Activities

MAIN PRODUCING FIELDS/INTERESTS Mare Adriatico - Barbara, Angela-Angelina, Porto Garibaldi, Cervia, Bonaccia (Eni 100%-Op.) and Annamaria B (Eni 90%, Op.) Central -Southern Appennines - Val D'Agri (Eni 60.77%-Op.)> Sicily - Gela, Ragusa, Giaurone, Fiumetto and Prezioso (Eni 100% - Op.)

Eni has been operating in Italy since 1926. Operations are carried out in Val Padana, the Adriatic Sea, the central-southern Apennines and in both the onshore and offshore areas of Sicily for a total area that at the end of 2009 amounted of 27,178 square kilometres (22,038 of which are attributable to Eni). All exploration and production operations are regulated by concession contracts. In 2009, Eni had 167 mining licences and 87 deposits in production and held definite hydrocarbon reserves of 703 million barrels of oil equivalent (boe), corresponding to over 20% of its worldwide reserves.

As part of the process of optimising the upstream portfolio, mineral activities in Italy have been rationalised with the creation of three newcos to which the three clusters representing distinct geographical areas have been contributed. These areas are: North Italy (the Po Valley and Emilia Romagna), Central Italy (Marche, Abruzzo, Molise) and South Italy, the Crotone area.

In October 2010 Eni sold to Gas Plus 100% of the share capital of Padana Energia, the company that holds hydrocarbon development and production rights in North Italy. The cost of the operation amounted to €179 million, to be integrated by a maximum of €25 million, corresponding to the production value of assets under development. Further integrations to the price are foreseen relating to the exploration potential of the assets sold.

This operation is part of the efforts being pursued by Eni to rationalise its mineral assets portfolio and optimise operating efficiency in Italy.

Exploration
In 2009 exploration activities mainly involved determining the residual mineral potential of the various wells.

Development
During the year intense sidetrack and workover activities were conducted for the recovery of the residual mineral potential of the main reservoirs in the Adriatic, specifically Antares, Cervia, Giovanna, Barbara, Luna and Annalisa.
Other planned activities include: (i) sidetrack and infilling work at Barbara and Calpurnia; (ii) the development of the Bonaccia Est field with the drilling of 2 wells.

During the year in the Po Valley the main focus was on optimisation, workover and sidetrack activities at the Trecate reservoir. Activities also continued at the Longanesi reservoir where the drilling of 3 wells is planned, as well as a link up with the Potito power station where a revamping has been planned. Start-up is scheduled for 2012.

In the Val d'Agri, meanwhile, the first phase of the development programme has been completed with the link up to the Val d'Agri oil centre of the first 3 wells in the Cerro Falcone area, with a production level of around 6,000 boe per day. Other activities in the Val d'Agri included the ongoing drilling programme, sidetrack activities and the upgrading of production facilities.
The main initiatives in gas involved the Capparuccia reservoir, where the drilling of a second production well is planned, as well as the construction of a new treatment plan and a link up with the national grid. Start-up is expected in 2011.

In Sicily, activities during the year included workover and infilling at the Gela reservoir for the recovery of residual mineral potential and upgrading efforts at the Ragusa facility. Other ongoing onshore initiatives onshore involved the completion of the development of the oil field at Tresauro, which began early production in 2009 through an LPT at the existing well. The recovery of the residual reserves at Tresauro will be made with the drilling of 2 production wells that will be linked to the Ragusa treatment plant, with start-up expected in the second half of 2011.
Offshore activities included the development programme for the three recently discovered gas fields  Panda, Argo and Cassiopea. The project foresees the development of these fields with 5 wells, 3 of which will be new and the recovery of 2 existing wells and the installation of a platform equipped with a treatment facility for the subsequent transport onshore. The mineral potential of the area is estimated to be in the region of 98 million boe. Start-up is scheduled for 2013.

