Rapporto Eni Hse2005 En

Health Safety Environment2005 report

MISSIONWe are a major integrated energy company, committed to growth in the activities of finding, producing,

transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges,

continuous improvement, excellence and particularly value people, the environment and integrity

Countries of activity

EUROPEAustria, Belgium, Croatia, Cyprus,Czech Republic, Denmark, France,Germany, Greece, Hungary, Ireland,Italy, Luxembourg, Malta, Netherlands,Norway, Poland, Portugal, Romania,Slovakia, Slovenia, Spain, Switzerland,Turkey, United Kingdom

CSIAzerbaijan, Georgia, Kazakhstan, Russia

AFRICAAlgeria, Angola, Cameroon, Chad,Congo, Egypt, Guinea Bissau, Libya,Morocco, Nigeria, Senegal, Somalia,South Africa, Sudan, Tunisia

MIDDLE EASTIran, Kuwait, Oman, Qatar,Saudi Arabia, United Arab Emirates

CENTRAL ASIAIndia, Pakistan

SOUTH EAST ASIA AND OCEANIAAustralia, China, Indonesia, Japan,Malaysia, Papua-New Guinea,Singapore, South Korea, Taiwan,Thailand, Vietnam

AMERICASArgentina, Brazil, Canada, DominicanRepublic, Ecuador, Mexico, Peru,Trinidad & Tobago, United States,Venezuela

MESSAGE FROM URS ITALIA We were appointed as independent auditors of the Eni 2005 HealthSafety and Environment Report. The auditing activity regarded thestructure and contents of the Report, the accounting processadopted and the Report’s suitability as an effective communicationtool for HSE themes. Our evaluations are summarized in the letter ofverification on page 98. Specific comments relating to the siteschecked are included in dedicated areas within the body of theReport.

(see page 98)

The following color code is used in the document: Eni, Petrochemicals, Oilfield Services Construction andEngineering, Other activities

Exploration & Production

Gas & Power

Refining & Marketing

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Message to our stakeholders 2Contents of the HSE Report 4

Main results 6

Company profile 8 Sectors of activity13 Financial and operating performance17 The economic dimension of HSE

HSE governance 20 Model of environmental sustainability21 HSE Policies22 Commitments, Achievements and Goals24 HSE Governance and Management System26 Certifications28 System and technical audits29 HSE knowledge management33 Opinion sharing

Health 34 Global approach, local attention35 Assessment and prevention36 Management40 Monitoring and reporting40 Information technology for health services41 Health promotion initiatives42 Management of health emergencies43 Expenditure and investments

Safety 44 Industrial risk assessment and management45 Plants and products46 Transport46 Injury prevention50 Emergency management52 Expenditure and investments

Energy and environmental sustainability 54 Energy58 Air62 Water64 Habitat, territory and landscape68 Expenditure and investments

Our commitments 7071 Climate change and energy79 Biodiversity82 Transport system88 Eco-friendly products

Tables and glossary 92 HSE key performance indicators94 Units of measurement, symbols and acronyms96 Glossary

Verification of the Report 98100 Methodological remarks

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2005 was a year of major progress for Eni in terms offinancial results, growth of our activities and HSE(Health, Safety, Environment) performances.Several of Eni’s economic and financial indicators havereached absolute records: consolidated revenues, grossand net operating profits, net capital employed, thedividend paid to shareholders and the stock-marketcapitalization, all proving that the overall value of thebusiness has grown.These record figures were achieved not just due to therise in oil prices, but to increased operational efficiency.Hydrocarbon production grew by 7%, as new reservoirswere put into production. Sales of gas in Italy andEurope grew by 8% and power generation developed ata very high rate, 64% on an annual basis, after newnatural gas fuelled combined cycle cogeneration plantswere started up.On the HSE front, the lowest ever injury indexes wererecorded, both for employees and contractors.Furthermore, annual expenditure rose by 33%, with theaim of satisfying stakeholders’ expectations from a largeindustrial group which operates in major industrialsectors, which are critical both in terms of safety andenvironmental protection.In a more global context, in which the demand forenergy is steadily increasing, the year 2005 alsoconfirmed the fragility and vulnerability of energysupplies which had, and are likely to continue having, astrong impact on the level and volatility of the prices ofprimary sources.On the environmental front, after a long incubation theKyoto Protocol came into effect. It is likely to have astrong influence on how the energy system evolves,with probable impacts on the mix of primary sources,on the quality of final energy products, on the choice of

technologies for conversion/use and on the finaldemand for energy. At the same time, in line with theobjectives of the Kyoto Protocol and new marketinstruments for tackling the challenge of ClimateChange, the Emission Trading market was set up inEurope, involving almost half of European CO2

emissions.The issues of energy safety and Climate Change andrelated greenhouse gas emissions have thus become,and in our opinion will remain for some time, thecentral drivers for the development of the energysystem.Many years ago, Eni recognized that Climate Changewas an important factor for the evolution of the energysector and for strategic business choices. To this end, itdrew up and adopted a Carbon Management strategy,which has as its aims:• preferential development of low carbon-content

fossil fuels, and of natural gas in particular;• gas-electricity integration, exploiting the greater

efficiency of combined cycles and cogeneration;• active participation in Emission Trading systems,

promoting the reduction of emissions in its ownindustrial plants;

• carrying out reduction projects based on the CDMand JI flexible mechanisms, instituted by the KyotoProtocol;

• gradual reduction of the flaring of gas associated withoil production, developing new local or internationalmarkets;

• development of technologies for the separation andgeological sequestration of CO2;

• designing a sustainable energy system based on abroader set of primary sources and highly efficienttechnologies.

Message to our stakeholders

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Eni has achieved satisfactory results across all of theselines of action. It is pursuing its pathway to becoming anenergy company with low CO2 emissions, whetherdirect or indirect. Indeed, with regard to our internalenergy consumption, we have reached an averageemission factor of 2.57 tCO2/toe, which is just abovethat of natural gas. For power generation, the newnatural gas fuelled combined cycle cogeneration plantshave meant that the average emission factor hasdropped to around 0.34 tCO2/MWh, which is a very lowvalue in the realm of thermoelectric generation. Andlastly, for the basket of energy products sold by Eni,thanks to the prevailing and growing share of naturalgas, the average emission factor is 2.65 tCO2/toe.As for the Emission Trading, Eni is one of the majorplayers in Italy and Europe. In Italy, it is the largestindustrial group in terms of number of plants involved(61, which is 7% of the total installations), and secondlargest in terms of allowances of the National AllocationPlan (22.4 Mt CO2 in 2005, equal to around 10% of theoverall allocation).In order to prepare for Emission Trading, Eni developeda coordinated series of activities and a capillarymanagement organization. Starting from the individualinstallations, it moves up to the various business unitsand, lastly, is consolidated at Corporate level. Since theorganization and integration of all these activities is verycomplex, a Management team for Greenhouse Gaseswas set up in Eni. It coordinates management and drawsup forecast and final compliance plans, identifying anyactions required to ensure that the group’s overallposition is balanced. The organization successfullypassed its first test in the first few months of 2006,

when 2005 emissions were verified and the firstallowances were surrendered.In addition to taking part in the European EmissionTrading system, Eni is developing its portfolio ofprojects to reduce emissions based on the otherFlexible Mechanisms of the Kyoto Protocol. The projectfor power generation carried out in Kwale in Nigeria hasalready been submitted to the CDM Executive Board.The project uses associated gas that was previouslyflared and curbs emissions by 1.5 MtCO2/year. The Kwaleproject is the first in a wider portfolio that has alreadybeen finalized; it is part of the collaboration that Eniestablished with the Italian Ministry for Environmentand Protection of the Territory through a VoluntaryAgreement signed during the COP9, which was held inMilan in December 2003. The Agreement focuses notonly on CDM projects, but also aims to use JointImplementation. To this end, Eni has begun theassessment of the opportunities for JI projects in themost promising countries.Lastly, Eni has launched the research and developmentof a more sustainable energy system, in whichtechnological innovation will play a very important role.Eni’s work towards this objective has initially focused oncapturing and permanently storing CO2 in geologicalformations, and on the energy uses of biomasses, bothfor power generation and for the use of biofuels in roadtransport.With these actions, and others still at the design phase,Eni intends to be a main player in the development of amore sustainable energy system, with the aim toreconcile the preservation of quality of living standardswith the need to protect the global environment.

Paolo ScaroniChief Executive Officerand General Manager

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Contents of the HSE Report

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Eni places great importance on monitoring HSEperformance. Firstly, because monitoring andinterpretative abilities are the basis for identifyingactions for continuous improvement. Secondly, becauseaccounting for and reporting on HSE performances areof interest to a vast range of Eni stakeholders.

For these reasons, the HSE Data Reporting Manual isupdated and expanded each year. It is the keydocument for monitoring and controlling HSEperformances. This activity is aimed at ensuring thecompleteness, precision, time consistency andreliability of the information, as well as the adequacyand efficacy of information flows. The accountingsystem, in addition to consolidating quantitative data, isable to acquire the main information that contribute torepresenting HSE management. The accounting systemuses a database containing the historical records of HSEperformances, taking into account the differentorganizational structures that Eni has had over time. Itcomprises the data of the three divisions, thesubsidiaries and all the joint ventures in which Eni hasthe role of operator and therefore responsibility formanagement, independently of our equity.HSE analysis and reporting also makes use of otherinstruments, such as:• organizing meetings to share HSE accounting

methods with HSE accounting experts in the businessunits;

• the operational procedure for monitoring andreporting on HSE data;

• audits of the accounting systems and planningobjectives for their improvement.

Eni’s organizational evolution towards a multi-divisioncompany prompted a new way of presenting Health,Safety and Environment issues. The aim of the HSE

Report 2005 is to present the operational dimension ofEni through the activities of the Divisions (E&P, G&P,R&M) and the consolidation of all the business units.

The historic coherence of the information isdemonstrated by the annexed synoptic tables of theperformance indicators of the last three years, dividedinto the six sectors of activity (Exploration& Production, Gas & Power, Refining & Marketing,Petrochemicals, Oilfield Services Construction andEngineering and Other activities).In the exploration & production sector, the activities ofthe Exploration & Production Division and Stogit areconsolidated; the activities of the Gas & Power Division,EniPower, Italgas and Snam Rete Gas are consolidated inthe gas & power sector; the refining & marketing sectorconsolidates the activities of the Refining & MarketingDivision; the Petrochemicals sector consolidates theactivities of Polimeri Europa; the activities of Saipemand Snamprogetti are consolidated in the OilfieldServices Construction and Engineering area and lastly,the last sector (Other activities) covers the activities ofAmbiente, Eni Corporate, EniTecnologie, Sieco, Syndialand Tecnomare.

For the first time, indirect HSE accounting has beenincluded for activities conducted on behalf of Eni, so asto highlight the importance given to the HSEcommitment along the supply chain.

The main reporting standards were taken intoconsideration when preparing the Report, ensuringcontinuity and integration with other communicationtools.

In particular, the Report was written with reference tothe GRI 2002 Guidelines in the parts regarding HSE. Asynoptic representation of the key indicators of HSEperformances used in the Report is given in the finalsection.

