ENI S.p.A. Special Call Transcript

ENI S.p.A. (E)

Special Call

October 6, 2011 1:00 pm ET

Executives

Paolo Scaroni – Chief Executive Officer

Claudio Descalzi – Chief Operating Officer Exploration & Production

Roberto Casula – Executive Vice President Sub-Saharan Africa

Alessandro Bernini – Chief Financial Officer

Analyst

Charles Hall – Newton Investment Management

Jon Rigby – UBS

Simon Hawkins – MF Global

Jason Kenney – Santander

Iain Reid – Jefferies & Co.

Presentation

(Call Started Abruptly)

Chief Operation Officer, Alessandro Bernini, Chief Financial Officer, Roberto Casula Executive Vice President, Sub-Saharan Africa. For the duration of the call, you will be in listen-only mode. However, at the end of the call you have the opportunity to ask questions.

I’m now handing you over to your host to begin today's conference. Thank you.

Paolo Scaroni

Good afternoon, ladies and gentlemen and welcome to our Field Trip to Congo. I hope you found the meeting with the President of Republic of Congo interesting and truthful. I’m also pleased that you had a chance to witness the excellent relationship that we have with the local institutions here. This is a trade that characterizes our approach wherever we operate, especially in Africa. Today, I will tell you more about the distinctive ways in which we try to build and consolidate relationships with our host countries and how this supports our growth prospects.

But first, the program for the next couple of hours. After my brief overview, I will hand you over to Claudio and Roberto, who will take you through our major ENP projects around the world and in the regions. And then, Alessandro will bring you up-to-date on our financial position. But first, let me give you an update on a few issues, which you might be interested in, the first, is Libya.

In Libya, we are working closely with the new management of NOC to restart all our operations. In the last few weeks, we have been to Bengazi and Tripoli. We open our offices in Tripoli and we started production at our Istanbul, Attifel oil field, which is producing almost 70,000 barrels a day. As for our other oil fields in Libya, including Elephant wells facilities and transportation systems have not been damaged.

In general, we expect oil production to reach pre-crisis levels in about 12 months. With regards to our oil – to our gas fields, which account for around 70% of our Libyan production, our employees have boarded the Sabratha Platform at the Bahz Essalam field located in the sea off the coast of Tripoli.

If security allows, we will restart production from this field before the end of the year. Full gas production will be restored in the early part of next year, meanwhile we will resume gas export to Italy through the Greenstream Pipeline gradually starting this month, as well as the ENP production, Libya has also impacted gas and power results and we are (inaudible) pleased we are heading towards a resolution on this front.

The other major uncertainty affecting gas and power in 2011 has been the ongoing renegotiations of our main gas supply contracts with Gazprom and Sonatrach. I want to give you an update on this front. Our discussions with Sonatrach had been positive and we are close to reaching a mutually satisfactory conclusion. Our discussion with Gazprom are progressing and we have seen evidence of an increasingly constructive dialogue, but it is difficult to be deterministic about the timing of a deal, we remain confident about the outcome. The satisfactory closure of these negotiations will improve our supply costs making them competitive with stock prices. It is true that stock prices have risen over the past two months thanks to increasing gas demand in the Far East offsetting weaker gas margin in Europe.

Our oil-linked prices have also been driven upwards by higher oil prices keeping the gate open. Finalizing the ongoing renegotiation with our suppliers will remove the significant uncertainty in our Gas & Power business and put us in a good position to grow volumes and profits, when the gas market tightens, which we expect by 2013, 2014.

And now let’s turn another topic you might be interested in, our main subsidiaries. With regards to Snam as you know, our strategy has changed. The adoption of the European Third Gas Directive and we’ve been studying options to unlock value from this stage.

We will provide further information on this topic at our next strategy presentation, bearing in mind that any disclosure will need the approval of the Italian Government. Our aim here is to make the whole process shareholder friendly for investors in both Snam and Eni.

Turning now to Saipem, nothing has changed. Saipem is a core part of our strategy and has (inaudible) with our upstream. Last but not least, Galp. As we have said before, we are working to crystallize the value of our stake. There is no doubt that there are parties, which are interested in acquiring it. Meanwhile, our shareholder agreement means that any disposal will need to be agreed with our partners Maureen Manor here and the Portuguese Government.

But now let’s get back to the reason why we are here. Africa is our core area, we have been present on the continent since entering Egypt in 1954 and in normal times, we produce here 1 million Boe per day or around 55% of our total production.

This production level was achieved through significant growth of around 6.5% a year, over the last 14 years in which we increased our share of African production and consolidated relationships with many important producing countries.

Today, we count our relationship standing several decades in North Africa and in Angola, Nigeria and of course Congo and at least an unparallel presence in the new oil producing countries in the continent. As a result of our long history of growth, today we are the leading international oil company in Africa.

We are the leading IOC in terms of production having more than doubled Africa (outcomes) in the past 15 years. Our current production in Africa is around 35% higher than that of our closest competitor. And we are the leading IOC in terms of geographical footprint with production operations in seven countries and exploration and development projects in many more.

Being the first IOC in Africa has a number of advantages in terms of scale, synergies and accessed projects with no breakeven. And our late leadership is set to continue for the next decade. That’s because of the significant growth opportunities we have on the continent. Our growth will come from major step backs in our legacy countries and from high potential exploration prospect in the new countries we have entered, Ghana, Togo, Mozambique, Gabon and the DFC.

Africa is also a key role in the development of our unconventional portfolio with initiatives in Nigeria and Tunisia and in South Africa. Meanwhile, we are working on the tough end here in Congo. You may be wondering why we had such a success in Africa over the last 40 years.

One may think that we are advantaged by being Italian with a smaller colonial past on the continent. And we think the real competitive advantage we had here is our approach to doing business. Our Eni model built over the last half a century give us a unique edge in securing access to resources.

Our model is made up of a number of differentiated factors or which the first is our core E&P expertise and technology. (Inaudible) as a number of distinctive benefits it can offer based on our competition along the whole of the oil and gas by the chain coupled with our commitment to look our social and economic development. Not all the lacks of our model are applied in all of the counties which we operate and in every country some are more important than others.

We now take you through some key examples of our model and its advantages. Looking in North Africa, the major differentiator in our dialogue with producing countries is our upstream, midstream integration. Among the majors we are the only one with a leading position in the European gas market, which we supplied by buying around 80 billion cubic meter of gas. Being big buyer of gas has been key in developing extreme opportunities in Algeria, Egypt and of course Libya.

Our integration along the oil and gas value chain is the base of our strong relationship with North Africa, which makes up more than a quarter of our gas supply portfolio and the third of our E&P global production.

Moving now to Sub-Saharan Africa other aspects of our model become significant in accordance with the need of the local population. One of the reasons most pricing issue is the lack of electricity. 600 million people almost two-thirds of the African population including many here in Congo have no access to any electricity at all. At the same time, Eni is fully committed in eliminating gas flaring. Eni tackles both this issue having being the first IOC to invest in power generation in Africa using gas previously flared. We implemented a major electricity generation project in Nigeria and in Congo and now we account for 20% of Nigeria power generation and 60% of Congo’s.

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