Production
In 2009, Eni produced 169,000 boe/day of natural gas. The main areas that provided the biggest contribution to Eni's production in Italy were the Adriatic Sea (46%), Basilicata (25%), Pianura Padana (5%) and Sicily (10%).
In the Adriatic Sea the main contributions came from Barbara (2.8 million cubic meters per day), Angela-Angelina (1.4 cubic metres per day), Porto Garibaldi (1.1 cubic metres per day), Cervia (1.3 million cubic metres per day) and Tea - Arnica - Lavanda (1 million cubic metres per day). Production in the area comes from 87 platforms and is transported by sealines to the land, where it then joins the national gas transportation network.

Production began in March 2010 at the offshore Annamaria B platform (Eni 90%, operator). The gas is sent by an underwater pipeline to the Fano power station, before being fed to the national grid. When fully operational, production is expected to reach around 1.2 million cubic metres per day.

Eni is the operator in Basilicata of the Val d'Agri permit (60.77% owned by Eni), which in  2008 produced 95,000 boe/day (58,000 net to Eni). Production from the Monte Alpi, Monte Enoc and Cerro Falcone deposits comes from 24 production wells (out of the 47 provided for in the approved development project), which is treated at the Viggiano oil centre that has a treatment capacity of 104,000 barrels of oil per day. The oil is transported along a 136-kilomete pipeline and is then treated at Eni's refinery at Taranto.
In Sicily Eni is the operator of 15 permits in both the offshore and onshore areas. The main deposits are situated at Gela, Ragusa, Giaurone, Fiumetto and Prezioso, and in 2009 they were responsible for 10% of Eni's total production in Italy.

In this sector Eni is involved in all the phases including supply, storage, transportation, distribution, sales and liquefied natural gas (LNG), based on a unique integrated business model.
 

Supply of Natural Gas
The demand for natural gas from Eni in Italy is currently met by supplies from abroad, including Algeria, Libya, Russia, the Low Countries and Norway.

Transportation, Distribution and Sale of Natural Gas

In 2009, the gas infrastructure was reorganised with the disposal of Italgas SpA and Stoccaggi Gas Italia SpA (Stogit) to snam rete gas SpA (in which Eni has a 50.03% controlling interest). The operation was aimed at introducing structural synergy into the business sector and will allow Eni to further develop its gas distribution and storage operations and reinforce its consolidated asset structure.
Snam Rete Gas is  the main Italian operator involved in transporting and dispatching natural gas in Italy, and it owns almost all the transportation infrastructure in the country with over 31,500 kilometres of high- and medium-pressure gas pipelines (approximately 94% of the entire transportation system).
Distribution operations consist of transporting natural gas along local networks of gas pipelines, which are mainly low pressure, to the final customers in the civil, third-party and small-scale industries sector in urban areas.

Eni, through Snam Rete Gas, owns the only natural gas regasification terminal currently operating in Italy (the Panigaglia terminal).
Eni, through Italgas (100% Eni) and other subsidiary companies, is responsible for distributing gas to 1,322 municipal districts by means of a pipeline network that covers approximately 50,000 kilometres, serves 5.8 million customers and distributes 7.7 billion cubic metres of gas. In 2009, the volume of gas transported by Eni in Italy amounted to 76.90 billion cubic metres, a 10.2% decrease compared with 2008. The gas pipeline network covers an area of approximately 31,500 kilometres, including 8,871 kilometres of large-diameter pipeline and 22,660 kilometres of smaller-dimension pipeline, which is used for local distribution.
During 2009, the gas pipeline network in Italy was increased by 92 kilometers following the completion of the Montalbano-Messina, Rende-Tarsia and Gagliano-Sparacollo methan pipelines and the work carried out to develop existing infrastructure.
Eni owns a terminal at Panigaglia for receiving and re-gassifying natural gas, and the terminal is capable of supplying the national transportation network with approximately 3.5 billion cubic metres/year when operating at full capacity. In 2009, a total of 1.32 cubic metres of natural gas was supplied to this network. Eni has plans to increase the re-gassification capacity of the Panigaglia terminal from the current figure of 3.5 billion cubic metres to 8 billion cubic metres at full capacity, in 2014.

In 2009, Eni sold approximately 40.04 billion cubic metres of natural gas in Italy (including gas for automobiles), a decrease of 12.83 billion cubic metres equal to 24.3% compared with 2008 that was due to the crisis in demand and to increased competition.