Methodological remarks page 100 j

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Economic-operating data 2003 2004 2005

Net sales from operations (1) (Mo) 51,487 57,545 73,728

Operating expenses (1) (Mo) 37,732 41,592 51,918

Operating profit (1) (Mo) 9,517 12,399 16,827

Net profit (1) (Mo) 5,585 7,059 8,788

Capital expenditure (1) (Mo) 8,802 7,499 7,414

Return On Average Capital Employed (ROACE) (1) (%) 15.6 16.6 19.5

Leverage (1) (%) 0.48 0.29 0.27

Daily production of hydrocarbons (kboe) 1,562 1,624 1,737

Total sales and own consumption of natural gas (Gm3) 78.33 83.81 91.15

Sales of refined products (Mt) 50.43 53.54 51.63

HSE expenditure (Mo) 924.8 1,124.5 1,496.7

HealthHealth staff (number) 791 862 1,014

Environmental surveys (2) (number) 10,051 41,273 13,459

SafetyInjury frequency index - employees 3.79 4.47 3.17

Injury severity index - employees 0.09 0.11 0.10

Mortality - employees (number) 8 9 5

Mortality - contractors (number) 22 26 13

Mortality index - employees 0.000039 0.000051 0.000027

Mortality index - contractors 0.000065 0.000063 0.000037

Hours worked - employees (number) 204,822,858 175,293,279 182,763,908

EnvironmentFreshwater consumption (Mm3) 268 274 256

Net energy consumption (Mtoe) 9.15 9.24 9.74

GHG emissions (Mt CO2 eq) 52.8 58.3 61.9

Direct CO2 emission/toe consumed (t/toe) 2.89 2.71 2.57

Acidification potential (t SO2 eq) 150,422 168,805 142,336

Hazardous waste (3) (kt) 1,043 1,681 2,014

Non-hazardous waste (3) (kt) 1,823 2,274 2,870

Number of oil spills (number) 121 226 335

Certifications (number) 122 133 155

Human resourcesEni employees (number) 75,421 70,348 72,258

HSE staff (number) 2,103 2,552 2,618

Hours of HSE training (2) (number) 479,381 1,116,895 867,215

Participations in HSE training courses (2) (number) 74,772 150,116 130,513

(1) The economic and financial data for 2004 and 2005 was taken from financial statements drawn up according to the international financial reporting standards, homologated by theEuropean Commission (IFRS), and cannot therefore be compared with that for 2003 (drawn up according to the Italian GAAP).(2) The figure for 2003 cannot be compared with that for later years as the surveying system was changed.(3) Data include waste produced during remediation activities.

Main results

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The net profit of o8.8 billion in 2005 sets a new record.The increase of o1.7 billion compared to 2004 (+24.5%) reflects the excellent performance of operations in all businessareas.Daily production of hydrocarbons was 1.74 million barrels of oil equivalent, up by 7%, and proved hydrocarbon reservesat 31 December 2005 were 6.84 billion boe (55% crude and condensates).Sales of natural gas in Europe, including direct upstream sales, were 96 billion cubic meters, up by 8%. Sales of liquefiednatural gas (LNG) reached 7 billion cubic meters, an increase of 17%.In 2005, HSE expenditure and investments were o1,496.7 billion, an increase of 33% compared to 2004.

In 2005, sanitary surveillance activities involved 38,000 employees. Eni’s health structure is based on an extensivenetwork of 339 units located around the world. Over 1,000 health staff provide their professional services and the percapita expenditure is around o553 per employee, which is more than in previous years.

Safety performances improved considerably compared to 2004. The injury frequency index of employees’ dropped by29% while the severity index dropped by 9%. The performances for contractors established an all-time low.Mortality indexes were halved. Safety expenditure was o391 million, with an increase of 34% compared to the previousyear.

Freshwater consumption showed a decrease of 6.4%.Due to the expansion of the business, net energy consumption slightly rose; however, the specific emission factor forCO2 per toe used (2.57 tCO2/toe) was reduced further, thanks to the fuel mix used, which was made up of 58.5% naturalgas.Since January 2005, Eni has been participating in the European Emissions Trading Scheme, with 63 installations, ofwhich 2 are abroad.At the same time, it is developing a portfolio of projects to reduce emissions, based on flexible mechanisms of theKyoto Protocol.It is continuing with its certification program, acquiring new certifications (+17%) and with an increase in auditactivities (+20%). The EMAS refinery registration plan will be completed in the course of 2006.

The work force dedicated to HSE activities is growing constantly; it comprises over 2,000 units and reflects theexpansion of Eni’s businesses and its greater commitment to HSE themes.Training activities showed a 22% decrease in hours provided, but new knowledge-sharing instruments were activated(HSE.net portal). Courses on safety issues make up 95% of HSE training.

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Company profile

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / C O M P A N Y P R O F I L E

Sectors of activity

Eni is an international energy company operating in theareas of oil and natural gas, power generation andoilfield services construction and engineering areas; inall these areas, it has a strong edge and leadinginternational market positions.

Exploration & ProductionExploration and production of hydrocarbons is carriedout through the E&P Division, which operates in Italy,North Africa, West Africa, the North Sea, the Gulf ofMexico, Latin America, Australia and in areas that offerconsiderable potential, such as the Caspian Sea and theMiddle and Far East.In the Caspian Sea region, in the Kazakh offshore, theworld’s most important oil discovery in the last thirty

years was made (the Kashagan oil field), which willproduce 1.2 million barrels a day when fully operational.In Kazakhstan Eni operates also with a 32.5% share inKarachaganak, one of the largest oil and natural gasfields in the world.In Libya, Eni is the primary international operator, witharound 19% of the country’s annual oil production. Theonshore gas field in Wafa and offshore gas field in BahrEssalam have recoverable reserves of around 1,750million boe, and fully operational production willprovide 10 Gm3 of natural gas, of which 8 billion will betransported to the European market through theoffshore gas pipeline Greenstream.In Nigeria, Eni extracts approx 10% of the country’scrude oil. The main oil fields are located in the Niger


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Delta region where, in addition to oil extraction, theBonny liquefaction plant is operational. It uses the gasassociated with the oil extraction, and when fullyoperational will have a production capacity of 26.5Gm3/year of LNG.In Egypt, Eni is one of the major hydrocarbonsproducers, with extraction of around 40% of thenational crude oil. The most productive gas fields aresituated in the Nile Delta region, where the DamiettaLNG plant is running, with a capacity of approx 7Gm3/year of LNG.

In addition to its activity of exploring and producinghydrocarbons, the Division carries out natural gasstorage activities through Stoccaggi Gas Italia SpA(Stogit). It manages eight natural gas fields locatedacross Italy, with modulation, mining and strategicstorage functions. The first is aimed at modulating daily,seasonal and peak consumption trends. Strategicstorage, on the other hand, guarantees the safety of thenational gas system should there be an unforeseengrowth in residential demand or a reduction in supply,which could be due, for example, to the temporarysuspension of an importation gas pipeline.

Proved reserves of oil and condensatesby geographic area at year end

3,773 million barrels

6% Italy26% North Africa25% West Africa11% North Sea32% Rest of world

Proved natural gas reservesby geographic area at year end

3,064 million boe


Proved reserves of hydrocarbons and reserve life index

8,000 million boe years 16

6,000 12

4,000 8

2,000 4

2003 20052004Oil and condensatesNatural gasLife index

2,000 thousand boe/day % 100

1,500 75

1,000 50

500 25

2003 20052004

Daily hydrocarbon production and share outside Italy

Oil and condensatesNatural gasOutside Italy

Oil and condensate productionby geographic area

1,111 thousand barrels/d


Natural gas productionby geographic area

626 thousand boe/d


The gas system

SUPPLY INFRASTRUCTURE SALES


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Gas & PowerThe G&P division is engaged in the activities of supply,transport, distribution and sale of natural gas, and is alsoactive in the power generation and marketing sector. Inaddition to Italy, the Division is also present in Europe,Australia, South America, North and West Africa and inthe LNG markets in the Far East.Supply of natural gas is guaranteed through gaspipelines from Algeria, Russia, the Netherlands, Norwayand Libya, as well as from the E&P Division. Gas is also

Supply of natural gas by geographic area

82.56 billion cubic meters

13% Italy28% Russia25% Algeria16% Other10% Netherlands7% Norway

Sales and own consumption of natural gas

91.15 billion cubic meters

58% Italy6% Own consumption34% Rest of Europe2% Outside Europe

imported by sea, using four liquefied natural gas tankerships owned by the subsidiary LNG Shipping.

The transport of natural gas in Italy is carried out bySnam Rete Gas through its network of gas pipelines,which is over 30,000-km long, and accounts forpractically the entire national network.Outside Italy, Eni owns transportation rights across anextensive network of gas pipelines.

Italgas manages the distribution of natural gas toresidential consumers. It is the largest company in itssector and is 100% controlled by Eni. Following thepartial splitting of Italgas, and with effect from 1 January2005, Eni was also assigned the shares that Italgasowned in foreign gas distribution companies operatingin Hungary, Slovenia and Argentina.The Division’s commercial activity is aimed both attraditional business customers (companies andwholesalers) and to the residential customers whichwere previously handled by Italgas Più, which wasabsorbed by Eni on 1 January 2005. In 2002 Italgas Piùcertified its Quality Management System according tothe ISO 9001 standard.

Power generation and marketing are managed by thesubsidiary EniPower, through 7 power stations situatedin Ferrera Erbognone, Mantua, Ferrara, Ravenna, Livorno,Brindisi and Taranto.Plans to expand power generation capacity expect toreach an installed capacity of 5.5 gigawatt by 2009, withthe construction of new combined cycle plants usingnatural gas, which have low environmental impact andare more efficient than traditional plants running onfuel oil.

GAS PRODUCTION

GAS IMPORTS

STO

RAG

E

DIS

TRIB

UTI

ON

SYS

TEM

TRANSPORT

POWER STATIONS

INDUSTRIALCUSTOMERS

RESIDENTIALAND COMMERCIALCUSTOMERS

SHIPPER


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Refining & MarketingThrough its R&M Division, Eni is engaged in the oilrefining and refined products marketing. In order toguarantee full availability of crude oils to its ownrefining system, it carries out trading activity on the oilmarket. The supply of crude oil is carried out through anefficient system of oil pipelines owned by third parties,as well as sea transport.Through this integrated system of refining, logistics anddistribution, Eni is able to meet the market’s needs withproducts that are also innovative from anenvironmental point of view.The refining system in Italy consists of fivewholly-owned refineries (Sannazzaro, Livorno, PortoMarghera, Taranto and Gela) and a 50% interest in theMilazzo refinery; outside Italy, Eni holds interests in theGerman refineries at Bayernoil and Schwedt, and in thecompany Ceska Rafinerska, which owns and managestwo refineries in the Czech Republic.The efficient supply of the system is guaranteed bylogistics activity, in which Eni is the Italian leader in thestorage and transportation of refined products.As for fuel distribution, Eni operates in Italy and abroadthrough the Agip brand distribution network, which has4,349 service stations in Italy and 1,933 in the rest ofEurope. The network has achieved high standards ofquality; this is partly due to the recent upgradingprocess, which means it can now offer clients a widerange of refined products and other products (bar,catering). In recent years, the company has gaineddistinction for the eco-compatibility of the fuels that itoffers. Indeed, the technological level of its refinerieshas allowed the production of high quality fuels withlow environmental impact, such as BluDiesel andBluSuper, ahead of the EU environmental regulationsthat are to come into force in 2009.

PetrochemicalsIn the Petrochemicals sector, Eni controls PolimeriEuropa which has been managing activities in thebusiness areas of Styrenes and Elastomers, Polyethyleneand Basic Chemicals since 2002.The company operates through 18 production sites, ofwhich 11 are in Italy and 7 in the rest of Europe (GreatBritain, Belgium, France, Germany, Portugal andHungary), 5 research centers and a sales network activein 35 countries.The company operates on the market with a highquality product portfolio which respects theenvironment and the community, through personalizedcustomer service.

Refinery intake and balanced capacity utilization in wholly-owned refineries in Italy

600 thousand barrels/day % 120

450 90

300 60

150 30

2003 20052004

Refinery intake in wholly-owned refineries

Balanced capacity utilization rate

Agip branded service stations and average throughput

5,000 units thousand liters 3,000

4,000 2,400

3,000 1,800

2,000 1,200

1,000 600

2003 20052004

Service stations

Average throughput


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Oilfield Services Construction and EngineeringEni is engaged in the engineering and constructionsector through Saipem and Snamprogetti.Saipem now has a leading position in the sectors ofconstruction and drilling and in supplying engineeringservices, project management, procurement andconstruction for the development of hydrocarbonfields. The company operates in strategic areas such asWest Africa, Russia and former Soviet Union countries,Central Asia, North Africa, the Middle East and SouthEast Asia. Its operational activities are mainly focused onconstruction and drilling onshore as well as offshore; ithas one of the most advanced and efficient offshorefleets in the industry from a technological point of view.

Snamprogetti is one of the leading internationalcompanies in the field of engineering and contracting. Itoperates on the international market as main contractorfor planning and installing large facilities in the sectors ofhydrocarbon production and treatment, exploitation ofnatural gas (liquefaction and conversion), conversionand use of the full barrel from conventional andunconventional sources, petrochemicals and chemicals,pipeline transmission systems, power generation,environmental activities and infrastructures.

