Against the backdrop of a strengthening global economy, in spite of volatility and uncertainty associated with the ongoing Lybian crisis and geo-political developments in other parts of the world, Eni will continue pursuing growth and creating sustainable long-term shareholders’ value.
Eni’s strategy is based on the following pillars:

- to select and implement the best capital and investment opportunities;
- to preserve a solid capital structure;
- to pursue capital and operating efficiency;
- to manage risks;
- to leverage research and innovation;
- to apply the highest ethical principles of business conduct;
- to promote the sustainability of the business model.

Over the next four years, Eni plans to execute a capital expenditure program amounting to €53.3 billion to support organic growth in its business. Approximately €37.1 billion (over 70%) of planned capital expenditures will be invested to explore, develop and produce oil and gas reserves. Planned projects have been assessed against our long-term scenario for Brent prices at $70 per barrel. Cash flow from operations and planned divestment proceeds (approximately €2 billion) will enable Eni to fund its capital expenditure program and remunerate its shareholders, while at the same time strengthening the balance sheet. Eni plans to progressively reduce the ratio of net borrowings to total equity (“leverage”) to below 0.40 within 2014.
Management intends to pursue a value creation for its shareholders trough a progressive dividend policy. Starting from 2011, management plans to increase dividends in line with OECD inflation. This dividend policy is based on management’s planning assumptions for oil prices at $70 per barrel flat in the next four years.

Business strategies and targets

In Exploration & Production Division, we intend to deliver strong profitable production growth leveraging on the Company’s portfolio of assets and pipeline of development projects. Management targets to deliver an average organic growth rate of more than 3% over the next four-year period, targeting a production level in excess of 2.05 mmboe/d by 2014 under our Brent price scenario at $70 per barrel. Growth will be fuelled by our strong pipeline of projects, with 15 new major fields and other projects planned to start production in the four-year period.

Planned start-ups will add 630 kbbl/d of new production in 2014, related mainly to conventional opportunities. Most of our new projects will get the relevant authorization within 2011.
Growth will be also achieved maintaining the actual production profile at the operating fields through a relevant commitment in optimization activities.

The booking of new reserves will enable us to replace reserves produced in the period, keeping the reserve life index stable. In the longer term, we expect to drive production growth leveraging on our giant fields, particularly Kashagan, Junin, Perla, Goliath, MLE-CAFC, Russian projects, Block 15/06 in Angola and unconventional opportunities. We will pursue the maximization of returns through selective exploration, the reduction in the time to market of our projects, and growing the share of operated production which – through the deployment of Eni standards and technologies – enables us to deliver tighter cost control and a better monitoring of operating risks.

In Gas & Power Division, Eni aims to preserve the profitability of the marketing segment in spite of a challenging trading environment as a result of increased competitive pressure, oversupply and depressing spot gas prices. Eni’s strategy will leverage on the renegotiation of gas purchase contracts in order to improve the gas cost position of the Company, the adoption of new pricing and risk management strategies to manage economic margins and to optimize asset value, as well as proposing an efficient commercial offer, focused on different client segments in Italy and abroad. Basing on these drivers, Eni aims to regain volumes and market share increasing gas sales in Italy and European target markets at an annual growth rate of 5%.

Over the next four years, Eni plans to recover the normal level of profitability of the Division with an EBITDA amounting to €4.2 billion due to the solid results achieved by the Regulated Business in Italy taking into account the expected divestment of our international pipelines.

In the Refining & Marketing Division, Eni targets a substantial improvement in the profitability and free cash generation of our refining operations against the backdrop of continuing weakness in the trading environment. Capital expenditures in the refining business will be sanctioned considering the higher profitability levels promoting upgrading of the conversion capacity projects, particularly by completing the new EST plant, and the refining flexibility. This will enable us to capture opportunities offered by demand for middle distillates and to process an higher range of feedstock. Margin recovery will be underpinned by operating cost reductions, energy recovery actions and the integration of refinery cycles. We plan to increase plant utilization rate to 90% and increase volumes throughputs by 2 million tonnes from 2010 in the next four years.
In the marketing business, in a context of low consumption, Eni plans to increase business profitability leveraging on a network of service stations revamped in design and style, modern and efficient, supported also by promotional campaigns aimed at increase customers’ loyalty and enhanced non-oil offer. We plan to achieve an increased market share on the Italian market when compared to 2010 (30.4% in 2010) by 2014. Abroad, we will grow selectively leveraging on the consolidation of the network acquired in Austria, commercial initiatives and the opening of new service stations.

Eni, through its subsidiary Saipem, is one of the major player in the business of engineering and services to oil industry. Saipem boasts a strong position in the relevant market, leveraging on solid engineering skills, capacity to execute complex projects on EPC (Engineering, Procurement and Construction), availability of a world-class construction and drilling fleet that will be fully upgraded by 2012.
Starting from the record level of the order backlog achieved at the end on 2010, in the medium term, Eni targets steady growth in revenues and profits with a strategic focus on Major oil companies and NOC, strong presence in frontier areas which are traditionally less exposed to the cyclical nature of this market and local content.

Over the four-year plan, efficiency remains one of the pillars of our strategy. The cost reduction program launched in 2006, has delivered €2.4 billion of savings to date. In the next four-year period, management is targeting €1.7 billion of additional efficiency gains with cumulated savings of €4.1 billion by 2014. The cost reduction program will leverage on supply optimization, rationalization of downstream logistic as well as continuous process streamlining.

Research and innovation will play a central role in Eni’s growth strategy. For the next four years Eni defined a relevant capital expenditure plan amounting to approximately €1.1 billion, split by activities aiming at preserving the competitiveness of our business and pursuing of long period strategic options in the field of renewable energies and environmental protection. Among the first kind of activities are included the maximization of the recovery rate of reserves on upstream opportunities, optimization of well drilling and performance activities, exploration and production of unconventional resources, new techniques of seismographic studies. In downstream sectors Eni intends to focus on the development of advanced fuel and lubricants able to guarantee the engine efficiency, reduce significantly noxious emissions, increase the value of the yields of refined heavy oils (in particular EST project) as well as development value added polymers and elastomers in Petrochemical Division.
In sustainable development field, Eni will continue to invest in the R&D of renewable energies, in particular in solar and photovoltaic energy, sequestration in geological sites of CO2, emissions reduction, reduction and control of main noxious emissions in atmosphere, security and integrity of upstream activities and environmental restoration and clean-up activities.

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Strategy