Letter to shareholders

In 2013 Eni faced challenging market conditions.

Hydrocarbon production in our upstream segment was severely hit by disruptions in Libya and, to a lesser extent, in Nigeria and Algeria due to social unrest, internal conflicts and other geopolitical risks. In our mid-downstream businesses, the economic downturn and strong competition from alternative sources of energy drove a further decline in the consumption of gas and fuels, mainly in Italy. Finally, Saipem reported sharply lower results due to the lower profitability of ongoing contracts.

In spite of these extraordinary headwinds, Eni achieved solid operating and financial results leveraging on the strength of its portfolio and the turnaround underway in the mid-downstream businesses.

Cash flow generation was robust thanks to the E&P contribution which continued to deliver an average cash flow per barrel of around 30 US dollars, absorbing the lower proceeds in the Countries which were by exceptional events. The ongoing turnaround in the G&P, R&M and Chemical segments delivered a €2 billion improvement in operating cash flows.

Finally, leveraging on the breadth of our portfolio boosted by the latest exploration successes, we were able to monetize a 20% interest in the Mozambique discovery for €3.4 billion and our interest in the Siberian assets of Articgas, with a consideration of €2.2 billion cashed in January 2014, without affecting our longer term growth prospects.

Capital expenditure was kept essentially flat in line with our policy in place from 2009 of strict project selection.

In a very challenging year, Eni recorded a 23% increase in net profit from 2012 and maintained the net debt flat.

Eni’s strong financial position and underlying growth perspectives underpin our progressive distribution policy, with a 2% increase in the dividend per share and the launch of the share buyback programme.

In conclusion, at the end of this three-year period, we deliver to our shareholders a Company even more focused on the upstream, with excellent prospects of profitability and cash generation thanks to our portfolio of projects and reserves which is so flexible to enable options for anticipated monetization, and with a clear strategy of turnaround in the mid-downstream businesses.

Our balance sheet is stronger with net debt halved compared to three years ago.

Exploration is the engine of our strategy in the upstream business. Eni has continued to deliver industry leading results. Since 2008 we have discovered 9.5 bln boe of resources, equal to 2.5 times the production of the period. 2013 has been a brilliant year too, with 1.8 bln boe of resources discovered at a competitive cost of $1.2 per barrel. The main discoveries made in the year were the Agulha prospect and the appraisal of Mamba and Coral in Area 4 in Mozambique, where we estimate an overall mineral potential up to 2,650 billion cubic meters of gas in place, Nené Marine in Congo, which has founded a new oil play with huge potential, the appraisal of Sankofa offshore Ghana, and other successes in Norway, Australia, Pakistan and Egypt.

Exploration success, which owes to our know-how and organization, is the feature that mostly distinguishes Eni among the oil majors.

In the next four-year we will pursue even more ambitious exploration targets, by focusing on the emerging plays in Sub-Saharan Africa, the Barent Sea and Asia.

In Africa our objectives are pre-saline deposits in Congo, Angola and Gabon, the completion of the appraisal campaign in Mozambique and the launch of exploration activity in the Lamu basin in Kenya.

In the Russian section of the Barents Sea we jointly operate with Rosneft a high potential basin where seismic surveys have been started. The Norwegian section of the Barents Sea confirms to be an extraordinary promising area, where, once the operated Goliat has been started marking the first oil project of the region as expected at the end of 2014, we will see a rapid development of the recent discoveries of the area.

In the Pacific basin we intend to go ahead with exploration in Vietnam and Myanmar and to confirm our commitment in Indonesia and Australia. Furthermore we intend to explore the Russian and Ukrainian frontier areas of the Black Sea, where the Subbotina oil discovery is in place.

We acquired the operatorship of three licences in the Cypriot deep offshore portion of the Levantine basin, in proximity of large gas discoveries.

Our second priority comes through a major review of our legacy assets where we are applying new geological play concepts with exciting results. A remarkable example of the value this approach can bring is by the extraordinary Nené discovery in Marine XII. This is a mature block which has been largely explored in the past, where the application of new geological targets led us to discover more than 2.5 bboe of resources in place.

We maintain a strong commitment to time-to-market of discovered resources and continue to be selective in the phased development of our projects.

We plan to start-up 26 new major fields in the next four years, mainly Goliat in the Barents Sea, the Block 15/06 West Hub in Angola, the heavy oil and gas Venezuelan assets and Jangkrik in Indonesia, which will add more than 500 kboe/d by 2017, supprting production growth and the replacement of mature production.

