropriate. In 2007 risk policies have been revisedto take account of changes in the group’s organizationalstructure (following the merger with Enifin on January 1, 2007and the establishment of Eni Trading & Shipping) as well asneeds to further integrate risk management. 

*Market risk*Market risk is the possibility that changes in currency exchangerates, interest rates or commodity prices will adversely affectthe value of the group’s financial assets, liabilities orexpected future cash flows. Eni’s market risk managementactivities is performed in accordance with standards prescribedby policies and guidelines mentioned above, providing for acentralized model of conducting finance, treasury and riskmanagement operations based in three separate entities: theparent company’s (Eni SpA) finance department, EniCoordination Center; Banque Eni subject to certain Bankregulatory restrictions preventing the group’s exposure toconcentrations of credit risk.

Additionally, in 2007, Eni Trading & Shipping wasestablished and has the mandate to manage and monitor solelycommodity derivative contracts.

In particular Eni SpA and Eni Coordination Center managesubsidiaries’ financing requirements in and outside ofItaly, respectively, covering borrowing requirements andemploying available surpluses.

All the transactions concerning currencies and derivativefinancial contracts are managed by the parent company as well asthe activity of trading certificates according to the EuropeanUnion Emission Trading Scheme. The commodity risk is managed byeach business unit with Eni Trading & Shipping ensuring thenegotiation of hedging derivatives. Eni uses derivative financialinstruments (derivatives) in order to minimize exposure to marketrisks related to changes in exchange rates and interest rates andto manage exposure to commodity price fluctuations. Eni does notenter derivative transactions on a speculative basis. Theframework defined by Eni’s policies and guidelinesprescribes that measurement and control of market risk are to beperformed on the basis of maximum tolerable levels of riskexposure defined in accordance with value-at-risk techniques.These techniques make a statistical assessment of the market riskon the Group’s activity, i.e., potential gain or loss infair values due to changes in market conditions taking account ofthe correlation existing among changes in fair value of existing 

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instruments. Eni’s finance departments define maximumtolerable levels of risk exposure to changes in interest ratesand foreign currency exchange rates, pooling Groupcompanies’ risk positions. Calculation and measurementtechniques for interest rate and foreign currency exchange raterisks followed by Eni are in accordance with established bankingstandards, as established by the Basel Committee for bankactivities surveillance. Tolerable levels of risk are based on aconservative approach, considering the industrial nature of thecompany. Eni’s guidelines prescribe that Eni’s groupcompanies minimize such kinds of market risks.

With regard to commodity risk, Eni’s policies andguidelines define rules to manage this risk aiming at theoptimization of core activities and the pursuing of presettargets of industrial margins. The maximum tolerable level ofrisk exposure is pre-defined in terms of value at risk inconnection with trading and commercial activities, while thestrategic risk exposure to commodity prices fluctuations –i.e. the impact on the Group’s business results derivingfrom changes in commodity price – is monitored in terms ofvalue-at-risk, albeit not hedged in a systematic way.Accordingly, Eni evaluates the opportunity to mitigate itscommodity risk exposure by entering into hedging transactions inview of certain acquisition deals of oil and gas reserves as partof the Group’s strategy to achieve growth targets orordinary asset portfolio management. The group controls commodityrisk with a maximum value-at-risk limit authorized for eachbusiness unit. Hedging needs from business units are pooled byEni Trading & Shipping which also manages its own riskexposure.

The three different market risks, whose management and controlhave 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). In particular revenues and costsdenominated in foreign currencies maybe significantly affected byfluctuations in exchange rates typically due to conversiondifferences on specific transactions arising from the time lagexisting between the execution of a given transaction and thedefinition of relevant contractual terms (economic risk) andconversion of foreign currency-denominated commercial andfinancial payables and receivables (transaction risk). Exchangerate fluctuations affect the group’s reported results andnet equity as financial statements of subsidiaries denominated incurrencies other than the euro are translated from theirfunctional currency into euro (translation risk). 

Generally, an appreciation of the U.S. dollar versus the eurohas a positive impact on Eni’s results of operations, andvice versa.

Eni’s foreign exchange risk management policy is tominimize economic and transaction exposures arising from foreigncurrency movements. Eni does not undertake any hedging activityfor risks deriving from translation of foreign currencydenominated profits or investments except for single transactionsto be evaluated on a case-by-case basis. 

Effective management of exchange rate risk is performed withinEni’s central finance departments which match oppositepositions within Group companies, hedging the Group net exposurethrough the use of certain derivatives, such as currency swaps,forwards and options. Such derivatives are evaluated at fairvalue on the basis of market prices provided by specializedsources. Changes in fair value of those derivatives are normallyrecognized in the profit and loss account as they do not meet theformal criteria to be recognized as hedges in accordance with IAS39. The VAR techniques are based on variance/covariancesimulation models and monitor the risk exposure arising frompossible future changes in market values over a 24-hour periodwithin a 99% confidence level and a 20-day holding period. 

*Interest rate risk*Changes in interest rates affect the market value of financialassets and liabilities of the company and the level of financecharges. Eni’s interest rate risk management policy is tominimize risk with the aim to achieve financial structureobjectives defined and approved in management’s plans.Borrowing requirements of the group’s companies are pooledby the group’s central finance department in order to managenet positions and the funding of portfolio developmentsconsistently with management’s plans while maintaining alevel of risk exposure within prescribed limits.

Eni enters into interest rate derivative transactions, inparticular interest rate swaps, to effectively manage the balancebetween fixed and floating rate debt. Such derivatives are valuedat fair value on the basis of market prices provided fromspecialized sources. Changes in fair value of those derivativesare normally recognized through the profit and loss account asthey do not meet the formal criteria to be accounted for underthe hedge accounting method in accordance with IAS 39. Value atrisk deriving from interest rate exposure is measured daily onthe basis of a variance/covariance model, with a 99% confidencelevel and a 20-day holding period.

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*Commodity risk*Eni’s results of operations are affected by changes in theprices of products and services sold. A decrease in oil and gasprices generally has a negative impact on Eni’s results ofoperations and vice versa. Eni manages the exposure to commodityprice risk by optimizing core activities in order to achievestable margins. In order to manage commodity risk in connectionwith its trading and commercial activities, Eni uses derivativestraded on the organized markets of ICE and NYMEX (futures) andderivatives traded over the counter (swaps, forward, contractsfor differences and options) with the underlying commoditiesbeing crude oil, refined products or electricity. Suchderivatives are valued at fair value on the basis of marketprices provided from specialized sources or absent market prices,on the basis of estimates provided by brokers or suitableevaluation techniques. Changes in fair value of those derivativesare normally recognized in the profit and loss account as they donot meet the formal criteria to be recognized as hedges inaccordance with IAS 39. Value at risk deriving from commodityexposure is measured daily on the basis of a historicalsimulation technique, with a 95% confidence level and a one-dayholding period.

The following table shows values in terms of value at risk,recorded during 2007 (compared with year 2006) referring tointerest rate risk and exchange rate in the first section, and tocommodity risk in the second section.

(Value-at-risk - parametric methodvariance/covariance; holding period: 20 days; confidence level:99%)

|   | **2006** |   | **2007** |
|--------|----------|--------|----------|
|   |          |   |          |

| (million        euro) |   | High |   | Low |   | Average |   | At period end |   | High |   | Low |   | Average |   | At period end |
|-----------------------|--------|------|--------|-----|--------|---------|--------|---------------|--------|------|--------|-----|--------|---------|--------|---------------|
|                  |   |      |   |     |   |         |   |               |   |      |   |     |   |         |   |               |

| Interest        rate |   | 5.15 |   | 0.45 |   | 2.01 |   | 1.10 |   | 7.36 |   | 0.47 |   | 1.39 |   | 4.35 |
|----------------------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------|
| Exchange rate        |   | 2.02 |   | 0.02 |   | 0.24 |   | 0.21 |   | 1.25 |   | 0.03 |   | 0.21 |   | 0.43 |

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

(Value-at-risk - historic simulation method;holding period: 1 day; confidence level: 95%)

|   | **2006** |   | **2007** |
|--------|----------|--------|----------|
|   |          |   |          |

| (million        dollar) |   | High |   | Low |   | Average |   | At period end |   | High |   | Low |   | Average |   | At period end |
|-------------------------|--------|------|--------|-----|--------|---------|--------|---------------|--------|------|--------|-----|--------|---------|--------|---------------|
|                    |   |      |   |     |   |         |   |               |   |      |   |     |   |         |   |               |

| Hydrocarbons    |   | 35.69 |   | 5.40  |   | 17.80 |   | 8.59  |   | 44.59 |   | 4.39  |   | 20.17 |   | 12.68 |
|-----------------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|--------|-------|
| Gas & power |   | 46.63 |   | 18.36 |   | 31.01 |   | 22.82 |   | 54.11 |   | 20.12 |   | 34.56 |   | 25.57 |

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

*Credit risk*Credit risk is the potential exposure of the Group to losses thatwould be recognized if counterparties failed to perform or failedto pay amounts due. The maximum exposure to credit risk is givenby the carrying amount of financial assets. The credit riskarising from the Group’s normal commercial operations iscontrolled by each operating unit within Group-approvedprocedures for evaluating the reliability and solvency of eachcounterparty, including receivable collection and the managing ofcommercial litigation. The monitoring activity of credit riskexposure is performed at the Group level according to setguidelines and measurement techniques to quantify and monitorcounterparty risk. In particular, credit risk exposure to largeclients and multi-business clients is monitored at the Grouplevel on the basis of score cards quantifying risk levels.Eni’ s has established guidelines prior to entering intocash management and derivative contracts to assess thecounterparty’s financial soundness and its rating. Eni hasnever experienced material non-performance by any counterparty.As of December 31, 2006 and 2007, Eni has no significant exposureto concentrations of credit risk.

*Liquidity risk*Liquidity risk is the risk that suitable sources of funding forthe group may not be available, or the group is unable to sellits assets in the marketplace as to be unable to meet short-termfinance requirements and settle obligations causing materialfinancial losses in the case the group is required to incuradditional expenses to meet its obligations or under the worst ofconditions a default. Eni manages liquidity risk by targeting anoptimal ratio between equity and total debt consistent withmanagement plans and business objectives, including prescribedlimits in terms of maximum indebtedness rate and of minimum debtratio between medium/long-term debt and total debt as well asbetween fixed rate debt and total medium/long-term debt. Thisenables Eni to maintain an appropriate level of liquidity andfinancial capacity as to minimize borrowing expenses and toachieve an optimal profile of composition and duration ofindebtedness. The Group has access to a wide range of funding atcompetitive rates through the capital markets and banks andcoordinates relationships with banks centrally. At present, theGroup believes it has access to sufficient funding and has alsoboth committed and uncommitted borrowing facilities to meetcurrently foreseeable borrowing requirements.

Effective management of liquidity risk has the objective ofensuring both availability of adequate funding to meet short-termrequirements and due obligations, and a sufficient level offlexibility in order to fund the 

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development plans of the Group businesses, maintaining anadequate finance structure in terms of debt composition andmaturity. 

This implies the adoption of a strategy for pursuing anadequate structure of borrowing facilities (particularlyavailability of committed borrowings facilities) and themaintenance of cash reserves.

Undiscounted long-term debt by maturity date, comprehensive ofthe current portion and contractual interest payments at December31, 2007, was as follows: 

|   |   | **Maturity** |
|--------|--------|--------------|
|   |   |              |

| (million        euro) |   | 2008 |   | 2009 |   | 2010 |   | 2011 |   | 2012 |   | Thereafter |   | Total |
|-----------------------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|--------|-------|
|                  |   |      |   |      |   |      |   |      |   |      |   |            |   |       |

| Long-term debt including the current portion of        long-term debt |   | 1,342 |   | 1,606 |   | 1,884 |   | 786 |   | 4,514 |   | 5,253 |   | 15,385 |
|-----------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|--------|-----|--------|-------|--------|-------|--------|--------|

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

*Country risk*Substantial portions of Eni’s hydrocarbon reserves arelocated in countries outside the EU and North America, certain ofwhich may be politically or economically less stable than EU orNorth American. At December 31, 2007, approximately 70% ofEni’s proved hydrocarbons reserves were located in suchcountries. Similarly, a substantial portion of Eni’s naturalgas supplies comes from countries outside the EU and NorthAmerica. In 2007, approximately 60% of Eni’s domestic supplyof natural gas came from such countries. Developments in thepolitical framework, economic crisis and social unrest cancompromise temporarily or permanently Eni’s ability tooperate or to economically operate in such countries, and to haveaccess to oil and gas reserves. Further risks related to theactivity undertaken in these countries, are represented by: (i)lack of well established and reliable legal systems anduncertainties surrounding enforcement of contractual rights; (ii)unfavorable developments in laws and regulations leading toexpropriation of Eni’s titles and mineral assets relating toan important oil field in Venezuela which occurred in 2006,following the unilateral cancellation of the contract regulatingoil activities in this field by the Venezuelan state oil companyPDVSA; (iii) restrictions on exploration, production, imports andexports; (iv) tax or royalty increases; (v) civil and socialunrest leading to sabotages, acts of violence and incidents.While the occurrence of these events is unpredictable, it ispossible that they can have a material adverse impact onEni’s financial condition and results of operations. Eniperiodically monitors political, social and economic risks ofapproximately 60 countries where it has invested or with regardto upstream projects evaluation where Eni is planning to invest,in order to assess returns of single projects based also on theevaluation of each country’s risk profile. Country risk ismitigated in accordance with guidelines on risk managementdefined in the procedure “Project risk assessment andmanagement”.

*Operational risk*Eni’s business activities conducted in and outside of Italyare subject to a broad range of legislation and regulations,including specific rules concerning oil and gas activitiescurrently in force in countries in which it operates.

In particular, these laws and regulations requirethe acquisition of a license before exploratory drilling maycommence and the compliance with health, safety and environmentrules. These environmental laws impose restrictions on the types,quantities and concentration of various substances that can bereleased into the environment and on discharges to surface andsubsurface water. 

In particular Eni is required to follow strictoperating practices and standards to protect biodiversity when itconducts exploration, drilling and production activities incertain ecologically sensitive locations (protected areas).

Environmental, health and safety laws andregulations have a substantial impact on Eni’s operationsand the expenses and liabilities that Eni may incur in relationto compliance with environmental, health and safety laws andregulations are expected to remain material to the group’sresults of operations or financial position. 

For this purpose, Eni adopted guidelines for theevaluation and management of health, safety and environmental(HSE) risks, with the objective of protecting Eni’semployees, the populations involved in its activity, contractorsand clients, and the environment and being in compliance withlocal and international rules and regulations. Eni’sguidelines prescribe the adoption of international best practicesin setting internal principles, standards and solutions. 

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The ongoing process for identifying, evaluating and managingHSE operations in each phase of the business activity isperformed through the adoption of procedures and effectivepollution management systems tailored on the peculiarities ofeach business and industrial site and on steady enhancement ofplants and process.

Additionally, coding activities and procedures on operatingphases allow to reduce the human component in the plant riskmanagement. Operating emergencies that may have an adverse impacton the assets, people and the environment are managed by theoperating (business) units for each site. These units manage theHSE risk through a systematic way that involves having emergencyresponse plans in place with a number of corrective actions to betaken that minimize damage in the event of an incident. In thecase of a major crisis, Divisions/Entities are assisted by theEni Crisis Unit to deal with the emergency through a team whichhas the necessary training and skills to coordinate in a timelyand efficient manner resources and facilities.

The integrated management system on health, safety andenvironmental matters is supported by the adoption of Eni’sModel of HSE operations in all the Divisions and companies of EniGroup. This is a procedure based on an annual cycle of planning,implementation, control, review of results and definition of newobjectives. The model is directed towards the prevention ofrisks, the systematic monitoring and control of HSE performance,in a continuous improvement cycle, also subject to audits byinternal and independent experts. Eni has major facilitiescertified to international environmental standards, such asISO14001, OHSAS 18001 and EMAS particularly in the Petrochemicalsand Refining & Marketing divisions.

Eni provides a program of specific training anddevelopment for HSE staff in order to:

| • |   | promote the execution of        behaviors consistent with guidelines;                                                      |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|
| • |   | drive people’s learning        growth process by developing professionalism, management        and corporate culture; |
| • |   | support management knowledge        and control of HSE risks.                                                              |

**Possible evolution of the Italian gas market**Legislative Decree No. 164/2000 opened the Italian natural gasmarket to competition, impacting on Eni’s activities, as thecompany is engaged in all the phases of the natural gas chain.The opening to competition was achieved through the enactment ofcertain antitrust thresholds on volumes input into the nationaltransport network and on volumes sold to final customers. Theseenabled new competitors to enter the Italian gas market,resulting in declining selling margins on gas. Other materialaspects regarding the Italian gas sector regulation are theregulated access to natural gas infrastructure (transportbackbones, storage fields, distribution networks and LNGterminals), and the circumstance that the Authority forElectricity and Gas is entrusted with certain powers in thematters of natural gas pricing and in establishing tariffs forthe use of natural gas infrastructures. Particularly, theAuthority for Electricity and Gas holds a general surveillancepower on pricing in the natural gas market in Italy and the powerto establish selling tariffs for supply of natural gas toresidential and commercial users consuming less than 200,000cubic meters per year (qualified as non eligible customers atDecember 31, 2002 as defined by Legislative Decree No. 164/2000)taking into account the public goal of containing theinflationary pressure due to rising energy costs. Accordingly,decisions of the Authority on these matters may limit the abilityof Eni to pass an increase in the cost of fuels onto finalconsumers of natural gas. As a matter of fact, following acomplex and lengthy administrative procedure started in 2004 andfinalized in March 2007 with Resolution No. 79/2007, theAuthority finally established a new indexation mechanism forupdating the raw material cost component in supplies toresidential and commercial users consuming less than 200,000cubic meters per year, establishing, among other things: (i) thatan increase in the international price of Brent crude oil is onlypartially transferred to residential and commercial users ofnatural gas in case international prices of Brent crude oilexceed the 35 dollars per barrel threshold; and (ii) that Italiannatural gas importers – including Eni – mustrenegotiate wholesale supply contracts in order to take accountof this new indexation mechanism.

In order to meet the medium and long-term demandfor natural gas, in particular in the Italian market, Eni enteredinto long-term purchase contracts with producing countries. Thesecontracts which contain take-or-pay clauses, will ensure totalsupply volumes of approximately 62.4 bcm/y of natural gas to Eniby 2010. Despite the fact that an increasing portion of naturalgas volumes purchased under said contracts is planned to be soldoutside Italy, management believes that in the long-termunfavorable trends in the Italian demand and supply for naturalgas, also due to the possible implementation of all publiclyannounced plans for the construction of new import infrastructure(backbone upgrading and new LNG terminals), and possibleevolution of Italian regulatory framework, represent risk factorsto the fulfillment of Eni’s obligations in connection withits take-or-pay supply contracts. Particularly, should naturalgas demand in Italy grow at a lower pace than managementexpectations, also in view of expected developments in the supplyof natural gas to Italy, Eni could face a further increase incompetitive pressure on the Italian gas market resulting in anegative impact on its selling margins, taking account ofEni’s gas availability under take-or-pay supply contractsand execution risks in increasing its sales volumes in Europeanmarkets.

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**Specific risks associated with theexploration and production of oil and natural gas**The exploration and production of oil and natural gas requireshigh levels of capital expenditure and entails particulareconomic risks. It is subject to natural hazards and otheruncertainties including those relating to the physicalcharacteristics of oil or natural gas fields. Exploratoryactivity involves numerous risks including the risk of dry holesor failure to find commercial quantities of hydrocarbons.Developing and marketing hydrocarbons reserves typically requiresseveral years after a discovery is made. This is because adevelopment project involves an array of complex and lengthyactivities, including appraising a discovery in order to evaluateits marketability, sanctioning a development project and buildingand commissioning related facilities. As a consequence, rates ofreturn of such long-lead-time projects are exposed to thevolatility of oil and gas prices and the risk of an increase indeveloping and lifting costs, resulting in lower rates of return.This set of circumstances is particularly important to thoseprojects intended to develop reserves located in deep water andhostile environments, where the majority of Eni’s plannedand ongoing projects is located.

**Managing sources of funds**Eni management makes use of the leverage as a financial measureto assess the soundness and efficiency of the Group balance sheetin terms of optimal mix between net borrowings and net equity,and to carry out benchmark analysis with industry standards.Leverage is a measure of the company’s level ofindebtedness, calculated as the ratio between net borrowings andshareholders’ equity, including minority interests. In themedium term, management plans to target a level of leverage up to0.4 which is intended to provide an efficient capital structureand the appropriate level of financial flexibility.

**Other information about financial instruments**The book value of financial instruments and relevant economiceffect for the year 2007 consisted of the following:

|   |   | **Finance income (expense) recognized in:** |
|--------|--------|---------------------------------------------|
|   |   |                                             |

| (million        euro) |   | carrying amount |   | profit and loss account |   | equity |
|-----------------------|--------|-----------------|--------|-------------------------|--------|--------|
|                  |   |                 |   |                         |   |        |

| **Held-for-trading financial instruments**                                                |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Non-hedging        derivatives (a)                                                        |   | 217    |   |   | 78     |   |   |   |   |
| **Held-to-maturity financial instruments**                                                |   |   |   |   |   |   |   |   |   |
| Securities                                                                                |   | 21     |   |   |   |   |   |   |   |
| **Available-for-sale financial instruments**                                              |   |   |   |   |   |   |   |   |   |
| Securities        (a)                                                                     |   | 433    |   |   | 39     |   |   | (6     | )      |
| **Receivables and payables and other        assets/liabilities valued at amortized cost** |   |   |   |   |   |   |   |   |   |
| Trade and        receivables and other (b)                                                |   | 19,606 |   |   | (242   | )      |   |   |   |
| Financing receivables (a)                                                                 |   | 2,276  |   |   | 112    |   |   |   |   |
| Trade        payables and other (c)                                                       |   | 17,533 |   |   | 3      |   |   |   |   |
| Financing payables (a)                                                                    |   | 19,830 |   |   | (558   | )      |   |   |   |
| **Assets        at fair value through profit or loss (fair value option)**                |   |   |   |   |   |   |   |   |   |
| Investments (a)                                                                           |   | 2,476  |   |   | 188    |   |   |   |   |
| **Net        liabilities for hedging derivatives**(a)                                     |   | 2,241  |   |   | (52    | )      |   | (2,237 | )      |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | Gains or        losses were recognized in the profit and loss account        within "Finance income (expense)".                                                                                                                                                                                                                                                                                                   |
| (b)          |    | In the profit        and loss account, impairments and losses on receivables        were recognized within "Purchase, services and        other" for euro 177 million whilst negative exchange        differences arising from accounts denominated in foreign        currency and translated into euro at year-end were        recognized within "Finance income (expense)"        for euro 6 million. |
| (c)          |    | Positive        exchange differences arising from accounts denominated in        foreign currency and translated into euro at year-end        were recognized in the profit and loss account within        "Finance income (expense)".                                                                                                                                                                            |

 

**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. The following is a descriptionof the most significant proceedings currently pending. Unlessotherwise 

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indicated below, no provisions have been made for these legalproceedings as Eni believes that negative outcomes are notprobable or because the amount of the provision cannot beestimated reliably.

 

**1. Environment**

**1.1 Criminal proceedings**

**ENI SPA**

| **(i)**   |   | **Subsidence.**The Court        of Rovigo conducted investigations concerning a        subsidence phenomenon allegedly caused by hydrocarbon        exploration and extraction activities in the Ravenna and        North Adriatic area both on land and in the sea. Eni        appointed an independent and interdisciplinary scientific        commission, composed of prominent and highly qualified        international experts of subsidence caused by hydrocarbon        exploration and extraction activities, with the aim of        verifying the magnitude and effects and any actions        appropriate to reduce or to neutralize any subsidence        phenomenon in the area. This commission produced a study        which excludes the possibility of any risk to human        health or damage to the environment. The study also        states that worldwide there are no instances of accidents        of harm to public safety caused by subsidence induced by        hydrocarbon production. It also shows that Eni employs        the most advanced techniques for monitoring, measuring        and controlling the soil. This proceeding is in the first        level hearing stage. The Veneto Region, other local        bodies and two private entities have been acting as        plaintiffs. Eni was admitted as a defendant. The Court        decided that the proceeding must be heard by the Court of        Ravenna. |
|-----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)**  |   | **Alleged damage.**In        2002, the public prosecutor of Gela commenced a criminal        investigation to ascertain alleged damage caused by        emissions of the Gela plant, owned by Polimeri Europa        SpA, Syndial SpA (formerly EniChem SpA) and Raffineria di        Gela SpA. The judge for the preliminary hearing dismissed        the accusation of adulteration of food products, while        the proceeding for the other allegations regarding        pollution and environmental damage remains underway.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **(iii)** |   | **Alleged negligent fire in        the refinery of Gela.**In June 2002, in connection        with a fire at the refinery of Gela, a criminal        investigation began concerning alleged negligent fire,        environmental crimes and crimes against natural beauty.        First degree proceedings ended with an acquittal        sentence. In November 2007, the public prosecutors of        Gela and of Caltanissetta filed an appeal against this        decision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **(iv)**  |   | **Investigation of the        quality of ground water in the area of the refinery of        Gela.**In 2002, the public prosecutor of Gela        commenced a criminal investigation concerning the        refinery of Gela to ascertain the quality of ground water        in the area of the refinery. Eni is charged of having        breached environmental rules concerning the pollution of        water and soil and of illegal disposal of liquid and        solid waste materials. The preliminary hearing phase was        closed for one employee who would stand trial, while for        the other plaintiffs the preliminary hearing phase is not        yet completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **(v)**   |   | **Alleged negligent fire        (Priolo).**The public prosecutor of Siracusa commenced        an investigation regarding certain Eni managers who were        previously in charge of conducting operations at the        Priolo refinery (Eni divested this asset in 2002) to        ascertain whether they acted with negligence in        connection with a fire that occurred at the Priolo plants        on April 30 and May 1-2, 2006. After preliminary        investigations the public prosecutor requested the        opening of a proceeding against the mentioned managers        for negligent behavior.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

**ENIPOWER SPA**

| **(i)** |   | **Alleged unauthorized        waste management activities.** In 2004, the public        prosecutor of Rovigo commenced an investigation for        alleged crimes related to unauthorized waste management        activities in Loreo relating to the samples of soil used        during the construction of the new EniPower power station        in Mantova. The prosecutor requested the CEO of EniPower        and the managing director of the Mantova plant at the        time of the alleged crime to stand trial. |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **(ii)** |   | **Air emissions.**The        public prosecutor of Mantova commenced an investigation        against two managers of the Mantova plant in connection        with air emissions by the new power plant. |
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**SYNDIAL SPA (FORMER ENICHEM SPA)**

**Criminal action commenced****by the public prosecutorof Brindisi.** In 2000, the public prosecutor of Brindisicommenced a criminal action against 68 persons who are employeesor former employees of companies that owned and managed plantsfor the manufacture of dichloroethane, vinyl chloride monomer andvinyl polychloride from the 

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early 1960s to date, some of which were managed by EniChemfrom 1983 to 1993. At the end of the preliminary investigationthe public prosecutor asked for the dismissal of the case inrespect of the employees and the managers of EniChem. Plaintiffspresented oppositions, but the prosecutor confirmed the requestto dismiss the case.

