Eni: Integrated Model for Sustainable Energy Resource Development

1. eni.com ESG Presentation Developing sustainable energy: Eni’s Integrated Model Paris, 30 September 2016
2. 1IEA New Policies Scenario UNFCCC Two main challenges for the future Maximising access to energy 2°C Carbon Budget: 2,900 Gton CO2 12 14 16 18 2013 2020 2025 2030 2035 2040 +32% 2040 vs 2013 Fighting climate change 1.3 billion people without access to electricity 2.7 billion cooking with biomass under INDCs, carbon budget will be exhausted within 2040 Gtoe emitted until 2011 remaining
3. 2 Eni integrated model Long term value creation for stakeholders Financial robustness Social & environmental sustainability STRATEGIC GOAL Key Pillars Risk management Competences & Innovation Compliance Co-operation model Operating model Path to decarbonization Levers
4. Eni governance on risks and compliance 1st line “Line” managers – risk owners 2nd line Risk & Control functions 3rd line Internal Audit Chairman Board Control and Risk Committee/Board of Auditors Risk Committee Compliance Committee Integrated Compliance Integrated Risk Management CEO  ~20 top risks out of around 150 risks identified  Nearly 80 indicators for top risks quarterly monitoring Strategic Risks External Risks Operational Risks  Price scenario, Climate change, Stakeholder’s relationship  Country political & social instability  Credit & Financial risk  Regulatory evolution – HSE and gas & power  Blow out/accidents  Investigations and legal proceedings  Cyber Security and other process risks ENI TOP RISKS ENHANCED GOVERNANCE ON RISKS & COMPLIANCE 3
5. 4 carbon footprint reduction commitment on renewables Reduction of GHG emissions: • Reduction of routine flaring • Minimise fugitive methane emissions • Energy efficiency Carbon pricing policies • Public advocacy for carbon pricing • Internal carbon pricing sensitivity large share of natural gas reserves portfolio resilience at 450 ppm scenario low carbon portfolio Energy Solutions Department Green conversion of downstream assets: green refinery and biofuels Research focus on energy mix diversification and green businesses Eni acknowledges the need to limit the temperature increase below 2°C International engagement for joint action An integrated strategy for decarbonization
6. 5 Portfolio resilience is enhanced by gas and cost competitiveness new projects 2P res | Bep $/boe $30 $15 $30 onshore deep water shallow water 0 50 100 150 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 Brent Eni IEA 450 scenario oil price scenario | $/bbl  Eni oil price scenario is lower than the IEA 2°C assumptions  Eni applies carbon pricing sensitivity $ 40/ton in real terms avg 27 $/boe no risk of stranded assets
7. 6 COOPERATION & DEVELOPMENT
8. 7 PRODUCTION FOR DOMESTIC MARKET ACCESS TO ELECTRICITY ENERGY MIX ECONOMIC DIVERSIFICATION LOCAL DEVELOPMENT HEALTH AND EDUCATION BEING LOCAL CREATING A LONG TERM PARTNERSHIP Long-term value creation - our flagship model FULL PARTNERSHIP Transfer of KNOW HOW UNINTERRUPTED PRESENCE
9. 8 Providing energy to foster development Power generation  4 gas power plants supplying:  60% of power in Congo  20% in Nigeria  Off-grid power in Congo and Nigeria Access to energy for 18 million people Gas to local markets  43 bcm of production to domestic markets  In 10 countries 100% of production sold locally = existing gas power plan = new power generation projects Libya Egypt Tunisia Algeria Pakistan Mozambique Angola Nigeria Congo Ghana Venezuela = 100% gas production to local market/primary suppliers = 100% future gas production to local market/primary suppliers
10. 9 Development projects for local communities Infrastructure Economic diversification Health care Access to water Education 2010-2019 Investments for ~1 Bln €* ≈ 550,000 people involved in agricultural projects mainly in Congo, Tunisia and Nigeria ≈ 900,000 patients examined more than 1 mln vaccinations mainly in Angola, Congo and Pakistan ≈90,000 students reached mainly in Kazakhstan, Italy, Mozambique and Nigeria ≈500,000 beneficiaries of transportation projects reached mainly in Kazakhstan and Nigeria ≈130,000 people reached mainly in Congo, Kazakhstan, Mozambique and Nigeria *including off-grid projects
11. Empowering local workforce 10* Direct Managed workforce – Consolidated and Unconsolidated Subsidiaries (excluding Italy) 66% of 2015 total procurement spent on local suppliers In the last 5 years, local employment* increased by 21%
12. 11 OPERATING MODEL
13. Continuous improvement on environmental impact FLARING DOWN REINJECTION OF PRODUCED WATER UPSTREAM METHANE EMISSIONS SAFETY Eni top performer since 2013 Volume of flared gas: -73% from 2007 56% reinjection of produced water in 2015 Target: Zero routine flaring by 2025 Target: 64% reinjected by 2019 Target: -80% reduction by 2025 -47% reduction from 2007 2015 vs 2014 -37% TRIR 12