Approximately 70% of the planned start-ups will relate to already sanctioned projects, whose costs and schedules are in line with budgets.

These progresses have been underpinned by our organizational model which is based on the in-source of critical engineering phases and a strong grip on construction and commissioning activities in order to minimize the risk of cost overruns.

Operational efficiency is the other driver of our organisation, mainly in the drilling and completion of our wells. 2013 was a record in terms of control of the operational risk as well as health and safety risks with a total recordable injury rate 60% lower than the average recorded in the previous six years, and zero blow-outs for the tenth consecutive year.

For the future we intend to target even more challenging targets. In the next four year plan we will invest in training initiatives and sharing of know-how in the prevention of accidents and injuries, in new techniques for the rationale use of resources by optimizing water reinjection and in reducing GHG emissions by means of flaring down projects.

Overall in 2013 the E&P Division reported excellent results, in spite of geopolitical factors, and laid the foundations of a new production growth phase which will fuel value and cash generation.

The G&P, R&M and Chemical segments intensified turnaround actions in a difficult market scenario.

The G&P Division devoted great efforts in the renegotiation of long-term gas supply contracts in order to both align supply costs to market conditions and to reduce the annual minimum take obligations (take-or-pay) ensuring higher flexibility to our commercial policies.

Our renegotiation strategy is based on a fair distribution of economic benefits between the producer and the acquirer in line with the contractual principles. In 2013 we renegotiated supply terms of 85% of our long-term contracted gas. In 2014-2016, we plan to finalize a new round of renegotiations with expected benefits of €2 billion per year on our cost position. Our marketing strategy will deliver increasingly innovative products in order to best suit large customers’ needs and maximize value generation from our physical and contractual assets, overcoming the traditional role of the wholesaler.

In the retail segment our mission is to achieve customer satisfaction and fidelity with a multi-Country approach. In doing so, we will evolve into a supplier of value-added energy services and leave behind us the role of a commodity reseller. We serve approximately 10 million of customers across Europe and we intend to increase and retain our customer base leveraging on the Eni’s brand awareness, the quality of service and the innovation.

We intend to streamline our fixed-cost structure by reorganizing post-sale activities, restructuring of logistics and simplifying the organizational structure.

In the R&M Division we have reduced our refining capacity by 13% since the beginning of the downturn and we are planning for a further cut of 22% in the next four years. In addition we will continue to adopt capital discipline, to increase plants’ flexibility, pursuing at the same time fixed cost reductions and energy saving initiatives. We foresee to consolidate our presence in the retail of fuels in Italy leveraging on the continuous innovation of products and services and the non-oil development. Outside Italy we intend to focus our presence on growing markets and to divest from non-strategic areas.

Our Chemical business will progressively reduce its exposure to commodity chemicals, which have been increasingly exposed to international competition. We intend to grow our presence in the green chemicals business and to expand internationally targeting those segments where Eni’s know-how represents a competitive advantage. In the four-year plan, bio-chemicals productions at Porto Torres and Porto Marghera are expected to start-up. Also the joint ventures with major operators in the South Korea and Malaysia in the elastomers will start production. The technology lever is the driver to upgrade the business. It is worth mentioning our collaborations with Genomatica and Yulex for the production of elastomers from renewable, non-food plantations, targeting to substitute the traditional oil-based feedstock.

2013 has been a tough year at Saipem due to a slowdown in the business and issues affecting the profitability of certain large contracts. The Company reacted with a renewed focus on execution activities, an organizational turnaround and the adoption of a more selective commercial strategy. 2014 will be a transitional year with a recovery in profitability, the dimension of which relies upon the effective execution of operational and commercial activities at low-margin contracts still present in the current portfolio, in addition to the speed at which bids underway will be awarded.

Results of the year

Results reported in 2013 reflect the complexity of the scenario. Adjusted operating and net profit amounted to €12.62 billion and €4.43 billion respectively, declining by approximately one third compared to 2012. These results were driven by geopolitical factors in the E&P Division causing production losses of about 110 kboe/d to an annual production of 1,619 kboe/d (down 5% from 2012), plunging margins on sales of gas, electricity, fuels and chemical products, the effects of which were partly offset by turnaround savings, and sharply lower profitability at Saipem.

