1. Kazakhstan’s Challenge
international trade
case study
Umberto de Feo, Priscilla Martella, Beatrice Ruospo

2. Agenda
PART 1: Company’s presentation
• Brief history of ENI S.p.A.
• Mission and Values
• Financial and operational highlights
• Key Factors Tag Cloud and Future targets
• Geographic Presence
PART 2: Kazakhstan’s overview
• Highlights
• Economic outlook
• Eni’s activities and initiatives in Kazakhstan
• GDP Composition and Figures
• Eni in Kazakhstan
• FDI Inflows and Determinants
• Revealed Comparative Advantage
PART 3: Host country effects
• Effects on industry
• Effects on local community and workers
• ENI’s distinctiveness: Energy for development

3. Brief history of ENI S.p.A.
’20 •1926 Establishment of AGIP (Azienda Generale Italiana Petroli) – Italian General Oil Company
•1945 Enrico Mattei is appointed Provisional Administrator of Agip
’40 • Exploration begun in Italy and foreign ventures initiated (Romania, Albania, Iraq)
’50 • 1953 Eni (Ente Nazionale Idrocarburi) is established; Enrico Mattei is the first Chairman
• 1957 Agreement signed with Iran and the revolutionary "Mattei formula" is launched which involves the producer country
‘60 in the management of its oil resources. This formula breaks the monopoly of the major oil companies, enabling the local
State Authority to share in the profits of oil and gas development.
‘70 •1971 Using a new "gravity" platform Agip discovers and then brings into production the "Loango" field in offshore Congo
•1973 The oil crisis favours the implementation of a policy based on natural gas as an alternative source to meet Italian
‘80 energy needs
•Agreement reached with Algeria and Netherlands for the supply of natural gas
• Agreement reached with Libya for the exploitation of the Mediterranean's largest oil field
•1992 Eni becomes a joint stock company
‘90 •1993 Contracts and agreements signed for oil exploration in Kazakhstan, China and Russia
•1997 Two major agreements signed with Kazakhstan: Karachaganak Project and Caspian Project
•1998 Eni incorporates Agip, thus becoming directly an oil and gas producer. Eni's daily oil and gas production reaches 1
million barrels of oil
•1999 Eni-Gazprom agreement for the Blue Stream Project
•2000 British Borneo acquisition. Agreements for the development of oil and gas fields in Iran
‘00 •2001 Eni is named sole operator of the North Caspian Sea project in the Kazakh Offshore
•2003 AgipPetroli is merged into Eni
•2004 Development of the Kashagan’s plan: the giant field in the Kazakh offshore of Caspian Sea, was
approved
•2006 Eni and Gazprom signed in Moscow an agreement that sets up an international, in the mid and
downstream gas

4. Mission and Values
Eni is an open, dynamic and integrated energy company, committed to developing its activities
in research, production, transport, transformation and marketing of oil and natural gas.
Businesses
Exploration & Transformation Oilfield Services
Oil and Gas Transportation Petrochemicals Engineering
Production & Mktg Construction
Eni in numbers:
“We are a major integrated energy company,
Revenues: €84.3 billion committed to growth in the activities of
Net Profit: €5.3 billion finding, producing, transporting, transforming
Ebitda Margin: 26.28% andmarketing oil and gas. Eni men and women have a
passion for challenges, continuous improvement,
Main businesses: excellence and particularly value people, the environment
• Exploration & Production and integrity”
Net profit: €3.8 billion
• Gas & Power Eni’s mission
Net profit: €2.9 billion

5. Key Factors Tag Cloud
attract young talent
innovation
sustainability
corporate responsibility culture
innovation change
efficiency qualified human resources
internal cohesion partnership
o Growth in core business
Future o Grow market share in Italy
o Upgrade in marketing network
Targets o Continue the integration of core activities
o Focus on operating efficiency
o Developing proprietary tech. to support Eni's growth process
o Maximize return for shareholders

6. Geographical Presence
ENI is active in 77 countries, with a staff of 78,400 employees.
Exploration and Production Engineering and Construction
Gas and Power Petrochemicals
Refining and Marketing

7. Kazakhstan’s Highlights
Population 15.4 million (2009 est.)
Country Risk rating B
Ease of doing business Rank 70 out of 181 (2008
est.)
Global competitiveness 4.08 - 67 out of 133 (2009
report est.)
Source: GlobalEdge

8. Kazakhstan’s Economic outlook
GDP annual growth rate in percentage
avg '92-'03 2004 2005 2006 2007 2008 2009
ITALY 1,44 1,53 0,66 2,04 1,48 -1,32 -5,04
KAZAKHSTAN 1,40 9,60 9,70 10,70 8,90 3,30 1,20
Source: World Bank Italy spreadsheet, Kazakhstan spreadsheet
GDP per capita as a percentage of U.S. GDP per capita (current USD)
2004 2005 2006 2007 2008 2009
ITALY 73,68% 71,31% 70,78% 76,72% 81,31% 75,55%
KAZAKHSTAN 7,13% 8,87% 11,85% 14,58% 18,03% 14,79%
Source: World Bank Kazakhstan spreadsheet
GDP growth rate
GDP per capita % of U.S. GDP per capita
12,00 90,00%
81,31%
10,00 80,00% 73,68% 76,72% 75,55%
71,31% 70,78% Italy
8,00 70,00%
Kazakhstan
6,00 60,00%
4,00 50,00%
2,00 40,00%
0,00 30,00%
-2,00 2004 2005 2006 2007 2008 2009 18,03%
20,00% 14,58% 14,79%
11,85%
7,13% 8,87%
-4,00 10,00%
-6,00 0,00%
2004 2005 2006 2007 2008 2009