14. Eni’s unique exploration track record and model *peers = BP, CVX, RDS, REP, TOT, XOM peers* average: 0.3x Cumulative discovered resources | bln boe Discoveries vs production 2008-15 | bln boe 0.4 0.3 0.4 0.4 0.2 1.0 Discoveries 2008-15 Discoveries / production ratio 1.4 10.5 2.4 yearly additions cumulative 13
15. Exploration risk evaluation Basin Geometry Temperature & Pressure Source Rock Geochemistry Generation & Expulsion Migration & Trapping Exploration Risk Evaluation HC Migration Paths Gas filling probability map Histogram of filling probability Green Data Center 7,700 physical and virtual servers 4.5 Petaflop of computation capacity Petroleum System Modelling 14
16.  Strong interfunctional integration from exploration to start-up  Working in parallel rather than sequentially  Risk reduction through reservoir uncertainties quantification  3D reservoir models developed during exploration stages Conventionalproject schedule Phased/fasttrack projectschedule Workflows: faster time-to-market from reserves to resources 15
17. 16 Our development model Phaseable development Design-to-cost approach Strict control on execution Integration with commissioning and operations People&Processes Knowledgemanagement A simpler and manageable operating model
18. 17 Marine XII and Nooros: examples of our integrated approach Marine XII Minsala Dev/Prod areas Exploration area Litchendjili Marine Nenè Marine Minsala Marine Nooros Equity production (kboed) Nenè 78 Marine XII 150 July 2015 Sept 2015 July 2016 Oct 2016 70 kboed 130 kboed
19. 18 Minimising our operational risks Competences  Training  Know how  Safety culture Technologies Processes  Organization model  Best Practices & Procedure  Rig Inspections  MSG Operations  Real Time Monitoring OPERATIONAL RISKS 1994 2001 20152000 20092005 50 patents to enhance safety and performance Automatic Drilling Downhole Isolation Packer New Wellhead Safety Valve Eni Rapid Cube Eni Dual ROV Killing System Casing valve 2014 2016 2017 Additional Well Barriers
20. 19 Offshore production activity limited to all-year-round ice-free conditions Safety for people Protecting Arctic environment Technologies and competencies Oil Spill Prevention Working together with local communities Our policy Our drivers Focus: our Arctic operations Weather base Design: FPSO design and operation limits defined to tolerate extreme weather conditions Emission reduction: FPSO powered from shore and associated gas re- injection Oil Spill Detection & Response: Intervention capability increased by novel technology (i.e. Stand by vessel Esvagt Aurora provided with the best technologies for oil detection and spill response) Specific risk mitigations: Goliat Setting the standards for offshore Arctic production
21. 20 PATH TO DECARBONISATION
22. 21 The role of gas in the energy transition process 18% 1% 52% 29% 26% 4% 50% 20% Other (Biomass + Hydro + Nuke) Wind & Solar O&G Coal 2030 2015 Costs Emissions Environmental impact Reliability Security of supply Gas Coal Oil Wind & Solar - - - IEA scenario Role of gas
23. 22 GHG emissions | tCO2 eq/toe GHG intensity reduction 2025 vs 2014: -43% -2%/y -3.5%/y -4%/y GHG reduction targets Methane fugitives  Main projects: Nigeria, Congo, Libya  GHG reductions: -5 Mton CO2 Flaring down Energy efficiency  Initiatives in existing sites & new plants  GHG reductions: -2 Mton CO2  Monitoring/control campaigns in 50 sites  GHG reductions: -2 Mton CO2
24. 23 Brownfields asset transition Greenfields new cooperation model Competitive skills Global presence and large portfolio of industrial assets Know-how in managing complex and hybrid projects Excellence in R&D Multiple and flexible financial levers Energy Solutions business model
25. 24 Energy Solutions: map of activities 220 MWp of capacity installed in Italy by 2022 Reclaim and convert existing industrial areas in Italy implementing large-scale renewables energy plants 160 MWp of capacity installed abroad by 2018 Integrating renewable with oil & gas assets 6 FIDs planned by end 2016 for fast-track development in Egypt, Algeria and selected Italian sites, for a total capacity of about 150 MWp On average 0.3 Mtons/y of CO2 emissions avoided for 20 years Ongoing Projects TARGET: maximize the use of renewables to meet the energy needs of our facilities and reduce CO2 emissions
26. 25 Eni’s new mission We are an energy company We are working to build a future where everyone can access energy efficiently and sustainably Our work is based on passion and innovation, on our unique strengths and skills, on the quality of our people and in recognising that diversity across all aspects of our operations and organisation is something to be cherished We believe in the value of long term partnerships with the countries and communities where we operate