**1.2 Civil and administrative proceedings**

**SYNDIAL SPA (FORMER ENICHEM SPA)**

| **(i)**   |   | **Alleged pollution caused        by the activity of the Mantova plant.** In 1992, the        Ministry of Environment summoned EniChem SpA (now Syndial        SpA) and Edison SpA before the Court of Brescia. The        Ministry requested, primarily, environmental remediation        for the alleged pollution caused by the activity of the        Mantova plant from 1976 until 1990, and provisionally, in        case there was no possibility to remediate, the payment        of environmental damages. Edison agreed on a settlement        with the Ministry whereby Edison quantified compensation        for environmental damage freeing from any obligation        Syndial, which purchased the plant in 1989. Syndial        failed to settle this dispute with the Ministry. The        proceeding is still pending.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| **(ii)**  |   | **Summon before the Court        of Venice for environmental damages allegedly caused to        the lagoon of Venice by the Porto Marghera plants.** On        December 13, 2002, EniChem SpA (now Syndial SpA), jointly        with Ambiente SpA (now merged into Syndial SpA) and        European Vinyls Corporation Italia SpA, was summoned        before the Court of Venice by the Province of Venice. The        province requested compensation for environmental damages        that were not quantified, allegedly caused to the lagoon        of Venice by the Porto Marghera plants, which were        already the subject of two previous criminal proceedings        against employees and managers of the defendants. EVC        Italia and Ineos presented an action to be indemnified by        Eni’s Group companies in case the alleged pollution        is proved. The environmental damage is being assessed by        an independent consultant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **(iii)** |   | **Claim of environmental        damages, allegedly caused by industrial activities in the        area of Crotone, commenced by the President of the        Regional Council of Calabria.**On April 14, 2003, the        President of the Regional Council of Calabria, as        Delegated Commissioner for Environmental Emergency in the        Calabria Region, commenced an action against EniChem SpA        (now Syndial SpA) with reference to environmental damages        for approximately euro 129 million and damages for euro        250 million (plus interest and compensation) in        connection with loss of income and damage to property        allegedly caused by industrial activities in the area of        Crotone. In addition, the Province of Crotone is acting        as plaintiff, claiming damage for euro 300 million. With        a decision in May 2007, the Court of Milan declared the        invalidity of the power of proxy conferred to the        Delegated Commissioner to act on behalf of the Calabria        Region with the notice served to Syndial SpA and decided        the liquidation of expenses born by the defendant. The        Province of Crotone appealed this decision. The second        instance court accepted this appeal and Syndial repealed        this determination. On October 21, 2004, Syndial was        convened before the Court of Milan by the Calabria Region        which is seeking to obtain a condemnation of Syndial for        a damage payment, should the office of the Delegated        Commissioner for Environmental Emergency in the Calabria        Region cease during this proceeding. The Calabria Region        requested a damage payment amounting to euro 800 million        as already requested by the Delegated Commissioner for        Environmental Emergency in the Calabria Region in the        proceeding commenced in 2003. This new proceeding is in        the preliminary investigation stage. This proceeding was        unified with the one opened by the Ministry of the        Environment. In 2006, the Council of Ministers, Ministry        for the Environment and the Delegated Commissioner for        Environmental Emergency in the Calabria Region        represented by the State Lawyer requested Syndial to        appear before the Court of Milan to obtain the        ascertainment, quantification and payment of damage (in        the form of land, air and water pollution and therefore        of the general condition of the population) caused by the        operations of Pertusola Sud SpA in the Municipality of        Crotone and in surrounding municipalities. The local        authorities requested the ascertainment of Syndial’s        responsibility as concerns expenses borne and to be borne        for the cleanup and reclamation of sites, currently        quantified at euro 129 million. This proceeding concerns        the same matter and damage claim as the proceedings        commenced by the Delegated Commissioner for Environmental        Emergency in the Calabria Region and the Calabria Region        against Syndial in 2003 and 2004, respectively. |

| **(iv)** |   | **Summon for alleged        environmental damage caused by DDT pollution in the Lake        Maggiore.** A proceeding is pending before the Court of        Turin by which the Minister of the Environment summoned        Syndial SpA and requested environmental damage for euro        3,237 million as well as the additional expenditures        needed for the reclamation and remediation of the site in        relation to alleged DDT pollution at Lake Maggiore        allegedly caused by the Pieve Vergonte plant. An        independent consultant estimated the environmental damage        and related reclamation expenditures to amount to euro        1,273 million. This estimate has been filed with the        court. Syndial opposed this estimate. Parties are waiting        for a final determination by the court. The Italian        Ministry enacted a ministerial decree providing for the:        (i)****upgrading of a hydraulic barrier to protect        the site; and (ii) presentation of a project for the |
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|   |   | environmental remediation of        Lake Maggiore. The administrative court of Piemonte        rejected Syndial’s opposition against the outlined        environmental measures requested by the Ministry of the        Environment. Syndial expects to repeal this decision. |
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| **(v)**  |   | **Action commenced by the        Municipality of Carrara for the remediation and        reestablishment of previous environmental conditions at        the Avenza site and payment of environmental damage.**        The Municipality of Carrara commenced an action before        the Court of Genova requesting Syndial SpA to remediate        and restore previous environmental conditions at the        Avenza site and the payment of certain environmental        damage which cannot be cleaned up as well as further        damages of various types (e.g. damage to the natural        beauty of this site). This request is related to an        accident that occurred in 1984, as a consequence of which        EniChem Agricoltura SpA (later merged into Syndial SpA),        at the time owner of the site, carried out safety and        remediation works. The Ministry of the Environment joined        the action and requested environmental damage payment        – from a minimum of euro 53.5 million to a maximum        of euro 93.3 million – to be broken down among the        various companies that ran the plant in the past. Syndial        summoned Rumianca SpA, Sir Finanziaria SpA and Sogemo        SpA, who ran the plant in previous years, in order to be        guaranteed. A report produced by an independent expert        charged by the judge was filed with the Court. The        findings of this report quantify the residual        environmental damage at euro 15 million. With a sentence        of March 2008, the Court of Genova rejected all claims        made by the Municipality of Carrara. |
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| **(vi)** |   | **Ministry for the        Environment Augusta harbor.** The Italian Ministry for        the Environment with various administrative acts ordered        companies running plants in the petrochemical site of        Priolo to perform safety and environmental remediation        works in the Augusta harbor. Companies involved include        Eni subsidiaries Polimeri Europa and Syndial. Pollution        has been detected in this area primarily due to a high        mercury concentration which is allegedly attributed to        the industrial activity of the Priolo petrochemical site.        Polimeri Europa opposed said administrative actions,        objecting in particular to the way in which remediation        works have been designed and information on concentration        of pollutants has been gathered. The Regional        Administrative Court of Catania with its decision of July        2007 annulled the decision made by the Service Conference        of the Ministry of the Environment concerning Priolo and        the Augusta harbor. The Ministry and the municipalities        of Augusta and Melilli filed a claim with an        Administrative Court of the Sicily Region which accepted        the claim. In January 2008 the Regional Court of Catania        accepted two further claims on this matter, while the        decision of the Administrative Court of Lazio is still        pending.                                                                                                                                                                                                              |

 

**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, a company 49% owned        by Sofid SpA and which is controlled by Eni SpA. The        claim relates to an amount receivable of euro 182 million        for fertilizer sales (plus interest and compensation for        inflation), originally owed by Federconsorzi to EniChem        Agricoltura SpA (later Agricoltura SpA - in liquidation),        and Terni Industrie Chimiche SpA (merged into Agricoltura        SpA - in liquidation), that has been merged into EniChem        SpA (now Syndial SpA). Such receivables were transferred        by Agricoltura and Terni Industrie Chimiche to        Serfactoring, which appointed Agrifactoring as its agent        to collect payments. Agrifactoring guaranteed to pay the        amount of such receivables to Serfactoring, regardless of        whether or not it received payment on the due date.        Following payment by Agrifactoring to Serfactoring,        Agrifactoring was placed in liquidation and the        liquidator of Agrifactoring commenced proceedings in 1991        against Serfactoring to recover such payments (equal to        euro 182 million) made to Serfactoring based on the claim        that the foregoing guarantee became invalid when        Federconsorzi was itself placed in liquidation.        Agricoltura and Terni Industrie Chimiche brought        counterclaims against Agrifactoring (in liquidation) for        damages amounting to euro 97 million relating to acts        carried out by Agrifactoring SpA as agent. The amount of        these counterclaims has subsequently been reduced to euro        46 million following partial payment of the original        receivables by the liquidator of Federconsorzi and        various setoffs. These proceedings, which have all been        joined, were decided with a partial judgment, deposited        on February 24, 2004; the request of Agrifactoring has        been rejected and the company has been ordered to pay the        sum requested by Serfactoring and damages in favor of        Agricoltura, to be determined following the decision.        Agrifactoring appealed this partial decision, requesting        in particular the annulment of the first step judgment,        the reimbursement of euro 180 million from Serfactoring        along with the rejection of all its claims and the        payment of all proceeding expenses. The judge of the        Court of Rome, responsible for the determination of the        amount of damages to be paid to Serfactoring and        Agricoltura, decided on May 18, 2005 to suspend this        determination until the publication of the decision of        the court hearing the appeals. On argument, Serfactoring        and Syndial requested that the final decision Court        return the case to its original court. The Court of        Cassation accepted the appeal and the return of the case        to its original court. |
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**ENI SPA**

| **(i)** |   | **Fintermica.**Fintermica        presented a claim against Eni concerning the management        of the Jacorossi joint venture with reference to an        alleged abuse of key roles played by Eni SpA in the joint        venture, thus damaging the other partner’s interest        and the alleged dilatory behavior of Syndial in selling        its interest in the joint venture to Fintermica. The        parties decided to commence arbitration on the matter.        The examining phase is ongoing and an independent        assessment of this matter is being executed. |
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**SNAMPROGETTI SPA**

| **(i)** |   | **CEPAV Uno and CEPAV Due.**Eni        holds interests in the CEPAV Uno (50.36%) and CEPAV Due        (52%) consortia that in 1991 signed two contracts with        TAV SpA for the construction of two railway tracks for        high speed/high capacity trains from Milan to Bologna        (under construction) and from Milan to Verona (in the        design phase). With regard to the project for the        construction of the line from Milan to Bologna, an        Addendum to the contract between CEPAV Uno and TAV was        signed on June 27, 2003, redefining certain terms and        conditions of the contract. Subsequently, the CEPAV Uno        consortium requested a time extension for the completion        of works and a claim amounting to euro 800 million. CEPAV        Uno and TAV failed to solve this dispute amicably. CEPAV        Uno opened an arbitration procedure as provided for under        terms of the contract on April 27, 2006.        With regard to the project for the construction of a        high-speed railway from Milan to Verona, in December        2004, CEPAV Due presented the final project, prepared in        accordance with Law No. 443/2001 on the basis of the        preliminary project approved by an Italian governmental        authority (CIPE). As concerns the arbitration procedure        requested by CEPAV Due against TAV for the recognition of        costs incurred by the Consortium in the 1991-2000        ten-year period plus suffered damage, in January 2007,        the arbitration committee determined the        Consortium’s right to recover the costs incurred in        connection with the design activities performed. A        technical independent survey is underway to assess the        amount of compensation to be awarded to the Consortium as        requested by the arbitration committee. TAV appealed the        arbitration committee’s determination. In April        2007, the Consortium filed with the second instance court        of Rome an appeal against Law Decree No. 7 of December        31, 2007 revoking the concessions awarded to TAV which        resulted in the annulment of arrangements signed between        TAV and the Consortium to build the high-speed railway        section from Milan to Verona. The European Court of        Justice was requested to judge on this matter. In the        meantime, TAV decided to not request the reimbursement of        advances paid to the Consortium. |
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**3. Antitrust, EU Proceedings, Actions of the Authorityfor Electricity and Gas and of Other Regulatory Authorities**

**3.1 Antitrust**

**ENI SPA**

| **(i)** |   | **Abuse of dominant        position of Snam alleged by the Italian Antitrust        Authority.** In March 1999, the Italian Antitrust        Authority concluded its investigation started in 1997        and: (i) found that Snam SpA (merged in Eni SpA in 2002)        abused its dominant position in the market for the        transportation and primary distribution of natural gas        relating to the transportation and distribution tariffs        applied to third parties and the access of third parties        to infrastructure; (ii) fined Snam for euro 2 million;        and (iii) ordered a review of the practices relating to        such abuses. Snam believes it has complied with existing        legislation and appealed the decision with the Regional        Administrative Court of Lazio requesting its suspension.        On May 26, 1999, stating that these decisions are against        Law No. 9/1991 and the European Directive 98/30/EC, this        Court granted the suspension of the decision. The        Authority did not appeal this decision. The decision on        the merit of this dispute is still pending before the        same Administrative Court. |
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| **(ii)** |   | **Formal assessment        commenced by the Commission of the European Communities        for the evaluation of alleged participation to activities        limiting competition in the field of paraffin.** On        April 28, 2005, the Commission of the European        Communities commenced a formal assessment to evaluate the        alleged participation of Eni and its subsidiaries in        activities limiting competition in the field of paraffin.        The alleged violation of competition is for: (i) the        determination of and increase in prices; (ii) the        subdivision of customers; and (iii) exchange of trade        secrets, such as production capacity and sales volumes.        After, the Commission requested information on Eni’s        activities in the field of paraffin and certain        documentation acquired by the Commission during an        inspection. Eni filed the requested information. This        proceeding is at the preliminary investigation stage        following the communication of a statement of objections        by the European Commission. Eni accrued a provision        against this proceeding. The final hearing was held in        December 2007. |
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| **(iii)** |   | **Ascertainment by the        European Commission of the level of competition in the        European natural gas market.**As part of its        activities to ascertain the level of competition in the        European natural gas market, with Decision No.        C(2006)1920/1 of May 5, 2006, the European Commission        informed Eni on May 16, 2006 that Eni and its        subsidiaries were subject to an investigation under        Article 20, paragraph 4 of the European Regulation No.        1/2003 of the Council in order to verify the possible        existence of any business activities breaching European        rules in terms of competition and intention to prevent        access to the Italian natural gas wholesale market and to        subdivide the market among a few operators in the        activity of supply and transport of natural gas.        Officials from the European Commission conducted        inspections at the headquarters of Eni and of certain Eni        subsidiaries and collected documents. Similar actions        have been performed by the Commission also against the        main operators in natural gas in Germany, France, Austria        and Belgium. In April 2007, the European Commission made        known its decision to start a further stage of inquiry,        and stated that elements collected so far induced in the        Commission the suspicion that Eni adopted behaviors        leading to "capacity hoarding and strategic        underinvestment in the transmission system leading to the        foreclosure of competitors and harm to competition and        customers in one or more supply markets in Italy".        In the same document, the Commission states that "It        is important to note that the initiation of proceedings        does not imply that the Commission has conclusive proof        of an infringement. It only signifies that the Commission        will conduct an in-depth investigation of the case as a        matter of priority". |
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| **(iv)**  |   | **TTPC.**In April 2006,        Eni filed a claim before the Regional Administrative        Court of Lazio against the decision of the Italian        Antitrust Authority of February 15, 2006 stating that        Eni’s behavior pertaining to implementations of        plans for the upgrading of the TTPC pipeline for        importing natural gas from Algeria represented an abuse        of dominant position under Article 82 of the European        Treaty and fined Eni. The initial fine amounted to euro        390 million and was reduced to euro 290 million in        consideration of Eni’s commitment to perform actions        favoring competition including the upgrade of the        gasline. Eni accrued a provision with respect to this        proceeding. With a decision filed on November 29, 2006,        the Regional Administrative Court of Lazio partially        accepted Eni’s claim, annulling such part of the        Authority’s decision where the fine was quantified.        Eni is waiting for the filing of the motivations of the        Court decision to ascertain the impact of said decision.        Pending this development, the payment of the fine has        been voluntarily suspended. In 2007, the Regional        Administrative Court of Lazio accepted in part Eni’s        claim and cancelled the quantification of the fine based        on the Antitrust Authority’s inadequate evaluation        of the circumstances presented by Eni. Eni filed an        appeal with the Council of State, as did the Antitrust        Authority and TTPC. Pending the final outcome, Eni awaits        for the determination of the amount of the fine to be        paid.                                                                                                                                                                                                                                                                                                                               |

**POLIMERI EUROPA SPA AND SYNDIAL SPA**

| **(i)** |   | **Inquiries in relation to        alleged anti-competitive agreements in the area of        elastomers.** In December 2002, inquiries were        commenced concerning alleged anti-competitive agreements        in the field of elastomers. These inquiries were        commenced concurrently by European and U.S. authorities.        At present, proceedings are pending before the European        Commission regarding the CR and NBR products. In March        2007, the Commission sent to Eni, Polimeri Europa and        Syndial a statement of objections, thus opening the        second phase of this proceeding. In December 2007, the        European Commission dismissed Syndial’s position on        CR and imposed on Eni and Polimeri a fine amounting to        euro 132.160 million. The two companies have filed an        appeal with the EU Court of First Instance against this        decision and, at the same time, paid the fine in March        2008. Investigations relating to other elastomers        products resulted in the ascertainment of Eni having        infringed European competition laws in the field of        synthetic rubber production (BR and ESBR). On November        29, 2006, the Commission fined Eni and its subsidiary        Polimeri Europa for an amount of euro 272.25 million. Eni        and its subsidiary filed claims against this decision        before the European Court of First Instance in February        2007. The Commission filed a counterappeal. Pending the        outcome, Polimeri Europa presented a bank guarantee for        euro 200 million and paid the residual amount of the        fine. In August 2007, Eni submitted a request for a        negative ascertainment with the Court of Milan aimed at        proving the non-existence of alleged damages suffered by        tire manufacturers. With regard to NBR, an inquiry is        underway also in the U.S., where class actions have also        been commenced. On the federal level, the class action        was abandoned by the plaintiffs. However, the federal        judge has yet to acknowledge this abandonment. With        regard to other products under investigation in the U.S.,        settlements were reached with both relevant U.S.        antitrust authorities and the plaintiffs acting through a        class action. Eni recorded a provision for these matters. |
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**3.2 Regulation**

| **(i)** |   | **Inquiry of the Italian        Authority for Electricity and Gas regarding information        to clients about the right to pay amounts due for natural        gas sales in installments.**With Decision No.        228/2007, the |
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|     |   | Italian Authority for        Electricity and Gas commenced a formal inquiry regarding        information to clients about the right to pay amounts due        for the natural gas sales in installments in order to        possibly put a stop to the alleged infringement of the        clients’ rights and to impose a fine. In April 2008,        the Authority concluded its inquiry and fined the Company        by euro 3.2 million.                                                                                                                                                                                      |
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| **(ii)** |   | **Toscana Energia Clienti        SpA.**Eni’s subsidiary Toscana Energia Clienti        started an action against a customer regarding alleged        lack of measurement of gas consumption due to inability        to access a measurement facility at the customer’s        site, also in connection with the application of        Resolution No. 229/2001 of the Italian Authority for        Electricity and Gas. This customer has annual consumption        in excess of 5,000 CM. The defendant has filed a        counter-claim in relation to this proceeding. This        proceeding is in a preliminary stage. |

**DISTRIBUDORA DE GAS CUYANA SA****Formal investigation of the agency entrusted with theregulations for the natural gas market in Argentina.**Enargasstarted a formal investigation on some operators, among themDistribuidora de Gas Cuyana SA, a company controlled by Eni.Enargas stated that the company improperly applied conversionfactors to volumes of natural gas invoiced to customers andrequested the company to apply the conversion factors imposed bylocal regulations from the date of the default notification(March 31, 2004) without prejudice to any damage payment andfines that may be decided after closing the investigation. InApril 2004 the company filed a defensive memorandum. On April 28,2006, the company formally requested the acquisition of documentsfrom Enargas in order to have access to the documents on whichthe allegations are based.

**4. Tax Proceedings**

**ENI SPA****ICI Pineto.** With a formal assessment presented bythe Municipality of Pineto (Teramo) in December 1999, Eni SpA hasbeen accused of not having paid a municipal tax on real estatefor the period from 1993 to 1998 on four oil platforms located inthe Adriatic Sea which constitute territorial waters in front ofthe coast of Pineto. Eni was requested to pay a total ofapproximately euro 17 million including interest and a fine. Enifiled a claim against this request stating that the sea where theplatforms are located is not part of the municipal territory andthe tax application as requested by the municipality lackedobjective fundamentals. The claim has been accepted in the firsttwo degrees of judgment at the Provincial and Regional TaxCommissions. However, the Court overturned both judgments,declaring that a municipality can consider requesting a tax onreal estate in the sea facing its territory and with the decisionof February 2005 sent the proceeding to another section of theRegional Tax Commission in order to judge on the matters of theproceeding. On February 22, 2007 the Commission held the hearing,and the filing of the judgment is pending. On December 28, 2005,the Municipality of Pineto presented the same request for thesame platforms for the years 1999 to 2004. The total amountrequested from Eni is euro 24 million including interest andpenalties. Eni filed a claim against this request which wasaccepted by the first degree judge with a decision of December 4,2007.

**AGIP KARACHAGANAK BV****Claims concerning unpaid taxes and relevant paymentof interest and penalties.** In July 2004, the relevant Kazakhauthorities informed Agip Karachaganak BV and Agip KarachaganakPetroleum Operating BV, shareholder and operator of theKarachaganak contract, respectively, on the final outcome of thetax audits performed for fiscal years 2000 to 2003. Claims by theKazakh authorities concern unpaid taxes for a total of $43million, net to Eni, and the anticipated offsetting of valueadded tax (VAT) credits for $140 million, net to Eni, as well asthe payment of interest and penalties for a total of $128million. Both companies filed a counterclaim. With an agreementreached on November 18, 2004, the original amounts were reducedto $26 million net to Eni that includes taxes, surcharges andinterest. Meetings continue regarding the residual matters. Enirecorded a provision for this matter.

**AGIP KCO NV**In December 2007 the Kazakh tax authority filed a notice of taxassessment for fiscal years 2004 to 2006 to Agip KCO, operator ofthe Kashagan contract. Allegedly unpaid taxes, including interestand penalties, amount to approximately $235 million net to Eniand relate to unpaid amounts and inapplicable deductions on valueadded tax and the default in applying certain withholding taxeson payments to foreign suppliers. The same notice also informs 

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the companies which are parties to the Kashagan contract thatfurther assessments are pending on undeductible costs for $188million net to Eni and higher taxable income of Kazakhorganizations for $48 million net to Eni. The company filed anappeal. Eni recorded a provision on this matters.

 

**5. Court Inquiries**

| **(i)**   |   | **EniPower.** In June        2004, the Milan Public Prosecutor commenced inquiries        into contracts awarded by Eni’s subsidiary EniPower        and on supplies from other companies to EniPower. These        inquiries were widely covered by the media. It emerged        that illicit payments were made by EniPower suppliers to        a manager of EniPower who was immediately dismissed. The        Court presented EniPower (commissioning entity) and        Snamprogetti (contractor of engineering and procurement        services) with notices of process in accordance with        existing laws regulating the administrative        responsibility of companies (Legislative Decree No.        231/2001). In its meeting of August 10, 2004, Eni’s        Board of Directors examined the aforementioned situation        and Eni’s CEO approved the creation of a task force        in charge of verifying the compliance with Group        procedures regarding the terms and conditions for the        signing of supply contracts by EniPower and Snamprogetti        and the subsequent execution of works. The Board also        advised divisions and departments of Eni to cooperate        fully in every respect with the Court. From the inquiries        performed, no default in the organization emerged, nor        deficiency in internal control systems. External experts        have performed inquiries with regard to certain specific        aspects. In accordance with its transparency and firmness        guidelines, Eni will take the necessary steps in acting        as plaintiff in the expected legal action in order to        recover any damage that could have been caused to Eni by        the illicit behavior of its suppliers and of their and        Eni employees. In the meantime, preliminary        investigations have found that both EniPower and        Snamprogetti are not to be considered defendants in        accordance with existing laws regulating the        administrative responsibility of companies (Legislative        Decree No. 231/2001). In August 2007, Eni was notified        that the Public Prosecutor requested the dismissal of        EniPower SpA and Snamprogetti SpA, while the proceeding        continues against former employees of these companies and        employees and managers of the suppliers under the        provisions of Legislative Decree No. 231/2001. Eni SpA,        EniPower and Snamprogetti presented themselves as        plaintiffs in the preliminary hearing. |
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| **(ii)**  |   | **Trading.**An        investigation is pending regarding two former Eni        managers who were allegedly bribed by third parties to        favor the closing of certain transactions with two oil        product trading companies. Within such investigation, on        March 10, 2005, the public prosecutor of Rome notified        Eni of two judicial measures for the seizure of        documentation concerning Eni’s transactions with the        said companies. Eni is acting as plaintiff in this        proceeding. In spite of the fact that the Public        Prosecutor filed a request for dismissing this        proceeding, the judge for preliminary investigations        ordered to start the penal action.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **(iii)** |   | **TSKJ Consortium        Investigations of the SEC and other Authorities.**The        U.S. Securities and Exchange Commission (SEC) is        currently investigating alleged improper payments made by        the TSKJ consortium to certain public officials in        relation to the construction of natural gas liquefaction        facilities at Bonny Island in Nigeria. The TSKJ        consortium is formed by Eni’s subsidiary        Snamprogetti (Eni’s interest being 43.41%) with a        25% interest and, for the remaining part, by subsidiaries        of Halliburton/KBR, Technip and JGC. Eni and its        subsidiary Snamprogetti adhered to a request for        voluntary collaboration notified by the SEC in June 2004.        The SEC request aimed at obtaining information regarding        the TSKJ consortium. Eni and Snamprogetti also adhered to        other requests for voluntary collaboration made by other        authorities which are currently investigating this        matter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| **(iv)** |   | **Gas Metering.**On May        28, 2007, a seizure order (in respect to certain        documentation) was served upon Eni and other Group        companies as part of a proceeding brought by the Public        Prosecutor at the Courts of Milan. The order was also        served upon five top managers of the Group companies in        addition to third party companies and their top managers.        The investigation alleges behavior which breaches Italian        criminal law, starting from 2003, regarding the use of        instruments for measuring gas, the related payments of        excise duties and the billing of clients as well as        relations with the Supervisory Authorities. The        allegation regards, interalia, the offense contemplated        by Legislative Decree of June 8, 2001, No. 231, which        establishes the liability of the legal entity for crimes        committed by its employee in the interests of such legal        entity, or to its advantage. Accordingly, notice of the        commencement of investigations was served upon Eni Group        companies (Eni, Snam Rete Gas and Italgas) as well as        third party companies. The Group companies are        cooperating with the Supervising Authorities in the        investigations. |
|----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **(v)** |   | **Agip KCO NV.** In        November 2007, the public prosecutor of Kazakhstan        informed Agip KCO of the start of an inquiry for an        alleged fraud in the award of a contract to the Overseas        International Constructors GmbH in 2005. |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**6. Settled ProceedingsENI SPA****Inquiry of the Italian Authority for Electricity and Gasregarding the use of storage capacity conferred in years2004-2005 and 2005-2006.** With Decision No. 37 of February 23,2006, the Italian Authority for Electricity and Gas commenced aninquiry on the activities of natural gas selling companies,including Eni, in order to potentially impose a fine or anadministrative sanction regarding the use of storage capacityconferred in years 2004-2005 and 2005-2006. For the 2004-2005thermal year and for the period from October 1, 2005 to December31, 2005, the Authority for Electricity and Gas supposed thatgiven the weather of the period, the use of modulation storagecapacity was featured by a higher volume of off takes withrespect to the volume which would have been necessary to satisfythe commercial requirements for which the storage companyentitled Eni to a priority in the conferral of storage capacity.According to the Authority for Electricity and Gas, suchsituation was in contrast with applicable regulation. WithDecision No. 281/2006 of December 6, 2006, the Authority forElectricity and Gas closed said inquiry and fined Eni by euro 90million of which euro 45 million pertaining to thermal year2004-2005 and euro 45 million to thermal year 2005-2006 as aconsequence of Eni having violated regulation in force pertainingto the priorities in the conferral of storage capacity. Enisettled the matter pertaining to thermal year 2004-2005 by payinga fractional amount of the fine imposed in accordance with LawNo. 689/1981 and filed an appeal before the RegionalAdministrative Court of Lombardy requesting the annulment of thefine pertaining to thermal year 2005-2006. On June 19, 2007, theRegional Administrative Court of Lombardy ruled in favor of Eniand annulled that section of Decision No. 281/2006 of theAuthority for Electricity and Gas imposing a fine on Eni forthermal year 2005-2006. Among other things, the Court’sruling established that the elements collected by the Authorityto fine Eni were lacking a sufficient degree of proof. The termsfor appealing this decision on part of the Authority expired.Consequently this proceeding closed without any further liabilityfor the Company. Unutilized provisions that were accrued for thisproceeding in 2006 were reversed in 2007.

**Inquiry of the Italian Antitrust Authority in relation tocollusive mechanisms for the pricing of automotive fuelsdistributed on the retail market.**With Decision of January18, 2007, the Italian Antitrust Authority opened an inquiry toascertain the existence of a possible agreement limit competitionin the field of pricing of automotive fuels distributed on theretail market in Italy in violation of Article 81 of the ECTreaty. This inquiry concerns eight oil companies, including Eni.According to the Authority, said companies would have beenputting in place collusive mechanisms intended to influence thepricing of automotive fuels distributed on the retail market byway of a continuing exchange of informative flows since 2004. InApril 2007, Eni filed with the Italian Antitrust Authority aproposal of initiatives, based on certain rules established bythe same Authority, enabling companies to reach the closure of aproceeding without sanctions or fines when they presentcounteractive measures designed to eliminate an infringingbehavior. In December 2007, the Antitrust Authority approved theinitiatives proposed by Eni and decided to close the inquirywithout ascertaining any violation and imposing any fine. Inparticular, Eni is engaged in initiatives designed to contain andpossibly reduce the retail prices of fuels in the hyper-selfselling mode until they are in line with European averages. Italso committed itself to pursue agreements with large chainstores.

**STOCCAGGI GAS ITALIA SPATariffs.** With Decision No. 26 of February 27, 2002, theItalian Authority for Electricity and Gas determined tariffcriteria for modulation, mineral and strategic storage servicesfor the period from April 1, 2002 to March 31, 2006 and effectiveretroactively from June 21, 2000. On March 18, 2002 Stoccaggi GasItalia SpA (Stogit) filed its proposal of tariff for modulation,mineral and strategic storage for the first regulated period.With Decision No. 49 of March 26, 2002, the Authority forElectricity and Gas repealed Stogit’s proposal and definedtariffs for the first regulated period. Stogit applied the tariffdetermined by the two decisions, but filed an appeal against bothdecisions with the Regional Administrative Court of Lombardyrequesting their cancellation. With a decision dated September29, 2003, that court rejected the appeal presented by Stogit.Stogit filed an appeal to the Council of State against thesentence, which was rejected by the Council of State on January6, 2006.

**POLIMERI EUROPA SPAViolation of environmental regulations on waste management.**Before the Court of Gela a criminal action took place relating tothe alleged violation of environmental regulations on wastemanagement concerning the ACN plant and the disposal of FOKresidue deriving from the steam cracking process. Defendants werefound guilty and a damage payment in first instance to anenvironmental association acting as plaintiff was required to bemade. The amount of said damage payment is immaterial. Thesentence was passed to the Civil Court for the quantification ofany further damage and claim. Eni appealed this sentence and wasacquitted by the Court of Appeal of Caltanissetta fornon-existence of the crime.

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**RAFFINERIA DI GELA SPASoil and sea pollution.** In 1999, the public prosecutor ofGela commenced an investigation in order to ascertain allegedsoil and sea pollution caused by the discharge of pollutants byEni’s Gela refinery. Three environmental organizations areacting as plaintiffs and have requested damage payment for euro551 million. With a Decision of February 20, 2007, the Court ofGela dismissed these allegations.

**SYNDIAL SPASummon for the ascertainment of responsibility in the pollutionof soil of Paderno Dugnano.** In 2004, Sitindustrie SpA, whichin 1996 purchased a plant in Paderno Dugnano from Enirisorse (nowmerged into Syndial SpA), summoned Syndial SpA before the Courtof Milan, requesting to establish the Syndial SpA’sresponsibility in the alleged pollution of soil around the plantand to require it to pay environmental damage necessary forremediation. The Tribunal of Milan rejected the plaintiff’srequest with a sentence released on June 10, 2006. The deadlineto appeal the Tribunal sentence expired on November 1, 2007.

**ENI SPANotification to Eni Petroleum Co Inc of a subpoena by theDepartment of Justice of the United States of America - AntitrustDivision and request of information and documents relating toactivities in the field of wax and of a deposition**. On April28, 2005, the Department of Justice of the United States ofAmerica - Antitrust Division, notified Eni Petroleum Co Inc of asubpoena requesting information and documents relating toactivities in the field of wax to be filed before June 20, 2005and a deposition on the same date. The Company informed thedepartment that it does not produce nor import wax in the UnitedStates of America.

**Decree of the Lombardy Region.** With a decree datedDecember 6, 2000, the Lombardy Region decided that natural gasused for electricity generation is subject to an additionalregional excise tax in relation to which Snam SpA (merged intoEni SpA in 2002) should substitute for the tax authorities in itscollection from customers. Given interpretive uncertainties, thesame decree provides the terms within which distributingcompanies are expected to pay this excise tax without paying anypenalty. Snam SpA and the other distributing companies of Enibelieve that natural gas used for electricity generation is notsubject to this additional excise tax. For this reason, anofficial interpretation was requested from the Ministry ofFinance and Economy. With a Decision of May 29, 2001, theMinistry confirmed that this additional excise tax cannot beapplied. The Region decided not to revoke its decree and Snamtook appropriate legal action. On the basis of action carried outby Snam, the Council of State decided on March 18, 2002 that thejurisdiction of the Administrative Court did not apply to thiscase. In case the Region should request payment, Eni willchallenge this request in the relevant Court. The Lombardy Regiondecided with Regional Law No. 27/2001 that no additional tax isdue from January 1, 2002 onwards, but still requested the paymentof taxes due before that date. The action for the recognition ofsuch taxes bears a five-year term. Consequently, the exercise ofsuch action has expired.