Production of Electricity
Operations in the electricity generating sector are carried out by Eni at Ferrera Erbognone, Ravenna, Livorno, Taranto, Mantova, Brindisi and Ferrara. At 31 December 2009, the installed capacity amounted to 5.3 gigawatts. In 2009, Eni sold 33.96 terawatts of electricity mainly on the Italian market, while electricity production amounted to 24.09 terawatts, an increase of 0.76 terawatts compared with 2008(equal to  3.3%), which was mainly due to the essentially negative effect of the increased production of the Ferrara site (51% Eni), thanks to the start-up of production of two new groups with a capacity of 390 megawatts. Eni is the third biggest producer of electricity in the Italian market.
Work is currently being carried out on defining initiatives aimed at increasing Eni's presence in the renewable energy sector. These initiatives are mainly concerned with the construction of photovoltaic power stations and a biomass-fuelled power station with a total capacity of 45 megawatts.

Eni expects to complete the plan to expand generating capacity by 2013, with the aim of having an installed capacity of 5.4 gigawatts (the capacity available when operations to decommission obsolete plant are completed). A development programme is currently being implemented at the Taranto (100% Eni) and Ferrara (51% Eni) power stations, and also at the Bolgiano power station (100% Eni).

CO₂ Storage
In October 2008, Eni and Enel signed a strategic cooperation agreement for the development of technology for capture, transportation and geological gathering of carbon dioxide (CO2) and for the joint setting up of the first project in this sector in Italy. According to the agreement, Enel will construct a plant for capturing and liquefying CO2 at Brindisi, while Eni will inject the CO2 into the exhausted Stogit deposit at Cortemaggiore (Piacenza).

Natural Gas Storage Operations

Eni, through Stogit (Italian gas storage), has been operating in the natural gas storage sector in Italy since 2001. Storing natural gas is used to compensate the differences between the demand and supply of gas since there is a significantly higher demand in winter than in summer. Storage services are concentrated at 8 operational licences, with 4 in Lombardy (Brugherio, Ripalta, Sergnano and Settala), 3 in Emilia Romagna (Cortemaggiore, Minerbio and Sabbioncello) and 1 in Abruzzo (Fiume Treste). The storage sites are situated in deposits that previously produced natural gas and have subsequently been converted into storing natural gas by the construction of special infrastructure and facilities connecting them to the national gas network. Gas injecting operations are generally carried out during the period April-October.

Refining & Marketing
Eni is Italy's leading operator in the Refining & Marketing sector. The company's strategy in this area is aimed at reinforcing the refining systems and consolidating leadership in the Italian market and building market share in synergic areas in Europe.

Refining
Eni's refining system in Italy consists of five refineries situated in Sannazzaro, Gela, Taranto, Livorno and Porto Marghera, and a 50% stake in the Milazzo refinery in Sicily. The refineries entirely owned by Eni have a combined capacity of 27 million tons per year (equal to 554,000 barrels per day).

Logistics
Eni is one of the leading companies in Italy for storing and transporting petroleum products, with an integrated logistics structure composed of an oil pipeline network and a system of 21 storage facilities throughout the country that are destined for the marketing and storage of finished products, LPG and crude oil. Eni holds stakes in 5 companies set up in collaboration with the most important Italian oil operators and situated in Vado Ligure - Genoa (Petrolig), Arquata Scrivia (Sigemi), Venezia (Petroven), Ravenna (Petra) and Trieste (DCT).

Eni also operates in the transportation of oil and petroleum products sector:
• across land, through a network of oil pipelines that cover a total area of 3,019 kilometres (1,447 of which are owned by Eni);
• across the sea, using tankers leased through spot contracts and future contracts.
The secondary distribution of oil products for the network and non-network market is assigned to third parties, in some of which Eni holds a minority interest. 

Distribution and Marketing
In Italy Eni is the leader in the distribution of petroleum products with a market share that in 2009 reached 31.5%. At the end of 2009 the company's distribution network in Italy included 4,474 service stations. During 2009 sales of fuel in Italy amounted to around a 11 billion litres (9.03 million tonnes) with an average supply of 2.48 million litres.