Corporate and Other activitiesEni is also engaged in other industrial sectors, through itscontrol of a number of companies. In particular, thisReport consolidates data for the activities of Ambiente,EniTecnologie, Sieco, Syndial, Tecnomare, Eni Corporateand financial companies.In November 2005, the company Ambiente merged withSyndial, completing the concentration of environmentalrehabilitation and waste management activities.

EniTecnologie is a center of excellence for industrialresearch. The company operates across the entire cycle ofoil and gas and on renewable sources, developingtechnological innovation in the areas of oil and gasupstream, conversion of natural gas and heavy residues,downstream gas, petrochemicals and refining processes,development of refined products, renewable sources.

Sieco is a Facility Management company that providessupport to companies within the Eni Group, offeringservices for anything concerning real estate, personneland businesses. It also provides services in the fields ofelectricity cogeneration, sanitary surveillance, globalsecurity, archive and warehouse management,inter-corporate links and other services.

Syndial is engaged in the challenging field ofenvironmental rehabilitation for areas polluted byprevious industrial activities, with the aim of makingthem available for new industrial initiatives. The companyoperates across Italy in 6 active sites, 20 abandoned sitesformerly involved in chemicals production and 7abandoned sites which were formerly for mining activity.

Tecnomare is a company specialized in providing a fullarray of offshore engineering services to oil companies,supporting them in the development of their corebusiness. In particular, its activities include engineeringfor oil development projects and operating andmaintenance system engineering, developing roboticssystems and technologies for hostile environments, andintegrated health, safety, environment and qualitymanagement services.This Report accounts also for the HSE performances of EniCorporate and its controlled financial companies. In Italy,these companies are Enifin, which carries out financialactivities on behalf of Eni companies; Sofid, which has therole of financial intermediary and is responsible formanaging payment systems for the Eni Group; PadanaAssicurazioni, a company authorized by ISVAP to provideinsurance and reinsurance; and the financialintermediation company Sofid Sim; outside Italy, Eni alsocontrols Eni International and Eni Coordination Center.

Oilfield Services and Construction: order backlog at period end

5,513 million euro

56% Offshoreconstruction

10% Onshoreconstruction

11% Leased FPSO

7% Offshore drilling

5% Onshore drilling

8% LNG

3% Maintenance

Engineering: order backlog at period end

4,451 million euro

46% Oil & Gas

7% Refining

21% Chemical complexes

5% Field upstream facilities and pipeline

18% Infrastructure

3% Energy, environment and other


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Financial and operating performance

In 2005, Eni had consolidated revenues of o73.7 billion,a net profit of o8.8 billion and a return on capitalemployed of 19.5% (16.6% in 2004).Debt to equity ratio dropped to 0.27 (0.29 in 2004).The strengthening of profits and the sound balancesheet structure meant the company was able todistribute to shareholders a cash dividend of o1.10 pershare for 2005, a 22% increase on 2004. Total

Revenues for the Exploration & Production sector(o22,477 million) rose by o7,131 million compared to2004, which is a 46% increase. Operating profit(o12,574 million) grew by 54%. These positive resultsare attributable to the trend of the price of the barrel inUSD and to the growth of marketed production ofhydrocarbons.Daily equity production of hydrocarbons reached 1,737kboe, in line with the annual increase target of 4% peryear, which will allow a production rate of 2 Mboe/dayto be reached by 2009. Production rose by 113 kboe,equal to 7%. The increase in production was madepossible by new oilfields in Libya, Angola, Iran, Algeriaand Kazakhstan. Proved hydrocarbon reserves reached6,837 million boe, with a reserve life index of 10.8 years;meanwhile, the mining portfolio consists of 1,041exclusive or shared rights for exploration anddevelopment of fields in 34 countries. During thecourse of 2005, new fields were discovered offshore inthe Gulf of Mexico and the China Sea. The developmentof the South Pars gas field in the Iranian waters of the

The net profit of o8.8 billion achieved in 2005 is a new record

Main operating data

Exploration & Production 2003 2004 2005Proved reserves of hydrocarbons at period end (Mboe) 7,272 7,218 6,837Reserve life index (years) 12.7 12.1 10.8Daily hydrocarbon production (kboe) 1,562 1,624 1,737

shareholder return thus rose to 35.3%, compared to28.5% in 2004. Pay-out stands at 47%.Capital expenditure made in 2005 amounts to o7,414million, of which 91% was in the Exploration& Production, Gas & Power and Refining & Marketingsectors.

Persian Gulf was successfully completed, as was that ofthe K2 oilfield in the Gulf of Mexico. The Darquainoilfield in Iran was inaugurated; production began in theKissanje and Dikanza oilfields in offshore Angola.Exploration licenses were acquired in India, Alaska andLibya and agreements were reached for constructing anoil pipeline that is to link the Black Sea with theMediterranean.Capital expenditure totals o4,964 million and mainlyconcerns development investments, particularly inKazakhstan, Libya, Angola and Egypt. As for investmentsin exploration research (o656 million), the activitiesmainly concerned Norway, Egypt, Gulf of Mexico, Braziland Indonesia.


14

Revenues in the Gas & Power sector amount too22,969 million, with an increase of o5,667 million onthe previous year, equivalent to 33%. Operating profitreached o3,321 million. These positive performancesare also due to the growth in volumes marketed anddistributed and the increase in the result of transportactivity in Italy and abroad.Marketed volumes of natural gas rose by 9% comparedto 2004 (91.15 Gm3), particularly in Spain, France,Turkey and Germany.The target for 2009 is to reach 50 Gm3 of gas marketedabroad. In Italy, sales of natural gas rose as an effect ofthe growth in national demand, and gas being morewidely used in power generation in EniPower powerstations. In 2005 an agreement was entered into withSonatrach for the expansion of the Trans TunisianPipeline Co (TTPC) gas pipeline, which transportsnatural gas from Algeria to Sicily. The agreement willmake it possible to increase the pipeline’s carryingcapacity by 3.2 Gm3 from 1 April 2008, and by another3.3 Gm3 from 1 October 2008.The Trans Austria Gasleitung (TAG) pipeline, whichtransports Russian gas to Italy, will also be expanded.From 1 October 2008, the increase will be at least 3.2Gm3 per year.Cameron terminal in the USA, of which Eni owns a 40%share, will have its regasifying capacity increased.

As for electricity production sold, there was a 64%increase on 2004, reaching the level of 22.77 TWh. Thisincrease is due to around 1.2 gigawatt of generationcapacity becoming operational in the new groups at thepower stations in Mantua and Brindisi, and the groupsalready installed in Ravenna and Ferrera Erbognone.Installed capacity as of 2005 is 4.5 gigawatt.Capital expenditure in 2005 for the Gas & Power sectortotaled o1,152 million and concerned in particular thedevelopment of the transmission and distributionnetwork for natural gas in Italy and the continuation ofthe construction program for combined cycle powerstations.

Main operating data

Gas & Power 2003 2004 2005Sales of natural gas to third parties (Gm3) 69.49 72.79 77.08Own consumption of natural gas (Gm3) 1.90 3.70 5.54

71.39 76.49 82.62Sales of natural gas of affiliatesand relevant companies (Eni’s share) (Gm3) 6.94 7.32 8.53Total sales and own consumption of natural gas (Gm3) 78.33 83.81 91.15Natural gas transported on behalf of third parties in Italy (Gm3) 24.63 28.26 30.22Electricity production sold (TWh) 5.55 13.85 22.77


15

Revenues for the Refining & Marketing sector(o33,732 million) rose by 29% compared to 2004.Operating profit totaled o1,857 million, with anincrease of o777 million on 2004 (72%). These positiveresults are due to the increase in the refining marginand the increase in refining and commercial activity inItaly and the rest of Europe.Refining throughputs on own account rose by around3% (36.7 Mt in 2005), due to increased processing in theTaranto and Livorno refineries. The utilization ofbalanced capacity in own refineries was 100%.Sales of refined products in Italy and abroad droppedslightly compared to 2004 (51.63 Mt). This decreasecan be attributed to the drop in national consumption;however, the effect of this was in any case compensatedfor by the increased efficiency of the distributionnetwork. In the rest of Europe, however, the trend ofgrowing volumes continued, thanks to acquisitions inGermany, Spain and the Czech Republic. The IP brandfuel distribution network was sold during 2005.Capital expenditure in the Refining & Marketing sector(o656 million) was mainly focused on improving therefining capacity, strengthening the refined productsdistribution network and building new service stationsin Italy.

In the Petrochemicals sector, revenues totaledo6,255 million, up by o924 million on 2004 (equal to17%). Operating profit was o202 million. Thisimprovement in financial results was essentially due tothe increase in product margins and the improvementof industrial performance.Product sales rose by 4% (5,376 thousand tonnes)thanks to increased sales in the intermediate, aromaticand olefine businesses. Chemical production slightlyincreased from 2004 (7,282 thousand tonnes), despitesome plant shutdowns and the negative trend ofdemand.Capital expenditure totaled o112 million and wasconcentrated particularly on maintenance andimprovement of the efficiency of plants interventions,environmental protection and compliance with healthand safety legislation.

Main operating data

Refining & Marketing 2003 2004 2005Refined products available from processing (Mt) 33.52 35.75 36.68Standard capacity of wholly-owned refineries at period end (kbbl/d) 504 504 524Utilization rate of standard capacity of wholly-owned refineries (%) 100 100 100Sales of refined products (Mt) 50.43 53.54 51.63Service stations at period end (in Italy and outside Italy) (number) 10,647 9,140 6,282Average throughput Italy (Agip brand) + abroad (kl/y) 2,109 2,488 2,479


16

Revenues for the Oilfield Services Construction andEngineering sector totaled o5,733 million (+1%).Operating profit was o307 million, with a 51% increaseon 2004. This positive performance is due to newforeign contracts being initiated.The order backlog at end of 2005 was o9,964 million.During the year, Snamprogetti was awarded contract forbuilding the treatment plant for liquids from natural gas(LNG) in the industrial complex at Ruwais in the UnitedArab Emirates and the contract for a joint venture withthe Canadian company SNC-Lavalin, to build threeplants for the hydrotreatment and conversion of heavycrudes in Canada.

Saipem won contracts for construction and drillingactivities in various countries, including Kazakhstan,Saudi Arabia, Nigeria and Angola. The contracts are forOnshore and Offshore Construction and Drilling.Capital expenditure (o349 million) mainly concernedthe Construction and Drilling activities, in particular forthe maintenance and upgrade of equipment and forimproving operational structures in Kazakhstan andWest Africa.

Main operating data

Petrochemicals 2003 2004 2005Production (kt) 6,907 7,118 7,282Sales (kt) 5,266 5,187 5,376

Oilfield Services Construction and Engineering 2003 2004 2005Orders acquired (Mo) 5,876 5,784 8,188Order backlog at period end (Mo) 9,405 8,521 9,964


17

The economic dimension of HSE

In 2005, HSE expenditure and investments totaledo1,496.7 million, an increase of 33.1% on the previousyear. The largest item was current expenditure (59.8% ofoverall expenditure), which totaled o895.7 million in2005.Over two thirds of total HSE expenditure (71.2%),o1,065.6 million, was spent on environmentalprotection projects (prevention and mitigation ofpollution risks and environmental restoration), whilethe percentages for safety and for health of employeeswere 26.1% and 2.7% respectively.Through its operational divisions and subsidiaries, Eni isengaged in businesses that differ in terms of type andcomplexity. The differences in the environmentalimpacts deriving from industrial activities and thepotential risks for the health and safety of employeesthus determine variations in HSE expenditure.Three quarters of HSE expenditure are concentrated inthe sectors of exploration and production (29% of Eni’stotal), refining and marketing (24.1%) and the Otheractivities sector (23.6%), which includes Syndial’sactivity of environmental qualification of abandonedsites.In addition to investments and current expenditure,each year Eni allocates a part of its financial resources tothe site restoration and abandonment reserve and theenvironmental risks reserve. These two items accountfor 62% of the provisions for risks and charges (o7,679million).The site restoration and abandonment reserve, whichtotaled o2,648 million (o1,967 million in 2004) and isan allocation which embraces the costs estimated to beincurred at the end of hydrocarbon productionactivities for shutoff of wells, removal of structures andrestoration of sites.The environmental risk reserve, at o2,103 million(o1,649 million in 2004), mainly covers estimated costsrelating to environmental actions that are required bylegislation and regulations.