**SNAM RETE GASEnvironmental tax of Sicilia Region upon the owners of primarypipelines.** With Regional Law No. 2 of March 26, 2002, theSicilia Region introduced an environmental tax upon the owners ofprimary pipelines in Sicily (e.g. pipelines operating at amaximum pressure of over 24 bar). Snam Rete Gas paid eightinstallments for a total of euro 86.1 million and suspendedpayments in December 2002 based on a decision of the RegionalAdministrative Court of Lombardy. At the same time, Snam Rete Gaspromoted all actions required to protect its interests withItalian and European Authorities. On June 21, 2007, the EuropeanCourt of Justice declared the regional law to be contrary toEuropean rules and to the cooperation agreement between theEuropean Economic Community and the Peoples’ DemocraticRepublic of Algeria, under which certain products (includingnatural gas) imported from this country could not be subjected tocustoms or other duties. Following this ruling, the SiciliaRegion cancelled the law introducing the tax with Regional LawNo. 15 of August 21, 2007. With various the Regional TaxCommission and the Provincial Tax Commission of Palermo declaredthe environmental tax of the Sicilia Region illegitimate becauseit is contrary to European rules and condemned the Region torepay the cashed amounts. In its budget law for 2008, the Regionaccrued the necessary provisions for repaying Snam Rete Gas. OnFebruary 17, 2007 the Region and Snam Rete Gas signed anagreement that provides for the repayment in six annualinstallments starting from the first quarter of 2008. On March 1,2008 Snam Rete Gas received the first payment.

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**ENI SPA**

| **(i)**   |   | **Inquiry of the Italian        Antitrust Authority on jet fuel.**With a Decision of        December 9, 2004, the Italian Antitrust Authority        commenced an inquiry on the distribution of jet fuel        against six oil companies operating in Italy, including        Eni and certain entities jointly controlled by said oil        companies engaged in the storing and loading jet fuel in        the Rome Fiumicino, Milan Linate and Milan Malpensa        airports. The inquiry intends to ascertain the existence        of alleged restrictions to competition as said oil        companies would agree to divide among themselves the        supplies to airlines. On December 22, 2005, the Authority        notified the preliminary results of the inquiry        concerning: (i) information flows to said oil companies        related to the functioning of the jointly-controlled        entities engaging in the storage and uploading of jet        fuel; (ii) barriers to the entrance of new competitors in        the capital of such entities operating the activities of        storing and loading; and (iii) the price of jet fuel        which is deemed to be higher than on other European        markets. On June 20, 2006, the Authority notified the        final decision of this proceeding to Eni and fined Eni by        an amount of euro 117 million. The Authority fined other        oil companies involved in this matter. Eni filed an        opposition against this decision before an administrative        court and suspended the payment of this fine. On January        29, 2007, the Regional Administrative Court of Lazio        accepted only partially the opposition made by Eni and        annulled part of the decision of the Authority. In        particular, a measure providing for the involved oil        companies to cease their joint participation in the        capital of the entities operating the activities of        storing and loading jet fuel was annulled. Eni accrued a        provision with respect to this proceeding. As a        consequence of this decision, Eni paid a fine amounting        to euro 117 million. Eni also decided to appoint        independent directors in the boards of those joint        ventures, replacing Eni managers acting as board members.        Eni filed an appeal against this decision before an        higher administrative court requesting for its rejection        or a reduction of the fine. |
|-----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)**  |   | **Inquiry commenced by the        Italian Antitrust Authority concerning an alleged abuse        of dominant position in the use of the total continuous        regasification capacity of GNL.** On November 18, 2005,        the Italian Antitrust Authority notified Eni and its        subsidiary GNL Italia of the opening of an inquiry, in        accordance with Article 14 of Law No. 287/1990,        concerning an alleged abuse of dominant position in the        assignment and use of the total continuous regasification        capacity of the Panigaglia terminal (owned by GNL Italia)        during thermal years 2002-2003 and 2003-2004, as already        reported by an inquiry of the Italian Authority for        Electricity and Gas on the same matter. The Authority for        Electricity and Gas concluded its inquiry by signaling        the fact to the Antitrust Authority. In a later        communication Eni was informed that the inquiry has been        extended also to thermal year 2004-2005 and to Snam Rete        Gas which is the parent company of GNL Italia SpA. On        September 25, 2006, the Antitrust Authority sent Eni the        findings of its inquiry. Eni then presented the Antitrust        Authority certain commitments based on Article 14-ter of        Law No. 287/1990. On November 23, 2006, the Antitrust        Authority resolved to publish such commitments effective        the following day. On March 9, 2007, the Antitrust        Authority resolved to accept Eni’s commitments and        to close the inquiry without charging or fining Eni. Eni        is committed to perform a gas release amounting to 4 BCM        in a two-year period, starting on October 1, 2007. Eni is        implementing its obligations under the gas release        agreement and providing timely information to the        Antitrust Authority on this activity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **(iii)** |   | **Alleged intentional        poisoning (Priolo).** In March 2002, the public        prosecutor of Siracusa commenced an investigation        concerning the activity of the refinery of Priolo to        ascertain whether infiltrations of refinery products into        the deep water-bearing stratum used for human consumption        purposes in the Priolo area had occurred. In September        2007, the judge for the preliminary investigation filed a        request to dismiss this proceeding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

**Other risks and commitments**Parent company guarantees amounted to euro 11,110 million (euro4,911 million at December 31, 2006) were issued in connectionwith certain contractual commitments for hydrocarbon explorationand production activities, quantified on the basis of the capitalexpenditures to be incurred. The increase of euro 6,199 millionprimarily related to commitments that Agip Caspian Sea BV inKazakhstan had entered into for euro 5,605 million.

Under the convention signed on October 15, 1991 by Treno AltaVelocità - TAV SpA and CEPAV (Consorzio Eni per l’AltaVelocità) Due, Eni committed to guarantee the execution ofdesign and construction of the works assigned to the CEPAVConsortium (to which it is party) and guaranteed to TAV thecorrect and timely execution of all obligations indicated in theconvention in a subsequent integration deed and in any furtheraddendum or change or integration to the same. The regulation ofCEPAV Due contains the same obligations and guarantees containedin the CEPAV Uno Agreement.

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A commitment entered into by Eni USA Gas Marketing Llc onbehalf of Cameron LNG for fulfilling certain obligations inconnection with a regasification contract signed on August 1,2005. This commitment is subject to a suspension clause and willcome into force when the regasification service starts in aperiod included between October 1, 2008 and June 30, 2009 for anestimated total consideration of euro 226 million.

A commitment entered into by Eni USA Gas Marketing Llc onbehalf of Gulf LNG Energy for the acquisition of unusedregasification capacity (5.78 bcm/y) over a twenty-year period(2011-2031) for an estimated total consideration as high as$1,400 million equal to euro 951 million. 

A commitment entered into by Eni USA Gas Marketing Llc onbehalf of Angola LNG Supply Service for the acquisition ofregasified gas at the Pascagoula plant in the United States thatwill come into force when the regasification service starts in aperiod included between 2011-2031.

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 onthe Company’s results of operations and liquidity.

**Assets under concession arrangements**Eni operates under concession arrangements mainly in theExploration & Production segment and in some activities ofthe Gas & Power segment and the Refining & Marketingsegment. In the Exploration & Production segment contractualclauses governing mineral concessions, licenses and explorationpermits regulate the access of Eni to hydrocarbon reserves. Suchclauses can differ in each country. In particular, mineralconcessions, licenses and permits are granted by the legal ownersand, generally, entered into with government entities, State oilcompanies and, in some legal contexts, private owners. As acompensation for mineral concessions, Eni pays royalties andtaxes in accordance with local tax legislation. Eni sustains allthe operation risks and costs related to the production anddevelopment activities and it is entitled to the productionsrealized. In Product Sharing Agreement and in buy-back contracts,realized productions are defined on the basis of contractualagreements drawn up with State oil companies which hold theconcessions. Such contractual agreements regulate the recover ofcosts incurred for the exploration, development and operatingactivities (cost oil) and give entitlement to the own portion ofthe realized productions (profit oil). With reference to naturalgas storage in Italy, the activity is conducted on the basis ofconcessions with a duration that does not exceed a twenty yearduration and it is granted by the Ministry of ProductiveActivities to persons that are consistent with legislationrequirements and that can demonstrate to be able to conduct astorage program that meets the public interest in accordance withthe laws. In the Gas & Power segment the gas distributionactivity is primarily conducted on the basis of concessionsgranted by local public entities. At the expiry date of theconcession, a 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. Legislative Decree No.164/2000 provides the grant of distribution service exclusivelyby tender, with a maximum length of 12 years. In the Refining& Marketing segment several service stations and otherauxiliary assets of the distribution service are located in themotorway areas and they are granted by the motorway concessionoperators following a public tender for the sub-concession of thesupplying of oil products distribution service and otherauxiliary services. Such assets are amortized over the length ofthe concession (generally, 5 years for Italy). In exchange of thegranting of the services described above, Eni provides to themotorway companies fixed and variable royalties on the basis ofquantities sold. At the end of the concession period, allnon-removable assets are transferred to the grantor of theconcession.

**Environmental regulations**Risks associated with the footprint of Eni’s activities onthe environment, health and safety are described in the risksection above, under the paragraph “Operational risks”.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 to cover environmental risks and theenvironmental risk provision accrued in the consolidatedfinancial statements. However, management believes that it ispossible that Eni may incur material losses and liabilities infuture years in connection with environmental matters due to: (i)the possibility of as yet unknown contamination; (ii) the resultsof the ongoing surveys and the other possible effects ofstatements required by Decree No. 471/1999 of the Ministry ofEnvironment; (iii) new developments in environmental regulation;(iv) the effect of possible technological changes relating tofuture remediation; and (v) the 

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possibility of litigation and the difficulty of determiningEni’s liability, if any, as against other potentiallyresponsible parties with respect to such litigation and thepossible insurance recoveries.

**Emission trading**Legislative Decree No. 216 of April 4, 2006 implementedthe Emission Trading Directive 2003/87/EC concerning greenhousegas emissions and Directive 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 February 24, 2006,the Ministry of the Environment published a decree definingemission permits for the 2005-2007 period. In particular, Eni wasassigned permits corresponding to 65.6 million tonnes of carbondioxide (of which 22.4 for 2005, 22.4 for 2006 and 20.8 for 2007)in addition to approximately 11.7 million of permits assignedwith respect to new plants in the three-year period 2005-2007.Following the realization of projects for the reduction ofemissions, in particular related to the cogeneration ofelectricity and steam through high efficiency combined cycles inrefineries and petrochemical sites, emissions of carbon dioxidefrom Eni’s plants were lower than permits assigned in 2007.In 2007 emissions of carbon dioxide amounted to approximately 24millions of tonnes.

 

**29 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:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Net sales from operations                  |   | 73,679     |   |   | 85,957     |   |   | 87,103     |   |
|--------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Change in        contract work in progress |   | 49         |   |   | 148        |   |   | 153        |   |
|                                       |   | **73,728** |   |   | **86,105** |   |   | **87,256** |   |

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

Net sales from operations were net of thefollowing items:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Excise taxes                                                                               |   | 14,140     |   |   | 13,762     |   |   | 13,292     |   |
|--------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Exchanges        of oil sales (excluding excise taxes)                                     |   | 2,487      |   |   | 2,750      |   |   | 2,728      |   |
| Services billed to joint venture partners                                                  |   | 1,331      |   |   | 1,385      |   |   | 1,554      |   |
| Sales to        service station managers for sales billed to holders of        credit card |   | 1,326      |   |   | 1,453      |   |   | 1,480      |   |
| Exchanges of other products                                                                |   | 108        |   |   | 127        |   |   | 121        |   |
|                                                                                       |   | **19,392** |   |   | **19,477** |   |   | **19,175** |   |

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

Net sales from operations by business segment andgeographic area of destination are presented in Note 35 -Information by business segment and geographic financialinformation.

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**Other income and revenues**Other income and revenues were as follows:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Contract penalties and other trade revenues |   | 114     |   |   | 61      |   |   | 181     |   |
|---------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Lease and        rental income              |   | 102     |   |   | 98      |   |   | 95      |   |
| Compensation for damages                    |   | 89      |   |   | 40      |   |   | 87      |   |
| Gains from        sale of assets            |   | 71      |   |   | 100     |   |   | 66      |   |
| Other proceeds (*)                          |   | 422     |   |   | 484     |   |   | 398     |   |
|                                        |   | **798** |   |   | **783** |   |   | **827** |   |

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

|    |    |                                                                             |
|--------------|--------------|---------------------------------------------------------------------------------------|
| (*)          |    | Each        individual amount included herein does not exceed euro 25        million. |

 

 

**30 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”.

**Purchases, services and other**Purchases, services and other included the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Production costs - raw, ancillary and consumable        materials and goods                        |   | 35,318     |   |   | 44,661     |   |   | 44,884     |   |
|----------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Production        costs - services                                                                 |   | 9,405      |   |   | 10,015     |   |   | 10,828     |   |
| Operating leases and other                                                                         |   | 1,929      |   |   | 1,903      |   |   | 2,276      |   |
| Net        provisions for contingencies                                                            |   | 1,643      |   |   | 767        |   |   | 591        |   |
| Other expenses                                                                                     |   | 1,100      |   |   | 1,089      |   |   | 1,095      |   |
|                                                                                               |   | **49,395** |   |   | **58,435** |   |   | **59,674** |   |
| less:                                                                                              |   |       |   |   |       |   |   |       |   |
| -        capitalized direct costs associated with self-constructed        assets - tangible assets |   | (704       | )      |   | (809       | )      |   | (1,357     | )      |
| - capitalized direct costs associated with        self-constructed assets - intangible assets      |   | (124       | )      |   | (136       | )      |   | (138       | )      |
|                                                                                               |   | **48,567** |   |   | **57,490** |   |   | **58,179** |   |

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

Production costs - services include brokeragefees for euro 37 million (euro 24 million and euro 39 million in2005 and 2006, respectively).

Costs incurred in connection with research anddevelopment activity recognized in profit and loss amounted toeuro 189 million (euro 202 million and euro 219 million in 2005and 2006, respectively) as they do not meet the requirements tobe capitalized.

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The item "Operating leases and other"included operating leases for euro 1,081 million (euro 777million and euro 860 million in 2005 and 2006, respectively) androyalties on hydrocarbons extracted for euro 772 million (euro965 million and euro 823 million in 2005 and 2006, respectively).Future minimum lease payments expected to be paid undernon-cancelable operating leases were as follows:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| To be paid within 1 year     |   | 363       |   |   | 594       |   |   | 588       |   |
|------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Between 2        and 5 years |   | 799       |   |   | 1,474     |   |   | 1,401     |   |
| Beyond 5 years               |   | 418       |   |   | 762       |   |   | 942       |   |
|                         |   | **1,580** |   |   | **2,830** |   |   | **2,931** |   |

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

Operating leases primarily concerned time charter andlong-term rentals of vessels, lands, service stations and officebuildings. Such leases did not include renewal options. There areno significant restrictions provided by these operating leaseswhich limit the ability of Eni to pay dividends, use assets or totake on new borrowings.

Increase of provisions for contingencies net of reversal ofunutilized provisions amounted to euro 591 million (euro 1,643million and euro 767 million in 2005 and 2006, respectively) andmainly regarded environmental risks for euro 327 million (euro515 million and euro 248 million in 2005 and 2006, respectively),contract penalties and legal or administrative proceedings foreuro 79 million (euro 336 million and euro 149 million in 2005and 2006, respectively), and marketing initiatives awardingprizes to clients for euro 59 million (euro 50 million and euro44 million in 2005 and 2006, respectively). More information isincluded in Note 22 - Provisions for contingencies.

**Payroll and related costs**Payroll and related costs were as follows:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Wages and salaries                                                                                   |   | 2,484     |   |   | 2,630     |   |   | 2,906     |   |
|------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Social        security contributions                                                                 |   | 662       |   |   | 691       |   |   | 690       |   |
| Cost related to defined benefits plans and        defined contributions plans                        |   | 126       |   |   | 230       |   |   | 161       |   |
| Other        costs                                                                                   |   | 255       |   |   | 305       |   |   | 275       |   |
|                                                                                                 |   | **3,527** |   |   | **3,856** |   |   | **4,032** |   |
| less:                                                                                                |   |      |   |   |      |   |   |      |   |
| - capitalized direct costs associated with        self-constructed assets - tangible assets          |   | (143      | )      |   | (161      | )      |   | (184      | )      |
| -        capitalized direct costs associated with self-constructed        assets - intangible assets |   | (33       | )      |   | (45       | )      |   | (48       | )      |
|                                                                                                 |   | **3,351** |   |   | **3,650** |   |   | **3,800** |   |

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

Provisions for post-retirement benefits of euro 161 millionincluded a gain deriving from the curtailment of the provisionsaccrued by Italian companies for employee termination indemnities("TFR") following the changes introduced by the ItalianBudget Law for 2007 and related decrees (euro 83 million). Moreinformation is included in Note 23 - Provisions for employeebenefits.

**Average number of employees**The average number and break-down of employees by category ofEni’s subsidiaries were as follows:

| (number) |   | **2005** |   | **2006** |   | **2007** |
|----------|--------|----------|--------|----------|--------|----------|
|     |   |          |   |          |   |          |

| Senior managers        |   | 1,754      |   |   | 1,676      |   |   | 1,594      |   |
|------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Junior        managers |   | 10,747     |   |   | 11,142     |   |   | 11,816     |   |
| Employees              |   | 34,457     |   |   | 34,671     |   |   | 35,725     |   |
| Workers                |   | 24,345     |   |   | 25,426     |   |   | 25,582     |   |
|                   |   | **71,303** |   |   | **72,915** |   |   | **74,717** |   |

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

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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-based compensation schemes are designed to improvemotivation and loyalty of the managers of Eni SpA and itssubsidiaries as defined in Article 2359 of the Civil Code12,by linking compensation to the attainment of preset individualand corporate objectives, making management participate incorporate risk and motivating them towards the creation ofshareholder value.

*Stock grants*Stock grants schemes provide for granting treasury shares for noconsideration to those managers who have achieved corporate andindividual objectives. The Company used this scheme for the 2003,2004 and 2005 years. Grants vest within 45 days after the end ofthe third year from the date of the engagement.

At December 31, 2007, 902,800 grants were outstanding forassigning an equal number of treasury shares with a nominal valueof euro 1 per share. These grants regarded the 2003 plan for atotal of 2,500 shares with a fair value of euro 11.20 per share,the 2004 plan for a total of 1,700 shares with a fair value ofeuro 14.57 per share and the 2005 plan for a total of 898,600shares with a fair value of euro 20.08 per share.

Changes in the 2005, 2006 and 2007 stock grant plans consistedof the following:

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | Number of shares |   | Market price (a) (euro) |   | Number of shares |   | Market price (a) (euro) |   | Number of shares |   | Market price (a) (euro) |
|--------|--------|------------------|--------|-------------------------|--------|------------------|--------|-------------------------|--------|------------------|--------|-------------------------|
|   |   |                  |   |                         |   |                  |   |                         |   |                  |   |                         |

| **Stock grants as of January 1**               |   | **3,112,200** |   |   | **18.461** |   |   | **3,127,200** |   |   | **23.460** |   |   | **1,873,600** |   |   | **25.520** |   |
|------------------------------------------------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|
| New rights        granted                      |   | 1,303,400     |   |   | 21.336     |   |   |          |   |   |       |   |   |          |   |   |       |   |
| Rights exercised in the period                 |   | (1,273,500    | )      |   | 23.097     |   |   | (1,236,400    | )      |   | 23.933     |   |   | (966,000      | )      |   | 24.652     |   |
| Rights        cancelled in the period          |   | (14,900       | )      |   | 22.390     |   |   | (17,200       | )      |   | 23.338     |   |   | (4,800        | )      |   | 26.972     |   |
| **Stock grants outstanding as of December 31** |   | **3,127,200** |   |   | **23.460** |   |   | **1,873,600** |   |   | **25.520** |   |   | **902,800**   |   |   | **25.120** |   |
| **of        which exercisable at December 31** |   | **38,700**    |   |   | **23.460** |   |   | **156,700**   |   |   | **25.520** |   |   | **68,100**    |   |   | **25.120** |   |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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 grant 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. |

*Stock options2002-2004 and 2005 plans*Stock options plans provide the right for the assignee topurchase treasury shares with a 1 to 1 ratio after the end of thethird year from the date of the grant (vesting period) and for amaximum period of five years. The strike price was determined tobe the arithmetic average of official prices registered on theMercato Telematico Azionario in the month preceding the grantdate or, from 2003 onwards, the average carrying amount oftreasury shares as of the day preceding the assignment, ifgreater.

*2006-2008 plan*The 2006-2008 stock option plan has introduced a performancecondition for the exercise of the options. At the end of eachthree-year period (vesting period) from the assignment, the Boardof Directors determines the percentage of exercisable options,from 0 to 100, in relation to the Total Shareholders’ Return(TSR) of Eni’s shares as benchmarked against the TSRdelivered by a panel of the six largest international oilcompanies for market capitalization. Options can be exercised fora maximum period of three years. The strike price is calculatedas the arithmetic average of official prices registered on theMercato Telematico Azionario in the month preceding assignment.

The arithmetic average of such prices, weighted with thenumber of shares assigned, amounts to euro 23.119 and euro 27.451per share for 2006 and 2007, respectively. 

At December 31, 2007, 17,699,625 options were outstanding forthe purchase of 17,699,625 ordinary shares.

----

| (12) |    | Did not        include listed subsidiaries, which have their own stock        grant plans. |
|------|--------------|--------------------------------------------------------------------------------------------|

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The break-down of outstanding options was the following:

- 2002 stock plan for 107,500 shares with an exercise price        of euro 15.216 per share;
- 2003 stock plan for 281,400 shares with an exercise price        of euro 13.743 per share;
- 2004 stock plan for 1,124,000 shares with an exercise        price of euro 16.576 per share;
- 2005 stock plan for 3,812,000 shares with an exercise        price of euro 22.512 per share;
- 2006 stock plan for 6,467,775 shares with an exercise        price of euro 23.119 per share;
- 2007 stock plan for 5,906,950 shares with an exercise        price of euro 27.451 per share.

At December 31, 2007 the weighted-average remainingcontractual life of the plans at December 2002, 2003, 2004, 2005,2006 and 2007 was 2 years and 7 months, 3 years and 7 months, 4years and 7 months, 5 years and 7 months, 4 years and 7 monthsand 5 years and 7 months, respectively.

Changes of stock option plans in 2005, 2006 and 2007 consistedof the following:

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | Number         of shares |   | Weighted average (euro) |   | Market price (a) (euro) |   | Number         of shares |   | Weighted average (euro) |   | Market price (a) (euro) |   | Number         of shares |   | Weighted average (euro) |   | Market price (a) (euro) |
|--------|--------|--------------------------|--------|-------------------------|--------|-------------------------|--------|--------------------------|--------|-------------------------|--------|-------------------------|--------|--------------------------|--------|-------------------------|--------|-------------------------|
|   |   |                          |   |                         |   |                         |   |                          |   |                         |   |                         |   |                          |   |                         |   |                         |

| **Options as of January 1**                    |   | **11,789,000** |   |   | **15.111** |   | **18.461** |   | **13,379,600** |   |   | **17.705** |   | **23.460** |   | **15,290,400** |   |   | **21.022** |   | **25.520** |
|------------------------------------------------|--------|----------------|--------|--------|------------|--------|------------|--------|----------------|--------|--------|------------|--------|------------|--------|----------------|--------|--------|------------|--------|------------|
| New        options granted                     |   | 4,818,500      |   |   | 22.512     |   | 22.512     |   | 7,050,000      |   |   | 23.119     |   | 23.119     |   | 6,128,500      |   |   | 27.451     |   | 27.447     |
| Options exercised in the period                |   | (3,106,400     | )      |   | 15.364     |   | 22.485     |   | (4,943,200     | )      |   | 15.111     |   | 23.511     |   | (3,028,200     | )      |   | 16.906     |   | 25.338     |
| Options        cancelled in the period         |   | (121,500       | )      |   | 16.530     |   | 23.100     |   | (196,000       | )      |   | 19.119     |   | 23.797     |   | (691,075       | )      |   | 24.346     |   | 24.790     |
| **Options outstanding as of December 31**      |   | **13,379,600** |   |   | **17.705** |   | **23.460** |   | **15,290,400** |   |   | **21.022** |   | **25.520** |   | **17,699,625** |   |   | **23.822** |   | **25.120** |
| **of        which exercisable at December 31** |   | **1,540,600**  |   |   | **16.104** |   | **23.460** |   | **1,622,900**  |   |   | **16.190** |   | **25.520** |   | **2,292,125**  |   |   | **18.440** |   | **25.120** |

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

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Market price        relating to new rights granted, rights exercised in the        period and rights cancelled in the period corresponds to        the average market value (arithmetic average of official        prices recorded on Mercato Telematico Azionario in the        month preceding: (i) the date of the Board of Directors        resolution regarding the stock grants assignment; (ii)        the date in which the emission/transfer of the shares        granted was recorded in the grantee’s securities        account; and (iii) the date in which the unilateral        termination of employment for rights was cancelled),        weighted with the number of shares. Market price of stock        at the beginning and end of the year is the price        recorded at December 31. |

The fair value of stock options granted duringthe years 2002, 2003, 2004 and 2005 was euro 5.39, euro 1.50,euro 2.01, euro 3.33 per share respectively. For 2006 and 2007the weighted average was euro 2.89 and euro 2.98 per share,respectively. The fair value was determined by applying thefollowing assumptions:

|                      |   |    |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **2007** |
|---------------------------|--------|---------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                      |   |    |   |          |   |          |   |          |   |          |   |          |   |          |
| Risk-free interest rate   |   | (%)     |   | 3.5      |   | 3.2      |   | 3.2      |   | 2.5      |   | 4.0      |   | 4.7      |
| Expected        life      |   | (years) |   | 8        |   | 8        |   | 8        |   | 8        |   | 6        |   | 6        |
| Expected volatility       |   | (%)     |   | 43.0     |   | 22.0     |   | 19.0     |   | 21.0     |   | 16.8     |   | 16.3     |
| Expected        dividends |   | (%)     |   | 4.5      |   | 5.4      |   | 4.5      |   | 4.0      |   | 5.3      |   | 4.9      |
|                      |   |    |   |          |   |          |   |          |   |          |   |          |   |          |

Costs of the year related to stock grant andstock option plans amounted to euro 27 million (euro 35 millionand euro 20 million in 2005 and 2006, respectively).

 

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**Compensation of key management**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) amount toeuro 15 million, euro 23 million and euro 25 million for 2005,2006 and 2007 respectively, and consisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Wages and salaries                                    |   | 11     |   |   | 16     |   |   | 17     |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Post-employment        benefits                       |   | 1      |   |   | 1      |   |   | 1      |   |
| Other long-term benefits                              |   |   |   |   | 3      |   |   | 3      |   |
| Indemnities        due upon termination of employment |   | 1      |   |   |   |   |   |   |   |
| Stock grant/option                                    |   | 2      |   |   | 3      |   |   | 4      |   |
|                                                  |   | **15** |   |   | **23** |   |   | **25** |   |

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

**Compensation of Directors and StatutoryAuditors**Compensation of Directors amounted to euro 19.2 million, euro 8.7million and euro 8.9 million for 2005, 2006 and 2007,respectively. Compensation of Statutory Auditors amounted to euro0.785, euro 0.686 million and euro 0.678 million in 2005, 2006and 2007, respectively. Compensation included emoluments and allother retributive and social security compensations due for thefunction of directors or statutory auditor assumed by Eni SpA orother companies included in the scope of consolidation,representing a cost for Eni.

**Depreciation, depletion, amortization and impairments**Depreciation, depletion, amortization and impairments chargesconsisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Depreciation, depletion and amortization:                                                            |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| - tangible        assets                                                                             |   | 4,576     |   |   | 4,821     |   |   | 5,031     |   |
| - intangible assets                                                                                  |   | 936       |   |   | 1,335     |   |   | 2,000     |   |
|                                                                                                 |   | **5,512** |   |   | **6,156** |   |   | **7,031** |   |
| Impairments:                                                                                         |   |      |   |   |      |   |   |      |   |
| - tangible        assets                                                                             |   | 264       |   |   | 231       |   |   | 145       |   |
| - intangible assets                                                                                  |   | 8         |   |   | 54        |   |   | 62        |   |
|                                                                                                 |   | **272**   |   |   | **285**   |   |   | **207**   |   |
| less:                                                                                                |   |      |   |   |      |   |   |      |   |
| - direct        costs associated with self-constructed assets                                        |   |      |   |   | (17       | )      |   |      |   |
| - capitalized direct costs associated with        self-constructed assets - tangible assets          |   | (2        | )      |   | (2        | )      |   | (2        | )      |
| -        capitalized direct costs associated with self-constructed        assets - intangible assets |   | (1        | )      |   | (1        | )      |   |      |   |
|                                                                                                 |   | **5,781** |   |   | **6,421** |   |   | **7,236** |   |

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

 

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**31 Finance income (expense)**Finance income (expense) consisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Income from equity instruments                                         |   |     |   |   |    |   |   | 188     |   |
|------------------------------------------------------------------------|--------|----------|--------|--------|---------|--------|--------|---------|--------|
| Capitalized        finance expense                                     |   | 159      |   |   | 116     |   |   | 180     |   |
| Net income from financing receivables                                  |   | 95       |   |   | 130     |   |   | 112     |   |
| Net income        from securities                                      |   | 36       |   |   | 51      |   |   | 39      |   |
| Interest on tax credits                                                |   | 17       |   |   | 17      |   |   | 31      |   |
| Gain        (loss) on derivative financial instruments                 |   | (386     | )      |   | 383     |   |   | 26      |   |
| Exchange differences, net                                              |   | 169      |   |   | (152    | )      |   | (51     | )      |
| Net        interest due to banks                                       |   | (38      | )      |   | 79      |   |   | (80     | )      |
| Net interest due to other financial institutions                       |   | (56      | )      |   | (101    | )      |   | (129    | )      |
| Finance        expense due to passage of time (accretion discount) (a) |   | (109     | )      |   | (116    | )      |   | (186    | )      |
| Interest and other finance expense on ordinary        bonds            |   | (265     | )      |   | (247    | )      |   | (258    | )      |
| Other        finance income (expense), net                             |   | 12       |   |   | 1       |   |   | 45      |   |
|                                                                   |   | **(366** | **)**  |   | **161** |   |   | **(83** | **)**  |

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

|   |   |                                                                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| (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:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Derivatives on exchange rate        |   | (85      | )     |   | 313     |   |   | 120    |   |
|-------------------------------------|--------|----------|-------|--------|---------|--------|--------|--------|--------|
| Derivatives        on interest rate |   | (138     | )     |   | 61      |   |   | 35     |   |
| Derivatives on commodities          |   | (163     | )     |   | 9       |   |   | (129   | )      |
|                                |   | **(386** | **)** |   | **383** |   |   | **26** |   |

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

Net gain from derivatives of euro 26 million(euro 386 million of net loss and euro 383 million of net gain in2005 and 2006, respectively) was primarily due to the recognitionin the profit and loss account of the change in fair value ofderivatives that cannot be qualified as hedging instruments underIFRS. In fact, since these derivatives are entered for amountscorresponding to the net exposure to exchange rate risk, interestrate risk or commodity risk, they cannot be referred to specifictrade or financing transactions. The lack of these formalrequirements in order to assess these derivatives as hedginginstruments under IFRS provides also the recognition in profit orloss of negative exchange translation differences on assets andliabilities denominated in currencies other than functionalcurrency, as these translation effects cannot be offset bychanges in fair value of derivative contracts. 