In July 2009 Eni, FIGISC-Confcommerciio and FAIB-Confesercenti signed a company agreement to modernising and innovate the Agip fuel distribution network and provide personnel with additional professional training as part of the Training, Sustainability, Professional Relations and Non-Oil Development.

The medium term strategy of Eni is aimed at reinforcing the company's competitive position in the network market in Italy. Planned actions are in particular focused on re-branding under a single "Eni" logo, a process that was launched in 2010 and will apply to all of the group's downstream oil & gas activities; as well as ongoing upgrades to the Eni distribution network aimed at improving the standards of service and quality at the sales outlets.

In February 2006 Saipem bought from Eni the entire stake in Snamprogetti, one of the most important engineering and construction companies operating on the international market in the sector concerned with the planning and construction of onshore plant for the production and treatment of hydrocarbons and the development of natural gas. In July 2008, the Board of Directors of Saipem resolved to merge Snamprogetti into Saipem, and in October 2008 the operation was finalised.
In May 2009, following the completion of the project to rationalize the company's associated structures that began the year before, the Board of Directors of Saipem approved the merger of Snamprogetti Sud.

Saipem is the market leader in the production and construction of offshore projects for the production and transportation of hydrocarbons, and it also constructs onshore projects. With the merger of Snamprogetti, Saipem acquired a position of competitive excellence for supplying engineering, procurement, project management and construction services for the oil industry with specific experience of working under particularly difficult conditions, such as in deep water and in remote areas, and with high-level technology, such as for developing natural gas and heavy oil.

In July 2006, Saipem was awarded a contract for exclusively supplying Eni, up to the first quarter of 2012, with maintenance services for its hydrocarbon production plant in Italy, both offshore and onshore. These services concern both ordinary and extraordinary maintenance and cover the entire maintenance process from engineering to procurement and operational maintenance.
During 2008, land-based drilling operations were carried out in Italy on behalf of Eni using two drilling rigs and workover operations for the deep wells. These operations were particularly concerned with:
• completing workover operations on a deep-well rig and commencing workover operations on an existing well in the province of Novara;
• transferring a medium/high capacity plant from the province of Reggio Emilia to the province of Novara.

In July 2009, Eni awarded Saipem a turnkey contract for work to be carried out in the Mediterranean Sea. The Saipem Castoro 7 ship (formerly Acergy Piper), purchased at the beginning of 2009, will carry out the marine work which is due to be completed during the third quarter of 2009.
In November 2009, Saipem was awarded a €1 billion contract for the supply and management of an FPSO (Floating Production Storage and Offloading ) unit.
The contract will cover a total period of 20 years, with the first 8 years being dedicated to the development of the Aquila deposit, situated at a depth of 815 metres in the Adriatic Sea off the Italian coast and around 50 kilometres north-east of Brindisi. For the remaining part of the contract the FPSO unit will be used for the development of deposits indicated by the client.  
The contract, awarded by Eni, entrusts Saipem with converting an oil tanker, which it already owns, into an FPSO unit  and subsequently installing and operating the unit. The FPSO will have a production capacity of 12,000 barrels of oil per day, while production is expected to commence in the fourth quarter of 2011. 

Also in November 2009, Saipem was awarded a new contract to provide various types of Technical Services and for the planning and implementation of new projects in the "Renewable and Environment" business area.
Technical services are generally engineering and project management services provided to Saipem clients during the front end and executive phases. The "Renewable and Environment" business area has recently been set up as part of the onshore business unit, and it concerns new projects for decontaminating land and water, reducing harmful emissions and producing electricity from renewable energy sources.

In Italy, engineering, procurement and construction operations are being carried out, on behalf of Eni, for the first application on a commercial scale of EST Technology (Eni Slurry Technology), as part of a project for the construction of a refinery at Sannazzaro. EST technology, which has been developed in conjunction with Saipem, is capable of almost completely converting the residue from heavy crude into lighter distillates.

Saipem is completing the construction at the Eni refinery at Gela of the first ENSOLVEX industrial plant, a new technology for decontaminating soil and sediments contaminated by organic substances.

Polimeri Europa operates in the basic petrochemical (aromatics, olefins and intermediaries), styrene, elastomers and polythene sectors, and it has 10 production facilities in Italy.