9. GDP Composition
Kazakhstan Economic Outlook
2004 2005 2006 2007 2008 2009
BN USD Percentage changes, volume (2004 prices)
Private consumption 16,12 11,1 13,8 10,6 9,0 5,2
Government consumption 2,93 10,8 7,3 14,7 10,5 10,5
Gross fixed capital formation 5,78 28,1 26,5 23,9 8,7 6,9
Total domestic demand 24,83 15,0 16,4 14,8 9,1 6,3
Exports of goods (BoP, current USD) 20,60 37,4 37,0 24,7 48,9 -38,9
Exports of services (BoP, current USD) 2,01 10,9 26,5 26,5 24,2 -3,7
Exports of goods and services (BoP, current USD) 22,61 35,0 36,2 24,9 47,2 -36,9
Imports of goods (BoP, current USD) 13,82 30,1 34,2 37,9 15,6 -25,2
Imports of services (BoP, current USD) 5,11 46,7 16,9 33,9 -5,2 -9,5
Imports of good and services (BoP, current USD) 18,93 34,6 29,1 36,8 10,2 -21,6
NET EXPORTS 3,69 37,1 72,1 -20,4 287,4 -65,0
GDP at chain-linked prices 9,60 9,70 10,70 8,90 3,30 1,20
Inflation rate* 6,7 7,5 8,4 18,8 9,5 6,2
Unemployment rate 8,4 8,0 8,1 7,4 7,3 6,6
Current account balance (BoP, current USD) -223,0 -414,8 89,3 316,4 -175,5 -154,2
Source: World Bank Kazakhstan spreadsheet
* Agency of Statistics of Kazakhstan

10. Balance of Payment composition
90
EXPORTS goods
80
EXPORTS services
70
60 EXPORTS total
50
IMPORTS goods
40
30 IMPORTS services
20 IMPORTS Total
10
0
2005 2006 2007 2008 2009
Domestic Demand
100 Private Consumption
Government consumption
50
Gross fixed capital formation
Total domestic demand
0
2005 2006 2007 2008 2009

11. Eni in Kazakhstan
Eni has been operating in Kazakhstan since 1992 in the exploration and
production of hydrocarbons and in the oilfield services, construction and
engineering sector.
MODE OF ENTRY
Joint Venture Greenfield
Kashagan Field Consortium (16.8% stake) ENI’s subsidiary Agip KCO
Caspian Pipeline Consortium (2% stake) and Saipem’s subsidiaries,
NCOC (one of 7 consortium partners) off-shore platforms, plants
KPO Consortium (32.5% stake)
Karachaganak field co-operation (21%)
In 2009, Eni produced 115,000 barrels of oil equivalent per
day, including 70,000 barrels per day of oil and condensate
and around 7,3 million cubic metres per day of natural gas.

12. FDI dynamics in Kazakhstan
FDI
(ln billions USD) 2004 2005 2006 2007 2008 2009
FDI net Inflows (BoP, current USD) 4,15720849 1,97121763 6,27816796 11,1190366 15,7797717 12,6007605
FDI NET (BoP, current USD) 5,43615368 2,11707781 6,66285548 7,96590328 14,7831491 9,52570362

13. Vertical FDI Determinants
ENI fragmented its value chain and set up in Kazakhstan these upstream activities:
Exploration & Production
North Caspian Sea Production Sharing Agreement - Kashagan
It defines the terms and conditions for exploring, developing and utilizing the Kashagan field (the largest and most
important of the country), which was discovered in the offshore area of the Caspian Sea. Eni was the sole operator,
up to January 2009
Karachaganak Situated onshore in the western part of the country, Karachaganak is a giant onshore hydrocarbon
deposit that produces oil, condensate and natural gas
Eni-KazMunayGas cooperation agreement
In November 2009, it was signed for the development of industrial infrastructure and exploration and production in
Kazakhstan
Caspian Pipeline Consortium (CPC) Oil Pipeline
Construction of the oil pipeline that transports oil Kazakhstan to Russia
Engineering & Construction
Saipem S.p.A. is an Italian oil and gas industry contractor. ENI owns approximately 43% of Saipem's
shares. The subsidiary has contracted for designing and constructing several pipelines.
Together with other partners, Saipem has completed various contracts as part of the Karachaganak
project, including the construction of production units, gas treatment plant, equipment for
recovering liquids and condensate and the Karachaganak-Atyrau oil pipeline and relative pumping
station.