Losses on commodity derivatives amounted to euro129 million, of which euro 52 million related to the ineffectiveportion of the negative change in fair value of cash flow hedgingderivatives entered into by the Exploration & Productionsegment in order to hedge the exposure to variability in futurecash flows expected in the 2008-2011 period deriving frommarketing an amount of Eni’s hydrocarbon proved reservesequal to 2% of proved reserves as of December 31, 2006 inconnection with the acquisition in 2007 of production,development and exploration upstream properties onshore Congofrom the French company. Maurel & Prom and in the Gulf ofMexico from the U.S. company Dominion Resources. Furtherinformation is given in Note 20 - Other current liabilities andNote 25 - Other non-current liabilities.

Income from equity instruments of euro 188million regarded the valuation at fair value of the 20% interestin OAO Gazprom Neft and the related call option granted by Eni toGazprom (more information is included in Note 2 - Other financialassets held for trading or available for sale).

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**32 Income (expense) frominvestments****Share of profit (loss) of equity-accounted investments**Share of profit (loss) of equity-accounted investments consistedof the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Share of profit of equity-accounted investments                         |   | 770     |   |   | 887     |   |   | 906     |   |
|-------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Share of        loss of equity-accounted investments                    |   | (33     | )      |   | (36     | )      |   | (135    | )      |
| Decreases (increases) in the provision for        losses on investments |   |    |   |   | (56     | )      |   | 2       |   |
|                                                                    |   | **737** |   |   | **795** |   |   | **773** |   |

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

More information is provided in Note 12 -Equity-accounted investments.

**Other gain (loss) from investments**Other gain (loss) from investments consisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Gains on disposals                 |   | 179     |   |   | 25      |   |   | 301     |   |
|------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Dividends                          |   | 33      |   |   | 98      |   |   | 170     |   |
| Losses on disposals                |   | (8      | )      |   | (7      | )      |   | (1      | )      |
| Other        income (expense), net |   | (27     | )      |   | (8      | )      |   |    |   |
|                               |   | **177** |   |   | **108** |   |   | **470** |   |

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

Gains on disposals of euro 301 million primarilyrelated to the sale of Haldor Topsøe AS (euro 265 million) andCamom SA (euro 25 million). Gains on disposals for 2006 of euro25 million primarily related to the sale of Fiorentina Gas SpAand Toscana Gas SpA (euro 16 million). 

Gains on disposal for 2005 of euro 179 millionprimarily related to the sale of Italiana Petroli SpA (euro 132million). Dividends of euro 170 million primarily related toNigeria LNG Ltd (euro 131 million) and Saudi EuropeanPetrochemical Co - IBN ZAHR (euro 19 million).

 

**33 Income tax expense**Income tax expense consisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Current taxes:                                                                     |   |      |   |   |       |   |   |      |   |
|------------------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|
| - Italian        subsidiaries                                                      |   | 1,872     |   |   | 2,007      |   |   | 2,380     |   |
| - foreign subsidiaries of the Exploration &        Production segment          |   | 5,116     |   |   | 6,740      |   |   | 6,695     |   |
| - foreign        subsidiaries                                                      |   | 373       |   |   | 529        |   |   | 482       |   |
|                                                                               |   | **7,361** |   |   | **9,276**  |   |   | **9,557** |   |
| less:                                                                              |   |      |   |   |       |   |   |      |   |
| - tax credits on dividend distributions not        offset with current tax payment |   | (34       | )      |   |       |   |   |      |   |
|                                                                               |   | **7,327** |   |   | **9,276**  |   |   | **9,557** |   |
| Net deferred taxes:                                                                |   |      |   |   |       |   |   |      |   |
| - Italian        subsidiaries                                                      |   | 334       |   |   | 230        |   |   | (582      | )      |
| - foreign subsidiaries of the Exploration &        Production segment          |   | 464       |   |   | 1,095      |   |   | 246       |   |
| - foreign        subsidiaries                                                      |   | 3         |   |   | (33        | )      |   | (2        | )      |
|                                                                               |   | **801**   |   |   | **1,292**  |   |   | **(338**  | **)**  |
|                                                                               |   | **8,128** |   |   | **10,568** |   |   | **9,219** |   |

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

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Current income taxes of euro 2,380 million werein respect of Italian subsidiaries for Ires (euro 1,964 million)and Irap (euro 346 million) and of foreign taxes (euro 70million).

The effective tax rate was 46% (46.8% and 51.8%in 2005 and 2006, respectively) compared with a statutory taxrate of 37.9% (38.1% and 37.9% in 2005 and 2006, respectively)and calculated by applying a 33% tax rate (Ires) to profit beforeincome taxes and 4.25% tax rate (Irap) to the net value ofproduction as provided for by Italian laws. Statutory tax ratesof Ires and Irap that were reduced to 27.5% and 3.9%,respectively are effective from January 1, 2008.

The difference between the statutory andeffective tax rate was due to the following factors:

| (%)    |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Statutory tax rate**                                                                                                          |   | **38.1** |   |   | **37.9** |   |   | **37.9** |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Items        increasing (decreasing) statutory tax rate:                                                                        |   |     |   |   |     |   |   |     |   |
| - higher foreign subsidiaries tax rate                                                                                          |   | 8.8      |   |   | 13.6     |   |   | 10.2     |   |
| - changes        in Italian statutory tax rate and adjustment of tax base        of amortizable assets for Italian subsidiaries |   |     |   |   |     |   |   | (2.0     | )      |
| - permanent differences and other adjustments                                                                                   |   | (0.1     | )      |   | 0.3      |   |   | (0.1     | )      |
|                                                                                                                            |   | **8.7**  |   |   | **13.9** |   |   | **8.1**  |   |
|                                                                                                                            |   | **46.8** |   |   | **51.8** |   |   | **46.0** |   |

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

In 2007 the increase in the tax rate of foreignsubsidiaries primarily related to a 15 percentage points increasein the Exploration & Production segment (12.7% and 17.2% in2005 and 2006, respectively). In 2006 the increase in the taxrate of foreign subsidiaries relating the Exploration &Production segment (4.5 percentage points) mainly derived fromthe application of a windfall tax introduced by the Algeriangovernment with effect starting from August 1, 2006 (1.6percentage points) and a supplemental tax rate introduced by thegovernment of the United Kingdom relating to the North Seaproductions with effect starting from January 1, 2006 (1percentage point). 

The adjustment to deferred tax assets andliabilities for Italian subsidiaries were recognized inconnection with certain amendments to the Italian tax regimeenacted by the 2008 Budget Law. These included an optionregarding the increase of the tax bases of certain tangible andother assets to their carrying amounts (euro 773 million) bypaying a special tax (euro 325 million) and a lower statutory taxrate (Ires from 33% to 27.5%, Irap from 4.25% to 3.9%, euro 54million) effective January 1, 2008. 

In 2006 and 2005 permanent differences mainlyarose from certain charges that are not deductible because takenin connection with risk provisions arising from proceedingsagainst the Italian Antitrust and other regulatory Authorities(0.4 and 0.6 percentage points, respectively). 

 

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**34 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 forthe calculation of the basic earnings per share outstanding atDecember 31, 2005, 2006 and 2007, was 3,758,519,603,3,698,201,896 and 3,668,305,807 respectively.

Diluted earnings per share is calculated bydividing net profit for the year attributable to Eni’sshareholders by the weighted average number of sharesfully-diluted which includes issued and outstanding shares duringthe year, excluding treasury shares and including the number ofshares that could be issued potentially in connection withstock-based compensation plans.

The average number of shares fully diluted usedin the calculation of diluted earnings was 3,763,375,140,3,701,262,557 and 3,669,172,762 for the years ending December 31,2005, 2006 and 2007 respectively.

Reconciliation of the average number of sharesused for the calculation for both basic and diluted earning pershare was as follows:

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Average number of shares used for the        calculation of the basic earnings per share**          |   |             |   | **3,758,519,603** |   | **3,698,201,896** |   | **3,668,305,807** |
|-------------------------------------------------------------------------------------------------------|--------|------------------|--------|-------------------|--------|-------------------|--------|-------------------|
| Number of        potential shares following stock grant plans                                         |   |             |   | 2,268,265         |   | 1,070,676         |   | 302,092           |
| Number of potential shares following stock        options plans                                       |   |             |   | 2,587,272         |   | 1,989,985         |   | 564,863           |
| **Average        number of shares used for the calculation of the diluted        earnings per share** |   |             |   | **3,763,375,140** |   | **3,701,262,557** |   | **3,669,172,762** |
| **Eni’s net profit**                                                                             |   | (million euro)   |   | **8,788**         |   | **9,217**         |   | **10,011**        |
| **Basic        earning per share**                                                                    |   | (euro per share) |   | **2.34**          |   | **2.49**          |   | **2.73**          |
| **Diluted earning per share**                                                                         |   | (euro per share) |   | **2.34**          |   | **2.49**          |   | **2.73**          |

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

 

 

 

 

 

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**35 Information by industrysegment and geographic financial information****Information by industry segment**13

| (million euro) |   | **Exploration &        Production** |   | **Gas & Power** |   | **Refining & Marketing** |   | **Petrochemicals** |   | **Engineering &        Construction** |   | **Other activities** |   | **Corporate and financial        companies** |   | **Elimination** |   | **Total** |
|----------------|--------|-----------------------------------------|--------|---------------------|--------|------------------------------|--------|--------------------|--------|-------------------------------------------|--------|----------------------|--------|----------------------------------------------|--------|-----------------|--------|-----------|
|           |   |                                         |   |                     |   |                              |   |                    |   |                                           |   |                      |   |                                              |   |                 |   |           |

| **2005**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net sales        from operations (a)                          |   | 22,531  |   |   | 22,969 |   |   | 33,732 |   |   | 6,255  |   |   | 5,733  |   |   | 863    |   |   | 1,239  |   |   |   |   |   |   |   |
| Less: intersegment sales                                      |   | (14,761 | )      |   | (572   | )      |   | (1,092 | )      |   | (683   | )      |   | (925   | )      |   | (546   | )      |   | (1,015 | )      |   |   |   |   |   |   |
| Net sales        to customers                                 |   | 7,770   |   |   | 22,397 |   |   | 32,640 |   |   | 5,572  |   |   | 4,808  |   |   | 317    |   |   | 224    |   |   |   |   |   | 73,728 |   |
| Operating profit                                              |   | 12,592  |   |   | 3,321  |   |   | 1,857  |   |   | 202    |   |   | 307    |   |   | (934   | )      |   | (377   | )      |   | (141   | )      |   | 16,827 |   |
| Provisions        for contingencies                           |   | 50      |   |   | 703    |   |   | 420    |   |   | 47     |   |   | 32     |   |   | 284    |   |   | 107    |   |   |   |   |   | 1,643  |   |
| Depreciation, amortization and writedowns                     |   | 4,101   |   |   | 685    |   |   | 467    |   |   | 147    |   |   | 180    |   |   | 91     |   |   | 114    |   |   | (4     | )      |   | 5,781  |   |
| Share of        profit (loss) of equity-accounted investments |   | 14      |   |   | 359    |   |   | 221    |   |   | 3      |   |   | 140    |   |   |   |   |   |   |   |   |   |   |   | 737    |   |
| Identifiable assets (b)                                       |   | 29,010  |   |   | 21,928 |   |   | 11,787 |   |   | 2,905  |   |   | 5,248  |   |   | 438    |   |   | 1,523  |   |   | (534   | )      |   | 72,305 |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 11,545 |   |
| Equity-accounted investments                                  |   | 292     |   |   | 2,155  |   |   | 936    |   |   | 19     |   |   | 457    |   |   | 31     |   |   |   |   |   |   |   |   | 3,890  |   |
| Identifiable        liabilities (c)                           |   | 6,785   |   |   | 5,097  |   |   | 4,542  |   |   | 702    |   |   | 3,204  |   |   | 2,070  |   |   | 2,131  |   |   |   |   |   | 24,531 |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 20,102 |   |
| Capital        expenditures                                   |   | 4,965   |   |   | 1,152  |   |   | 656    |   |   | 112    |   |   | 349    |   |   | 48     |   |   | 132    |   |   |   |   |   | 7,414  |   |
| **2006**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales        from operations (a)                          |   | 27,173  |   |   | 28,368 |   |   | 38,210 |   |   | 6,823  |   |   | 6,979  |   |   | 823    |   |   | 1,174  |   |   |   |   |   |   |   |
| Less: intersegment sales                                      |   | (18,445 | )      |   | (751   | )      |   | (1,300 | )      |   | (667   | )      |   | (771   | )      |   | (520   | )      |   | (991   | )      |   |   |   |   |   |   |
| Net sales        to customers                                 |   | 8,728   |   |   | 27,617 |   |   | 36,910 |   |   | 6,156  |   |   | 6,208  |   |   | 303    |   |   | 183    |   |   |   |   |   | 86,105 |   |
| Operating profit                                              |   | 15,580  |   |   | 3,802  |   |   | 319    |   |   | 172    |   |   | 505    |   |   | (622   | )      |   | (296   | )      |   | (133   | )      |   | 19,327 |   |
| Provisions        for contingencies                           |   | 153     |   |   | 197    |   |   | 264    |   |   | 30     |   |   | (13    | )      |   | 236    |   |   | (100   | )      |   |   |   |   | 767    |   |
| Depreciation, amortization and writedowns                     |   | 4,776   |   |   | 738    |   |   | 447    |   |   | 174    |   |   | 196    |   |   | 28     |   |   | 71     |   |   | (9     | )      |   | 6,421  |   |
| Share of        profit (loss) of equity-accounted investments |   | 28      |   |   | 509    |   |   | 194    |   |   | 2      |   |   | 66     |   |   | (4     | )      |   |   |   |   |   |   |   | 795    |   |
| Identifiable assets (b)                                       |   | 29,720  |   |   | 23,500 |   |   | 11,359 |   |   | 2,984  |   |   | 6,362  |   |   | 344    |   |   | 1,023  |   |   | (666   | )      |   | 74,626 |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 13,686 |   |
| Investments accounted for using the equity        method      |   | 258     |   |   | 2,214  |   |   | 874    |   |   | 11     |   |   | 483    |   |   | 46     |   |   |   |   |   |   |   |   | 3,886  |   |
| Identifiable        liabilities (c)                           |   | 9,119   |   |   | 5,284  |   |   | 4,712  |   |   | 806    |   |   | 3,869  |   |   | 1,940  |   |   | 1,619  |   |   |   |   |   | 27,349 |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 19,764 |   |
| Capital        expenditures                                   |   | 5,203   |   |   | 1,174  |   |   | 645    |   |   | 99     |   |   | 591    |   |   | 72     |   |   | 88     |   |   | (39    | )      |   | 7,833  |   |

| **2007**                                                      |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net sales        from operations (a)                          |   | 27,278  |   |   | 27,633 |   |   | 36,401 |   |   | 6,934  |   |   | 8,678  |   |   | 205    |   |   | 1,313  |   |   |   |   |   |   |   |
| Less: intersegment sales                                      |   | (16,475 | )      |   | (760   | )      |   | (1,276 | )      |   | (363   | )      |   | (1,182 | )      |   | (31    | )      |   | (1,099 | )      |   |   |   |   |   |   |
| Net sales        to customers                                 |   | 10,803  |   |   | 26,873 |   |   | 35,125 |   |   | 6,571  |   |   | 7,496  |   |   | 174    |   |   | 214    |   |   |   |   |   | 87,256 |   |
| Operating profit                                              |   | 13,788  |   |   | 4,127  |   |   | 729    |   |   | 74     |   |   | 837    |   |   | (444   | )      |   | (217   | )      |   | (26    | )      |   | 18,868 |   |
| Provisions        for contingencies                           |   | 5       |   |   | 37     |   |   | 256    |   |   | 15     |   |   | 11     |   |   | 264    |   |   | 3      |   |   |   |   |   | 591    |   |
| Depreciation, amortization and writedowns                     |   | 5,626   |   |   | 687    |   |   | 491    |   |   | 116    |   |   | 248    |   |   | 10     |   |   | 68     |   |   | (10    | )      |   | 7,236  |   |
| Share of        profit (loss) of equity-accounted investments |   | 23      |   |   | 449    |   |   | 216    |   |   |   |   |   | 79     |   |   | 6      |   |   |   |   |   |   |   |   | 773    |   |
| Identifiable assets (b)                                       |   | 33,435  |   |   | 24,530 |   |   | 13,767 |   |   | 3,427  |   |   | 8,017  |   |   | 275    |   |   | 854    |   |   | (692   | )      |   | 83,613 |   |
| Unallocated        assets                                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 17,847 |   |
| Equity-accounted investments                                  |   | 1,926   |   |   | 2,152  |   |   | 1,267  |   |   | 15     |   |   | 230    |   |   | 49     |   |   |   |   |   |   |   |   | 5,639  |   |
| Identifiable        liabilities (c)                           |   | 11,480  |   |   | 5,390  |   |   | 5,420  |   |   | 939    |   |   | 4,349  |   |   | 1,827  |   |   | 1,380  |   |   |   |   |   | 30,785 |   |
| Unallocated liabilities                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 27,808 |   |
| Capital        expenditures                                   |   | 6,625   |   |   | 1,366  |   |   | 979    |   |   | 145    |   |   | 1,410  |   |   | 59     |   |   | 108    |   |   | (99    | )      |   | 10,593 |   |

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

|   |   |                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------|
| (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. |

 

----

| (13) |   | Operating        profit (loss) by industry segment for 2005 has been        reclassified on the basis of the new subdivision within        segments. This reclassification concerns the Exploration        & Production, Other activities and Corporate and        financial companies segments. |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Inter-segment sales were conducted on an arm’s lengthbasis.

**Geographic financial information***Assets and investments by geographic area of origin*

| (million euro) |   |   |   | **Italy** |   | **Other EU** |   | **Rest of Europe** |   | **Americas** |   | **Asia** |   | **Africa** |   | **Other areas** |   | **Total** |
|----------------|--------|--------|--------|-----------|--------|--------------|--------|--------------------|--------|--------------|--------|----------|--------|------------|--------|-----------------|--------|-----------|
|           |   |   |   |           |   |              |   |                    |   |              |   |          |   |            |   |                 |   |           |

| **2005**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Identifiable        assets (a) |   | 38,229 |   | 8,768  |   | 3,085  |   | 2,670  |   | 5,864  |   | 13,445 |   | 244    |   | 72,305 |
| Capital expenditures           |   | 2,442  |   | 545    |   | 415    |   | 507    |   | 1,181  |   | 2,233  |   | 91     |   | 7,414  |
| **2006**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Identifiable assets (a)        |   | 37,339 |   | 10,037 |   | 3,200  |   | 2,987  |   | 6,341  |   | 14,190 |   | 532    |   | 74,626 |
| Capital        expenditures    |   | 2,529  |   | 713    |   | 436    |   | 572    |   | 1,032  |   | 2,419  |   | 132    |   | 7,833  |
| **2007**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Identifiable        assets (a) |   | 39,742 |   | 11,071 |   | 3,917  |   | 6,260  |   | 6,733  |   | 15,368 |   | 522    |   | 83,613 |
| Capital expenditures           |   | 3,246  |   | 1,246  |   | 469    |   | 1,004  |   | 1,253  |   | 3,152  |   | 223    |   | 10,593 |
|                           |   |        |   |        |   |        |   |        |   |        |   |        |   |        |   |        |

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (a)    |   | Includes        assets directly related to the generation of operating        profit. |

 

*Sales from operations by geographic area of destination*

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Italy                       |   | 32,846     |   |   | 36,343     |   |   | 37,346     |   |
|-----------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Other        European Union |   | 19,601     |   |   | 23,949     |   |   | 23,074     |   |
| Rest of Europe              |   | 5,123      |   |   | 6,975      |   |   | 5,507      |   |
| Americas                    |   | 6,103      |   |   | 6,250      |   |   | 6,447      |   |
| Asia                        |   | 4,399      |   |   | 5,595      |   |   | 5,840      |   |
| Africa                      |   | 5,259      |   |   | 5,949      |   |   | 8,010      |   |
| Other areas                 |   | 397        |   |   | 1,044      |   |   | 1,032      |   |
|                        |   | **73,728** |   |   | **86,105** |   |   | **87,256** |   |

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

 

**36 Transactions withrelated parties**In the ordinary course of its business Eni enters intotransactions concerning the exchange of goods, provision ofservices and financing with joint ventures, affiliated companiesand non-consolidated subsidiaries as well as with entitiesdirectly and indirectly owned or controlled by the Government.All such transactions are mainly conducted on an arm’slength basis on behalf of Eni companies.

The following is a description of trade andfinancing transactions with related parties.

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**Trade and other transactions**Trade and other transactions in the 2005 consisted ofthe following:

| (million euro) |   | **Dec. 31, 2005** |   | **2005** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

|   | Costs |   | Revenues |
|--------|-------|--------|----------|
|   |       |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Goods |   | Services |   | Goods |   | Services |
|------|--------|-------------|--------|----------|--------|------------|--------|-------|--------|----------|--------|-------|--------|----------|
|      |   |             |   |          |   |            |   |       |   |          |   |       |   |          |

| **Joint ventures and affiliates**                              |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
|----------------------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------------|--------|-----------|--------|-----------|--------|---------|
| ASG Scarl                                                      |   | 13      |   | 66        |   | 72        |   |          |   | 173       |   |      |   | 6       |
| Azienda Energia e Servizi Torino SpA                           |   | 2       |   | 24        |   |      |   |          |   | 56        |   |      |   | 2       |
| Bayernoil        Raffineriegesellshaft mbH                     |   |    |   | 49        |   | 1         |   |          |   | 814       |   |      |   |    |
| Bernhard Rosa Inh. Ingeborg Plöchinger GmbH               |   | 10      |   |      |   |      |   |          |   |      |   | 172       |   |    |
| Blue        Stream Pipeline Co BV                              |   | 45      |   | 12        |   |      |   |          |   | 177       |   |      |   | 4       |
| Bronberger & Kessler Und Gilg &        Schweiger GmbH  |   | 12      |   |      |   |      |   |          |   |      |   | 207       |   |    |
| Cam        Petroli Srl                                         |   | 85      |   |      |   |      |   |          |   |      |   | 593       |   |    |
| CEPAV (Consorzio Eni per l’Alta Velocità)        Uno |   | 105     |   | 107       |   | 4,894     |   |          |   |      |   |      |   | 411     |
| Eni Oil Co        Ltd                                          |   |    |   | 84        |   |      |   |          |   | 50        |   |      |   |    |
| Fox Energy SpA                                                 |   | 22      |   |      |   |      |   | 4             |   |      |   | 240       |   |    |
| Gruppo        Distribuzione Petroli Srl                        |   | 22      |   |      |   |      |   |          |   |      |   | 89        |   |    |
| Karachaganak Petroleum Operating BV                            |   | 13      |   | 46        |   |      |   | 6             |   | 99        |   |      |   | 4       |
| Mellitah        Gas BV (ex Eni Gas BV)                         |   | 16      |   | 149       |   |      |   |          |   | 47        |   |      |   |    |
| Mangrove Gas Netherlands BV                                    |   |    |   |      |   | 55        |   |          |   |      |   |      |   |    |
| Modena        Scarl                                            |   | 2       |   | 12        |   | 61        |   |          |   | 56        |   | 1         |   | 1       |
| Petrobel Belayim Petroleum Co                                  |   |    |   | 138       |   |      |   |          |   | 248       |   |      |   |    |
| Promgas        SpA                                             |   | 44      |   | 45        |   |      |   | 307           |   |      |   | 355       |   |    |
| Raffineria di Milazzo ScpA                                     |   | 10      |   | 10        |   |      |   |          |   | 204       |   | 94        |   |    |
| Rodano        Consortile Scarl                                 |   | 2       |   | 20        |   |      |   |          |   | 80        |   |      |   | 2       |
| RPCO Enterprises Ltd                                           |   |    |   |      |   | 55        |   |          |   |      |   |      |   |    |
| Supermetanol        CA                                         |   |    |   | 8         |   |      |   | 65            |   |      |   |      |   |    |
| Super Octanos CA                                               |   | 1       |   | 14        |   |      |   | 265           |   |      |   |      |   |    |
| Toscana        Energia Clienti SpA                             |   | 46      |   |      |   |      |   |          |   |      |   | 118       |   |    |
| Trans Austria Gasleitung GmbH                                  |   | 43      |   | 55        |   |      |   | 43            |   | 143       |   |      |   | 47      |
| Transitgas        AG                                           |   |    |   | 7         |   |      |   |          |   | 64        |   |      |   |    |
| Transmediterranean Pipeline Co Ltd                             |   |    |   | 4         |   |      |   |          |   | 88        |   |      |   | 1       |
| Unión        Fenosa Gas SA                                |   | 4       |   | 4         |   | 62        |   | 79            |   |      |   | 16        |   | 2       |
| Other (*)                                                      |   | 101     |   | 86        |   | 112       |   | 69            |   | 157       |   | 147       |   | 67      |
|                                                           |   | **598** |   | **940**   |   | **5,312** |   | **838**       |   | **2,456** |   | **2,032** |   | **547** |
| **Unconsolidated entities controlled by Eni**                  |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
| Agip        Kazakhstan North Caspian Operating Co NV           |   | 4       |   | 152       |   |      |   | 5             |   | 19        |   |      |   | 28      |
| Eni BTC Ltd                                                    |   |    |   |      |   | 165       |   |          |   |      |   |      |   |    |
| Other (*)                                                      |   | 44      |   | 48        |   | 8         |   | 1             |   | 31        |   | 15        |   | 9       |
|                                                           |   | **48**  |   | **200**   |   | **173**   |   | **6**         |   | **50**    |   | **15**    |   | **37**  |
|                                                           |   | **646** |   | **1,140** |   | **5,485** |   | **844**       |   | **2,506** |   | **2,047** |   | **584** |
| **Entities owned or controlled by the        Government**      |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
| Alitalia                                                       |   | 20      |   |      |   |      |   |          |   |      |   | 276       |   |    |
| Enel                                                           |   | 187     |   | 5         |   |      |   | 12            |   | 10        |   | 1,180     |   | 333     |
| Other (*)                                                      |   | 20      |   | 19        |   |      |   |          |   | 57        |   | 103       |   | 12      |
|                                                           |   | **227** |   | **24**    |   |      |   | **12**        |   | **67**    |   | **1,559** |   | **345** |
|                                                           |   | **873** |   | **1,164** |   | **5,485** |   | ** 856** |   | **2,573** |   | **3,606** |   | **929** |
|                                                                |   |         |   |           |   |           |   |               |   |           |   |           |   |         |

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

F-86

----

##### Table of Contents

Trade and other transactions for the year 2006 consisted ofthe following:

| (million euro) |   | **Dec. 31, 2006** |   | **2006** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

|   | Costs |   | Revenues |
|--------|-------|--------|----------|
|   |       |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Goods |   | Services |   | Goods |   | Services |
|------|--------|-------------|--------|----------|--------|------------|--------|-------|--------|----------|--------|-------|--------|----------|
|      |   |             |   |          |   |            |   |       |   |          |   |       |   |          |

| **Joint ventures and affiliates**                              |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
|----------------------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|
| ASG Scarl                                                      |   | 7       |   | 40        |   | 80        |   |      |   | 88        |   | 1         |   | 1       |
| Azienda Energia e Servizi Torino SpA                           |   | 1       |   | 22        |   |      |   |      |   | 64        |   | 1         |   | 1       |
| Bernhard        Rosa Inh. Ingeborg Plöchinger GmbH        |   | 10      |   |      |   |      |   |      |   |      |   | 96        |   |    |
| Blue Stream Pipeline Co BV                                     |   | 34      |   | 19        |   |      |   |      |   | 193       |   |      |   | 1       |
| Bronberger        & Kessler Und Gilg & Schweiger GmbH  |   | 11      |   |      |   |      |   |      |   |      |   | 113       |   |    |
| Cam Petroli Srl                                                |   | 103     |   |      |   |      |   |      |   |      |   | 310       |   |    |
| CEPAV        (Consorzio Eni per l’Alta Velocità) Uno |   | 87      |   | 87        |   | 5,654     |   | 16        |   | 2         |   |      |   | 304     |
| Charville - Consultores e Serviços Lda                    |   | 7       |   |      |   | 85        |   |      |   |      |   | 4         |   | 11      |
| Eni Oil Co        Ltd                                          |   | 5       |   | 96        |   |      |   |      |   | 59        |   |      |   |    |
| Fox Energy SpA                                                 |   | 35      |   |      |   |      |   |      |   |      |   | 125       |   |    |
| Gasversorgung        Süddeutschland GmbH                  |   | 14      |   |      |   |      |   |      |   | 1         |   | 123       |   | 19      |
| Gruppo Distribuzione Petroli Srl                               |   | 19      |   |      |   |      |   |      |   |      |   | 54        |   |    |
| Karachaganak        Petroleum Operating BV                     |   | 23      |   | 70        |   |      |   | 29        |   | 129       |   |      |   | 7       |
| Mangrove Gas Netherlands BV                                    |   |    |   | 1         |   | 52        |   |      |   |      |   |      |   |    |
| Mellitah        Gas BV (ex Eni Gas BV)                         |   | 28      |   | 90        |   |      |   | 7         |   | 72        |   | 8         |   | 2       |
| Petrobel Belayim Petroleum Co                                  |   |    |   | 3         |   |      |   |      |   | 181       |   |      |   |    |
| Promgas        SpA                                             |   | 44      |   | 39        |   |      |   | 375       |   |      |   | 419       |   |    |
| Raffineria di Milazzo ScpA                                     |   | 9       |   | 12        |   |      |   |      |   | 237       |   | 109       |   |    |
| Rodano        Consortile Scarl                                 |   | 3       |   | 14        |   |      |   |      |   | 54        |   |      |   | 1       |
| RPCO Enterprises Ltd                                           |   | 13      |   |      |   | 104       |   |      |   |      |   |      |   | 12      |
| Supermetanol        CA                                         |   |    |   | 13        |   |      |   | 91        |   |      |   |      |   |    |
| Super Octanos CA                                               |   |    |   | 13        |   |      |   | 257       |   |      |   |      |   |    |
| Trans        Austria Gasleitung GmbH                           |   | 7       |   | 78        |   |      |   | 53        |   | 138       |   |      |   | 56      |
| Transitgas AG                                                  |   |    |   | 8         |   |      |   |      |   | 64        |   |      |   |    |
| Transmediterranean        Pipeline Co Ltd                      |   |    |   | 7         |   |      |   |      |   | 80        |   |      |   |    |
| Unión Fenosa Gas SA                                       |   | 1       |   | 7         |   | 61        |   | 93        |   | 7         |   |      |   |    |
| Other (*)                                                      |   | 72      |   | 169       |   | 168       |   | 75        |   | 188       |   | 119       |   | 66      |
|                                                           |   | **533** |   | **788**   |   | **6,204** |   | **996**   |   | **1,557** |   | **1,482** |   | **481** |
| **Unconsolidated        entities controlled by Eni**           |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
| Agip Kazakhstan North Caspian Operating Co NV                  |   | 27      |   | 132       |   |      |   | 18        |   | 16        |   |      |   | 57      |
| Eni BTC        Ltd                                             |   |    |   |      |   | 185       |   |      |   |      |   |      |   |    |
| Eni Timor Leste SpA                                            |   |    |   |      |   | 102       |   |      |   |      |   |      |   |    |
| Other (*)                                                      |   | 20      |   | 30        |   | 8         |   | 1         |   | 4         |   | 8         |   | 4       |
|                                                           |   | **47**  |   | **162**   |   | **295**   |   | **19**    |   | **20**    |   | **8**     |   | **61**  |
|                                                           |   | **580** |   | **950**   |   | **6,499** |   | **1,015** |   | **1,577** |   | **1,490** |   | **542** |
| **Entities owned or controlled by the        Government**      |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
| Alitalia                                                       |   | 12      |   |      |   |      |   |      |   |      |   | 354       |   |    |
| Enel                                                           |   | 162     |   | 42        |   |      |   | 47        |   | 33        |   | 1,068     |   | 383     |
| Other (*)                                                      |   | 42      |   | 29        |   |      |   | 4         |   | 44        |   | 136       |   | 1       |
|                                                           |   | **216** |   | **71**    |   |      |   | **51**    |   | **77**    |   | **1,558** |   | **384** |
|                                                           |   | **796** |   | **1,021** |   | **6,499** |   | **1,066** |   | **1,654** |   | **3,048** |   | **926** |
|                                                                |   |         |   |           |   |           |   |           |   |           |   |           |   |         |