1,600 million euro

1,200

800

400

2003 20052004

Eni - HSE expenditure and investments

Investments

Current expenditure

1,600 million euro

1,200

800

400

2003 20052004

Eni - HSE expenditure breakdown

Health

Safety

Environment

HSE expenditure by sector of activity

29.0% Exploration& Production

8.1% Gas & Power

24.1% Refining & Marketing

11.1% Petrochemicals

4.1% Oilfield ServicesConstructionand Engineering

23.6% Other activities

Selected economic and financial indicators 2005 (million euro)

Net sales Operating Capital HSEfrom profit expenditure investments

operations (1) and expenditureExploration & Production 22,477 12,574 4,964 435Gas & Power 22,969 3,321 1,152 121Refining & Marketing 33,732 1,857 656 360Petrochemicals 6,255 202 112 165Oilfield Services Construction and Engineering 5,733 307 349 62

(1) Before elimination of intersegment sales.


18

In the E&P sector, from 2004 onwards only the HSEexpenditures of the associated companies in which Eniacts as operator are taken into account, independentlyof the equity held. For this reason, the 2004 and 2005figures cannot be compared with those of 2003, whenexpenditure was still calculated according to the equityowned in the joint venture.In 2005, HSE expenditure for the E&P Division totaledo434.8 million, with an increase of 65.2% on theprevious year. 65% was spent on investments (o283.3million), while current expenditure totaled o151.5million. The increase is due essentially to a strongincrease in investments made by the associatedcompany Agip KCO, in particular for safety expenditurefor equipment and tools and environmentalexpenditure for building new plants.

In 2005, HSE expenditure for the G&P Division totaledo121.3 million, an 21.1% increase on the previous year.Current expenditure, equal to o38.1 million, made up31.5% of the Division’s total HSE expenditure.Investments totaled o83.1 million (a 28.9% increase on2004) and were mainly due to landscape protectionactivities and environmental restoration following thelaying and maintenance of gas pipelines.The G&P sector has low HSE expenditure, due to theintrinsic “clean” quality of natural gas.

500 million euro

300

400

200

100

2003 20052004

G&P - HSE Expenditure and investments

Investments

Current expenditure

500 million euro

300

400

200

100

2003 20052004

E&P - HSE expenditure and investments

Investments

Current expenditure

120,000 ktoe

(1) Considers 100% of net production from operated activity.

million euro 500

90,000 375

60,000 250

30,000 125

2003 20052004

E&P - Hydrocarbon production and HSE expenditure (1)

Hydrocarbon productionHSE expenditure

100 140billion m3 million euro

75 105

50 70

25 35

2003 20052004

G&P - Sales of natural gas to third partiesand own consumption and HSE expenditure

Sales of natural gas to third parties and own consumption

HSE expenditure

Health Safety Environment investments and expenditure 2005 (million euro)

Health Safety Environment TotalExploration & Production 13.77 189.00 231.99 434.76Gas & Power 3.48 20.13 97.66 121.27Refining & Marketing 3.24 63.80 293.04 360.08Petrochemicals 5.96 61.65 97.89 165.50Oilfield Services Construction and Engineering 8.63 36.18 16.93 61.74Other activities 4.91 20.33 328.09 353.33Eni total 39.99 391.09 1,065.60 1,496.68


19

In the R&M sector, HSE expenditure for 2005 reachedo360.1 million, a 19.0% increase on the previous year.Current expenditure totaled o200.2 million (o150.1million in 2004), while investments were o159.9million, compared to o152.4 million of the previousyear. Above all, environmental expenditure rosefollowing the start-up of major projects to protect soilsand groundwater, for energy recovery, for recyclingindustrial water and for wastewater compliance withlegislative requirements.

Health Safety Environment investments and expenditure/Operating data 2003 2004 2005

Exploration & ProductionHSE expenditure/Hydrocarbon production (1) (o/toe) 1.83 1.73 2.51Gas & PowerHSE expenditure/Sales of natural gas to third parties and own consumption (o/103 m3) 1.10 1.31 1.47Refining & MarketingHSE expenditure/Sales of refined products (o/t) 4.28 5.65 6.97PetrochemicalsHSE expenditure/Production (o/t) 24.65 22.50 22.73Oilfield Services Construction and EngineeringHSE expenditure*100/Order backlog at period end (%) 0.41 0.44 0.62

(1) Considers 100% of net production from operated activity.

500 million euro

300

400

200

100

2003 20052004

R&M - HSE expenditure and investments

Investments

Current expenditure

60 400million tonnes million euro

45 300

30 200

15 100

2003 20052004

R&M - Sales of refined products and HSE expenditure

Sales of refined products

HSE expenditure

Titolo 1° livello

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / H S E G OV E R N A N C E

Model of environmentalsustainability

An approach to sustainability based on all possibleinstruments to address this issue – as disciplinedmanagement systems, strategically focused projects,research and innovation, dialogue with stakeholders – isthe path to follow if a leading role is to be played in theenergy industry.To achieve such a complex and dynamic balance, Eniconforms to the following guidelines:• encouraging corporate growth strictly in compliance

with the Code of Conduct and the rules ofgovernance;

• protecting environmental receptors – air, water, soil –from potentially irreversible impacts beyond theircarrying capacity;

• precautionary principle;• intergenerational equity;• rational use of non-renewable resources;• accounting to and communication with stakeholders

on environmental performances.Eni is committed to providing its stakeholders with anintegrated vision of its industrial project, whichever maybe the areas of special interest.Communication and dialogue are the basis for progresstoward sustainability.Through a careful assessment of HSE problems, Eni hasbeen able to pinpoint and analyze on an ongoing basisthe sustainability agenda pertaining to the sectorswithin which it operates.

The challenge of sustainability is represented by the balance between interdependentsocial, environmental and economic needs

20

HSE governance

21


HSE Policies

When carrying out its activities, the aim of Eni SpA andits controlled companies1 is to guarantee the health andsafety of its employees, local communities, contractorsand customers, to protect the environment and ensurepublic safety on the basis of the following principles:

• industrial and commercial activities must bemanaged in strict compliance with regulations andoperating procedures established for the sectors ofactivity;

• the adoption of principles, standards and solutionsthat constitute international best practices inbusiness for the protection of health, safety, theenvironment and public safety; to this end thecompanies must implement systematicbenchmarking processes;

• operational management must be based onstate-of-the-art criteria in terms of environmentalprotection and energy efficiency and the objectivemust be pursued of improving health and safetyconditions according to practices and procedureswhich are also agreed with trade unions;

• operational management must be subject to constantauditing in all sectors;

• research and technological innovation must aim atpromoting products and processes which areincreasingly compatible with the environment andwhose content reflects the constant attention paid tothe health and safety of customers and employees;

• personnel training and the exchange of experienceand information must be considered fundamental

tools in order to achieve HSE objectives, with a viewto the continuous improvement of prevention andprotection standards;

• employees, when carrying out their duties, must beactively involved in the process of HSE safeguards;this, in the interests of their colleagues and the publicat large, as well as in their own interests;

• employees and trade unions, authorities and thegeneral public must be informed periodically aboutthe results achieved in terms of environmentalprotection, health and safety;

• an active part must be played in scientific-technicalcircles and business associations to promote scientificand technological developments aimed at protectingthe environment and safeguarding resources;

• when requested, cooperation must be ensured withcompetent authorities regarding the preparation oftechnical regulations and guidelines concerning HSEissues;

• the foregoing principles must be reviewed constantlyand their application monitored periodically.

Besides considering the protection of health, safety andthe environment as a priority corporate objective, thecompanies are actively engaged in contributing, withtheir respective technological know-how andprofessional skills, to the well-being and improvementof the quality of life of the communities in which theyoperate.

15 November 19992

(1) Controlled companies include the Exploration & Production, Gas & Power and Refining & Marketing Divisions that are considered in the same way as thecompanies.(2) Taken from the “Group Guidelines for the protection of health, safety and the environment and public safety”, circular No. 98 dated 15 November 1999,signed by the Managing Director.

22


Health

Safety

Environment

C O M M I T M E N T S

› Preventing health risks in the workplace and in thesurrounding areas

› Contributing to the fight against endemic and epidemicdiseases entailing serious social consequences

› Drawing up schemes for the management of healthemergencies

› Preventing workplace injuries

› Maintaining standards of excellence in the safetymanagement

› Preventing oil spills in transport and distribution

› Strengthening the environmental management system

› Mitigating atmospheric greenhouse gas emissions bymeans of the Flexible Mechanism of the Kyoto Protocol

› Limiting the environmental footprint of activities whilesafeguarding biodiversity

› Developing fuels with a low environmental impact

Commitments, Achievements and Goals

23


A C H I E V E M E N T S

› Information system for the management of occupational healthand industrial hygiene (pages 37-39-40)

› Employees’ sensibilization on sexually transmitted diseases(page 41)

› Intervention procedures for health emergencies (AIDS, TB,Ebola) (page 42)

› Launch of international partnerships for the fight againstendemic and epidemic diseases in E&P sector (page 41)

› Decrease, compared to 2001, in Eni’s injury frequency index of51% and in the severity index of 35% (pages 46-47)

› Decrease in the injury indexes in E&P Division (page 48)

› Extension of the zero injury trend in some plants and refineriesof R&M Division (page 50)

› Emergency response plans (pages 45-50)

› Tightening procedures for the selection of tankers (pages 46-86)

› HSE training plan differentiated according to standard profilesand as function of specific goals (page 31)

› Increase in auditing of 20% and, compared with 2004, in thefollowing certifications: ISO 14001 by 11%, EMAS by 25% andOHSAS by 14% (page 27)

› Adoption of HSEQR integrated management systems andenvironmental management systems compliance with the ISO14001 standard for the foreign E&P affiliated companies (pages24-26)

› Implementation of the methodology of the Project HSE Reviewfor the main E&P projects (page 24)

› New HSE Management System in R&M to be implemented inItaly and abroad (page 25)

› Completion of the ISO 14001 certification for the whole refiningand logistics departments of R&M (page 27)

› Adoption of Eni GHG Protocol and implementation of thedatabase for the mapping of site emission sources (page 77)

› Participation of Eni in the Emission Trading (pages 71-74-75-77)› Carrying out of the CDM Kwale-Okpai project (pages 3-72-73-77)› Reduction of energy consumption and atmospheric emissions

in the G&P Division (page 57)

› Adoption of advanced technologies to limit the soil and subsoilimpacts of pipe-laying (pages 64-65-66-82)

› Characterization of biodiversity through biological markers(pages 79-80-81)

› Continuing implementation of double seals for all hydrocarbontanks in refineries and depots (page 69)

› Marketing of eco-friendly fuels (pages 11-78-88-89)

G O A L S

› Completion of the information system (HealthCard, E-learning, telemedicine for remoteoccupational health services)

› Further provision of health services to localcommunities

› Further improvement of injury indexes andmaintenance of the zero injury trend in plantsand refineries

› Improvement of safety indexes of contractingCompanies

› Further reduction of oil spills

› Implementation of an integrated HSE IT systemapplicable to the entire Group

› Completion of the ISO 14001 certification in themain sites and extension of the EMAScertification in the Group’s refineries

› Development of the portfolio of projects aimingat reducing CO2 emissions in installations subjectto Emission Trading

› Development of the portfolio of the CDM and JIprojects

› Extension of the use of biomarkers for theecotoxicological monitoring of the mainhydrocarbons exploration and production sites

› Completion of the interventions on tanks

› Further development of eco-friendly fuels(biofuel)

24


Within Eni Corporate, the Health, Safety andEnvironment Department directly reports to theManaging Director and is responsible for promoting theconstant enhancement of HSE performances and forencouraging an integrated approach to environmentalsustainability topics.Since its establishment in 2002, the HSE Departmenthas been contributing to rationalizing, through a set ofobjectives and through coordination, the HSE activitiescarried out in all operational units.Based on the Eni guidelines, the Divisions andCompanies identify the specific HSE policies,commitments and objectives while the business unitssistematically inform their employees of Eni’s HSEprinciples. Employees and contractors, on their part, arebound to guarantee the safety of operations, therespect for the environment and the quality of finalproducts.