14. FDI Determinants
Factor endowments: oil & gas reserves: the country has Firm specific assets such as specific
large reserves of natural gas and production of both oil expertise in oil & gas technology,
and gas is steadily increasing. Moreover, the Caspian management know-how (Model 231”
Sea sector holds other major unexploited oil and
natural gas deposits.
organizational, management and control
Strong evidence: with 1.54 million barrels per day Model), intangible assets, intellectual
(bbl/d) in 2009 Kazakhstan is the most promising property assets.
country among non-OPEC oil producers (such as West Intellectual Property assets are key value
Africa, Russia, Ecuador already considered as Eni’s for Eni:
priority) and it can countervail the Middle East - Eni has developed a model for the
Country determinants
Industry determinants
predominance over oil price management and exploitation of its
Financial risk: even if Kazakhstan is an unstable country
due to corruption, ENI doesn’t take this risk though. In
technological Intellectual Property
fact who actually finances ENI’s camps are the World (patents, trade secrets and software
Bank and the International Finance Corporation that copyright).
granted funds from private banks. Moreover, Agip -Eni's total patent portfolio includes over
might be protected by Italian public capital through the 8,000 patents, protecting about 1,000
export credits agency SACE. inventions.
Strategic position: it is a bridge between Asia and -In 2009 Eni filed 106 new patent
Europe
Knowledge spillovers in exploration and drilling
applications: an absolute record for Eni.
activities coming from consortium partners Factor intensity:
Agreements signed with the government for oil & gas availability of oil and
exploration, development ,exploitation and production gas reserves
sharing

15. Revealed Comparative Advantage
Source: “Kazakhstan and the World Trade Organization”, “Kazakhstan’s Revealed Comparative Advantage vis-à-vis tue EU-27”, ECIPE – European Centre for
International Political Economy, March 2008
EU is Kazakhstan’s first trade partner and the economic trade relations between Kazakhstan and the EU are
becoming increasingly important.
The analysis is based on the Balassa index of Revealed CA and calculated for the period 1999 to 2006.
Results:
Kazakhstan retains a comparative advantage mainly in the energy and mineral sectors. Moreover, mineral fuels
account for over 80% of exports, where RCA>1. In fact oil and minerals have been driving force of the country’s
economic development over the past decade and a half.
EXPORT Minerals and
Fuels RCAi1 = >1 RCAi2= >1
Year % share on total
EU-27 export
Kazakhstan’s exports advantage with Kazakhstan’s CA with respect to intra EU-
1999 51,33
respect to world exports into the EU-27 trade between 27 member states
2000 71,83
2001 70,06
2002 78,75
2003 80,24
2004 84,81
2005 87,71
2006 83,49
Changing trends of
revealed CA over
time for index RCA1

16. Host Country Effects
• Oil and gas production bears on annual GDP for the 15% and ENI is one of the largest
employer in Kazakhstan.
• Unemployment/employment: in 2008 country recorded a decrease in unemployment
rate (7, 3%) from 2006 (8,1%) to 2009 (6,6%) whereas the employment rate has
increased mainly in unskilled and labour intensive sectors and predominantly in oil
and gas field.
• Mining industry: in 2008 mining industry, represented only by seven big companies,
grew at 5,3% ($52bil) mainly due to the oil extraction.
• Wages: monthly nominal salary of mining industry is $730. One of the highest after
those of the financial sector whereas the average gross monthly nominal salary in
Kazakhstan is $420 (on 2010 USD).
• ENI’s activities in Kazakhstan have contributed to make the energy sector as
the leading economic one throughout the years.
In fact significant amount of crude oil and natural gas condensate
production comes from the Kazakhstan’s oil and gas basins.

17. Host Country Effects -
On local communities and workers
- Investments for local communities €32.604.142
- Spillovers: contribution on country’s industrial modernization and on employees
training activities through technological transfer. Development of “local content
program” in which Eni helps local companies to get quality certifications.
- The most significant initiatives are several infrastructure works, such as:
• the rehabilitation and upgrading of health and school facilities,
• the implementation of public works and social infrastructure
programs
• projects to supply natural gas and water to urban and rural areas
not reached by the distribution networks
- Education subsidies such as 42 scholarships and internships for 450 students
KPO Program for all ENI’s employees in Kazakhstan, the latest initiative was “The
comprehensive program for developing intercultural competence”
- “Craft Training Program” to reintegrate unemployed people through specific training
activities, such as maintenance specialists for the Atyrau Centre
- Partnerships with the main Italian universities to encourage the international exchange
- Adoption of the Safety Watch Scheme and the 12 Golden Rules to prevent from working
accidents.

18. ENI’s distinctiveness:
Energy for Development
“By working we have built a culture of diversity.
Living with other people helps to develop a distinctive culture
based on the key concepts of a respect for the rules - a guarantee for
everyone's safety - and respect for diversity and for people - given
that any command system must be based on the knowledge that
everyone has an important role to play, regardless of their position.
Eni's corporate culture is now at the service of its commitment to
Sustainability.
The company's objective of creating value is closely linked to the
social and economic development of the countries and the
communities we operate in.
We take responsibility for the environment we share with the
inhabitants of the countries where we operate, and the safety and
wellbeing of everyone who works with us is key to our success.
All this means for us Energy for Development”

19. Thanks for your attention