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

F-87

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##### Table of Contents

Trade and other transactions in 2007 consisted of thefollowing:

| (million euro) |   | **Dec. 31, 2007** |   | **2007** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

|   | Costs |   | Revenues |
|--------|-------|--------|----------|
|   |       |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Goods |   | Services |   | Goods |   | Services |
|------|--------|-------------|--------|----------|--------|------------|--------|-------|--------|----------|--------|-------|--------|----------|
|      |   |             |   |          |   |            |   |       |   |          |   |       |   |          |

| **Joint ventures and affiliates**                              |   |      |   |      |   |      |   |    |   |      |   |      |   |    |
|----------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|---------|
| ASG Scarl                                                      |   | 6         |   | 43        |   | 121       |   |    |   | 108       |   |      |   | 3       |
| Bernhard Rosa Inh. Ingeborg Plöchinger GmbH               |   | 11        |   |      |   |      |   |    |   |      |   | 86        |   |    |
| Blue        Stream Pipeline Co BV                              |   | 19        |   |      |   |      |   |    |   | 183       |   |      |   | 1       |
| Bronberger & Kessler und Gill &        Schweiger GmbH  |   | 18        |   |      |   |      |   |    |   |      |   | 106       |   |    |
| CEPAV        (Consorzio Eni per l’Alta Velocità) Uno |   | 84        |   | 70        |   | 5,870     |   |    |   |      |   |      |   | 263     |
| CEPAV (Consorzio Eni per l’Alta Velocità)        Due |   | 1         |   | 1         |   | 64        |   |    |   | 1         |   |      |   | 1       |
| Eni Oil Co        Ltd                                          |   | 7         |   | 60        |   |      |   |    |   | 141       |   | 1         |   |    |
| Fox Energy Srl                                                 |   | 49        |   |      |   |      |   |    |   |      |   | 139       |   |    |
| Gasversorgung        Süddeutschland GmbH                  |   | 54        |   |      |   |      |   |    |   |      |   | 195       |   | 4       |
| Gruppo Distribuzione Petroli Srl                               |   | 26        |   |      |   |      |   |    |   |      |   | 50        |   |    |
| Karachaganak        Petroleum Operating BV                     |   | 43        |   | 102       |   |      |   | 24      |   | 301       |   |      |   | 7       |
| Mellitah Gas BV                                                |   | 10        |   | 137       |   |      |   |    |   | 105       |   | 1         |   | 6       |
| OOO        "EniNeftegaz"                             |   | 215       |   |      |   |      |   |    |   |      |   |      |   | 1       |
| Petrobel Belayim Petroleum Co                                  |   |      |   | 60        |   |      |   |    |   | 211       |   |      |   |    |
| Raffineria        di Milazzo ScpA                              |   | 17        |   | 21        |   |      |   |    |   | 245       |   | 118       |   | 5       |
| Supermetanol CA                                                |   |      |   | 11        |   |      |   | 78      |   |      |   |      |   | 1       |
| Super        Octanos CA                                        |   |      |   | 18        |   |      |   | 201     |   |      |   |      |   | 1       |
| Trans Austria Gasleitung GmbH                                  |   | 6         |   | 80        |   |      |   | 43      |   | 147       |   |      |   | 47      |
| Transitgas        AG                                           |   |      |   | 8         |   |      |   |    |   | 64        |   |      |   |    |
| Transmediterranean Pipeline Co Ltd                             |   |      |   | 6         |   |      |   |    |   | 70        |   |      |   | 1       |
| Unión        Fenosa Gas SA                                |   | 1         |   |      |   | 61        |   |    |   |      |   | 193       |   |    |
| Other (*)                                                      |   | 120       |   | 127       |   | 56        |   | 76      |   | 374       |   | 122       |   | 118     |
|                                                           |   | **687**   |   | **744**   |   | **6,172** |   | **422** |   | **1,950** |   | **1,011** |   | **459** |
| **Unconsolidated entities controlled by Eni**                  |   |      |   |      |   |      |   |    |   |      |   |      |   |    |
| Agip        Kazakhstan North Caspian Operating Co NV           |   | 49        |   | 111       |   |      |   | 11      |   | 534       |   |      |   | 52      |
| Eni BTC Ltd                                                    |   |      |   |      |   | 138       |   |    |   |      |   |      |   | 1       |
| Other (*)                                                      |   | 23        |   | 8         |   | 11        |   | 2       |   | 18        |   | 5         |   | 18      |
|                                                           |   | **72**    |   | **119**   |   | **149**   |   | **13**  |   | **552**   |   | **5**     |   | **71**  |
|                                                           |   | **759**   |   | **863**   |   | **6,321** |   | **435** |   | **2,502** |   | **1,016** |   | **530** |
| **Entities owned or controlled by the        Government**      |   |      |   |      |   |      |   |    |   |      |   |      |   |    |
| Alitalia                                                       |   | 4         |   |      |   |      |   |    |   |      |   | 363       |   | 1       |
| Enel                                                           |   | 384       |   | 8         |   |      |   |    |   | 245       |   | 894       |   | 408     |
| GSE -        Gestore Servizi Elettrici                         |   | 124       |   | 63        |   |      |   | 239     |   | 37        |   | 870       |   | 7       |
| Terna SpA                                                      |   | 19        |   | 69        |   |      |   | 106     |   | 105       |   |      |   | 31      |
| Other (*)                                                      |   | 45        |   | 79        |   |      |   | 19      |   | 89        |   | 75        |   | 3       |
|                                                           |   | **576**   |   | **219**   |   |      |   | **364** |   | **476**   |   | **2,202** |   | **450** |
|                                                           |   | **1,335** |   | **1,082** |   | **6,321** |   | **799** |   | **2,978** |   | **3,218** |   | **980** |

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

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Certain engineering, construction and maintenance serviceswere acquired from the Cosmi Holding Group, related to Enithrough a member of the Board of Directors. Relevant transactionswhich were executed on an arm's length basis amounted toapproximately euro 18 million, euro 13 million and euro 18million in 2005, 2006 and 2007, respectively.

Most significant transactions concerned:

- transactions related to the planning and the construction        of the tracks for high speed/high capacity trains from        Milan to Bologna with ASG Scarl, CEPAV (Consorzio Eni per        l’Alta Velocità) Uno, and related guarantees;
- supply of oil products to Bernhard Rosa Inh. Ingerborg        Plöchinger GmbH, Bronberger & Kessler und Gilg &        Schweiger GmbH, Fox Energy Srl, Gruppo Distribuzione        Petroli Srl and Raffineria di Milazzo ScpA on the basis        of prices referred to the quotations on international        markets of the main oil products, as they would be        conducted on an arm’s length basis;
- acquisition of natural gas transport services outside        Italy from Blue Stream Pipeline Co BV, Trans Austria        Gasleitung GmbH and Transitgas AG;
- guarantees issued on behalf of CEPAV (Consorzio Eni per        l’Alta Velocità) Due in relation to contractual        commitments related to the execution of project planning        and realization;

F-88

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##### Table of Contents

- provision of specialized services in upstream activities        and payables for investment activities from Agip        Kazakhstan North Caspian Operating Co NV, Mellitah Gas        BV, Eni Oil Co Ltd, Karachaganak Petroleum Operating BV        and Petrobel Belayim Petroleum Co; services are invoiced        on the basis of incurred costs;
- receivable for dividends from OOO        “EniNeftegaz”;
- sale of natural gas with Gasversorgung Süddeutschland        GmbH;
- acquisition of refining services from Raffineria di        Milazzo ScpA in relation to incurred costs;
- acquisition of petrochemical products from Supermetanol        CA and Super Octanos CA on the basis of prices referred        to the quotations on international markets of the main        products;
- acquisition of natural gas transport services outside        Italy from Transmediterranean Pipeline Co Ltd;        transactions are regulated on the basis of tariffs which        ensure a return on invested capital;
- performance guarantees given on behalf of Unión Fenosa        Gas SA in relation to contractual commitments related to        the results of operations;
- guarantees issued in relation to the construction of an        oil pipeline on behalf of Eni BTC Ltd;
- sale of oil products with Alitalia;
- sale and transportation of natural gas, the sale of fuel        oil and the sale and purchase of electricity and the        acquisition of electricity transmission service with        Enel;
- sale and purchase of electricity with GSE - Gestore        Servizi Elettrici;
- sale and purchase of electricity and the acquisition of        domestic electricity transmission service jointly with        Terna SpA.

**Financing transactions**Financing transactions in 2005 were as follows:

| (million euro) |   | **Dec. 31, 2005** |   | **2005** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Charges |   | Gains |
|------|--------|-------------|--------|----------|--------|------------|--------|---------|--------|-------|
|      |   |             |   |          |   |            |   |         |   |       |

| **Joint ventures and affiliates**             |   |    |   |    |   |      |   |   |   |   |
|-----------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|--------|--------|--------|
| Blue Stream        Pipeline Co BV             |   |    |   | 15      |   | 887       |   |   |   |   |
| Raffineria di Milazzo ScpA                    |   |    |   |    |   | 72        |   |   |   |   |
| Spanish        Egyptian Gas Co SAE            |   |    |   |    |   | 360       |   |   |   |   |
| Trans Austria Gasleitung GmbH                 |   | 386     |   |    |   |      |   |   |   | 12     |
| Transmediterranean        Pipeline Co Ltd     |   | 190     |   |    |   |      |   |   |   | 11     |
| Other (*)                                     |   | 74      |   | 125     |   | 81        |   | 27     |   | 47     |
|                                          |   | **650** |   | **140** |   | **1,400** |   | **27** |   | **70** |
| **Unconsolidated entities controlled by Eni** |   |    |   |    |   |      |   |   |   |   |
| Other (*)                                     |   | 79      |   | 30      |   | 34        |   | 1      |   | 2      |
|                                          |   | **79**  |   | **30**  |   | **34**    |   | **1**  |   | **2**  |
|                                          |   | **729** |   | **170** |   | **1,434** |   | **28** |   | **72** |
|                                          |   |         |   |         |   |           |   |        |   |        |

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

F-89

----

##### Table of Contents

Financing transactions in 2006 were as follows:

| (million euro) |   | **Dec. 31, 2006** |   | **2006** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Charges |   | Gains |
|------|--------|-------------|--------|----------|--------|------------|--------|---------|--------|-------|
|      |   |             |   |          |   |            |   |         |   |       |

| **Joint ventures and affiliates**             |   |    |   |    |   |      |   |   |   |   |
|-----------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|--------|--------|--------|
| Blue Stream        Pipeline Co BV             |   |    |   | 3       |   | 794       |   | 4      |   | 26     |
| Raffineria di Milazzo ScpA                    |   |    |   |    |   | 57        |   |   |   |   |
| Spanish        Egyptian Gas Co SAE            |   |    |   |    |   | 323       |   |   |   | 6      |
| Trans Austria Gasleitung GmbH                 |   | 41      |   |    |   |      |   |   |   |   |
| Transmediterranean        Pipeline Co Ltd     |   | 147     |   |    |   |      |   |   |   | 11     |
| Other (*)                                     |   | 88      |   | 81      |   | 39        |   | 13     |   | 11     |
|                                          |   | **276** |   | **84**  |   | **1,213** |   | **17** |   | **54** |
| **Unconsolidated entities controlled by Eni** |   |    |   |    |   |      |   |   |   |   |
| Other (*)                                     |   | 95      |   | 25      |   | 2         |   | 1      |   | 4      |
|                                          |   | **95**  |   | **25**  |   | **2**     |   | **1**  |   | **4**  |
|                                          |   | **371** |   | **109** |   | **1,215** |   | **18** |   | **58** |

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

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Financing transactions in 2007 were as follows:

| (million euro) |   | **Dec. 31, 2007** |   | **2007** |
|----------------|--------|-------------------|--------|----------|
|           |   |                   |   |          |

| Name |   | Receivables |   | Payables |   | Guarantees |   | Charges |   | Gains |
|------|--------|-------------|--------|----------|--------|------------|--------|---------|--------|-------|
|      |   |             |   |          |   |            |   |         |   |       |

| **Joint ventures and affiliates**                         |   |    |   |    |   |    |   |   |   |   |
|-----------------------------------------------------------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|
| Blue        Stream Pipeline Co BV                         |   |    |   | 1       |   | 711     |   |   |   | 20     |
| Raffineria di Milazzo ScpA                                |   |    |   |    |   | 60      |   |   |   |   |
| Trans        Austria Gasleitung GmbH                      |   | 65      |   |    |   |    |   |   |   | 3      |
| Transmediterranean Pipeline Co Ltd                        |   | 97      |   |    |   |    |   |   |   | 9      |
| Other (*)                                                 |   | 108     |   | 120     |   | 52      |   | 19     |   | 11     |
|                                                      |   | **270** |   | **121** |   | **823** |   | **19** |   | **43** |
| **Unconsolidated        entities controlled by Eni**      |   |    |   |    |   |    |   |   |   |   |
| Other (*)                                                 |   | 114     |   | 26      |   | 1       |   | 1      |   | 6      |
|                                                      |   | **114** |   | **26**  |   | **1**   |   | **1**  |   | **6**  |
| **Entities owned or controlled by the        Government** |   |    |   |    |   |    |   |   |   |   |
| Other (*)                                                 |   |    |   |    |   |    |   | 39     |   | 49     |
|                                                      |   |    |   |    |   |    |   | **39** |   | **49** |
|                                                      |   | **384** |   | **147** |   | **824** |   | **59** |   | **98** |

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

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Most significant transactions in 2007 included:

- bank debt guarantee issued on behalf of Blue Stream        Pipeline Co BV and cash deposit at Eni’s financial        companies;
- bank debt guarantee issued on behalf of Raffineria di        Milazzo ScpA;
- the financing of the Austrian section of the gasline from        the Russian Federation to Italy and the construction of        natural gas transmission facilities and transport        services with Trans Austria Gasleitung GmbH and        Transmediterranean Pipeline Co Ltd.

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**Impact of transactions and positions with relatedparties on the balance sheet, net profit and cash flows**The impact of transactions and positions with relatedparties on the balance sheet, net profit and cash flows consistedof the following:

|   |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |   | **Dec. 31, 2007** |
|--------|--------|-------------------|--------|-------------------|--------|-------------------|
|   |   |                   |   |                   |   |                   |

| (million        euro) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Trade and other receivables                                 |   | 17,902 |   | 1,344  |   | 7.51   |   | 18,799 |   | 1,027  |   | 5.46   |   | 20,676 |   | 1,616  |   | 7.82   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Other        current assets                                 |   | 369    |   |   |   |   |   | 855    |   | 4      |   | 0.47   |   | 1,080  |   |   |   |   |
| Other non-current financial assets                          |   | 1,050  |   | 258    |   | 24.57  |   | 805    |   | 136    |   | 16.89  |   | 923    |   | 87     |   | 9.43   |
| Other        non-current assets                             |   | 995    |   |   |   |   |   | 994    |   |   |   |   |   | 1,110  |   | 16     |   | 1.44   |
| Current financial liabilities                               |   | 4,612  |   | 152    |   | 3.30   |   | 3,400  |   | 92     |   | 2.71   |   | 7,763  |   | 131    |   | 1.69   |
| Trade and        other payables                             |   | 13,095 |   | 1,164  |   | 8.89   |   | 15,995 |   | 961    |   | 6.01   |   | 17,116 |   | 1,021  |   | 5.97   |
| Other liabilities                                           |   | 613    |   |   |   |   |   | 634    |   | 4      |   | 0.63   |   | 1,556  |   | 4      |   | 0.26   |
| Long-term        debt and current portion of long-term debt |   | 8,386  |   | 18     |   | 0.21   |   | 8,299  |   | 17     |   | 0.20   |   | 12,067 |   | 16     |   | 0.13   |
| Other non-current liabilities                               |   | 897    |   |   |   |   |   | 418    |   | 56     |   | 13.40  |   | 2,031  |   | 57     |   | 2.81   |

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

The impact of transactions with related parties on the profitand loss accounts consisted of the following:

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| (million        euro) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Net sales from operations            |   | 73,728 |   | 4,535 |   | 6.15 |   | 86,105 |   | 3,974 |   | 4.62 |   | 87,256 |   | 4,198 |   | 4.81 |
|--------------------------------------|--------|--------|--------|-------|--------|------|--------|--------|--------|-------|--------|------|--------|--------|--------|-------|--------|------|
| Purchases,        services and other |   | 48,567 |   | 3,429 |   | 7.06 |   | 57,490 |   | 2,720 |   | 4.73 |   | 58,179 |   | 3,777 |   | 6.49 |
| Financial income                     |   | 3,131  |   | 72    |   | 2.30 |   | 4,132  |   | 58    |   | 1.40 |   | 4,600  |   | 98    |   | 2.13 |
| Financial        expense             |   | 3,497  |   | 28    |   | 0.80 |   | 3,971  |   | 18    |   | 0.45 |   | 4,683  |   | 59    |   | 1.26 |

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

Transactions with related parties concerned the ordinarycourse of Eni’s business and were mainly conducted on anarm’s length basis.

Main cash flows with related parties were as follows:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Revenues and other income                                        |   | 4,535     |   |   | 3,974     |   |   | 4,198    |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|
| Costs and        other expenses                                  |   | (3,429    | )      |   | (2,720    | )      |   | (3,777   | )      |
| Net change in trade and other receivables and        liabilities |   | (221      | )      |   | 162       |   |   | (492     | )      |
| Dividends        and net interests                               |   | 345       |   |   | 790       |   |   | 620      |   |
| **Net cash provided from operating activities**                  |   | **1,230** |   |   | **2,206** |   |   | **549**  |   |
| Capital        expenditures in tangible and intangible assets    |   | (474      | )      |   | (733      | )      |   | (779     | )      |
| Investments                                                      |   | (30       | )      |   | (20       | )      |   | 8        |   |
| Change in        accounts payable in relation to investments     |   | 342       |   |   | (276      | )      |   | (8       | )      |
| Change in financial receivables                                  |   | 2         |   |   | 343       |   |   | (43      | )      |
| **Net        cash used in investing activities**                 |   | **(160**  | **)**  |   | **(686**  | **)**  |   | **(822** | **)**  |
| Change in financial liabilities                                  |   | 23        |   |   | (57       | )      |   | 20       |   |
| **Net        cash used in financing activities**                 |   | **23**    |   |   | **(57**   | **)**  |   | **20**   |   |
| **Total financial flows to related parties**                     |   | **1,093** |   |   | **1,463** |   |   | **(253** | **)**  |

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

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The impact of cash flows with related parties consisted of thefollowing:

|   |   | **2005** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| (million        euro) |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |   | Total |   | Related parties |   | Impact % |
|-----------------------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|--------|-------|--------|-----------------|--------|----------|
|                  |   |       |   |                 |   |          |   |       |   |                 |   |          |   |       |   |                 |   |          |

| Cash provided from operating activities  |   | 14,936 |   |   | 1,230 |   |   | 8.24   |   |   | 17,001 |   |   | 2,206 |   |   | 12.98 |   |   | 15,517  |   |   | 549  |   |   | 3.54 |   |
|------------------------------------------|--------|--------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|-------|--------|--------|---------|--------|--------|------|--------|--------|------|--------|
| Cash used in        investing activities |   | (6,815 | )      |   | (160  | )      |   | 2.35   |   |   | (7,051 | )      |   | (686  | )      |   | 9.73  |   |   | (20,097 | )      |   | (822 | )      |   | 4.09 |   |
| Cash used in financing activities        |   | (7,824 | )      |   | 23    |   |   |   |   |   | (7,097 | )      |   | (57   | )      |   | 0.80  |   |   | 2,909   |   |   | 20   |   |   | 0.69 |   |

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

 

**37 Significant non-recurring events andoperations**Non-recurring income (charges) consisted of the following:

| (million euro) |   | **2005** |   | **2006** |   | **2007** |
|----------------|--------|----------|--------|----------|--------|----------|
|           |   |          |   |          |   |          |

| Curtailment of post-retirement benefits for        Italian employees                         |   |     |   |   |     |   |   | 83     |   |
|----------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|--------|--------|
| Risk        provisions for proceedings against Antitrust authorities                         |   | (290     | )      |   | (184     | )      |   | (130   | )      |
| Risk provisions for proceedings against the        Italian Authority for Electricity and Gas |   |     |   |   | (55      | )      |   | 39     |   |
|                                                                                         |   | **(290** | **)**  |   | **(239** | **)**  |   | **(8** | **)**  |

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

Non-recurring income related to a gain deriving from thecurtailment of the provisions accrued by Italian companies foremployee termination indemnities (“TFR”) following thechanges introduced by Italian Budget Law for 2007 and relateddecrees (euro 83 million), more information is provided in theNote 23 - Provisions for employee benefits.

Non recurring charges concerned risk provisions related toongoing antitrust proceedings against the European Antitrustauthorities (euro 130 million) in the fields of paraffin andelastomers. The euro 39 million gain relating to proceedingbefore the Italian Authority for Electricity and Gas mainlyrelated to the annulment of a fine imposed in 2006 for theallegedly improper use of storage capacity in the Italian naturalgas sector (euro 45 million).

In 2006 a risk provision was made in connection with aproceeding against the Italian Antitrust authority regarding thefield of supplies of jet fuel (euro 109 million). In addition arisk provision was made for an inquiry before the EuropeanAntitrust authorities in the field of elastomers (euro 75million). In 2006 certain fines were imposed by the Authority forElectricity and Gas regarding an inquiry relating to the use ofstorage capacity in thermal year 2006-2007 (euro 45 million) andan inquiry relating to an information requirement on natural gassupplying prices (euro 10 million). 

In 2005 a risk provision was made in connection with aproceeding against the Italian Antitrust authority relating to anabuse of dominant position in the natural gas sector. 

More information on these proceedings is included in Note 28 -Guarantees, commitments and risks - Legal Proceedings.

 

**38 Positions or transactions derivingfrom atypical and/or unusual operations**In 2005, 2006 and in 2007 no transactions deriving fromatypical and/or unusual operations were reported.

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**39 Supplementary oil and gasinformation (unaudited)**The following information pursuant to“International Financial Reporting Standards” (IFRS) ispresented in accordance with Statement of Financial AccountingStandards No. 69, “Disclosures about Oil & Gas ProducingActivities”. Amounts related to minority interest are notsignificant.*Capitalized costs*Capitalized costs represent the total expenditures for proved andunproved 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 consisted of the following:

| (million euro) |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|----------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|           |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **December 31, 2006**                                       |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |       |   |   |       |   |   |      |   |
|-------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
| Proved        mineral interests                             |   | 10,267     |   |   | 8,273      |   |   | 8,004      |   |   | 8,333     |   |   | 1,570     |   |   | 6,447      |   |   | 42,894     |   |   | 427       |   |
| Unproved mineral interests                                  |   | 33         |   |   | 143        |   |   | 402        |   |   | 382       |   |   | 39        |   |   | 964        |   |   | 1,963      |   |   | 35        |   |
| Support        equipment and facilities                     |   | 276        |   |   | 1,238      |   |   | 451        |   |   | 33        |   |   | 37        |   |   | 60         |   |   | 2,095      |   |   | 8         |   |
| Incomplete wells and other                                  |   | 582        |   |   | 399        |   |   | 612        |   |   | 110       |   |   | 1,342     |   |   | 564        |   |   | 3,609      |   |   | 31        |   |
| **Gross        capitalized costs**                          |   | **11,158** |   |   | **10,053** |   |   | **9,469**  |   |   | **8,858** |   |   | **2,988** |   |   | **8,035**  |   |   | **50,561** |   |   | **501**   |   |
| Accumulated depreciation, depletion and        amortization |   | (6,958     | )      |   | (4,738     | )      |   | (5,231     | )      |   | (5,185    | )      |   | (413      | )      |   | (4,387     | )      |   | (26,912    | )      |   | (300      | )      |
| **Net        capitalized costs******(a) (b)                 |   | **4,200**  |   |   | **5,315**  |   |   | **4,238**  |   |   | **3,673** |   |   | **2,575** |   |   | **3,648**  |   |   | **23,649** |   |   | **201**   |   |
| **December 31, 2007**                                       |   |       |   |   |       |   |   |       |   |   |      |   |   |      |   |   |       |   |   |       |   |   |      |   |
| Proved        mineral interests                             |   | 10,571     |   |   | 8,118      |   |   | 8,506      |   |   | 8,672     |   |   | 1,447     |   |   | 7,718      |   |   | 45,032     |   |   | 790       |   |
| Unproved mineral interests                                  |   | 32         |   |   | 120        |   |   | 1,030      |   |   | 330       |   |   | 35        |   |   | 2,582      |   |   | 4,129      |   |   | 1,089     |   |
| Support        equipment and facilities                     |   | 279        |   |   | 1,125      |   |   | 443        |   |   | 16        |   |   | 41        |   |   | 59         |   |   | 1,963      |   |   | 10        |   |
| Incomplete wells and other                                  |   | 726        |   |   | 562        |   |   | 1,078      |   |   | 75        |   |   | 1,852     |   |   | 808        |   |   | 5,101      |   |   | 112       |   |
| **Gross        capitalized costs**                          |   | **11,608** |   |   | **9,925**  |   |   | **11,057** |   |   | **9,093** |   |   | **3,375** |   |   | **11,167** |   |   | **56,225** |   |   | **2,001** |   |
| Accumulated depreciation, depletion and        amortization |   | (7,440     | )      |   | (4,960     | )      |   | (5,340     | )      |   | (5,670    | )      |   | (445      | )      |   | (4,909     | )      |   | (28,764    | )      |   | (345      | )      |
| **Net        capitalized costs**(a) (b)                     |   | **4,168**  |   |   | **4,965**  |   |   | **5,717**  |   |   | **3,423** |   |   | **2,930** |   |   | **6,258**  |   |   | **27,461** |   |   | **1,656** |   |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | The amounts        included net capitalized financial charges totaling euro        420 million in 2006 and euro 441 million in 2007.                                                                                                                                                                                                                                                                                                                                                                                                              |
| (b)          |    | The amounts        did not include costs associated with exploration        activities which were 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 2,179 million in 2006 and euro        2,547 million in 2007 for the consolidated companies and        of euro 24 million in 2006 and euro 94 million in 2007        for joint ventures affiliates. |
| (1)          |    | Eni’s        capitalized costs of the Kashagan field were determined        based on Eni share of 18.52%.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (2)          |    | The amounts        of joint ventures and affiliates as at December 31, 2007        included 60% of the three Russian companies former Yukos        purchased in 2007, for which Gazprom has a call option of        51%.                                                                                                                                                                                                                                                                                                                          |

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*Costs incurred*Costs incurred represent amounts both capitalized and expensed inconnection with oil and gas producing activities. Costs incurredby geographical area consisted of the following:

| (million euro) |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|----------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|           |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **2005**                                 |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |      |   |   |       |   |   |      |   |
|------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|
| Proved        property acquisitions      |   | 19        |   |   |      |   |   | 16        |   |   |    |   |   | 88      |   |   | 11        |   |   | 134        |   |   |      |   |
| Unproved property acquisitions           |   | 13        |   |   |      |   |   | 44        |   |   |    |   |   | 42      |   |   | 57        |   |   | 156        |   |   |      |   |
| Exploration                              |   | 45        |   |   | 153       |   |   | 75        |   |   | 127     |   |   | 15      |   |   | 249       |   |   | 664        |   |   | 18        |   |
| Development (a)                          |   | 644       |   |   | 960       |   |   | 910       |   |   | 522     |   |   | 646     |   |   | 745       |   |   | 4,427      |   |   | 31        |   |
| **Total        costs incurred**          |   | **721**   |   |   | **1,113** |   |   | **1,045** |   |   | **649** |   |   | **791** |   |   | **1,062** |   |   | **5,381**  |   |   | **49**    |   |
| **2006**                                 |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |      |   |   |       |   |   |      |   |
| Proved        property acquisitions      |   | 139       |   |   | 10        |   |   |      |   |   |    |   |   |    |   |   |      |   |   | 149        |   |   |      |   |
| Unproved property acquisitions           |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   | 3         |   |   | 3          |   |   |      |   |
| Exploration                              |   | 128       |   |   | 270       |   |   | 471       |   |   | 174     |   |   | 25      |   |   | 280       |   |   | 1,348      |   |   | 26        |   |
| Development (a)                          |   | 1,120     |   |   | 892       |   |   | 956       |   |   | 478     |   |   | 595     |   |   | 766       |   |   | 4,807      |   |   | 31        |   |
| **Total        costs incurred**          |   | **1,387** |   |   | **1,172** |   |   | **1,427** |   |   | **652** |   |   | **620** |   |   | **1,049** |   |   | **6,307**  |   |   | **57**    |   |
| **2007**                                 |   |      |   |   |      |   |   |      |   |   |    |   |   |    |   |   |      |   |   |       |   |   |      |   |
| Proved        property acquisitions (b1) |   |      |   |   | 11        |   |   | 451       |   |   |    |   |   |    |   |   | 1,395     |   |   | 1,857      |   |   | 187       |   |
| Unproved property acquisitions (b2)      |   |      |   |   |      |   |   | 510       |   |   |    |   |   |    |   |   | 1,417     |   |   | 1,927      |   |   | 1,086     |   |
| Exploration        (b3)                  |   | 104       |   |   | 380       |   |   | 298       |   |   | 193     |   |   | 36      |   |   | 1,181     |   |   | 2,192      |   |   | 42        |   |
| Development (a) (b4)                     |   | 320       |   |   | 1,047     |   |   | 1,425     |   |   | 518     |   |   | 744     |   |   | 1,185     |   |   | 5,239      |   |   | 156       |   |
| **Total        costs incurred**          |   | **424**   |   |   | **1,438** |   |   | **2,684** |   |   | **711** |   |   | **780** |   |   | **5,178** |   |   | **11,215** |   |   | **1,471** |   |

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

|    |    |                                                                                                                                                                                          |
|--------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | Included the        abandonment costs of the assets for euro 578 million in        2005, euro 1,170 million in 2006 and euro 173 million in        2007.                                           |
| (b1)         |    | Included        business combinations in West Africa amounting to euro        451 million, euro 1,395 million in Rest of World and euro        187 million in joint ventures and affiliates.       |
| (b2)         |    | Included        business combinations in West Africa amounting to euro        510 million, euro 1,334 million in Rest of World and euro        1,086 million in joint ventures and affiliates.     |
| (b3)         |    | Included        business combinations in West Africa amounting to euro 59        million and euro 474 million in Rest of World.                                                                    |
| (b4)         |    | Included        business combinations in West Africa amounting to euro 10        million, euro 345 million in Rest of World and euro 101        million in joint ventures and affiliates.          |
| (1)          |    | Eni’s        costs incurred of the Kashagan field were determined        based on Eni share of 18.52%.                                                                                        |
| (2)          |    | The amounts        of joint ventures and affiliates for 2007 included 60% of        the three Russian companies former Yukos purchased in        2007, for which Gazprom has a call option of 51%. |

*Results of operations from oil and gasproducing activities*Results of operations from oil and gas producing activities,including gas storage services used to modulate the seasonalvariation of demand, represent only those revenues and expensesdirectly associated with such activities, including operatingoverheads. These amounts do not include any allocation ofinterest expense or general corporate overhead and, therefore,are not necessarily indicative of the contributions toconsolidated net earnings of Eni. Related income taxes arecomputed by applying the local income tax rates to the pre-taxincome from producing activities. Eni is a party to certainProduction Sharing Agreements (PSAs), whereby a portion ofEni’s share of oil and gas production is withheld and soldby its joint venture partners which are state-owned entities,with proceeds being remitted to the state in satisfaction ofEni’s PSA related tax liabilities. Revenue and income taxesinclude such taxes owed by Eni but paid by state-owned entitiesout of Eni’s share of oil and gas production. 