Model of HSE Management SystemIn 2003 Eni drew up the Model of Management System(MMS) to safeguard health, safety, the environment andthe well-being of the public at large. The model is anoperational instrument which supports the continuousimprovement of HSE performances and is based on anannual cycle organized into planning and definingtargets, implementing the relevant operational plans,verifying the results through constant monitoring,auditing and periodic prearranged reporting andidentifying corrective actions. The cycle of constant

improvement ends with the review and definition ofnew objectives.With the MMS, Eni has made a reference available forthe HSE management systems of the Divisions andCompanies, which identifies principles and criteria towhich they must conform. These systems areautonomous but are linked to Eni via a predeterminedinformation flow that allows monitoring of HSEperformance and the achievement of objectives.

An HSE Integrated Management System has been inexistence for a long time in the E&P Division enabling toput into effect the policies in force. In 2004 it enacted thedirective “Organization of the HSE and Public SafetyIntegrated Management System” which outlines andupdates the requirements for the development of the HSEIntegrated Management System in Italy and abroad inaccordance with Eni’s MMS. The document also providesan update of the HSE policy complied with by the Division.The program is underway in the foreign affiliatedcompanies for the implementation of the HSEQR (HSE,Quality and Radioprotection) management systems.The E&P Division has adopted the methodology of theProject HSE Review for 74 out of 84 main projects in itsown sector.

Adoption of the Model of Management System isunderway in the G&P Division, for all business areas inorder to align, coordinate and aim towards theprinciples of sustainability in all operating sectors.

HSE Governance and Management System

HSE Department organizational chart

GENERAL MANAGEMENTR&M DIVISION

GENERAL MANAGEMENTG&P DIVISION

HEALTH SAFETY

HSE DEPARTMENT

ENVIRONMENT HSE SERVICES

GENERAL MANAGEMENTE&P DIVISION

DIVISION’S HSEDEPARTMENT



SITE’S/SUBSIDIARY’SHSE OFFICE



MANAGING DIRECTOR

Model of Management System - Structure and implementation

MANAGEMENT CONTROLS

PRIMARY ACTIVITIES

MONITORING AND REVIEWING

25


In 2005 the R&M Division defined the new HSEManagement System in line with Eni’s MMS and withthe new divisional HSE Policy updated in 2004. Asproved by such initiatives, the attention to HSE topics isan enduring element in the Division’s activities, whichfinds expression through the definition of:• the excellence of conduct in view of the continuous

improvement of HSE-related matters;• the cooperation among human resources and the

prompting of employees’ and contractors’ activeparticipation;

• the responsible and sustainable development of itsown activities;

• the attention to both internal and externalcustomers;

• the central role of people and the knowledge andexperience sharing.

Monitoring and ReportingWithin the MMS the monitoring and reporting systemof HSE performances is a key instrument in the controlof Eni’s HSE Management and in the evaluation of theperformances in relation to the objectives to beachieved.Over the years the quality and reliability of datacollected have considerably improved thanks to thecontinuous update of accounting methods, inaccordance with the current best practices and theinternationally recognized reporting standards. Theaccounting system is based on the “Manual of HSE DataReporting” which each Division and Company mustconform to, while maintaining specific data collectionsystems. Ad hoc instruments have been upgraded forareas of particular interest (health, accidents andinjuries, atmospheric emissions, etc.) which permit tohave a more frequent monitoring.

STRATEGIC POLICIES AND OBJECTIVES

CERTIFICATIONS OF MANAGEMENT SYSTEMS

HSE 4-YEAR AND ANNUAL PROGRAMS

ORGANIZATION AND RESPONSIBILITIES

STAFF TRAINING AND PARTICIPATION

PROCEDURES AND DOCUMENTATION

MONITORING

REPORTING

SYSTEM AUDIT, HSE SYSTEM VERIFICATIONSAND CONTROL OF HSE CONFORMITY

MANAGEMENT REVIEW

HEALTH, SAFETYAND ENVIRONMENTALMANAGEMENT

HSE RESEARCH& DEVELOPMENT

PLANNING ANDMANAGEMENT OF CHANGES

HSE KNOWLEDGE SHARING

RELATIONSHIPSWITH SUPPLIERSAND CONTRACTORS

RELATIONSHIPSWITH CUSTOMERSAND COMMUNITIESAND INFORMATION

EMERGENCYMANAGEMENT

ASSET MANAGEMENT

26


CertificationsThe certifications of management systems andoperational units according to the most advancedinternational standards have continued. In fact, by theend of 2005, a total of 155 certifications were obtainedagainst 133 in 2004.The certifications according to the ISO 14001 standardrepresent the majority, i.e. 82 of which 17 formanagement systems and 65 for individual sites. TheEMAS registrations are 5, the OHSAS certifications 8 andthe other certifications 60, mainly constituted byattestations of quality management systems (ISO 9001)and safety management systems (ISM - InternationalSafety Management) for the ships of the G&P Divisionand of Saipem.

In the E&P Division the certification program ofactivities abroad according to the ISO 14001 standardcarries on: at the end of 2005, the management systemsof Unità Geografica Italia and of many foreignsubsidiaries such as those in Congo, Ecuador, Egypt,Indonesia, Kazakhstan and Pakistan were certified.

In 2005 also continued the certifications ofmanagement and quality systems within theoperational units and the G&P Division.In the gas transportation sector, the environmentalmanagement systems of gas compression plants and ofthe regasification plant of LNG (Liquefied Natural Gas)are ISO 14001 certified. In the course of the year theimplementation of an environmental managementsystem certifiable to ISO 14001 standards for the entirenetwork of gas pipelines also continued.As for gas distribution, in 2004 Italgas obtained athree-year extension of the Certificate of Conformity ofthe Quality, Environmental and Safety IntegratedManagement System.The four LNG’s tankers for gas transportation are all SMS(Safety Management System) certified in compliancewith the ISM code, issued by the International MaritimeOrganization (IMO).

The trans -Tunisian pipelineservice company Sergaz (Sociétéde service du gazoductranstunisien), established byvirtue of the agreement betweenthe Tunisian government and Eni,is involved in the operation andmaintenance of the Tunisiansection of the Transmed gaspipeline. Transmed, constructedbetween 1977 and 1983, linksAlgeria to Italy across Tunisia andincludes an underwater section inwhich pipelines can reach a depth

of 640 meters. Doubled in sizebetween 1991 and 1994, the gaspipeline is altogether 2,580-kmlong and comprises eleven gascompression and gas pumpplants. The 370-km long Tunisiansection consists of two 48-inchdiameter pipes and is supportedby the compression plants ofFeriana, situated along theAlgerian border, of Sbikha and ofEl Haouaria in Cap Bon, the latterbeing also equipped with adispatch center and a

telecommunication system.The gas exiting from the ElHaouaria plant, situated by the seaand covering a 37-hectare area,reaches the entry terminal of theTransmediterranean PipelineCompany (TMPC), where it isredistributed through fiveundersea pipelines (three 20-inchdiameter and two 26-inchdiameter pipes), which link ElHaouaria to Sicily. In 1986 TMPCcharged Sergaz with the operationand maintenance management of

SERGAZ

27


In the electricity sector the commitment to reach anintegrated management system for industrial andcommercial activities has continued. The EniPowerplants in Brindisi, Livorno, Mantua, Ravenna and Tarantohave been ISO 14001 certified; the EMAS certificationfor the plants in Ferrera Erbognone, Mantua andRavenna is also underway and scheduled to becompleted in 2006.

In 2005 the R&M Division proceeded to progressivelyextend the certification of management systems to allcorporate activities and, in this respect, it is worthnoting the EMAS certification acquired, in 2005, by therefinery in Taranto, which followed those obtained bythe refineries in Livorno and Venice. The procedureshave kicked off for the EMAS certification of the refineryin Sannazzaro de’ Burgondi and the one in Gela, whichwill be completed in 2006.By the end of 2005 all the refining and logistic activitieswere provided with an ISO 14001 certified

environmental management system. The certificationprogram currently envisages the adoption of anenvironmental management system in commercialareas. In 2005 a first set of fuel distribution plants,situated in the commercial areas of Milan and Padua(Italy), were ISO 14001 certified.

180 number

135

90

45

2003 20052004

Eni - 2003 to 2005 certification trend

OthersOHSAS

EMASISO 14001

Certifications at the end of 2005

ISO 14001 EMAS OHSAS Others TotalExploration & Production 13 - 2 - 15Gas & Power 8 - 1 6 15Refining & Marketing 39 3 - - 42Petrochemicals 12 2 3 2 19Oilfield Services Construction and Engineering 5 - 2 43 50Other activities 5 - - 9 14Total 82 5 8 60 155

the terminal and of all onshoreplants and with detecting thetracing of undersea pipe-laying. Inthe terminal it is possible tomeasure the quantity of gastransported and to insert pigs forthe cleaning and the inspection ofthe pipes.

Since 1996 the organization ofSergaz, committed to the technicalinspection and use of the plants,has been expanding its operationsto include a departmentresponsible for tackling the mostimportant environmental, healthand safety issues.

During 2005 the preliminaryactivities were accomplished forthe implementation of a health,safety, environmental and qualityintegrated management system inconformity with the law in force inTunisia, the leading internationalstandards and Eni’s guidelines.

“The inspection carried out in the Cap Bon plant has allowed to tangibly evaluate Eni’s commitment to equip all itsforeign operational units with HSE organizational structures aligned, in the fulfillment of their tasks andresponsibilities, to the analogous assignments carried out in Italy.The HSE organization within the Technical Department of Sergaz has demonstrated, through its initiatives andprograms, to be able to pragmatically contribute to the attainment of Eni’s objectives and targets while fully applyingEni’s HSE policy to situations and realities differing from those regulated by the Italian law.”

URS Italia SpA


28

System and technical auditsSystem audit program has continued, which is intendedto evaluate the existence, completeness andfunctionality of the HSE management systems adoptedby the business units. In this view Eni has drawn up adetailed evaluation protocol named “Eni’s HSEEvaluation System”, enabling to assess the managementsystems adopted by Eni’s Divisions and Companies withrespect to the Model of HSE Management System.System audits spam over a three-year cycle and arebased on criteria of relevance and rotation of theaudited units. To date Eni has carried out six systemaudits, four of which were finalized in 2005 and intendsto carry out four more during 2006 thus completing thefirst cycle. A training program has been organized for

Total audits in 2005

Health Safety Environment Quality Integrated Integrated TotalHSE HSEQ

Exploration & Production 47 741 68 2 135 - 993Gas & Power - 8 84 3 22 147 264Refining & Marketing - 45 46 - 5 - 96Petrochemicals 1 5 5 - - - 11Oilfield Services Construction and Engineering 49 97 27 1,977 360 120 2,630Other activities 4 23 22 39 16 39 143Total 101 919 252 2,021 538 306 4,137

180 number

135

90

45

2003 20052004

R&M - 2003-2005 audit trend

Integrated HSEQIntegrated HSEQuality

EnvironmentSafetyHealth

280 number

210

140

70

2003 20052004

G&P - 2003-2005 audit trend



2005 Auditing by sector of activity


6.4% Gas & Power


0.3% Petrochemicals



5,000 number

3,750

2,500

1,250

2003 20052004

Eni - 2003-2005 audit trend



1,200 number

900

600

300

2003 20052004

E&P - 2003-2005 audit trend



E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O R T 2 0 0 5 / H S E G OV E R N A N C E

29

2005-2008, which will be addressed to the internalauditors of the HSE Corporate Department and whichwill aim at ensuring that audits are carried out moreeffectively.The business units have individually carried outtechnical audits, i.e. HSE and quality evaluationsintended to ascertain the conformity of managementsystems and of sites/plants to the law in general or tospecific regulations.These inspections are directly programmed andcoordinated by the Divisions and Subsidiaries. In 20052,116 HSE technical audits and 2,021 quality auditswere carried out, which 1,099 internal auditorsparticipated in.

