Country Risk

Substantial portions of Eni’s hydrocarbons reserves are located in countries outside the EU and North America, certain of which may be politically or economically less stable than EU or North American. At December 31, 2009, approximately 80% of Eni’s proved hydrocarbons reserves were located in such countries.

Similarly, a substantial portion of Eni’s natural gas supplies comes from countries outside the EU and North America. In 2009, approximately 60% of Eni’s domestic supply of natural gas came from such countries. Developments in the political framework, economic crisis, social unrest can compromise temporarily or permanently Eni’s ability to operate or to economically operate in such countries, and to have access to oil and gas reserves. Further risks associated with activities in those countries are represented by:

• lack of well established and reliable legal systems and uncertainties surrounding enforcement of contractual rights;
• unfavourable developments in laws and regulations leading to expropriation of Eni’s titles and mineral assets, changes in unilateral contractual clauses reducing the value of Eni’s assets;
• restrictions on exploration, production, imports and exports;
• tax or royalty increases;
• civil and social unrest leading to sabotages, acts of violence and incidents.

While the occurrence of these events is unpredictable, it is possible that they can have a material adverse impact on Eni’s financial condition and results of operations. Eni periodically monitors political, social and economic risks of approximately 60 countries where it has invested, or, with regard to upstream projects evaluation, where Eni is planning to invest in order to assess returns of single projects based also on the evaluation of each country’s risk profile. Country risk is mitigated in accordance with guidelines on risk management defined in the procedure “Project risk assessment and management‘.

In the most recent years, unfavourable developments in the regulatory framework, mainly regarding tax issues, have been implemented or announced also in EU countries and in North America.