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Results of operations from oil and gas producingactivities by geographical area consisted of the following:

| (million euro) |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|----------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|           |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **2005**                                                          |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
|-------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|----------|--------|
| **Revenues**                                                      |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
| Sales to consolidated entities                                    |   | 3,133     |   |   | 2,813     |   |   | 4,252     |   |   | 2,707     |   |   | 209       |   |   | 619       |   |   | 13,733     |   |   |     |   |
| Sales to        third parties                                     |   | 161       |   |   | 2,579     |   |   | 394       |   |   | 889       |   |   | 586       |   |   | 2,297     |   |   | 6,906      |   |   | 106      |   |
| **Total revenues**                                                |   | **3,294** |   |   | **5,392** |   |   | **4,646** |   |   | **3,596** |   |   | **795**   |   |   | **2,916** |   |   | **20,639** |   |   | **106**  |   |
| Operations        costs                                           |   | (261      | )      |   | (390      | )      |   | (363      | )      |   | (417      | )      |   | (123      | )      |   | (215      | )      |   | (1,769     | )      |   | (16      | )      |
| Production taxes                                                  |   | (157      | )      |   | (98       | )      |   | (513      | )      |   | (15       | )      |   |      |   |   | (207      | )      |   | (990       | )      |   | (3       | )      |
| Exploration        expenses                                       |   | (38       | )      |   | (137      | )      |   | (74       | )      |   | (158      | )      |   | (15       | )      |   | (196      | )      |   | (618       | )      |   | (32      | )      |
| D.D. & A. and provision for abandonment (a)                   |   | (512      | )      |   | (634      | )      |   | (598      | )      |   | (668      | )      |   | (90       | )      |   | (929      | )      |   | (3,431     | )      |   | (50      | )      |
| Other        income and (expenses)                                |   | (224      | )      |   | (463      | )      |   | (201      | )      |   | 17        |   |   | (53       | )      |   | (216      | )      |   | (1,140     | )      |   | 10       |   |
| **Pretax income from producing activities**                       |   | **2,102** |   |   | **3,670** |   |   | **2,897** |   |   | **2,355** |   |   | **514**   |   |   | **1,153** |   |   | **12,691** |   |   | **15**   |   |
| Income        taxes                                               |   | (780      | )      |   | (1,976    | )      |   | (1,717    | )      |   | (1,387    | )      |   | (195      | )      |   | (321      | )      |   | (6,376     | )      |   | (25      | )      |
| **Results of operations from E&P activities**(b)              |   | **1,322** |   |   | **1,694** |   |   | **1,180** |   |   | **968**   |   |   | **319**   |   |   | **832**   |   |   | **6,315**  |   |   | **(10**  | **)**  |
| **2006**                                                          |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
| **Revenues**                                                      |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
| Sales to        consolidated entities                             |   | 3,601     |   |   | 4,185     |   |   | 4,817     |   |   | 3,295     |   |   | 261       |   |   | 712       |   |   | 16,871     |   |   |     |   |
| Sales to third parties                                            |   | 184       |   |   | 3,012     |   |   | 967       |   |   | 983       |   |   | 721       |   |   | 1,873     |   |   | 7,740      |   |   | 120      |   |
| **Total        revenues**                                         |   | **3,785** |   |   | **7,197** |   |   | **5,784** |   |   | **4,278** |   |   | **982**   |   |   | **2,585** |   |   | **24,611** |   |   | **120**  |   |
| Operations costs                                                  |   | (249      | )      |   | (496      | )      |   | (475      | )      |   | (481      | )      |   | (147      | )      |   | (191      | )      |   | (2,039     | )      |   | (18      | )      |
| Production        taxes                                           |   | (181      | )      |   | (95       | )      |   | (475      | )      |   |      |   |   |      |   |   | (82       | )      |   | (833       | )      |   | (3       | )      |
| Exploration expenses                                              |   | (137      | )      |   | (273      | )      |   | (186      | )      |   | (160      | )      |   | (25       | )      |   | (293      | )      |   | (1,074     | )      |   | (26      | )      |
| D.D. &        A. and provision for abandonment (a)            |   | (457      | )      |   | (795      | )      |   | (737      | )      |   | (684      | )      |   | (80       | )      |   | (895      | )      |   | (3,648     | )      |   | (43      | )      |
| Other income and (expenses)                                       |   | (315      | )      |   | (569      | )      |   | (190      | )      |   | 57        |   |   | (89       | )      |   | (283      | )      |   | (1,389     | )      |   | 8        |   |
| **Pretax        income from producing activities**                |   | **2,446** |   |   | **4,969** |   |   | **3,721** |   |   | **3,010** |   |   | **641**   |   |   | **841**   |   |   | **15,628** |   |   | **38**   |   |
| Income taxes                                                      |   | (909      | )      |   | (2,980    | )      |   | (2,133    | )      |   | (1,840    | )      |   | (223      | )      |   | (381      | )      |   | (8,466     | )      |   | (31      | )      |
| **Total        results of operations from E&P activities**(b) |   | **1,537** |   |   | **1,989** |   |   | **1,588** |   |   | **1,170** |   |   | **418**   |   |   | **460**   |   |   | **7,162**  |   |   | **7**    |   |
| **2007**                                                          |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
| **Revenues**                                                      |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |     |   |
| Sales to consolidated entities                                    |   | 3,171     |   |   | 3,000     |   |   | 4,439     |   |   | 3,125     |   |   | 296       |   |   | 512       |   |   | 14,543     |   |   |     |   |
| Sales to        third parties                                     |   | 163       |   |   | 4,793     |   |   | 693       |   |   | 755       |   |   | 833       |   |   | 2,260     |   |   | 9,497      |   |   | 176      |   |
| **Total revenues**                                                |   | **3,334** |   |   | **7,793** |   |   | **5,132** |   |   | **3,880** |   |   | **1,129** |   |   | **2,772** |   |   | **24,040** |   |   | **176**  |   |
| Operations        costs                                           |   | (248      | )      |   | (542      | )      |   | (499      | )      |   | (579      | )      |   | (142      | )      |   | (271      | )      |   | (2,281     | )      |   | (27      | )      |
| Production taxes                                                  |   | (188      | )      |   | (91       | )      |   | (473      | )      |   |      |   |   |      |   |   | (28       | )      |   | (780       | )      |   | (6       | )      |
| Exploration        expenses                                       |   | (108      | )      |   | (385      | )      |   | (291      | )      |   | (193      | )      |   | (36       | )      |   | (764      | )      |   | (1,777     | )      |   | (42      | )      |
| D.D. & A. and provision for abandonment (a)                   |   | (499      | )      |   | (768      | )      |   | (685      | )      |   | (729      | )      |   | (76       | )      |   | (989      | )      |   | (3,746     | )      |   | (51      | )      |
| Other        income and (expenses)                                |   | (283      | )      |   | (627      | )      |   | (297      | )      |   | (45       | )      |   | (72       | )      |   | (243      | )      |   | (1,567     | )      |   | (18      | )      |
| **Pretax income from producing activities**                       |   | **2,008** |   |   | **5,380** |   |   | **2,887** |   |   | **2,334** |   |   | **803**   |   |   | **477**   |   |   | **13,889** |   |   | **32**   |   |
| Income        taxes                                               |   | (746      | )      |   | (3,102    | )      |   | (1,820    | )      |   | (1,419    | )      |   | (284      | )      |   | (241      | )      |   | (7,612     | )      |   | (49      | )      |
| **Results of operations from E&P activities**(b)              |   | **1,262** |   |   | **2,278** |   |   | **1,067** |   |   | **915**   |   |   | **519**   |   |   | **236**   |   |   | **6,277**  |   |   | **(17)** |   |

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

|    |    |                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |         | Included        asset impairments amounting to euro 130 million in 2005,        euro 156 million in 2006 and euro 91 million in 2007.                                                                                                                                                                                                                                                       |
| (b)          |         | The        “Successful Effort Method” application would        have led to an increase of result of operations of euro        21 million in 2005, euro 220 million in 2006 and euro 438        million in 2007 for the consolidated companies and of        euro 1 million in 2005, euro 15 million in 2006 and euro        26 million in 2007 for joint ventures and affiliates. |

| (1) |    | Eni’s        costs incurred of the Kashagan field were determined        based on Eni share of 18.52%.                                                                                        |
|-----|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | The amounts        of joint ventures and affiliates for 2007 included 60% of        the three Russian companies former Yukos purchased in        2007, for which Gazprom has a call option of 51%. |

F-95

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##### Table of Contents

*Average sale prices and production costs per unit ofproduction*

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area** |   | **Rest of World** |   | **Total** |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|------------------|--------|-------------------|--------|-----------|
|                  |           |   |                  |   |                 |   |               |   |                  |   |                   |   |           |

| **2005**                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Average        sales prices              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and condensates, per BBL             |   | ($)    |   | 45.50  |   | 50.11  |   | 51.45  |   | 51.68  |   | 41.78  |   | 44.50  |   | 49.09  |
| Natural        gas, per KCF              |   |   |   | 6.32   |   | 3.37   |   | 0.79   |   | 5.26   |   | 0.35   |   | 4.97   |   | 4.49   |
| Average production costs, per BOE        |   |   |   | 5.58   |   | 3.66   |   | 8.90   |   | 5.32   |   | 4.21   |   | 5.60   |   | 5.59   |
| **2006**                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average sales prices                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and        condensates, per BBL      |   | ($)    |   | 55.22  |   | 60.99  |   | 61.55  |   | 62.18  |   | 53.18  |   | 57.15  |   | 60.09  |
| Natural gas, per KCF                     |   |   |   | 8.23   |   | 4.17   |   | 1.05   |   | 6.89   |   | 0.39   |   | 5.09   |   | 5.29   |
| Average        production costs, per BOE |   |   |   | 6.36   |   | 3.87   |   | 9.02   |   | 6.03   |   | 5.02   |   | 4.52   |   | 5.79   |
| **2007**                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average        sales prices              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and condensates, per BBL             |   | ($)    |   | 62.47  |   | 67.86  |   | 69.77  |   | 69.40  |   | 59.34  |   | 68.63  |   | 67.70  |
| Natural        gas, per KCF              |   |   |   | 8.58   |   | 4.60   |   | 1.21   |   | 6.53   |   | 0.41   |   | 5.53   |   | 5.42   |
| Average production costs, per BOE        |   |   |   | 7.89   |   | 4.22   |   | 11.53  |   | 8.56   |   | 4.90   |   | 5.33   |   | 6.90   |

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

*Oil and natural gas reserves*Proved oil and gas reserves are the estimated quantities of crudeoil, natural gas and natural gas liquids which geological andengineering data demonstrate with reasonable certainty to berecoverable in future years from known reservoirs undertechnical, contractual, economic and operating conditionsexisting at the time. Prices include consideration of changes inexisting prices provided only by contractual arrangements, butnot of escalations based upon future conditions.

Net proved reserves exclude royalties and interests owned byothers.

Proved developed oil and gas reserves are proved reserves thatcan be estimated to be recovered through existing wells,equipment and operating methods.

Proved undeveloped oil and gas reserves are reserves that areexpected to be recovered from new wells on undrilled acreage, orfrom existing wells where a relatively major expenditure isrequired for completion.

Additional oil and gas reserves expected to be obtainedthrough the application of fluid injection or other improvedrecovery techniques for supplementing natural forces andmechanisms of primary recovery are included as proved developedreserves only after testing by a pilot project or after theoperation of an installed program has confirmed, throughproduction response, that increased recovery will be achieved.

Eni’s proved reserves have been estimated on the basis ofthe applicable U.S. Securities & Exchange Commissionregulation, Rule 4-10 of Regulation S-X and its interpretationsand have been disclosed in accordance with Statement of FinancialAccounting Standard No. 69. The estimates of proved reserves,developed and undeveloped for years ended December 31, 2004,2005, 2006 and 2007 are based on data prepared by Eni. Since 1991Eni has requested qualified independent oil engineering companiesto carry out an independent evaluation14 of its provedreserves on a rotation basis. Eni believes these independentevaluators to be experienced and qualified in the marketplace. Inthe preparation of their reports, these independent evaluatorsrelied, without independent verification, upon informationfurnished by Eni with respect to property interest, production,current cost of operation and development, agreements relating tofuture operations and sale, prices and other factual informationand data that were accepted as represented by the independentevaluators. This information was used by Eni in determining itsproved reserves and included log, directional surveys, core andPVT analysis, maps, oil/gas/water monthly production/injectiondata of wells, reservoirs and fields; field studies, reservoirstudies; engineers' comments relevant to field performance,reservoir performance, development programs, work programs etc.;budget data for each field, long range development plans, futurecapital and operating costs, actual prices received fromhydrocarbon sales, instructions on future prices, and otherpertinent information to calculate NPV for the fields required toundertake an independent evaluation. Accordingly, the workperformed by the independent evaluators is an evaluation ofEni’s proved reserves carried out concurrently with theinternal one. Notwithstanding the above, the circumstance thatthe independent evaluations achieved the same results as those ofthe Company for the vast majority of fields supportmanagement’s confidence that the company’s bookedreserves meet the regulatory definition of proved reserves andare reasonably certain to be produced in the future.Additionally, for those fields

----

| (14) |   | From 1991 to        2002 by DeGolyer and MacNaughton, from 2003 also by Ryder        Scott Company. |
|------|--------|-----------------------------------------------------------------------------------------------------|

F-96

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##### Table of Contents

where a discrepancy arose, the Company has adopted the mostconservative reserve estimate. In any case, those differenceswere not significant.

In particular a total of 2.4 BBOE of proved reserves, or about37% of Eni’s total proved reserves at December 31, 2007,have been evaluated. The results of this independent evaluationconfirmed Eni’s evaluations, as in previous years. In the2005-2007 three-year period, 67% of Eni’s total provedreserves were subject to independent evaluations. In the lastthree years, the most important Eni properties as at December 31,2007 which were not subject to an independent evaluation were:Kashagan (Kazakhstan), Bayu Undan (Australia), Cerro Falcone andMonte Alpi-Monte Enoc (Italy). 

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 represented48%, 53% and 46% of total proved reserves as of year-end 2005,2006 and 2007, 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 1% of total proved reserveson an oil-equivalent basis as of year-end 2005, 2006 and 2007,respectively.

Oil and gas reserve quantities include: (i) oil and naturalgas quantities in excess to cost recovery which the company hasan obligation to purchase under certain PSAs with governments orauthorities, whereby the company serves as producer of reserves.In accordance with SFAS 69, paragraph 13, reserve volumesassociated with such oil and gas quantities represented 1.7%,1.1%and 1.8% of total proved reserves as of year-end 2005, 2006 and2007, respectively, on an oil-equivalent basis; (ii) volumes ofnatural gas used for own consumption and (iii) volumes of naturalgas held in certain Eni’s storage fields in Italy. Provedreserves attributable to these fields include: (a) the residualnatural gas volumes of the reservoirs and (b) natural gas volumesfrom other Eni fields input into these reservoirs in subsequentperiods. Proved reserves do not include volumes owned by oracquired from third parties. Gas withdrawn from storage isproduced and thereby detracted from proved reserves when sold.

Numerous uncertainties are inherent in estimating quantitiesof proved reserves and in projecting future rates of productionand timing of development expenditures. The accuracy of anyreserve estimate is a function of the quality of available dataand engineering and geological interpretation and judgment.Results of drilling, testing and production after the date of theestimate may require substantial upward or downward revision. 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. Reserve estimates are also subject torevision as prices fluctuate due to the cost recovery featureunder certain PSAs.

The following table presents yearly changes in estimatedproved reserves, developed and undeveloped, of crude oil(including condensate and natural gas liquids) and natural gasfor the years 2005, 2006 and 2007.

F-97

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##### Table of Contents

*Crude oil (including condensate and natural gas liquids)*

(mmBBL)

| **Proved oil reserves** |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|-------------------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                    |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **Reserves at December 31, 2004**          |   | **225** |   |   | **967** |   |   | **1,047** |   |   | **450** |   |   | **799** |   |   | **484** |   |   | **3,972** |   |   | **36**  |   |
|--------------------------------------------|--------|---------|--------|--------|---------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|-----------|--------|--------|---------|--------|
| Purchase        of Minerals in Place       |   | 2       |   |   |    |   |   | 6         |   |   |    |   |   | 46      |   |   | 1       |   |   | 55        |   |   |    |   |
| Revisions of Previous Estimates            |   | 33      |   |   | 36      |   |   | (47       | )      |   | 27      |   |   | (73     | )      |   | (15     | )      |   | (39       | )      |   | (9      | )      |
| Improved        Recovery                   |   |    |   |   | 43      |   |   | 29        |   |   |    |   |   | 15      |   |   |    |   |   | 87        |   |   |    |   |
| Extensions and Discoveries                 |   |    |   |   | 26      |   |   | 14        |   |   | 21      |   |   | 14      |   |   | 2       |   |   | 77        |   |   |    |   |
| Production                                 |   | (32     | )      |   | (111    | )      |   | (113      | )      |   | (65     | )      |   | (23     | )      |   | (60     | )      |   | (404      | )      |   | (2      | )      |
| Sales of Minerals in Place                 |   |    |   |   |    |   |   |      |   |   |    |   |   |    |   |   |    |   |   |      |   |   |    |   |
| **Reserves        at December 31, 2005**   |   | **228** |   |   | **961** |   |   | **936**   |   |   | **433** |   |   | **778** |   |   | **412** |   |   | **3,748** |   |   | **25**  |   |
| Purchase of Minerals in Place              |   |    |   |   |    |   |   |      |   |   |    |   |   |    |   |   |    |   |   |      |   |   |    |   |
| Revisions        of Previous Estimates (a) |   | 15      |   |   | 61      |   |   | (85       | )      |   | 20      |   |   | 72      |   |   | (19     | )      |   | 64        |   |   | 1       |   |
| Improved Recovery                          |   |    |   |   | 49      |   |   | 41        |   |   |    |   |   | 14      |   |   |    |   |   | 104       |   |   | 1       |   |
| Extensions        and Discoveries          |   |    |   |   | 30      |   |   | 11        |   |   |    |   |   | 52      |   |   | 10      |   |   | 103       |   |   |    |   |
| Production                                 |   | (28     | )      |   | (119    | )      |   | (117      | )      |   | (65     | )      |   | (23     | )      |   | (38     | )      |   | (390      | )      |   | (3      | )      |
| Sales of        Minerals in Place (b)      |   |    |   |   |    |   |   |      |   |   | (2      | )      |   |    |   |   | (170    | )      |   | (172      | )      |   |    |   |
| **Reserves at December 31, 2006**          |   | **215** |   |   | **982** |   |   | **786**   |   |   | **386** |   |   | **893** |   |   | **195** |   |   | **3,457** |   |   | **24**  |   |
| Purchase        of Minerals in Place       |   |    |   |   |    |   |   | 32        |   |   |    |   |   |    |   |   | 54      |   |   | 86        |   |   | 101     |   |
| Revisions of Previous Estimates            |   | 28      |   |   | (35     | )      |   | (26       | )      |   | 14      |   |   | (114    | )      |   | (31     | )      |   | (164      | )      |   | 20      |   |
| Improved        Recovery                   |   |    |   |   | 9       |   |   | 12        |   |   | 1       |   |   |    |   |   |    |   |   | 22        |   |   | 1       |   |
| Extensions and Discoveries                 |   |    |   |   | 43      |   |   | 22        |   |   | 1       |   |   |    |   |   | 29      |   |   | 95        |   |   | 1       |   |
| Production                                 |   | (28     | )      |   | (121    | )      |   | (101      | )      |   | (57     | )      |   | (26     | )      |   | (36     | )      |   | (369      | )      |   | (5      | )      |
| Sales of Minerals in Place                 |   |    |   |   |    |   |   |      |   |   |    |   |   |    |   |   |    |   |   |      |   |   |    |   |
| **Reserves        at December 31, 2007**   |   | **215** |   |   | **878** |   |   | **725**   |   |   | **345** |   |   | **753** |   |   | **211** |   |   | **3,127** |   |   | **142** |   |

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

(mmBBL)

| **Proved developed oil reserves** |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|-----------------------------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                              |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| Reserves at December 31, 2004        |   | 174 |   |   | 655 |   |   | 588 |   |   | 386 |   |   | 323 |   |   | 345 |   |   | 2,471 |   |   |   |   |
|--------------------------------------|--------|-----|--------|--------|-----|--------|--------|-----|--------|--------|-----|--------|--------|-----|--------|--------|-----|--------|--------|-------|--------|--------|--------|--------|
| Reserves        at December 31, 2005 |   | 149 |   |   | 697 |   |   | 568 |   |   | 353 |   |   | 266 |   |   | 298 |   |   | 2,331 |   |   | 19     |   |
| Reserves at December 31, 2006        |   | 136 |   |   | 713 |   |   | 546 |   |   | 329 |   |   | 262 |   |   | 140 |   |   | 2,126 |   |   | 18     |   |
| Reserves        at December 31, 2007 |   | 133 |   |   | 649 |   |   | 511 |   |   | 299 |   |   | 219 |   |   | 142 |   |   | 1,953 |   |   | 26     |   |

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

|    |         |                                                                                             |
|--------------|--------------|------------------------------------------------------------------------------------------------------------|
| (a)          |    | Included the        effect of Eni share redetermination in the Val        d’Agri concession in Italy. |
| (b)          |    | Included 170        mmBBL related to unilateral termination of OSA for        Dación field by PDVSA.  |

| (1) |    | Eni’s        proved reserves of the Kashagan field were determined        based on Eni share of 18.52%.                                                                                                          |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Reserves of        joint ventures and affiliates as at December 31, 2007        included 60% of the three Russian companies former Yukos        purchased in 2007, for which Gazprom has a call option of        51%. |

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##### Table of Contents

*Natural gas*

(BCF)

| **Proved natural gas reserves** |   | **Italy**        (a) |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|---------------------------------|--------|----------------------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                            |   |                      |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **Reserves at December 31, 2004**        |   | **3,818** |   |   | **6,432** |   |   | **1,727** |   |   | **2,051** |   |   | **2,124** |   |   | **2,126** |   |   | **18,278** |   |   | **157**   |   |
|------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|
| Purchase        of Minerals in Place     |   | 63        |   |   |      |   |   | 8         |   |   |      |   |   | 14        |   |   | 208       |   |   | 293        |   |   |      |   |
| Revisions of Previous Estimates          |   | 159       |   |   | (6        | )      |   | (9        | )      |   | (18       | )      |   | (284      | )      |   | (84       | )      |   | (242       | )      |   | (47       | )      |
| Improved        Recovery                 |   |      |   |   | 11        |   |   |      |   |   |      |   |   |      |   |   |      |   |   | 11         |   |   |      |   |
| Extensions and Discoveries               |   | 1         |   |   | 37        |   |   | 309       |   |   | 50        |   |   |      |   |   | 56        |   |   | 453        |   |   | (20       | )      |
| Production                               |   | (365      | )      |   | (357      | )      |   | (70       | )      |   | (219      | )      |   | (80       | )      |   | (201      | )      |   | (1,292     | )      |   |      |   |
| Sales of Minerals in Place               |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |      |   |
| **Reserves        at December 31, 2005** |   | **3,676** |   |   | **6,117** |   |   | **1,965** |   |   | **1,864** |   |   | **1,774** |   |   | **2,105** |   |   | **17,501** |   |   | **90**    |   |
| Purchase of Minerals in Place            |   |      |   |   |      |   |   |      |   |   | 4         |   |   |      |   |   |      |   |   | 4          |   |   |      |   |
| Revisions        of Previous Estimates   |   | 36        |   |   | 154       |   |   | 31        |   |   | 53        |   |   | 183       |   |   | 47        |   |   | 504        |   |   | (7        | )      |
| Improved Recovery                        |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |      |   |
| Extensions        and Discoveries        |   | 19        |   |   | 146       |   |   | 34        |   |   | 1         |   |   |      |   |   | 132       |   |   | 332        |   |   |      |   |
| Production                               |   | (340      | )      |   | (471      | )      |   | (103      | )      |   | (218      | )      |   | (83       | )      |   | (222      | )      |   | (1,437     | )      |   | (15       | )      |
| Sales of        Minerals in Place        |   |      |   |   |      |   |   |      |   |   | (7        | )      |   |      |   |   |      |   |   | (7         | )      |   |      |   |
| **Reserves at December 31, 2006**        |   | **3,391** |   |   | **5,946** |   |   | **1,927** |   |   | **1,697** |   |   | **1,874** |   |   | **2,062** |   |   | **16,897** |   |   | **68**    |   |
| Purchase        of Minerals in Place     |   |      |   |   |      |   |   | 5         |   |   |      |   |   |      |   |   | 395       |   |   | 400        |   |   | 2,963     |   |
| Revisions of Previous Estimates          |   | (53       | )      |   | 250       |   |   | 74        |   |   | 67        |   |   | (222      | )      |   | 6         |   |   | 122        |   |   | 5         |   |
| Improved        Recovery                 |   |      |   |   |      |   |   |      |   |   | 3         |   |   |      |   |   |      |   |   | 3          |   |   |      |   |
| Extensions and Discoveries               |   | 4         |   |   | 89        |   |   | 213       |   |   | 7         |   |   | 205       |   |   | 89        |   |   | 607        |   |   |      |   |
| Production                               |   | (285      | )      |   | (534      | )      |   | (97       | )      |   | (216      | )      |   | (87       | )      |   | (261      | )      |   | (1,480     | )      |   | (14       | )      |
| Sales of Minerals in Place               |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |      |   |
| **Reserves        at December 31, 2007** |   | **3,057** |   |   | **5,751** |   |   | **2,122** |   |   | **1,558** |   |   | **1,770** |   |   | **2,291** |   |   | **16,549** |   |   | **3,022** |   |

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

(BCF)

| **Proved developed natural gas reserves** |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|-------------------------------------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|                                      |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| Reserves at December 31, 2004        |   | 2,850 |   |   | 1,760 |   |   | 924   |   |   | 1,845 |   |   | 1,998 |   |   | 1,124 |   |   | 10,501 |   |   |   |   |
|--------------------------------------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|
| Reserves        at December 31, 2005 |   | 2,704 |   |   | 3,060 |   |   | 1,289 |   |   | 1,484 |   |   | 1,618 |   |   | 1,004 |   |   | 11,159 |   |   | 70     |   |
| Reserves at December 31, 2006        |   | 2,449 |   |   | 3,042 |   |   | 1,447 |   |   | 1,395 |   |   | 1,511 |   |   | 1,105 |   |   | 10,949 |   |   | 48     |   |
| Reserves        at December 31, 2007 |   | 2,304 |   |   | 3,065 |   |   | 1,469 |   |   | 1,293 |   |   | 1,580 |   |   | 1,256 |   |   | 10,967 |   |   | 428    |   |

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

|    |    |                                                                                                                                                                       |
|--------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)          |    | Including        approximately 737, 760 754 and 749 billion of cubic feet        of natural gas held in storage at December 31, 2004,        2005, 2006 and 2007, respectively. |

| (1) |    | Eni’s        proved reserves of the Kashagan field were determined        based on Eni share of 18.52%.                                                                                                          |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Reserves of        joint ventures and affiliates as at December 31, 2007        included 60% of the three Russian companies former Yukos        purchased in 2007, for which Gazprom has a call option of        51%. |

*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 to the estimated future productionof proved reserves. Future price changes are considered only tothe extent provided by contractual arrangements. Estimated futuredevelopment and production costs are determined by estimating theexpenditures to be incurred in developing and producing theproved reserves at the end of the year. Neither the effects ofprice and cost escalations nor expected future changes intechnology and operating practices have been considered.