Hinweis der Redaktion

Good morning and thank you for being here today.
The main objective of this meeting is to give you an update on our Environmental, Social and Governance model.
Since last time we met, many things have happened and Eni’s model has been improved and adjusted in order to face this different scenario.
And now I’d like to give you some elements to define the context and the future challenges we are going to face.
The key future challenge for the energy sector is to achieve a balance between:
maximising access to energy, and
fighting climate change.
Today 2/3 of our carbon budget, equivalent to 2.9 Trillion tons of CO2, has already been used.

Over the coming decades, the World’s population will grow from 7 to 9 billion and energy demand will increase by around 30%. There will be also a geographical shift in consumption and 70% of energy demand will come from non-OECD countries, which represent around 85% of the world’s population.
A major priority is how to extend access to affordable energy. Today there are 1.3 billion people with no access to electricity, half of them in Sub-Saharan Africa, and 2.7 billion people still using biomass for domestic cooking and heating.
However, if the global temperature increase is to stay below 2°, we cannot give access to energy and satisfy the increasing energy demand with the current carbon intensive energy mix.
The solution to this equation will provide the basis for energy transition, although this process will take time, at least until there is a technological breakthrough.
The challenge therefore is to change the energy mix, thinking in terms of priorities, feasibility, long term planning and the world’s carbon budget.
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And now let’s focus on the first of our operating levers, our model of cooperation and development in host countries.
We can see this model in this short video
INFOGRAPHIC
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Thank you Claudio.