HSE knowledge managementHSE personnelIn 2005 the HSE personnel numbered 2,618 full-timeequivalent staff (against 2,552 in 2004).Since professionalism is fundamental for the goodperformance of HSE management systems and for goodresults, Eni has developed a knowledge managementsystem intended to favor the synergy between theplanning and developing of HSE professionalism for thecritical business units activities and the programs ofknowledge management.

80,000 number

60,000

40,000

20,000

2003 20052004

Eni - Percentage of HSE staff per total number of employees

% 14.0

10.5

7.0

3.5

Employees at period end (1)

Percentage of staff (2)

14,000 number

Employees at period end (1)

Percentage of staff (2)

%

10,500

7,000

3,500

14.0

10.5

7.0

3.5

2003 20052004

E&P - Percentage of HSE staff per total number of employees

14,000 number

10,500

7,000

3,500

2003 20052004

G&P - Percentage of HSE staff per total number of employees

Employees at period end

Percentage of staff

% 14.0

10.5

7.0

3.5

14,000 number

10,500

7,000

3,500

2003 20052004

R&M - Percentage of HSE staff per total number of employees

Employees at period end

Percentage of staff

% 14.0

10.5

7.0

3.5

Eni’s HSE personnel at 2005-end

Employees (1) HSE staff (2) AuditorsExploration & Production 7,491 858 275Gas & Power 12,324 155 41Refining & Marketing 8,894 162 542Petrochemicals 6,462 196 40Oilfield Services Construction and Engineering 28,684 903 143Other activities 8,403 344 58Total (3) 72,258 2,618 1,099

(1) The data refer to the staff of consolidated subsidiaries at period end.(2) The data refer to the total HSE staff of consolidated and non-consolidated subsidiaries.(3) The data include the staff of the diversified business areas.

30


HSE professional modelEni considers HSE as fundamental in maintaining acompetitive advantage in the near and distant future.The issues involved are characterized by a high level ofdiversity affecting all business areas, operationaldecisions and organizational levels.In order to ameliorate the HSE organization andoptimize the professional development programs, in

2004 a project focusing on the “HSE ProfessionalModel” was launched, through which Eni defined theHSE Professional Family with a view to identifyingdistinct professional roles and expertise, strengtheningand configuring knowledge sharing and pinpointingjoint instruments for training, developing andmotivating the resources. The project, involving all HSEorganizations, also defined the professional roles withineach of the four families identified (Health, Safety,Environment and HSE Integrated Process) and, during2005, embarked on the census and assessment of theresources.

Structure of Eni’s Professional Model

HSE PROFESSIONAL FAMILIES

ROLES IN THE PROFESSIONAL FAMILIES

HEALTHFAMILY

SAFETYFAMILY

ENVIRONMENTALFAMILY

INTEGRATEDHSE PROCESSFAMILY

HealthManager

OccupationalHealth

IndustrialHygiene

SafetyOperationalManagement

SafetyStudiesand Analyses

SafetyTechnologies

EnvironmentalOperationalManagement

EnvironmentalStudiesand Analyses

EnvironmentalTechnologies

HSEManagementMethods& Systems

HSE ProjectManagement

HSEManagement

31

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O R T 2 0 0 5 / H S E G OV E R N A N C E

HSE trainingThe collaboration between Eni’s Health, Safety andEnvironmental experts on the one hand andprofessionals on the other has led to the completion ofa catalogue of training courses addressed to specificHSE topics. Such an instrument aims at promoting thediffusion and development of capabilities andknowledge on the matter, meeting Eni’s growingdemands linked to the spreading of the HSE culture andemphasizing proactive and responsible behaviors. Thedefined itineraries, differing from one anotheraccording to the positions covered, involve both non-HSE professionals and experts. The selected courses willpermit the latter to achieve the objectives described inthe HSE Professional Model.

In 2005 Eni’s employees attended HSE courses for atotal duration of 867,215 hours (compared with1,116,895 hours in 2004). The training on health andsafety related topics, although representing 95% of thetotal hours of HSE training, has undergone, compared to2004, a reduction of 24% attributable to the fact that in2004, in some foreign countries such as Iran andKazakhstan, safety training hit the highest point.A greater interest in environmental issues is highlightedby the total number of hours allocated to the relevanttraining, which has amounted to 46,839 with anincrease of 8% compared to 2004.In 2005 o6.2 million were spent on HSE training(against 8.8 in 2004).

1,200 thousands of hours

900

600

300

2003 20052004

Eni - 2003-2005 HSE training hours

Health and SafetyEnvironment

160 thousands of participations

120

80

40

2003 20052004

Eni - Participations in 2003-2005 training courses

Health and SafetyEnvironment

2005 HSE training hours by sector of activity

9% Exploration& Production

6% Gas & Power

5% Refining & Marketing

12% Petrochemicals

63% Oilfield ServicesConstructionand Engineering

5% Other activities

Total training

Employees HSE training hours HSE participationsExploration & Production 7,491 77,414 16,789Gas & Power 12,324 54,395 11,724Refining & Marketing 8,894 43,497 12,216Petrochemicals 6,462 105,124 26,146Oilfield Services Construction and Engineering 28,684 543,376 53,717Other activities 8,403 43,409 9,921Total 72,258 867,215 130,513

Eni - Breakdown of 2005 HSE training expenditure

11% Health

65% Safety

24% Environment


32

The spreading of the HSE cultureIn addition to the “traditional” training channels, Eniuses other instruments to disseminate the knowledgeof health, safety and environmental topics addressed toemployees but also to external interlocutors. Amongthese, Eni is greatly committed to students, bothentering the job market and the younger ones.A basic catalyst for the spreading and sharing of the HSEculture is Eni’s website in which a dedicated section hasbeen created that contains an in-depth analysis ofsustainable energy, Eni’s environmental commitmentand the HSE guidelines and results achieved.Employees find the HSE.net portal of great use. It is, infact, one of the most used applications within thecorporate intranet, since it aims at providing traininginstruments and refresher courses to all those who, atEni, have to tackle HSE-related problems. In 2005 it wassupplemented with a special section dedicated toClimate Change.

The E&P Division has set up the KnowledgeManagement Portal intended as an instrument for thespreading of corporate knowledge. The intranet portalincludes a section focusing on Health and allowing toaccess internal and external sources of comprehensiveinformation.

In collaboration with the Eni EnricoMattei Foundation (FEEM) andsponsored by the Ministry ofEducation, University and Research

and the Ministry of Environment and Territory, Eni hascreated www.eniscuola.net addressed to junior highschool students. The portal provides documents,videos, charts, exercises and games aiding to discoverthe world of energy and natural resources. Descriptionsare also contained of the impact that human activitiesproduce on the environment and resources through theexploration of energy sources and of all the advantagesand drawbacks related to sustainable growth stemmingfrom their use.

Post-graduate trainingEni has also embarked on post-graduate projects bothdirectly through Scuola Enrico Mattei and indirectlythrough the combined network of relationships withprestigious universities. The aim of such programs is tofulfill the needs of specific categories of corporateprofessionals.

Through Scuola Enrico Mattei which, since itsestablishment in 1957, has carried out research workand organized post-graduate training, every year Enigets involved in the planning of the MEDEA MASTER

(Master in Management and Economics of Energy andthe Environment). The main characteristics of theMaster, originating in 1991 from the reorganization ofthe school’s educational activities, are its integration ofenergy and the environment and its internationality.From its establishment to date the school has trainednearly 2,500 students 55% of whom are foreigners from100 countries. The environmental topic has becomeincreasingly important and is studied in detail in thelarger context of such economic and energy issues asthe economic growth, the reform of the energy marketand sustainability. In this respect the high number ofworks carried out by students in relation to theEuropean Union’s environmental policies, the studieson biodiversity and on the management of waterresources and the analysis on the environmentalaccounting of the main energy companies is particularlyinteresting.


33

A number of projects carried out in 2005 incollaboration with a few Italian UNIVERSITIES for thetraining of HSE professionals are also noteworthy.At the Polytechnic of Turin five fellowships wereassigned by Eni in view of the second edition of theMaster in “Reliability, Safety and Maintenance ofComplex Technological Systems”.Under sponsorship of the Italian Navy, two fellowshipswere assigned at the University of Pisa to youngEngineering graduates for the Master in “UnderseaElectroacoustics”. The educational programencompasses the issues related to underseaelectroacoustic signals and their application for thecreation of systems and plants suitable for the controlof the environment and natural resources, for theenvironmental decontamination, for undersea activitiesconnected to the installation and maintenance of oilpipelines and telecommunication links and for thedevelopment of surveying and localizing systems to beutilized in the sea surveillance and protection.

Eni has also assigned 15 fellowships for a postgraduatecourse in Energy Engineering - OrientationHydrocarbons at the Polytechnic in Milan. The coursedeals with topics related to the technologies for theexploration, processing, transport, distribution and useof hydrocarbons while focusing on the environment,territory and safety management.The Eni Master Project, now at its third edition,embraces the Master in Process Engineering at theUniversity of Bologna and the Master in PetroleumEngineering at the Polytechnic of Turin, which analyze,in specific modules, the issues connected to industrialsafety, health protection, risk assessment, safety systemmanagement and the techniques and technologies forthe environmental protection.

Opinion sharingThis report is the most comprehensive instrument forcommunicating Eni’s HSE commitment, objectives andresults. With the passing of time its presentation haspermitted to open dialogue with Eni’s main HSEstakeholders.On 14 July 2005 the third edition of “Eni’sEnvironmental Commitment: Opinion sharing”conference took place in Rome, a “round table” aimedat promoting the discussion with and among thevarious participants. In each of these events, it has beenattempted to guarantee the participation of diverseviewpoints, the involvement of stakeholders interestedin Eni’s HSE improvement and the continuity in time ofthe participations. Starting from the analysis of the HSEReport, this kind of confrontation permits to know thestakeholders’ real perception of Eni’s way of operating inthe HSE sector and to identify areas of improvementwhile trying to take in the comments made and theproposals put forward by the various interlocutors.The 2005 edition was attended by the Ministry ofEnvironment and Territory, the Italian EnvironmentalAgency, a number of trade unionists, two environmentalassociations (WWF and Legambiente),Cittadinanzattiva, a university teacher, twosustainability rating companies (Avanzi SRI Researchand SAM) and FEEM.

Charts of students at Scuola Enrico Mattei from its establishment (1957) to 2005

45% Total Italian Students

55% Total Foreign Students

12.2% South America

1.2% Central America

2.1% North America

0.4% Australia

11.7% Asia

1.5% Middle East

9.8% Africa

16.1% Europe

34

Health

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / H E A LT H

Global approach, local attention

In Eni’s diversified operating contexts, the integratedand coordinated approach to health protection is felt asa necessity.The procedures for the coordination of those in chargeof health services in the business units represent amoment of sharing of individual experiences aimed atfinding optimal solutions to common problems and inaccordance with management autonomy and thepeculiarities of the various business activities.By applying the methodology of a technical andscientific consensus to the diverse topics, thecoordination group shares policies, procedures and

instruments appropriate for ensuring the protection ofall workers’ health in the numerous living and workingconditions and, at the same time, assures thecommunities that the highest care is being taken for theenvironment and territory, while minimizing the impactexerted on them by industrial activities.The health management within Eni is characterized by:• clear policies;• standardized methodologies;• knowledge sharing;• optimal exploitation of internal expertise.

The commitment to health protection and safeguard stems from the top value given tohuman resources


35

The health management system is based on a cyclicalprocess of evaluation of impacts, identification ofpurposes (policies and sector’s objectives),accomplishment of interventions (health centers,telemedicine, international cooperation andagreements), monitoring (system audit), definition ofnew targets and improvement of areas referring to:• workers’, contractors’ and communities’ health

protection;• prevention of occupational injuries and diseases;• promotion of a healthy life style and behavior in the

workplace.