In spite of these headwinds, we reported a solid 23% increase in net profit to €5.2 billion, which was boosted by the gains recorded on portfolio transactions at the E&P segment. We generated a robust cash flow from operations at €11 billion, reflecting the high value per barrel in the E&P, turnaround improvements in the mid-downstream businesses and capital discipline. The disposal of assets contributed €6.4 billion to cash generation and mainly related to the Mozambique deal and the divestment of the financial interests in Snam and Galp. These inflows financed capital expenditure of €12.75 billion, in line with the last three years trend, and the dividend payment to Eni’s shareholders of €3.95 billion, maintaining net borrowings and leverage flat compared to 2012 at €15.4 billion and 0.25, respectively.

On the basis of the Company’s results, the Board of Directors intends to submit to the Annual Shareholders’ Meeting a dividend proposal of €1.10 per share (€1.08 in 2012).

Corporate Governance

Our business commitment cannot leave a sound and structured governance system out of consideration.

In these three years, we have promoted several initiatives to improve our internal and national system.

In July 2011, we published 35 proposals for the national governance and most of them were adopted in the self-discipline recommendations enacted in December 2011.

In 2013, Eni’s Chairman held a number of meetings in Europe and in the United States with proxy advisors and major investors, examinating the main governance issues.

We received positive feedback from our counterparts who recognized Eni’s corporate governance as a well structured and one of the most efficient in Italy.

Transparency was valued as a strong point of our Company, which, together with the quality and completeness of information, allowed Eni to be awarded for the best corporate website in the world.

One of the pillars of Eni’s governance is the internal control and risk management model, further strengthened during 2013 by the definition of regulatory instruments aimed at ensuring effectiveness and efficiency of the whole system.

In this contest, Eni has developed an integrated risk management system, finalized to the individuation, management and monitoring of all risks, not only industrial. In particular, the risk management system is intended to submit periodically to the Board of Directors the main risks of Eni.

Also the internal control model and the integrated risk management system were appreciated by the above-mentioned proxy advisors and institutional investors.

Strategies and mid-term objectives

The 2014 outlook features a moderate strengthening in the global economic recovery. Still a number of uncertainties are surrounding this outlook due to weak growth prospects in the Euro-zone and risks concerning the emerging economies. Crude oil prices are forecast on a solid trend in the short-term, driven by geopolitical factors against the backdrop of well supplied global markets. For investment evaluation purposes we assume a long-term price of $90 a barrel for the Brent crude benchmark. Management expects that the trading environment will remain challenging in the Company’s businesses due to higher Country risks in the upstream segment and to continuing weak fundamentals in our businesses exposed to the European market. Particularly in our businesses of gas reselling, refining and marketing of fuels and chemical products we do not anticipate any meaningful improvement in demand, while competition, oversupply and overcapacity will continue to weigh on selling margins of energy commodities.

Against this challenging environment, management reaffirms its strategy of profitable growth in the upstream and of further strengthening and turning around the mid-downstream businesses.

In Exploration & Production we target an average growth rate of 3% per year, in line with our long-term targets, and the discovery of 3.2 bboe of fresh resources, to be accomplished while at the same time reducing capital expenditure by 5% from the previous four-year plan. Our capital expenditure plan for the 2014-2017 period considers an outlay of €54 billion that will be directed for 83% to exploration and development of hydrocarbons reserves.

Our operational efforts will on the start-up of our major projects in portfolio, the reduction of time-to-market and to achieve a well balanced risk profile in our countries of presence. The entry into production of high-margin projects will enable us to expand cash generation from operations at a 5% rate per year.

We expect that once the turnaround plans have been completed, our mid-downstream business will be able to generate returns also in a trading environment as unfavourable as the one experienced in 2013. The medium-term target is to breakeven in the four year plan.

All in all, also supported by a valuable Corporate Governance system, which ensure an effective decisional process, we are confident that the planned strategies and initiatives will allow Eni to perform strongly leveraging on the valuable growth in the E&P and a recover to profitability in the mid-downstream businesses thanks to contract renegotiation, capacity reductions and focus on premium segments. Those drivers and the continuing refocusing of our portfolio will deliver robust cash generation where we are targeting an average 13% increase per year in our free cash flow till 2017 under our price scenario.

Such prospects will underpin our progressive dividend policy and the prosecution of the buyback programme.

March 17, 2014

In representation of the Board of Directors