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 cash flows as of December 31, 2005, 2006 and 2007include amounts that Eni’s Gas & Power segment and othergas companies pay for storage services, required to supportmarket demand flexibility needs.

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 Statement ofFinancial Accounting Standard No. 69. The standardized measuredoes not purport to reflect realizable values or fair marketvalue of Eni’s proved reserves. 

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An estimate of fair value would also take into account, amongother things, the expected recovery of reserves in excess ofproved reserves, anticipated changes in future prices and costsand a discount factor representative of the risks inherent inproducing oil and gas.

The standardized measure of discounted future net cash flowsby geographical area consisted of the following:

| (million euro) |   | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Caspian Area**(1) |   | **Rest of World** |   | **Total consolidated subsidiaries** |   | **Total joint ventures and affiliates**(2) |
|----------------|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|---------------------|--------|-------------------|--------|-------------------------------------|--------|--------------------------------------------|
|           |   |           |   |                  |   |                 |   |               |   |                     |   |                   |   |                                     |   |                                            |

| **At December 31, 2005**                                            |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |        |   |   |      |   |
|---------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|--------|-----------|--------|
| Future        cash inflows                                          |   | 36,203     |   |   | 66,100     |   |   | 45,952     |   |   | 30,835    |   |   | 30,339     |   |   | 20,251     |   |   | 229,680     |   |   | 1,055     |   |
| Future production costs                                             |   | (4,609     | )      |   | (10,030    | )      |   | (9,604     | )      |   | (5,632    | )      |   | (3,848     | )      |   | (2,551     | )      |   | (36,274     | )      |   | (226      | )      |
| Future        development and abandonment costs                     |   | (2,936     | )      |   | (3,960     | )      |   | (2,594     | )      |   | (1,774    | )      |   | (2,562     | )      |   | (1,497     | )      |   | (15,323     | )      |   | (89       | )      |
| Future        income tax                                            |   | (9,890     | )      |   | (22,744    | )      |   | (21,056    | )      |   | (15,225   | )      |   | (6,973     | )      |   | (5,124     | )      |   | (81,012     | )      |   | (187      | )      |
| **Future net cash flows**                                           |   | **18,768** |   |   | **29,366** |   |   | **12,698** |   |   | **8,204** |   |   | **16,956** |   |   | **11,079** |   |   | **97,071**  |   |   | **553**   |   |
| 10%        discount factor                                          |   | (7,643     | )      |   | (12,095    | )      |   | (4,122     | )      |   | (2,155    | )      |   | (11,934    | )      |   | (3,771     | )      |   | (41,720     | )      |   | (182      | )      |
| **Standardized measure of discounted future net        cash flows** |   | **11,125** |   |   | **17,271** |   |   | **8,576**  |   |   | **6,049** |   |   | **5,022**  |   |   | **7,308**  |   |   | **55,351**  |   |   | **371**   |   |
| **At        December 31, 2006**                                     |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |        |   |   |      |   |
| Future cash inflows                                                 |   | 43,495     |   |   | 64,381     |   |   | 34,935     |   |   | 24,821    |   |   | 33,825     |   |   | 14,766     |   |   | 216,223     |   |   | 1,038     |   |
| Future        production costs                                      |   | (6,086     | )      |   | (9,707     | )      |   | (8,028     | )      |   | (6,426    | )      |   | (4,162     | )      |   | (1,753     | )      |   | (36,162     | )      |   | (224      | )      |
| Future development and abandonment costs                            |   | (6,739     | )      |   | (5,383     | )      |   | (2,865     | )      |   | (2,265    | )      |   | (3,103     | )      |   | (1,473     | )      |   | (21,828     | )      |   | (79       | )      |
| Future        income tax                                            |   | (10,838    | )      |   | (24,639    | )      |   | (14,141    | )      |   | (10,901   | )      |   | (7,649     | )      |   | (3,824     | )      |   | (71,992     | )      |   | (227      | )      |
| **Future net cash flows**                                           |   | **19,832** |   |   | **24,652** |   |   | **9,901**  |   |   | **5,229** |   |   | **18,911** |   |   | **7,716**  |   |   | **86,241**  |   |   | **508**   |   |
| 10%        discount factor                                          |   | (11,493    | )      |   | (10,631    | )      |   | (2,994     | )      |   | (1,392    | )      |   | (13,878    | )      |   | (2,626     | )      |   | (43,014     | )      |   | (154      | )      |
| **Standardized measure of discounted future net        cash flows** |   | **8,339**  |   |   | **14,021** |   |   | **6,907**  |   |   | **3,837** |   |   | **5,033**  |   |   | **5,090**  |   |   | **43,227**  |   |   | **354**   |   |
| **At        December 31, 2007**                                     |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |        |   |   |      |   |
| Future cash inflows                                                 |   | 47,243     |   |   | 73,456     |   |   | 48,283     |   |   | 29,610    |   |   | 42,710     |   |   | 20,359     |   |   | 261,661     |   |   | 7,135     |   |
| Future        production costs                                      |   | (5,926     | )      |   | (11,754    | )      |   | (9,875     | )      |   | (6,670    | )      |   | (4,997     | )      |   | (2,782     | )      |   | (42,004     | )      |   | (1,249    | )      |
| Future development and abandonment costs                            |   | (7,218     | )      |   | (4,643     | )      |   | (3,013     | )      |   | (2,461    | )      |   | (3,374     | )      |   | (2,459     | )      |   | (23,168     | )      |   | (1,721    | )      |
| Future        income tax                                            |   | (10,778    | )      |   | (29,083    | )      |   | (23,083    | )      |   | (14,375   | )      |   | (9,977     | )      |   | (5,397     | )      |   | (92,693     | )      |   | (2,009    | )      |
| **Future net cash flows**                                           |   | **23,321** |   |   | **27,976** |   |   | **12,312** |   |   | **6,104** |   |   | **24,362** |   |   | **9,721**  |   |   | **103,796** |   |   | **2,156** |   |
| 10%        discount factor                                          |   | (13,262    | )      |   | (11,143    | )      |   | (3,953     | )      |   | (1,600    | )      |   | (17,480    | )      |   | (3,356     | )      |   | (50,794     | )      |   | (1,265    | )      |
| **Standardized measure of discounted future net        cash flows** |   | **10,059** |   |   | **16,833** |   |   | **8,359**  |   |   | **4,504** |   |   | **6,882**  |   |   | **6,365**  |   |   | **53,002**  |   |   | **891**   |   |

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

|    |    |                                                                                                                                                                                          |
|--------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)          |    | Eni’s        standardized measure of discounted future of net cash        flows of the Kashagan field is determined based on Eni        share of 18.52%.                                      |
| (2)          |    | The amounts        of joint ventures and affiliates for 2007 included 60% of        the three Russian companies former Yukos purchased in        2007, for which Gazprom has a call option of 51%. |

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##### Table of Contents

*Changes in standardized measure of discounted future netcash flows*Changes in standardized measure of discounted future netcash flows for the years 2005, 2006 and 2007.

| (million        euro) |   | **2005** |   | **2006** |   | **2007** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Beginning of year for consolidated        subsidiaries**                                               |   | **36,901** |   |   | **55,351**  |   |   | **43,227** |   |
|----------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|
| Increase        (decrease):                                                                              |   |       |   |   |        |   |   |       |   |
| - sales, net of production costs                                                                         |   | (17,880    | )      |   | (21,739     | )      |   | (20,979    | )      |
| - net        changes in sales and transfer prices, net of production        costs                        |   | 33,372     |   |   | 4,097       |   |   | 34,999     |   |
| - extensions, discoveries and improved recovery,        net of future production and development costs   |   | 3,527      |   |   | 3,629       |   |   | 3,982      |   |
| - changes        in estimated future development and abandonment costs                                   |   | (3,654     | )      |   | (6,964      | )      |   | (4,000     | )      |
| - development costs incurred during the period        that reduced future development costs              |   | 3,865      |   |   | 3,558       |   |   | 4,682      |   |
| -        revisions of quantity estimates                                                                 |   | 47         |   |   | 383         |   |   | (2,995     | )      |
| - accretion of discount                                                                                  |   | 6,573      |   |   | 9,489       |   |   | 7,968      |   |
| - net        change in income taxes                                                                      |   | (17,327    | )      |   | 3,060       |   |   | (17,916    | )      |
| - purchase of reserves in-place                                                                          |   | 977        |   |   | 10          |   |   | 3,521      |   |
| - sale of        reserves in-place                                                                       |   |       |   |   | (1,252      | )      |   |       |   |
| - changes in production rates (timing) and other                                                         |   | 8,950      |   |   | (6,395      | )      |   | 513        |   |
| **Net        increase (decrease)**                                                                       |   | **18,450** |   |   | **(12,124** | **)**  |   | **9,775**  |   |
| **Standardized measure of discounted future net        cash flows for consolidated subsidiaries**        |   | **55,351** |   |   | **43,227**  |   |   | **53,002** |   |
| Standardized        measure of discounted future net cash flows for joint        ventures and affiliates |   | 371        |   |   | 354         |   |   | 891        |   |

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

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##### Table of Contents

**EXHIBIT 1**

**Eni SpA By-laws**

> 
***Part I - Establishment - Name -    Registered Office and Duration of the Company***

**ARTICLE 1**

| 1.1 |   | "Eni        SpA" resulting from the transformation of Ente        Nazionale Idrocarburi, a public law agency, established        by Law 136 of February 10, 1953, is regulated by these        by-laws. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 2**

| 2.1 |   | The        registered head office of the company is located in Rome,        Italy and the company’s two branches in San Donato        Milanese (MI).   |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.2 |   | Main        representative offices, affiliates and branches may be        established and/or wound up in Italy or abroad in        compliance with the law. |

**ARTICLE 3**

| 3.1 |   | The company        is expected to exist until December 31, 2100. Its        duration may be extended one or more times by resolution        of the shareholders’ meeting. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part II - Company Objects***

**ARTICLE 4**

| 4.1 |   | The company        objects are the direct and/or indirect management, by way        of shareholdings in companies, agencies or businesses, of        activities in the field of hydrocarbons and natural        vapours, such as exploration and development of        hydrocarbon fields, construction and operation of        pipelines for transporting the same, processing,        transformation, storage, utilisation and trade of        hydrocarbons and natural vapours, all in respect of        concessions provided by law.        The company also has the object of direct and/or indirect        management, by way of shareholdings in companies,        agencies or businesses, of activities in the fields of        chemicals, nuclear fuels, geothermy and renewable energy        sources, in the sector of engineering and construction of        industrial plants, in the mining sector, in the        metallurgy sector, in the textile machinery sector, in        the water sector, including derivation, drinking water,        purification, distribution and reuse of waters; in the        sector of environmental protection and treatment and        disposal of waste, as well as in every other business        activity that is instrumental, supplemental or        complementary with the aforementioned activities.        The company also has the object of managing the technical        and financial co-ordination of subsidiaries and        affiliated companies as well as providing financial        assistance on their behalf.        The company may perform any operations necessary or        useful for the achievement of the company objects; by way        of example, it may initiate operations involving real        estate, moveable goods, trade and commerce, industry,        finance and banking asset and liability operations, as        well as any action that is in any way connected with the        company objects with the exception of public fund raising        and the performance of investment services as regulated        by Legislative Decree No. 58 of February 24, 1998.        The company may take shareholdings and interests in other        companies or businesses with objects similar, comparable        or complementary to its own or those of companies in        which it has holdings, either in Italy or abroad, and it        may provide real and or personal bonds for its own and        others’ obligations, especially guarantees. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part III - Capital -    Shareholdings - Bonds***

**ARTICLE 5**

| 5.1 |   | The company        capital is euro 4,005,358,876.00 (four billion five        million three hundred and fifty-eight thousand eight        hundred and seventy-six) represented by 4,005,358,876        (four billion five million three hundred and fifty-eight        thousand eight hundred and seventy-six) shares of        ordinary stock with a nominal value of euro 1 (one) each. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.2 |   | Shares may        not be split up and each share is entitled to one vote.                                                                                                                                                                                                                                                                                                                 |
| 5.3 |   | The fact of        being a Shareholder in itself constitutes approval of        these by-laws.                                                                                                                                                                                                                                                                                            |

**ARTICLE 6**

| 6.1 |   | Pursuant to        Article 3 of Law Decree 332 of May 31, 1994, converted        with amendments into Law 474 of July 30, 1994, no one, in        any capacity, may own company shares that entail a        holding of more than 3 per cent of voting share capital.        Such maximum shareholding limit is calculated by taking        into account the aggregate shareholding held by the        controlling entity, either a physical or legal person or        company; its directly or indirectly controlled entities,        as |
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|   |   | well as        entities controlled by the same controlling entity;        affiliated entities as well as people related to the        second degree by blood or marriage, also in the case of a        legally separated spouse.        Control exists, with reference also to entities other        than companies, in the cases envisaged by Article 2359,        paragraphs 1 and 2 of the Civil Code.        Affiliation exists in the case set forth in Article 2359,        paragraph 3, of the Civil Code as well as between        entities that directly or indirectly, by way of        subsidiaries, other than those managing investment funds,        are bound, even with third parties, in agreements        regarding the exercise of voting rights or the transfer        of shares or portions of third companies or, in any        event, in agreements or pacts as per Article 122 of        Legislative Decree No. 58 of February 24, 1998 regarding        third party companies if said agreements or pacts concern        at least 10 per cent of the voting capital, if they are        listed companies, or 20 per cent if they are unlisted        companies.        The aforementioned shareholding limit (3 per cent) is        calculated by taking into account shares held by any        fiduciary nominee or intermediary. Any voting rights        attributable to voting capital held or controlled in        excess of the maximum limit indicated in the foregoing        cannot be exercised and the voting rights of each entity        to whom such limit on shareholding applies are reduced in        proportion, unless otherwise jointly provided in advance        by the parties involved. In the event that shares        exceeding this limit are voted, any Shareholders’        resolution adopted pursuant to such a vote may be        challenged pursuant to Article 2377 of the Civil Code, if        the required majority had not been reached without the        votes exceeding the aforementioned maximum limit.        Shares not entitled to vote are included in the        determination of the quorum at shareholders’        meetings. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.2    |   | Pursuant to        Article 2, paragraph 1 of Law Decree 332 of May 31, 1994,        converted with amendments into Law 474 of July 30, 1994,        as modified by Article 4, paragraph 227, of Law December        24, 2003 No. 350, the Minister of Economy and Finance        retains the following special powers to be exercised in        agreement with the Minister of the Economic Development        and according to the criteria contained in the Decree        issued by the President of the Council of Ministers on        June 10, 2004:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|   |   | a) |   | opposition        with respect to the acquisition of material shareholdings        by entities affected by the shareholding limit as set        forth in Article 3 of Law Decree 332 of May 31, 1994,        converted with amendments into Law 474 of July 30, 1994,        by which – as per Decree issued by the Minister of        Treasury on October 16, 1995 – are meant those        representing at least 3% of share capital with the right        to vote at the ordinary shareholders’ meeting. The        opposition is expressed within ten days of the date of        the notice to be filed by the Board of Directors at the        time request is made for registration in the        Shareholders’ Register if the Minister considers        that such an acquisition may prejudice the vital        interests of the Italian State. Until the ten-day term is        not lapsed, the voting rights and the non-asset linked        rights connected with the shares representing a material        shareholding may not be exercised. If the opposition        power is exercised, through a duly motivated act in        connection with the prejudice that may be caused by the        operation to the vital interests of the Italian State,        the transferee may not exercise the voting rights and the        other non-asset linked rights connected with the shares        representing a material shareholding and must sell said        shares within one year. Failing to comply, the law court,        upon request of the Minister of Economy and Finance, will        order the sale of the shares representing a material        shareholding according to the procedures set forth in        Article 2359-ter of the Civil Code. The act through which        the opposition power is exercised may be sued by the        transferee before the Regional Administrative Court of        Latium within sixty days as of its issue;                                                                                               |
|--------|--------|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | opposition        with respect to the subscription of Shareholders’        pacts or agreements as per Article 122 of Legislative        Decree No. 58 of February 24, 1998, involving – as        per Decree issued by the Minister of Treasury on October        16, 1995 – at least 3% of the share capital with the        right to vote at ordinary shareholders’ meetings. In        order to allow the exercise of the above mentioned        opposition power, Consob notifies the Minister of Economy        and Finance of the relevant pacts or agreements        communicated to it pursuant to the aforementioned Article        122 of Legislative Decree No. 58 of February 24, 1998.        The opposition power may be exercised within ten days as        of the date of the notice by Consob. Until the ten-day        term is not lapsed, the voting right and the other        non-asset linked rights connected with the shares held by        the shareholders who have subscribed the above mentioned        pacts or agreements may not be exercised. If the        opposition power is exercised through the issue of an act        that shall be duly motivated in consideration of the        prejudice that may be caused by said pacts or agreements        to the vital interests of the Italian State, the        shareholders pacts or agreements shall be null and void.        If in the shareholders’ meetings the shareholders        who have signed shareholders’ pacts or agreements        behave as if those pacts or agreements disciplined by        Article 122 of Legislative Decree No. 58 of February 24,        1998 were still in effect, the resolutions approved with        their vote, if determining for the approval, may be sued.        The act through which the opposition power is exercised        may be sued by the shareholders who joined the above        mentioned pacts or agreements before the Regional        Administrative Court of Latium within sixty days as of        its issue; |
|   |   | c) |   | veto power        with respect to resolutions to dissolve the company, to        transfer the business, to merge, to demerge, to transfer        the company’s registered office abroad, to change        the company objects and to amend the by-laws cancelling        or modifying the powers indicated in this Article. The        act through which the veto power is exercised shall be        duly motivated in consideration of the prejudice the        related resolution may cause to the vital interests of        the Italian State and may be sued by the dissenting        Shareholders before the Regional Administrative Court of        Latium within sixty days as of its issue;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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|   |   | d) |   | appointment        of one Board member with no voting rights. Should such        appointed Director lapse, the Minister of Economy and        Finance in agreement with the Minister of the Economic        Development will appoint his substitute. |
|--------|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 7**

| 7.1 |   | When shares        are fully paid, and if the law so allows, they may be        issued to the bearer. Bearer shares may be converted into        registered shares and vice versa. Conversion operations        are performed at the Shareholder’s expense. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 8**

| 8.1 |   | In the event,        and for whatever reason, a share belongs to more than one        person, the rights relating to said share may not be        exercised by other than one person or by a proxy for all        co-owners. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 9**

| 9.1 |   | The        shareholders’ meeting may resolve to increase the        company capital and establish terms, conditions and means        thereof.                                                                                               |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9.2 |   | The        shareholders’ meeting may resolve to increase the        company capital by issuing shares, including shares of        different classes, to be assigned for no consideration        pursuant to Article 2349 of the Civil Code. |

**ARTICLE 10**

| 10.1 |   | Payments on        shares are requested by the Board of Directors in one or        more times.                                                                                                                                         |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2 |   | Shareholders        who are late in payment are charged an interest        calculated at the official discount rate established by        the Bank of Italy besides the provisions envisaged in        Article 2344 of the Civil Code. |

**ARTICLE 11**

| 11.1 |   | The company        may issue bonds, including convertibles and warrant bonds        in compliance with the law. |
|------|--------|-----------------------------------------------------------------------------------------------------------------|

> 
***Part IV - Shareholders’ meeting***

**ARTICLE 12**

| 12.1 |   | Ordinary and        extraordinary shareholders’ meetings are usually        held at the company registered office unless otherwise        resolved by the Board of Directors, provided however they        are held in Italy.                 |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 12.2 |   | Ordinary        shareholders’ meetings must be called at least once        a year to approve the financial statements, within 180        days of the end of the business year, as the Company        approves the Group Financial Statements. |

**ARTICLE 13**

| 13.1 |   | Shareholders’        meetings are convened through a notice to be published on        the Italian Official Gazette or the following newspapers:        "Il Sole 24 Ore", "Corriere della        Sera" and "Financial Times", according to        the current legislation and in compliance with the rules        in force regulating the exercise of the vote by mail.        The Shareholders that, severally or jointly, represent at        least one fortieth of Eni share capital, may ask, within        five days as of the date of publication of the        shareholders’ meeting notice, to add other items in        the agenda. The request shall contain the matters to be        proposed to the shareholders’ meeting. Said faculty        may not be exercised on the matters upon which, pursuant        to the applicable legislation, the shareholders’        meeting resolves on the basis of a proposal of the Board        of Directors or on the basis of a project or report of        the Board. The integrations accepted by the Board shall        be published at least ten days before the        shareholders’ meeting date, through a notice to be        published as indicated above. |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 13.2 |   | Admission to        the shareholders’ meeting is subject to the        delivery, also for registered shares, of the        communication issued by financial intermediaries at least        two labour days before the date of the shareholders’        meeting on first call.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

**ARTICLE 14**

| 14.1 |   | Each        Shareholder entitled to attend the meeting may also be        represented in compliance with the law by a person        appointed by written proxy. Incorporated entities and        companies may attend the meeting by way of a person        appointed by written proxy. In order to simplify        collection of proxies issued by Shareholders who are        employees of the company or its subsidiaries and members        of Shareholders associations incorporated under and        managed pursuant to current legislation regulating        proxies collection, notice boards for communications and        rooms to allow proxies collection are made available to        said associations according to terms and conditions        agreed from time to time by the company with the        associations representatives. |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 14.2 |   | The Chairman        of the meeting has to assure the regularity of written        proxies and, in general, the right to attend the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 14.3 |   | The right to        vote may also be exercised by mail according to the laws        and regulations in force concerning this matter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 14.4 |   | Eni SpA        shareholders’ meetings are disciplined by Eni        SpA’s shareholders’ meeting Regulation approved        by the ordinary shareholders’ meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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**ARTICLE 15**

| 15.1 |   | The meeting        is chaired by the Chairman of the Board of Directors, or        in the event of absence or impediment, by the Chief        Executive Officer; in absence of both, by another person,        duly delegated by the Board of Directors, failing which        the meeting may elect its own Chairman. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 15.2 |   | The Chairman        of the meeting is assisted by a Secretary, who need not        be a Shareholder, to be designated by the Shareholders        present, and may appoint one or more scrutineers.                                                                                                                    |

**ARTICLE 16**

| 16.1 |   | The ordinary        shareholders’ meeting decides on all the matters for        which it is legally entitled and authorises the transfer        of the business.                   |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 16.2 |   | Resolutions        either at ordinary or extraordinary meetings, either on        first, second or third call, must be taken with the        majority required by the law in each case. |
| 16.3 |   | Resolutions        of the meeting taken in compliance with the law and these        by-laws are binding for all Shareholders even if absent        or dissenting.                       |
| 16.4 |   | The minutes        of ordinary meetings must be signed by the Chairman and        the Secretary.                                                                                        |
| 16.5 |   | The minutes        of extraordinary meetings must be drawn up by a notary        public.                                                                                                |

> 
***Part V - The Board of Directors***

**ARTICLE 17**

| 17.1 |   | The company        is managed by a Board of Directors consisting of no fewer        than three and no more than nine members. The        shareholders’ meeting determines the number within        these limits. The Minister of Economy and Finance in        agreement with the Minister of the Economic Development        may appoint another member, with no voting rights,        pursuant to Article 6, second paragraph, letter d), of        the by-laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| 17.2 |   | The Board of        Directors is appointed for a period of up to three        financial years; this term lapses on the date of the        shareholders’ meeting convened to approve the        financial statements of the last year of their office.        They may be reappointed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 17.3 |   | The Board of Directors, except for the member        appointed pursuant to Article 6.2, letter d) of these        by-laws, is appointed by the shareholders’ meeting        on the basis of lists presented by Shareholders and by        the Board of Directors; in such lists the candidates must        be listed in numerical order. Should the retiring Board        of Directors present its own candidate list, it must be        deposited at the company’s registered office****and        published in at least three Italian newspapers of general        circulation, two of them business dailies, at least        twenty days before the date set for the first call of the        shareholders’ meeting. Candidate lists presented by        Shareholders must be deposited and published as indicated        in the foregoing at least ten days before the date set        for the first call of the shareholders’ meeting.        Each Shareholder may present or take part in the        presenting of only one candidate list and vote only one        candidate list. Those who are controlling or controlled        entities or are under common control, as defined by        Article 93 of Legislative Decree No. 58 issued on        February 24, 1998, by the same entity of the shareholder        presenting a list shall not present nor take part in the        presentation of another candidate list, nor vote them,        also through intermediaries or fiduciaries. Each        candidate may appear in one list only or he will be        ineligible. Only those Shareholders who, alone or        together with other Shareholders, represent at least 1        per cent****of voting share capital at the ordinary        shareholders’ meeting may present candidate lists.        In order to demonstrate the title on the number of shares        necessary to present candidate lists, the Shareholders        must present and/or deliver with****the        company’s registered office a copy of the        communication issued by the authorised financial        intermediaries that are depositaries of their shares at        least five days prior to the date set for the first call        of the shareholders’ meeting.        At least one Board member, if the Board members are no        more than five, or at least three Board members if the        Board members****are more than five, shall have the        independence requirements set for the Board of Statutory        Auditors members of listed companies. The independent        candidates shall be expressly indicated in each list.        All candidates shall also have the honorability        qualifications set forth by the applicable legislation.        Together with the deposit of each list, in order to        assure its validity, the following documents shall be        deposited: (i) the curriculum of each candidate; (ii)        statements of each candidate to****accept his        nomination and attest, in his own responsibility, that        causes for his ineligibility and incompatibility are non        existing and that he possesses the aforementioned        honorability and,****if any, independence        requirements.        The Directors appointed shall communicate to the Company        if they have lost the above mentioned independence and        honorability requirements and if situations of        ineligibility or incompatibility have arisen.        The Board of Directors evaluates periodically the        independence and the honorability of its members and if        situations of ineligibility or incompatibility have        arisen.        If the honorability or independence****requirements        declared and set forth by the legislation in force are        not present or elapse for a Board member or if situations        of ineligibility or incompatibility have arisen, the        Board of Directors removes said Board member and resolves        upon his substitution or invites him to remove the        situation of incompatibility within the term set by the        Board itself; if this last condition is not met, the        Director will be removed from office. |

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|   |   | Board members        will be elected in the following manner: |
|--------|--------|---------------------------------------------------------------|

|   |   | a) |   | seven tenths        of the members to be elected will be drawn out from the        candidate list that receives the majority of votes        expressed by the Shareholders in the numerical order in        which they appear on the list, rounded off in the event        of a fractional number to the next lower number;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | the remaining        Board members will be drawn out from the other candidate        lists; said lists shall not be linked in any way, neither        indirectly, to the shareholders who have presented or        voted the list that has obtained the highest number of        votes; to this purpose the votes obtained by each        candidate list will be divided by one or two depending on        the number of the members to be elected. The quotients        thus obtained will be assigned progressively to        candidates of each said list in the order given in the        lists themselves. Quotients thus assigned to candidates        of said lists will be set in one decreasing numerical        order. Those who obtain the highest quotients will be        elected.        In the event that more than one candidate obtains the        same quotient, the candidate elected will be the one of        the list that has not hitherto had a Board member elected        or that has elected the least number of Board members.        In the event that none of the lists has yet elected a        Board member or that all of them have elected the same        number of Board members, the candidate from all such        lists who has obtained the largest number of votes will        be elected. In the event of equal list votes and equal        quotient, a new vote will be taken by the entire        shareholders’ meeting and the candidate elected will        be the one who obtains a simple majority of the votes; |
|   |   | c) |   | if through        the procedure described above the minimum number of        independent Directors set by these by-laws is not        elected, the quotient is calculated according to letter        b) above in order to be assigned to the candidates        present in each list; the independent candidates not yet        drawn from the lists pursuant to letters a) and b) above,        who have got the highest quotients will be elected in        order to meet the provision of the by-laws on the number        of the independent Directors. The Directors so appointed        will replace the non independent Directors to whom the        lowest quotients have been assigned. If the number of        independent candidates is lower than the minimum limit        set by the by-laws, the shareholders’ meeting will        make a resolution with the majorities prescribed by the        law to substitute the not independent candidates who have        got the lowest quotients;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | d) |   | to appoint        Board members for any reason not covered by the terms of        the aforementioned procedure, the shareholders’        meeting will make a resolution with the majorities        prescribed by the law****in order, however, to assure        that the Board composition complies with the current        legislation and the by-laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|   |   | The vote by        list procedure shall apply only in case of appointment of        the entire Board of Directors.                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 17.4   |   | The        shareholders’ meeting may, even during the        Board’s term of office, change the number of members        of the Board of Directors, always within the limits set        forth in paragraph 17.1 above, and make the relating        appointments. Board members so elected will expire at the        same time as the rest of the Board.                                                                                                           |
| 17.5   |   | If during the        term of office one or more members leave the Board,        action will be taken in compliance with Article 2386 of        the Civil Code with exception of the Board member        appointed pursuant to Article 6.2 letter d) of these        by-laws. If a majority of members leaves the Board, the        whole Board will be considered lapsed and the Board must        promptly call a shareholders’ meeting to appoint a        new Board. |
| 17.6   |   | The Board may        establish Board Committees that shall have advisory and        consulting tasks on specific items.                                                                                                                                                                                                                                                                                                                                                      |

**ARTICLE 18**

| 18.1 |   | If the        shareholders’ meeting has not appointed a Chairman,        the Board will elect one of its members. The Director        appointed pursuant to Article 6, second paragraph, letter        d) of the by-laws cannot be appointed as Chairman. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 18.2 |   | The Board, at        the Chairman’s proposal, appoints a Secretary, who        need not belong to the company.                                                                                                                                            |

**ARTICLE 19**

| 19.1 |   | The Board        meets in the place indicated in the notice whenever the        Chairman or, in case of absence or impediment, the Chief        Executive Officer deems necessary, or when written        application has been made by the majority of the members.        The Board of Directors may be convened also pursuant to        Article 28.4 of the by-laws. The Board of Directors’        meetings may be held by video or teleconference if each        of the participants to the meetings may be identified and        if each is allowed to follow the discussion and take part        to it in real time. If said conditions are met, the        meeting is considered duly held in the place where the        Chairman and the Secretary are present. |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 19.2 |   | Usually        notice is given at least five days in advance. In cases        of urgency notice may be sent earlier. The Board of        Directors decides on how to convene its meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 19.3 |   | The Board of        Directors must likewise be convened when so requested by        at least two Board members or by one member if the Board        consists of three members to decide on a specific matter        considered of particular importance, pertaining to        management, matter to be indicated in the request.                                                                                                                                                                                                                                                                                                                                                                                                                                             |

**ARTICLE 20**

| 20.1 |   | The Chairman        of the Board or, in his absence, the oldest Board member        in attendance chairs the meeting. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------|

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**ARTICLE 21**

| 21.1 |   | A majority of        members of the Board having a voting right must be        present for a Board meeting to be valid.                                                                                |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 21.2 |   | Resolutions        are taken with the majority of votes of the Board members        having a voting right present; should votes be equal, the        person who chairs the meeting has a casting vote. |