The second lever is our operating model, which is characterized by a continuous effort in minimizing risks along the whole production cycle.
On this, specific risk evaluation and management is carried out in all operations to support decision making and efficiency.
Focus on minimizing risks and safeguarding people and the environment, is a must in our operating model and one of the main targets of each phase of the production cycle.
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As i said earlier In 2008, we made the strategic decision to change our approach in exploration and to develop internal competences and proprietary technologies.
These last 8 years, we have spent more than 200 Mln € in Geophysical and Geological Research to develop our own proprietary technologies for Seismic imaging and Petroleum System Modelling in order to:
Better quantify geological uncertainties
De-risk Exploration,
De-risk the Asset Life cycle
These technologies are based on complex algorithms and implemented on our high-performance hardware platform located in our Green Data Center, where we can call on 4,5 petaflops of computing capacity.
With this, we can process about 90% of the depth imaging projects in-house, savings on the cost of licenses.
All of this is also instrumental in fast tracking the transformation of discovered resources into reserves, but we will come back to this later on.
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The close integration from exploration to start-up means fast-tracking resources into reserves. Indeed, to mitigate risks associated to development activities, reduce costs and enhance the time to market, we pursue a simpler, more effective and manageable approach composed of the following elements:
Firstly, a phased approach. This gives us a better time to market of our projects and accelerates start-up and ramp-up;
Second is design to cost. This is where the project is optimised to reduce development costs whilst making sure the facilities are energy efficient and environmentally safe,
Third is the strict control on project execution: contractual strategies, design freezes, and maintaining high level of supervision by using our own people.Finally, a closer integration between commissioning and operations;
This approach resulted in an average upstream cost of our new projects from 30$/boe level of 2014 to around 20 $/boe.
Furthermore an other important element is a high level of operatorship, which will reach 90% in our start-ups in the next 4 years, putting us in a position to strictly control risks, costs and time.
Let me give you some examples of our integrated approach to exploration and development, Marine XII in Congo and Noroos in Egypt.
Both Marine XII and Noroos come from our near-field exploration strategy, which is leading to a rapid development of these new discoveries thanks to synergies with the existing production infrastructure with an exceptional time-to-market.
In Congo we reached first oil just 11 months after discovery.The huge potential of this play is now about 5.5 billion boe of resources and we expect further upsides reaching overall production of 150 kboe at the end of this decade.
In Egypt, the Nooros field has reached in only 13 Months a production level of 128,000 boepd. We expect to reach a production level of 160,000 boepd early next year.
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Let’s start with the role of gas in the transition process.
The promotion of gas is key to our decarbonization strategy, which in turn is based on the ideal energy mix of the future.
According to the IEA scenario, global energy demand in 2030 will increase by 21% with respect to the current levels, reaching 16 Gtoe. However, this growth will only involve minor changes in the energy mix. Coal will still play a major role, satisfying 20% of total demand, while modern renewables will contribute just 4%. As a consequence, this will cause a further increase of total GHG emissions, from 32 Gton in 2013 to 35 Gton in 2030.
If we do not intervene to change the energy mix, we will not be able to reach the goals of meeting energy needs and safeguarding the environment.
We all know that modern renewables, like solar and wind, have a very positive impact on the environment but today they still suffer from several limitations:
extended areas that are needed for installation; a wind field for example, needs 200 times the space of a gas power plant;
intermittence, subject to the availability of the natural source and to climate conditions;
low utilization factor, and
geographical misfit, meaning high potential areas are often far from consumption areas, and require large investments in infrastructures.

When considering the pros and cons of the different sources of energy, it is clear that today the best partner for renewables is gas.
From an environmental perspective gas-fired power plants are more efficient and produce about half of CO2 emissions with respect to a coal plant, and none of the other pollutants as SOX, NOX and fine dust.
In terms of costs, gas is a highly competitive resource as well as being reliable and secure. Gas is therefore the best energy source as it can supply power systems with baseload profiles and considerable flexibility.

We also have to remember that gas is largely available and easily accessible, with current estimates of proved worldwide reserves around 203,000 bcm.
In this transition process towards renewables, natural gas is the ideal fuel for electricity generation, and has an important role to play also in transport.

Today, 58% of Eni’s portfolio is made up of gas and the forthcoming projects in Mozambique, Egypt and Indonesia confirm Eni’s commitment on this front.
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To conclude our presentation I’d like to share with you our brand new mission statement which is the perfect way to summarize the essence of our ESG efforts.
- “We are an energy company”.
- “We are working to build a future where everyone can access energy efficiently and sustainably”.
- “Our work is based on passion and innovation, on our unique strengths and skills, on the quality of our people and in recognising that diversity across all aspects of our operations and organisation is something to be cherished”.
“We believe in the value of long term partnerships with the countries and communities where we operate”.

The key words in this mission statement are :
1 ) access to energy , which means development and building a better future for humanity
2) Diversity, which means respect for others and inclusion, enhancing all the potential around us
3) Stakeholder engagement which means creating long term value

Thank you for listening, and now we will answer your questions.

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