Assessment and prevention

When planning multifaceted industrial activities, oftenin extreme geo-climatic conditions and in remotelocations, priority is given to the assessment of healthrisks in workplaces and in working situations. Theassessment is led alongside the evaluation of the impactof the project on the health of the communitiesconcerned.Physical, chemical and biological impacts depending onwork activities are among the health-affecting factorstaken into account together with those causes, whichare connected to the environment and the worker’sliving conditions, including elements potentiallyhazardous from a psychological and social point of view.The preliminary analysis allows to outline a corporatehealth plan and to arrange the organizational structuremost appropriate to the requirements of each project.Along the operations, monitoring campaigns forspecific agents (768) are conducted which involvenumerous environmental surveys (13,459) complyingwith international standards and local regulations. Asimilar monitoring process is carried out in workplaceson air quality, microclimate and air-conditioning plants(164 surveys).Drinking water analyses (9,613) are also noteworthyespecially in the sectors of R&M, Oilfield ServicesConstruction and Engineering and E&P, to whichindividual checkups through the use of detectors ofsystematic individual exposures are added; in 2005, forinstance, 4,526 samplings with personal dosimetry werecarried out.Sanitary surveillance, which in 2005 involved over38,000 employees, is perfected through:• the information to and the active and receptive

participation by trade unions and individual workers;• the tight integration between the continuous

monitoring of workplaces and the sanitary

surveillance of risk-exposed employees, by means ofadvanced and extremely sensitive analyticaltechniques in order to be able to obtain early testsand make early diagnoses. In 2005 over 44,000medical examinations and more than 143,600laboratory and instrumental tests were carried out;

• the upgrading of health centers in terms of medicalexpertise and monitoring systems.

Eni - Typology of environmental surveys in 2005 (1)

(1) Excluding water drinkability analyses.

18% Noise

5% Ionizing radiations

2% Non-ionizingradiations

4% Microclimateand lighting

3% Particulate matter

3% Biological agents

65% Chemical agents

2005 Environmental surveys by sector of activity


1% Gas & Power


9% Petrochemicals


12% Other activities

2005 Medical examinations by sector of activity


12% Gas & Power


15% Petrochemicals


10% Other activities


36

Management

The changing conditions of work activities and therequirements for an ever-increasing business flexibilityand motivation drive corporate health services towardsmultidisciplinary, competitive, efficient and high-qualityoperational models.Health management is based on a global systemconstituted by 339 HEALTH UNITS, located in all majorproduction sites in Italy and abroad as well as on ships,which provide first aid services and medical support forthe employees’ and the contractors’ health protection.The business units benefit from a MEDICAL STAFF of theirown (559 operators in 2005) dealing with occupationalhealth, on-site first aid and primary health assistance inremote abroad areas. In Italy, in accordance with the lawin force, workers’ sanitary surveillance is entrusted toover 100 “competent doctors”.

In some foreign countries Eni’s health centers alsoprovide aid to the families of local workers andexpatriates in full collaboration with the local publichealth institutions. This extended initiative of medicalassistance which, in 2005, witnessed approximately120,000 checkups and examinations on people rangingfrom employees to contractors, turns out to be veryimportant in the relationship with the communities.In those locations where Eni does not provide a healthward, service agreements are negotiated with othercompanies, within the same industry and operatinglocally, or assistance is asked for to external operators.The agreement entered into with International SOSensures the provision of qualified health services for alloperational needs and in any part of the world andguarantees assisted evacuations and repatriations incases of severe health emergencies.

Eni provides operational assistance and organizationalsupport to the business units without an internal healthcenter of their own thus emphasizing the synergiesamong the group’s companies. By way of example it hascontributed to the creation of a special health office

Summary of health surveillance activities in 2005

Health service Medical Diagnosticstaff examinations exams

Exploration & Production 427 14,031 49,298Gas & Power 54 5,287 10,464Refining & Marketing 56 4,620 7,742Petrochemicals 97 6,463 14,978Oilfield Services Construction and Engineering 256 9,061 48,342Other activities 124 4,540 12,786Total 1,014 44,002 143,610

800 number

600

400

200

2003 20052004

Eni - Corporate health centers

Italy Abroad

2005 Health centers by sector of activity


7% Gas & Power


3% Petrochemicals


4% Other activities

Eni - Health service staff in 2005

10% Health managementphysicians

17% Occupational healthphysicians

29% First aid physicians

56% Medical staff

35% Nursing staff

9% Other health servicepermanent staff


37

and to the outlining of corporate health programs forboth Snamprogetti and the G&P Division.

In 2005 a substantial health TRAINING program waslaunched for a total duration of 47,000 hours and withthe involvement of 30,300 people including employees,contractors, medical and nursing staff.

The E&P Division, operating in 33 countries with 151health centers, is provided with a health managementsystem complying with the OHSAS 18001 standards andbased on three guiding principles. The first pertains tothe tactical approach to health management founded ona preliminary analysis of health risks and the effectsbrought about by extraction activities. During 2005 sevenHealth Impact Assessments were completed in Australia,Kazakhstan and Italy which, in defining the interventionareas, saw the participation of all parties concerned.The second principle concerns health prevention andpromotion activities. Prevention, while directlycomplying with local regulations and with Eni’sstandards, is carried out through a series of interventionplans ranging from the diagnoses, treatment andprevention of occupational diseases and injuries to themonitoring and detection of causes; from responseplanning to first aid emergencies.In 2005 there was a considerable rise in the sanitarysurveillance activities through the accomplishment of14,031 medical examinations and 49,298 diagnosticexams. Health promotion is based on a close analysis ofthe employees’ and communities’ needs as illustrated bythe accomplishment of 78,000 health examinations (ofwhich 8,650 on contractors and community members)and the administration of 9,652 vaccinations (of which2,431 to third parties). Such promotion activities asscreening, information campaigns on healthy diets,sexually transmitted diseases prevention, healtheducation, first aid and so forth are equally important. In2005, 173 campaigns took place in 13 countries whichwitnessed the participation of over 180,000 people andwere complemented by publications like Health TravelGuide, Guide to Vaccinations and Guide to Malaria andOther Insect-Borne Diseases. Soon to be publishedhandbooks are The Travel Guide to Safe Food and Waterand The Guide to Personal Fitness and Better Health.To support the health management system based on riskassessment, an IT program has been developed whichdeals with the issues related to medical assistance andsanitary surveillance. The Individual Health ManagementIT System (GIPSI - Gestione Informazioni PrestazioniSanitarie Individuali) enables the health performancemanagement and elaboration for all employees in Italyand abroad, in full respect of their privacy.

The third principle rests upon the definition ofminimum standards (procedures and guidelines) whichconstitute benchmark criteria for the implementationof the health management system in all subsidiaries.The Division has issued a guideline which regulates thetraining and aims at improving the qualification of themedical and nursing staff working abroad in conditionsoften inadequate for lack of local medicalinfrastructures. In 2005 a health training program wasenforced for a total duration of 11,954 hours which, allconsidering employees, contractors and medical staff,was attended by a total of 7,312 people.The halving in the number of international healthrepatriations, which last year dropped from 16 to 7, isone of the indicators of the effectiveness and quality ofhealth and medical assistance activities recentlydeveloped in foreign countries.

2005 Health training activities by sector of activity


36% Gas & Power


2% Petrochemicals


2% Other activities

25 million euro

15

20

10

5

2003 20052004

E&P - Health expenditure

Investments

Current expenditure

E&P - Health expenditure breakdown for 20054.6% Equipment and tools

1.8% Environmental surveys

70.0% Health and hygienemanagement

0.4% Researchand development

16.4% Sanitary surveillance

0.1% Legislativerequirements

0.2% Communication

2.5% Training

4.0% Other


38

Operative in 32 countries, the G&P Division isstructured in such a way as to envisage that, for riskassessment, identification of solutions and elaborationof procedures, the ones responsible for healthmanagement be assisted by the Prevention andProtection Services.The competent doctors, in accordance with a protocolof targeted clinical tests, implement the sanitarysurveillance programs on risk-exposed workers. Toprovide health assistance, the Division makespredominant use of Sieco’s medical staff and structures.In 2005 5,287 medical examinations and 10,464

diagnostic exams were completed while 181environmental surveys were carried out, in order tomonitor the ergonomics of workplaces and the staff’sexposure to chemical and biological agents, ionizingand non-ionizing radiations, particulate matter andemissions produced during welding, noise andmicroclimate.

G&P - Health expenditure breakdown for 2005

22.8% Equipment and tools





2.4% Communication

0.5% Training

5.2% Other

4.0 million euro

3.0

2.0

1.0

2003 20052004

G&P - Health expenditure

Investments

Current expenditure


39

Health management in all units of the R&M Divisionrelies on the Computerized System for Medicine andHygiene in the Workplace (SMIL - SistemaInformatizzato di Medicina e Igiene del Lavoro) whichrecords the information resulting from the activities ofsanitary surveillance and the workplace monitoring andis complemented with a CD distributed by the Divisionto all Italian and foreign sites and called “OccupationalHealth and Hygiene in the Refining & Marketing Division- Methodology and Equipment of the HealthManagement System”.In 2005 the activity of sanitary surveillance involvedover 4,600 potentially risk-exposed workers andentailed 42 campaigns for the detection of exposure torisk agents in consideration of which 4,804environmental surveys were also carried out. Specialchecklists have also been defined for auditing theimplementation of the Health Management System inthe European subsidiaries.The biological monitoring program addressed tobenzene-exposed workers has been completed and themonitoring has kicked off of the PAH (poli-cyclicalaromatic hydrocarbons) and n-hexane risk agents. Inaddition, for the assessment of the acoustic impactexerted by the retail outlets in commercial areanetworks, a protocol has been delineated which, withinthe activities for the ISO 14001 certification of thecommercial area network of Milan, Padua, Bologna,Palermo and Turin, has been applied to approximately250 outlets.

The guidelines on the “Standard Ergonomic Criteria forthe Structuring of Video Terminal Units” have beenpublished, which represent a benchmark for theconfiguration of work posts covered by video terminalworkers.In collaboration with CNIT, the Italian national center oftoxicological information, the training has continued ofthe staff of peripheral units and of the local healthauthority (ASL). The project started in the refinery ofTaranto and involved not only first aid operators butalso the local health authority, the 118 first-aid andhospital emergency services.The “Model Study on Skin Exposure” has beencompleted, which aims at determining the skin reactionto the exposure to volatile products such as keroseneand diesel and which has led to a specific protocol ofworkers’ sampling, analysis and biological monitoring.On completion of the inventory of materials containingasbestos in the entire Agip’s commercial network, theoperations to remove products containing asbestosfrom petrol stations have been intensified.

R&M - Health expenditure breakdown for 2005


22.9% Environmentalsurveys



0.2% Training

5.9% Other

4.0 million euro

3.0

2.0

1.0

2003 20052004

R&M - Health expenditure

Investments

Current expenditure


40

Monitoring and reporting

Until 2004 health accounting only covered workers’sanitary surveillance. In 2005 the Health AccountingSystem (SCS - Sistema Contabile della Salute) wasupdated in order to widen the reporting domain toinclude such initiatives as health promotion,community assistance services and performancesprovided by Eni’s structures.The Health Accounting System encompasses thefollowing:• medical staff and structures;• sanitary surveillance activities (examinations,

instrumental tests and surveys);• risk and impact assessment;• employee’s health conditions (sickness absence,

repatriations etc.);• activities carried out by Eni’s health services;• health promotion campaigns;• health training;• financial commitment.

Monitoring is supplemented with special auditsexecuted in order to evaluate the efficiency level ofboth corporate health structures and external healthservices.

Information technologyfor health servicesKnowledge sharing through the development andimplementation of new instruments allows to alignlanguages and behaviors with good practices and aboveall to ameliorate health performances.

The HEALTH CARD is an electronic device allowing theemployee to easily and speedily access his/her ownhealth data from all over the world. The card enablesthe employee to share the information in his/her clinicalhistory with the business unit’s physician, in the case ofoccupational health, or with his/her generalpractitioner. The Health Card can be accessed on thewebsite or the intranet in full compliance with privacyregulations and IT security. In 2005 over 1,700 cardswere introduced into the net, with priority given to newrecruits and employees in foreign sites. It is estimated,however, that the full coverage within Eni will beattained by the end of 2007.

The use of new information technologies and ofincreasingly powerful telecommunication networkspermits to overcome the cultural isolation of the healthoperators posted in remote areas and favors theimprovement of services’ quality. Eni’s TELEMEDICINE

project is one of the instruments made available toenhance the operational capability and efficiency in thehealth sector. Every year new stations and connectionsare activated for the teleconsultation with thecoordination centers of the University in Milan and withvarious international health partnerships. Today thetelemedicine service is available to the Libyan,Congolese, Nigerian and Italian centers and shortly itwill be offered to the sites in Pakistan, Kazakhstan andAngola.The extension of telemedicine to the maritime sector,where the presence on board of a health operator is notenvisaged, is currently under evaluation. To date, in caseof necessity, the ship’s commander can consult theInternational Radio-Medical Center, an institutioncomposed of voluntary physicians offering assistance bytelephone, e-mail or fax.