**ARTICLE 22**

| 22.1 |   | Resolutions        of the Board are entered in the minutes, which are        recorded in a book kept for that purpose pursuant to the        law, and said minutes are signed by the Chairman of the        meeting and by the Secretary. |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 22.2 |   | Copies of the        minutes are bona fide if they are signed by the Chairman        or the person acting for him and countersigned by the        Secretary.                                                                              |

**ARTICLE 23**

| 23.1 |   | The Board of        Directors is invested with the fullest powers for        ordinary and extraordinary management of the company and,        in particular, the Board has the power to perform all        acts it deems advisable for the implementation and        achievement of the company objects, except for the acts        that the law or these by-laws reserve for the        shareholders’ meeting.                                                                                                                                                                                                 |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 23.2 |   | The Board of        Directors is allowed to resolve on the following matters:        - the merger and the demerger of at least 90% directly        owned subsidiaries;        - the establishment and winding up of branches;        - the amendment to the by-laws in order to comply with        the current legislation.                                                                                                                                                                                                                                                                                          |
| 23.3 |   | The Board of        Directors and the Chief Executive Officer report timely,        at least every three months and however in the Board of        Directors meetings, to the Board of Statutory Auditors on        the activities and on the most relevant operations        regarding the operational, economic and financial        management of the company and its subsidiaries; in        particular the Board of Directors and the Chief Executive        Officer report to the Board of Statutory Auditors on        operations entailing an interest on their behalf or on        behalf of third parties. |

**ARTICLE 24**

| 24.1   |   | The Board of Directors delegates its powers to        one of its members with the exception of the Director        appointed pursuant to Article 6, second paragraph, letter        d) of the by-laws, in compliance with the limits set        forth in Article 2381 of the Civil Code. In addition the        Board of Directors may delegate powers to the Chairman        for researching and promoting integrated projects and        strategic international agreements. The Board of        Directors may at any time withdraw the delegations of        powers hereon; if the Board of Directors withdraws powers        delegated to the Chief Executive Officer, a new Chief        Executive Officer is simultaneously appointed.        The Board of Directors, upon proposal of the Chairman and        in agreement with the Chief Executive Officer, may confer        powers for single acts or categories of acts to other        members of the Board of Directors with the exception of        the Director appointed pursuant to Article 6, second        paragraph, letter d) of the by-laws. The Chairman and the        Chief Executive Officer, in compliance with the limits of        their delegations, may delegate and empower company        employees or persons not belonging to the company to        represent the company for single acts or specific        categories of acts.        Further, upon proposal of the Chief Executive Officer and        in agreement with the Chairman, the Board of Directors        may also appoint one or more General Managers and        determines the powers to be conferred to them. In order        to make the appointment effective, the Board of Directors        shall verify if the General Manager to be appointed has        the honorability requirements set by the current        legislation. The Board of Directors shall periodically        verify said honorability requirements. The General        Managers without said requirement shall be removed.        Upon proposal of the Chief Executive Officer presented        and in agreement with the Chairman, the Board of        Directors appoints the Manager responsible for the        preparation of financial reporting documents. The        appointment is subject to the favourable opinion of the        Board of Statutory Auditors. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The Manager        responsible for the preparation of financial reporting        documents is chosen among people who, for at least three        years, have exercised:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   |   | a) |   | administration        or control activities or directive tasks in companies        listed on regulated stock exchanges in Italy or other        European Union countries or other countries member of        OECD with a share capital not less than two million euro        or |
|--------|--------|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | audit        activities in the companies mentioned in letter a) above,        or                                                                                                                                                                                                |
|   |   | c) |   | professional        activities or teaching activities in universities in the        financial or accounting sectors, or                                                                                                                                                         |
|   |   | d) |   | managerial        functions in public or private bodies in the financial,        accounting, or control sectors.                                                                                                                                                                |

|   |   | The Board of        Directors assures that the Manager responsible for the        preparation of financial reporting documents is given        adequate powers and means to execute his or her tasks and        to respect the administrative and accounting procedures. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 25**

| 25.1 |   | Legal        representation towards any judicial or administrative        authority and towards third parties, together with the        company signature, are vested either onto the Chairman or        the Chief Executive Officer. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

**ARTICLE 26**

| 26.1 |   | The Chairman        and the members of the Board are remunerated in an amount        established by the ordinary shareholders’ meeting.        Said resolution, once taken, will remain valid for        subsequent business years until the shareholders’        meeting decides otherwise. |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 27**

| 27.1 |   | The Chairman: |
|------|--------|---------------|

|   |   | a) |   | represents        the company according to the provisions of Article 25.1;                                               |
|--------|--------|----|--------|--------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | chairs the        shareholders’ meeting pursuant to Article 15.1;                                                   |
|   |   | c) |   | convenes and        chairs meetings of the Board of Directors pursuant to        Articles 19.1 and 20.1;                 |
|   |   | d) |   | ascertains        whether Board resolutions have been implemented;                                                       |
|   |   | e) |   | exercises the        powers delegated to him by the Board of Directors        pursuant to Article 24.1 of these by-laws. |

> 
***Part VI - Board of Statutory Auditors***

**ARTICLE 28**

| 28.1 |   | The Board of        Statutory Auditors consists of five effective members and        two alternate members. The Auditors shall have the        professional and honour requirements set forth by the        Ministerial Decree No. 162, dated March 30, 2000 issued        by the Ministry of Justice.        Pursuant to the aforementioned Ministerial Decree, the        matters strictly connected to those of interest of the        Company are: companies law, business economics and        corporate finance.        Pursuant to said Ministerial Decree, the sectors strictly        connected with those of interest of the Company are the        engineering and geological sectors.        The Statutory Auditors may be appointed members of        administration and control bodies in other companies        within the limits set by Consob regulation.        Until those provisions do not come in force, those who        are already appointed effective auditor or supervisory        board member or audit committee member in at least five        companies with securities listed on regulated securities        markets other****than Eni SpA subsidiaries may not be        appointed Statutory Auditor; if elected, they will lapse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 28.2 |   | The Board of        Statutory Auditors is appointed by the shareholders’        meeting on the basis of lists presented by the        Shareholders; in such lists candidates are listed in        numerical order.        For the presentation, deposit and publication of        candidate lists the procedures set forth in Article 17.3        shall apply and according to the rules set forth by        Consob.        Lists shall be divided into two sections: the first one        for the candidates to be appointed effective Auditors and        the second one for the candidates to be appointed        alternate Auditors. At least the first candidate of each        section shall be chartered accountant and have exercised        audit activities for not less than three years.        Three effective Auditors and one alternate Auditor will        be drawn from the list that obtains the majority of        votes. The other two effective Auditors and the other        alternate Auditor will be appointed pursuant to Article        17.3, letter b) of the by-laws. The procedure described        in this last Article shall be applied to each section of        the lists involved separately.        The shareholders’ meeting appoints the Chairman of        the Board of Statutory Auditors among the effective        Auditors appointed according to Article 17.3 letter b) of        these by-laws.        To appoint effective or alternate Auditors for any reason        not elected according to the terms of the aforementioned        procedure, the shareholders’ meeting will resolve        with the majorities prescribed by the law.        The vote by list procedure shall apply only in case of        appointment of the entire Board of Statutory Auditors.        Should an effective Auditor drawn out from the candidate        list that receives the majority of votes expressed by the        Shareholders be replaced, he will be succeeded by the        alternate Auditor drawn out from the same candidate list;        should an effective Auditor drawn out from the other        candidate list be replaced, he will be substituted by the        Alternate Auditor drawn by those other lists. |
| 28.3 |   | Retiring        Auditors may be reelected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 28.4 |   | Subject to a        previous communication to the Chairman of the Board of        Directors, the Board of Statutory Auditors is empowered        to convene the shareholders’ meeting and the Board        of Directors. At least two effective Auditors are        empowered to convene the shareholders’ meetings and        at least one effective Auditor is empowered to convene        the Board meetings.        The Board of Statutory Auditors’ meetings may be        held by video or teleconference if each of the        participants to the meetings may be identified and if        each is allowed to follow the discussion and take part to        it in real time. If said conditions are met, the Meeting        is considered duly held in the place where the Chairman        and the Secretary are present.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

> 
***Part VII - Financial Statements and    Profits***

**ARTICLE 29**

| 29.1 |   | The business        year ends on December 31 every year. |
|------|--------|----------------------------------------------------------|

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##### Table of Contents

| 29.2 |   | At the end of        each business year, the Board of Directors sees to the        preparation of the company financial statements in        conformity with the law. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 29.3 |   | The Board of        Directors may, during the course of the business year,        pay interim dividends to the Shareholders.                                          |

**ARTICLE 30**

| 30.1 |   | Dividends not        collected within five years of the day on which they are        payable will be prescribed in favour of the company and        allocated to reserves. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part VIII - Winding Up and    Liquidation of the Company***

**ARTICLE 31**

| 31.1 |   | In the event        the company is wound up, the shareholders’ meeting        will decide the manner of liquidation, appoint one or        more liquidators and determine their powers and        remuneration. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part IX - General Provisions***

**ARTICLE 32**

| 32.1 |   | For matters        not expressly regulated by these by-laws, the norms of        the Civil Code and specific laws concerning these matters        will apply.                                                                                                                                 |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 32.2 |   | The Ministry        of Economy and Finance may retain his shareholding in the        company share capital in excess of the limit set forth in        Article 6.1 of these by-laws and will not be subject to        the provisions of said Article 6.1 for the period set by        the law. |

**ARTICLE 33**

| 33.1 |   | The company        retains all assets and liabilities held before its        transformation by the public law agency Ente Nazionale        Idrocarburi. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

 

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##### Table of Contents

**EXHIBIT 8**

**List of Eni’ssubsidiaries for year 2007**

| 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 Mediterranea        Idrocarburi SpA                                     |   | Italy       |   | 100.00 |
| Eni Timor Leste SpA                                                         |   | Italy       |   | 100.00 |
| Ieoc SpA                                                                    |   | Italy       |   | 100.00 |
| Società Oleodotti        Meridionali - SOM SpA                         |   | Italy       |   | 70.00  |
| Società Petrolifera        Italiana SpA                                |   | Italy       |   | 99.96  |
| Stoccaggi Gas Italia SpA        - Stogit SpA                                |   | Italy       |   | 100.00 |
| Tecnomare - Società per        lo Sviluppo delle Tecnologie Marine SpA |   | Italy       |   | 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 |
| 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         |   | 0.07   |
| 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 China BV                                                                |   | Netherlands |   | 100.00 |
| Eni Congo Holding BV                                                        |   | Netherlands |   | 100.00 |
| Eni Congo SA                                                                |   | Congo       |   | 99.99  |
| 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 Ltd (in        liquidation)                                      |   | UK          |   | 100.00 |
| Eni Energy Russia BV                                                        |   | Netherlands |   | 100.00 |
| Eni Ganal Ltd                                                               |   | UK          |   | 100.00 |
| Eni Gas & Power LNG                                                     |   | Netherlands |   | 100.00 |
| Eni Grand Maghreb BV                                                        |   | Netherlands |   | 100.00 |
| 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 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          |   | 99.99  |
| 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 |

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##### Table of Contents

| Eni MOG Ltd (in        liquidation)                                      |   | UK                    |   | 100.00 |
|--------------------------------------------------------------------------|--------|-----------------------|--------|--------|
| Eni Morocco BV                                                           |   | Netherlands           |   | 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 PetroRussia BV                                                       |   | Netherlands           |   | 100.00 |
| Eni Popodi Ltd                                                           |   | UK                    |   | 100.00 |
| Eni Rapak Ltd                                                            |   | UK                    |   | 100.00 |
| Eni Resources Ltd (in        liquidation)                                |   | UK                    |   | 100.00 |
| Eni Securities Ltd                                                       |   | UK                    |   | 100.00 |
| Eni TNS Ltd                                                              |   | UK                    |   | 100.00 |
| Eni Trading BV                                                           |   | Netherlands           |   | 100.00 |
| Eni Transportation Ltd                                                   |   | UK                    |   | 100.00 |
| Eni Trinidad and Tobago        Exploration BV                            |   | Netherlands           |   | 100.00 |
| Eni Trinidad and Tobago        Ltd                                       |   | Trinidad & Tobago |   | 100.00 |
| Eni TTO Ltd                                                              |   | UK                    |   | 100.00 |
| Eni Tunisia BEK BV                                                       |   | Netherlands           |   | 100.00 |
| Eni Tunisia BV                                                           |   | Netherlands           |   | 100.00 |
| Eni UFL Ltd (in        liquidation)                                      |   | 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 |
| Ieoc Exploration BV                                                      |   | Netherlands           |   | 100.00 |
| Ieoc Production BV                                                       |   | Netherlands           |   | 100.00 |
| Lasmo Sanga Sanga Ltd                                                    |   | Bermuda               |   | 100.00 |
| Nigerian Agip Exploration        Ltd                                     |   | Nigeria               |   | 100.00 |
| Nigerian Agip Oil Co Ltd                                                 |   | Nigeria               |   | 100.00 |
| OOO ’Eni        Energhia’                                      |   | Russia                |   | 100.00 |
|                                                                     |   |                  |   |   |
|                                                                     |   |                  |   |   |
| GAS & POWER                                                          |   |                  |   |   |
|                                                                     |   |                  |   |   |
| Acqua Campania SpA                                                       |   | Italy                 |   | 47.61  |
| Compagnia Napoletana di        Illuminazione e Scaldamento col Gas SpA   |   | Italy                 |   | 99.69  |
| 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 |
| EniPower Trasmissione SpA                                                |   | Italy                 |   | 100.00 |
| GNL Italia SpA                                                           |   | Italy                 |   | 55.59  |
| LNG Shipping SpA                                                         |   | Italy                 |   | 100.00 |
| Siciliana Gas SpA                                                        |   | Italy                 |   | 100.00 |
| Snam Rete Gas SpA                                                        |   | Italy                 |   | 55.59  |
| Società EniPower Ferrara        Srl                                 |   | Italy                 |   | 51.00  |
| Società Italiana per il        Gas pA                               |   | Italy                 |   | 100.00 |
| Toscana Energia Clienti        SpA                                       |   | Italy                 |   | 79.22  |
| Adriaplin Podjetje za        distribucijo zemeljskegaplina doo Ljubljana |   | Slovenia              |   | 51.00  |

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##### Table of Contents

| Distribuidora de Gas        Cuyana SA                                                                                                                            |   | Argentina       |   | 45.60  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|
| Eni Gas & Power GmbH                                                                                                                                         |   | Germany         |   | 100.00 |
| Eni Gas Transport        International SA (ex Eni Gas & Power CH SA)                                                                                         |   | Switzerland     |   | 100.00 |
| Eni G&P France BV                                                                                                                                            |   | Netherlands     |   | 100.00 |
| Eni G&P Trading BV                                                                                                                                           |   | Netherlands     |   | 100.00 |
| Gas Brasiliano        Distribuidora SA                                                                                                                           |   | Netherlands     |   | 100.00 |
| GreenStream BV                                                                                                                                                   |   | Netherlands     |   | 75.00  |
| 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                                                                                                                                         |   |            |   |   |
|                                                                                                                                                             |   |            |   |   |
| AgipFuel Nord SpA (ex CAM        Petroli Srl)                                                                                                                    |   | Italy           |   | 100.00 |
| AgipFuel SpA                                                                                                                                                     |   | Italy           |   | 100.00 |
| Agip Rete SpA                                                                                                                                                    |   | Italy           |   | 100.00 |
| Costiero Gas Livorno SpA                                                                                                                                         |   | Italy           |   | 65.00  |
| Ecofuel SpA                                                                                                                                                      |   | Italy           |   | 100.00 |
| Eni Trading &        Shipping SpA                                                                                                                            |   | Italy           |   | 100.00 |
| Petrolig Srl                                                                                                                                                     |   | Italy           |   | 70.00  |
| Petroven Srl                                                                                                                                                     |   | Italy           |   | 68.00  |
| Praoil Oleodotti Italiani        SpA                                                                                                                             |   | Italy           |   | 100.00 |
| Raffineria di Gela SpA                                                                                                                                           |   | Italy           |   | 100.00 |
| Agip Austria GmbH                                                                                                                                                |   | Austria         |   | 75.00  |
| Agip Benelux BV                                                                                                                                                  |   | Netherlands     |   | 100.00 |
| Agip Ceská Republika Sro                                                                                                                                    |   | Czech Republic  |   | 100.00 |
| Agip Deutschland GmbH                                                                                                                                            |   | Germany         |   | 100.00 |
| Agip Ecuador SA                                                                                                                                                  |   | Ecuador         |   | 100.00 |
| Agip España SA                                                                                                                                              |   | Spain           |   | 100.00 |
| Agip France Sàrl                                                                                                                                            |   | France          |   | 100.00 |
| Agip Hungaria Zrt                                                                                                                                                |   | Hungary         |   | 99.40  |
| Agip Lubricantes SA                                                                                                                                              |   | Argentina       |   | 100.00 |
| Agip Oil Ceská Republika        Sro                                                                                                                         |   | Czech Republic  |   | 100.00 |
| Agip Oil Slovensko Spol        Sro                                                                                                                               |   | Slovakia        |   | 100.00 |
| Agip Olaj Magyarország        Kft                                                                                                                           |   | Hungary         |   | 100.00 |
| Agip Portugal        Combustiveis SA                                                                                                                             |   | Portugal        |   | 100.00 |
| Agip Romania Srl                                                                                                                                                 |   | Romania         |   | 100.00 |
| Agip Schmiertechnik GmbH                                                                                                                                         |   | Germany         |   | 100.00 |
| Agip Slovenija doo                                                                                                                                               |   | Slovenia        |   | 100.00 |
| Agip Slovensko Spol Sro                                                                                                                                          |   | Slovakia        |   | 100.00 |
| Agip Suisse SA                                                                                                                                                   |   | Switzerland     |   | 100.00 |
| 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 |

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##### Table of Contents

| ENGINEERING &        CONSTRUCTION                                                                      |   |                   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|
|                                                                                                       |   |                   |   |   |
| Saipem SpA                                                                                                 |   | Italy                  |   | 43.42  |
| Energy Maintenance        Services SpA                                                                     |   | Italy                  |   | 43.42  |
| Engineering &        Management Services SpA                                                           |   | Italy                  |   | 43.42  |
| Intermare Sarda SpA                                                                                        |   | Italy                  |   | 43.42  |
| Saipem Energy        International SpA                                                                     |   | Italy                  |   | 43.42  |
| Saipem FPSO SpA                                                                                            |   | Italy                  |   | 43.42  |
| Saipem Projects SpA                                                                                        |   | Italy                  |   | 43.42  |
| Snamprogetti SpA                                                                                           |   | Italy                  |   | 43.42  |
| Snamprogetti Sud SpA                                                                                       |   | Italy                  |   | 43.42  |
| Andromeda Consultoria        Tecnica e Representações Ltda                                       |   | Brazil                 |   | 43.42  |
| BOSCONGO SA                                                                                                |   | Congo                  |   | 43.42  |
| BOS Investment Ltd                                                                                         |   | UK                     |   | 43.42  |
| BOS - UIE Ltd                                                                                              |   | UK                     |   | 43.42  |
| Delong Hersent - Estudos,        Construções Maritimas e Participações, Unipessoal Lda |   | Portugal               |   | 43.42  |
| Entreprise Nouvelle        Marcellin SA                                                                    |   | France                 |   | 43.42  |
| ER SAI Caspian Contractor        Llc                                                                       |   | Kazakhstan             |   | 43.42  |
| ERS - Equipment Rental        & Services BV                                                            |   | Netherlands            |   | 21.71  |
| European Marine        Contractors Ltd                                                                     |   | UK                     |   | 43.42  |
| European Marine        Investments Ltd                                                                     |   | UK                     |   | 43.42  |
| European Maritime        Commerce BV                                                                       |   | Netherlands            |   | 43.42  |
| Frigstad Discoverer        Invest Ltd                                                                      |   | British Virgin Islands |   | 43.42  |
| Frigstad Discoverer        Invest (S) Pte Ltd                                                              |   | Singapore              |   | 43.42  |
| Global Petroprojects        Services AG                                                                    |   | Switzerland            |   | 43.42  |
| Hazira Cryogenic        Engineering & Construction Management Private Ltd                              |   | India                  |   | 23.83  |
| Hazira Marine Engineering        & Construction Management Private Ltd                                 |   | India                  |   | 43.42  |
| Katran-K Llc                                                                                               |   | Russia                 |   | 43.42  |
| Moss Arctic Offshore AS                                                                                    |   | Norway                 |   | 43.42  |
| Moss Maritime AS                                                                                           |   | Norway                 |   | 43.42  |
| Moss Maritime Inc                                                                                          |   | USA                    |   | 43.42  |
| Moss Offshore AS                                                                                           |   | Norway                 |   | 43.42  |
| North Caspian Service Co                                                                                   |   | Kazakhstan             |   | 43.42  |
| Petrex SA                                                                                                  |   | Peru                   |   | 43.42  |
| Petromar Lda                                                                                               |   | Angola                 |   | 30.40  |
| PT Saipem Indonesia                                                                                        |   | Indonesia              |   | 43.42  |
| Saibos Construções        Maritimas Ltda                                                         |   | Portugal               |   | 43.42  |
| Saigut SA De Cv                                                                                            |   | Mexico                 |   | 43.42  |
| Saimexicana SA De Cv                                                                                       |   | Mexico                 |   | 43.42  |
| Saipem America Inc                                                                                         |   | USA                    |   | 43.42  |
| Saipem Asia Sdn Bhd                                                                                        |   | Malaysia               |   | 43.42  |
| Saipem Contracting        Algerie SpA                                                                      |   | Algeria                |   | 43.42  |
| Saipem Contracting        (Nigeria) Ltd                                                                    |   | Nigeria                |   | 42.53  |
| Saipem do Brasil        Serviçõs de Petroleo Ltda                                                |   | Brazil                 |   | 43.42  |
| Saipem Holding France SAS                                                                                  |   | France                 |   | 43.42  |
| Saipem India Project        Services Ltd                                                                   |   | India                  |   | 43.42  |
| Saipem International BV                                                                                    |   | Netherlands            |   | 43.42  |
| Saipem Logistics Services        Ltd                                                                       |   | Nigeria                |   | 43.42  |
| Saipem Luxembourg SA                                                                                       |   | Luxembourg             |   | 43.42  |
| Saipem (Malaysia) Sdn Bhd                                                                                  |   | Malaysia               |   | 17.97  |
| Saipem Mediteran Usluge        doo                                                                         |   | Croatia                |   | 43.42  |
| Saipem Misr for Petroleum        Services SAE                                                              |   | Egypt                  |   | 43.42  |
| Saipem (Nigeria) Ltd                                                                                       |   | Nigeria                |   | 38.83  |
| Saipem Perfuraçoes e        Construçoes Petroliferas Lda                                         |   | Portugal               |   | 43.42  |
| Saipem (Portugal)        Comércio Marítimo, Sociedade Unipessoal Lda                             |   | Portugal               |   | 43.42  |
| Saipem (Portugal) -        Gestão de Participações SGPS Sociedade Unipessoal SA             |   | Portugal               |   | 43.42  |
| Saipem SA                                                                                                  |   | France                 |   | 43.42  |
| Saipem Services México        SA De Cv                                                                |   | Mexico                 |   | 43.42  |
| Saipem Services SA                                                                                         |   | Belgium                |   | 43.42  |
| Saipem Singapore Pte Ltd                                                                                   |   | Singapore              |   | 43.42  |

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| Saipem UK Ltd                                                                      |   | UK                   |   | 43.42  |
|------------------------------------------------------------------------------------|--------|----------------------|--------|--------|
| SAS Port de Tanger                                                                 |   | France               |   | 43.42  |
| Saudi Arabian Saipem Ltd                                                           |   | Saudi Arabia         |   | 26.05  |
| Services et Equipements        Gaziers et Petroliers SA                            |   | France               |   | 43.42  |
| Snamprogetti Canada Inc                                                            |   | Canada               |   | 43.42  |
| Snamprogetti France Sàrl                                                      |   | France               |   | 43.42  |
| Snamprogetti Ltd                                                                   |   | UK                   |   | 43.42  |
| Snamprogetti Lummus Gas        Ltd                                                 |   | Malta                |   | 42.99  |
| Snamprogetti Management        Services SA                                         |   | Switzerland          |   | 43.42  |
| Snamprogetti Netherlands        BV                                                 |   | Netherlands          |   | 43.42  |
| Snamprogetti Romania Srl                                                           |   | Romania              |   | 43.42  |
| Snamprogetti Saudi Arabia        Ltd                                               |   | Saudi Arabia         |   | 43.42  |
| Snamprogetti USA Inc                                                               |   | USA                  |   | 43.42  |
| Société de Construction        d’Oleoducs Snc                       |   | France               |   | 43.42  |
| Sofresid Engineering SA                                                            |   | France               |   | 43.42  |
| Sofresid SA                                                                        |   | France               |   | 43.42  |
| Sonsub AS                                                                          |   | Norway               |   | 43.42  |
| Sonsub International Pty        Ltd                                                |   | Australia            |   | 43.42  |
| Sonsub Ltd (in        liquidation) (ex Sonsub Ltd)                                 |   | UK                   |   | 43.42  |
| Star Gulf FZ Co                                                                    |   | United Arab Emirates |   | 43.42  |
| Varisal - Serviços De        Consultadoria e Marketing Lda                    |   | Portugal             |   | 21.71  |
|                                                                               |   |                 |   |   |
|                                                                               |   |                 |   |   |
| OTHER ACTIVITIES                                                                   |   |                 |   |   |
|                                                                               |   |                 |   |   |
| Syndial SpA - Attività        Diversificate                                   |   | Italy                |   | 100.00 |
| Ing. Luigi Conti Vecchi        SpA                                                 |   | Italy                |   | 100.00 |
|                                                                               |   |                 |   |   |
|                                                                               |   |                 |   |   |
| CORPORATE AND FINANCIAL        COMPANIES                                           |   |                 |   |   |
|                                                                               |   |                 |   |   |
| Agenzia Giornalistica        Italia SpA                                            |   | Italy                |   | 100.00 |
| Eni Corporate University        SpA                                                |   | Italy                |   | 100.00 |
| EniServizi SpA                                                                     |   | Italy                |   | 100.00 |
| Padana Assicurazioni SpA                                                           |   | Italy                |   | 99.72  |
| Serfactoring SpA                                                                   |   | Italy                |   | 48.81  |
| Servizi Aerei SpA                                                                  |   | Italy                |   | 100.00 |
| Società Finanziamenti        Idrocarburi - Sofid - SpA                        |   | Italy                |   | 99.61  |
| Banque Eni SA                                                                      |   | Belgium              |   | 100.00 |
| Eni Coordination Center        SA                                                  |   | Belgium              |   | 100.00 |
| Eni Insurance Ltd                                                                  |   | Ireland              |   | 100.00 |
| Eni International Bank        Ltd (in liquidation) (ex Eni International Bank Ltd) |   | Bahamas              |   | 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.

 

 

 

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| (1) |   | In the        present Code "Eni" or "Group" mean        Eni SpA and its subsidiaries as defined in Article 2359        of the Italian Civil Code as well as other subsidiaries        as defined in Article 26 of Legislative Decree No. 127 of        April 9, 1991. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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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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| • |   | 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: May 21, 2008

| /s/PAOLO SCARONI                                    |
|-----------------------------------------------------|
|                                                     |
| Paolo Scaroni        Title: Chief Executive Officer |

 

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**EXHIBIT 12.2**

**Certification**

 

I, Marco Mangiagalli, certify that:

|   | 1. |   | I have reviewed this annual        report on Form 20-F of Eni SpA; |
|--------|----|--------|--------------------------------------------------------------------|

|   | 2. |   | Based on my knowledge, this        report does not contain any untrue statement of a        material fact or omit to state a material fact necessary        to make the statements made, in light of the        circumstances under which such statements were made, not        misleading with respect to the period covered by this        report; |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. |   | Based on my knowledge, the        financial statements, and other financial information        included in this report, fairly present in all material        respects the financial condition, results of operations        and cash flows of the company as of, and for, the periods        presented in this report; |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. |   | The company’s other        certifying officer and I are responsible for establishing        and maintaining disclosure controls and procedures (as        defined in Exchange Act Rules 13a-15(e) and 15d-15(e))        and internal control over financial reporting (as defined        in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the        company and have: |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | Designed such disclosure        controls and procedures, or caused such disclosure        controls and procedures to be designed under our        supervision, to ensure that material information relating        to the company, including its consolidated subsidiaries,        is made known to us by others within those entities,        particularly during the period in which this report is        being prepared; |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Designed such internal        control over financial reporting, or caused such internal        control over financial reporting to be designed under our        supervision, to provide reasonable assurance regarding        the reliability of financial reporting and the        preparation of financial statements for external purposes        in accordance with generally accepted accounting        principles; |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) |   | Evaluated the effectiveness        of the company’s disclosure controls and procedures        and presented in this report our conclusions about the        effectiveness of the disclosure controls and procedures,        as of the end of the period covered by this report based        on such evaluation; and |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) |   | Disclosed in this report any        change in the company’s internal control over        financial reporting that occurred during the period        covered by the annual report that has materially        affected, or is reasonably likely to materially affect,        the company’s internal control over financial        reporting; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. |   | The company’s other        certifying officer and I have disclosed, based on our        most recent evaluation of internal control over financial        reporting, to the company’s auditors and the audit        committee of the company’s board of directors (or        persons performing the equivalent functions): |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | All significant deficiencies        and material weaknesses in the design or operation of        internal control over financial reporting which are        reasonably likely to adversely affect the company’s        ability to record, process, summarize and report        financial information; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Any fraud, whether or not        material, that involves management or other employees who        have a significant role in the company’s internal        control over financial reporting. |
|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Date: May 21, 2008

 

| /s/MARCO MANGIAGALLI                                    |
|---------------------------------------------------------|
|                                                         |
| Marco Mangiagalli        Title: Chief Financial Officer |

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**EXHIBIT 13.1**

 

**Certification Pursuant to 18U.S.C. Section 1350**

 

For purposes of 18 U.S.C. Section 1350, the undersignedofficer of Eni SpA, a company incorporated under the laws ofItaly (the "Company"), hereby certifies, to suchofficer’s knowledge, that:

> 
(i) the Annual Report on Form 20-F of the Company for the    year ended December 31, 2007 (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: May 21, 2008

 

| /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, 2007 (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: May 21, 2008

 

| /s/MARCO MANGIAGALLI                                    |
|---------------------------------------------------------|
|                                                         |
| Marco Mangiagalli        Title: Chief Financial Officer |

 

The foregoing certification is not deemed filed for purpose ofSection 18 of the Exchange Act and not incorporated by referencewith any filing under the Securities Act.

 

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