The E-LEARNING Project enables Italian and foreign healthoperators to access continuous remote training. It usesan IT platform named Mastermed which permits tomanage classes modulated according to the individualneeds of the professionals concerned. The projectcomprises courses designed for physicians operating inremote areas and for those working in Italian plants. Thecourse for first aid operators is already accessible on thenet while the section regarding the work-suitabilityevaluation of workers with cardiovascular pathologies isstill to be set off.

An important contribution to health knowledge sharingis made by the timely, up-to-date and reliableinformation, from such sources as the World HealthOrganizations (WHO), the Center for Disease Control(CDC) and the Superior Health Institute, on epidemicsand on other transmittable pathologies. Thisinformation is provided to both health operators andworkers through Eni’s HSE.net portal or via regularnewsletters. The recent international issues linked tothe spreading of infective diseases such as SARS, Avianflu, Ebola, bioterrorism, natural catastrophes etc. haveproved the portal’s usefulness, simplicity and efficiency.

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O R T 2 0 0 5 / H E A LT H

41

For employees to be posted to foreign sites, the healthassistance program involves a check-up intended toascertain their good health conditions.After an examination for suitability, the employee isadministered all necessary vaccinations andprophylaxes and is informed of the epidemiologic issuesand hygienic practices existing in the country ofdestination. To provide the employee with exhaustiveinformation, the “HEALTH HANDBOOK FOR ENI’S TRAVELERS”has been published, which lists the vaccinations andprophylaxes needed in each country and the relatedterritorial and endemic problems.

Eni has launched a series of prevention programs basedon information, screening and direct interventionswhich the employees can join on a voluntary basis.

Bearing in mind the targets of the National Health Planand on the basis of the agreements entered into withthe Italian League for the Fight against Tumors and witha number of health partnerships, Eni has embarked onan early diagnosis project destined to the employees inall Italian sites.By the end of December 2005, 46 Eni sites had beeninvolved in the project and over four thousandemployees had adhered to the tumor preventionprogram for a total of nine thousand examinations.In 2004, in collaboration with the Health IntegrativeFund, an ictus prevention campaign was carried outduring which Eni’s employees were offered a cost-freescreening and which continued through 2005 withseven thousand people partaking in it. In agreementwith FASEN (Fondo Attività e Servizi Sociali Energia Eni),the welfare fund managed by trade unions, a project hasbeen launched for heart risk assessments.In Italy, in the field of infective pathology prevention,Eni’s health structures have continued the anti-fluvaccination campaign, which has seen a high level ofparticipation by employees.

Abroad Saipem’s commitment is spotlighted in theprevention of sexually transmitted diseases and, aboveall, in the promotion of the Sexually Transmitted

Disease (STD) Program based on information andeducation, motivation to change sexually riskybehaviors and identification of the behavioral factorsinfluencing the modalities of STD infection.In 2004 Saipem issued the Corporate HIV-AIDS Policypromoting and informing on more appropriate sexualbehaviors, free and voluntary individual tests, the accessto medical structures guaranteeing suitable controlsystems of instruments and materials representingpotential disease carriers, non-discrimination againstHIV-positive personnel either during working or sociallife, compliance with the privacy of all peopleconcerned according to legal requirements anddeontological ethics, consultancy and access to the bestmedical treatments.

CommunitiesAt the international level, information campaigns havebeen promoted aiming at the health safeguard ofemployees, families and local communities with whomEni interacts and at the prevention of malaria (in Nigeriaand Azerbaijan) and of the transmission of the HIV virus(in Nigeria and Congo).The foreign medical activity carried out by Eni hassupported several health initiatives in favor of the localcommunities.

VenezuelaThe integrated program of assistance to the localcommunities developed through the cooperationagreement with SALUDANZ, the regional healthauthority of Venezuela, has continued. Among theinitiatives embarked on, it is worth emphasizing anational vaccination program addressed to employeesand local populations living near the production areas.On the whole the program has involved 20,000 peoplewith 201 vaccinations (polio, BCG, hepatitis B, tetanus,diphtheria) administered to employees and 174,607 tolocal community members.

Health promotion initiatives


42

CongoIn order to prevent the mother-to-child transmission ofthe HIV virus, the “Kento-Muana” project continues tobe developed with the collaboration between EniCongo, the University of Genoa and the Pointe NoireHospital. The heart of the project is the laboratory ofserological and molecular diagnostics inaugurated in2005 at the Regional Hospital of the Army (HôpitalRégional des Armées) of Pointe Noire.

NigeriaWithin the national plan for the prevention and fightagainst malaria launched by the federal governmentand known as the Roll Back Malaria Program, theOlogoama Health Center has been completed. Thecenter, situated in an area where malaria is one of themain causes of death, is provided with an analyticallaboratory, equipment and medications. Through theprovision of aid and drugs, Eni still supports theactivities of the center currently controlled by theBayelsa State.The program for the prevention of mother- to-child HIVtransmission, developed in collaboration with UNICEF,has also been extended to the hospitals of Omoku andPort Harcourt. In April 2005 the restructuring activitiesof the health centers of Port Harcourt, Omoku andOkolobiri were concluded.

KazakhstanThe main intervention areas are those where oil-relatedactivities are carried out, namely the regions of Atyrauand Mangistau, part of the North Caspian SeaProduction Sharing Agreement (PSA), the regions ofUralsk-Aksai and the region of the capital Astana.Among the principal activities, worth noting are thenumerous infrastructural interventions such as therefurbishment of health centers and, in particular, thecompletion in 2005 of the surgery ward of Uralskregional hospital. In the previous years interventionshad included the extension of the infectious diseasehospital of the city of Uralsk, the construction inKatzalovka of a new hospital with 150 beds and therefurbishment of the Aksai hospital.

IndonesiaThe main interventions include the construction andrefurbishment of rural health centers, the donation ofequipment for the malaria diagnosis, the organizationof training courses and vaccination campaigns forchildren and pregnant women. Within the VicoIndonesia consortium, Eni has carried out awarenessinitiatives related to HIV/AIDS, drug addiction and blooddonation.

PakistanThe activities aimed at promoting the improvement ofhealth services, primary education, social training andsocial development of the communities living in Eni’soperational areas continue to grow.

Management of health emergencies

Eni’s strategy for managing major health crises isessentially based on:• the increase in the response capabilities and the

quality standards of its internal medical services;• the staff’s and health operators’ information and

training;• the creation of privileged channels for the supply and

distribution of indispensable drugs;• the identification of reference and partnership health

centers in the various geographic areas;• the constant verification of the evacuation and

repatriation procedures for health reasons;• the coordination with the national and supranational

bodies.


43

Expenditure and investments

For the health safeguard approximately o40 millionwere spent with an increase of 33% compared to 2004.95% of the total amount is represented by currentexpenditures. As an average the per capita expenditurefor Eni’s employees has equaled around o553 thusrecording an increase compared to 2004 when itamounted to o429. The diversity of the expenditureincurred by the Divisions is due to the variety ofactivities carried out, which produce a diverse exposureto risk agents and the geopolitical conditions underwhich they develop.As for the breakdown of expenditures, the mostimportant categories are those related to health andindustrial hygiene management (o21.8 million) andsanitary surveillance (o8.4 million).

Eni - Health expenditure breakdown for 2005




0.2% Research& Development



0.4% Communication

1.8% Training

3.2% Other

60 million euro

45

30

15

2003 20052004

Eni - Health expenditure and investments

Investments

Current expenditure

80 600thousand employees euro per capita

75 450

70 300

65 150

2003 20052004

Eni - Per capita health expenditure

Employees

Per capita health expenditure

With a disbursement of o553 per employee, in 2005 health expenditure raised by 33%compared to the previous year

2005 Health investments and current expenditure (million euro)

Investments Current expenditure TotalExploration & Production 0.58 13.19 13.77Gas & Power 0.24 3.24 3.48Refining & Marketing 0.14 3.09 3.24Petrochemicals 0.59 5.37 5.96Oilfield Services Construction and Engineering 0.20 8.43 8.63Other activities 0.15 4.76 4.91Total 1.91 38.08 39.99

40 %

30

20

10

Exploration& Production

PetrochemicalsGas& Power

Refining& Marketing

Otheractivities

OilfieldServices

Constructionand Engineering

2005 Health expenditure by sector of activity

44

Safety

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / S A F E T Y

Always deeply committed to the issues related toprevention, protection and industrial safety, Eni hasfounded its strategy on:• uniform policies, specific operational procedures and

appropriate management systems;• control of the exposure to hazardous situations, its

prevention and the protection from it;• recognizing the need to guarantee the lowest risk

exposure in all production activities.In 2004 the guidelines on risk assessment andmitigation were further elaborated. They classify themethodologies to be used for the identification ofhazards, the assessment and mitigation of risksoriginating from plants, processing, transportmodalities, workplaces, chemical substances andpreparations used, produced and sold.The assessment is a process starting with plant planningand completion, proceeding with the use, maintenanceand technological upgrade and ending with thedecommissioning and restoration of the site.

This course of action is configured in five stages:• identification of all kinds of exposure to potential

hazards linked to processing, products and operationsbased on the Hazard and Operability Studies(HAZOP), critical tasks analysis, Fault Tree Analysis,Event Tree Analysis etc.;

• risk assessment in relation to the event severity andfrequency and the probability of happening;

• elaboration of an action plan beginning with theelimination or reduction of the potential risk bymeans of technological investments, riskmanagement systems, staff’s training and insurancecover;

• implementation of the plan through the definition ofobjectives, targets, responsibilities, standards,procedures, training, investments and so on;

• monitoring characterized by the measurement,evaluation and correction of individual and processperformances.

Industrial risk assessment and management

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O R T 2 0 0 5 / S A F E T Y

45

Plants and productsThere are 53 Eni’s sites in Italy operating in compliancewith Decree No. 334/1999 modified by Decree No.238/2005 and enforcing the EU directive 2003/105/EC onthe control of major-accidents hazards involvingdangerous substances. This regulation requests that thesites concerned are equipped with a safety managementsystem and present a safety report to be verified by theAuthorities. Each PLANT is endowed with an emergencyplan which takes into account the potential accidentsand relevant scenarios identified during the variousstages of risk assessment. The directors of the industrialsites participate in the drafting of the external emergencyplan prearranged by the competent authority.Similar management procedures are applied to theEuropean plants subject to the Seveso directive.

Within the range of activities related to risk mitigationand the control of accidents, Eni has promoted theproject named “HSE Simulation Models” whichconstitutes the benchmark system for identifying andreorganizing the instruments and methodologies to beused in the assessment of accident scenarios in Eniplants and in the analysis of the consequencesaccomplished in the environmental and safety studies.For the risk assessment and the evaluation of theimpacts on people and, especially, on the environment,the project entails a census of the simulation modelsused in the business units and listed hereafter:• evaluation models of the consequences of such

accidents as release of hazardous substances,emissions, leaks, fires, explosions;

• models for offshore and onshore air leaks of pollutingagents and for noise propagation.

All along the life cycle encompassing such stages asresearch, planning, production, distribution and the useand final disposal, Eni remains faithful to a PRODUCT

policy based on quality, safety and environmentalcompatibility.For each oil and chemical product, a safety sheet hasbeen worked out which considers the qualities of theproduct, the risks it involves and the measures to takewhen using it. The description of the technicalcharacteristics and of the “product sheets” can be foundin the www.agip.it, www.gasandpower.eni.it andwww.polimerieuropa.com.

In the Refining & Marketing sector the activities oftoxicovigilance cover the continuous update of “productand plant dossiers”, which contain information onsubstances and preparations and a classification of sitesaffected by toxicological risks. The R&M Division hasembarked on cooperation with the National Center forToxicology Information (CNIT - Centro Nazionale diInformazione Tossicologica) thus guaranteeing theprompt and timely intervention in emergency situationsand the training, through theoretical and hand-oncourses, of the staff in peripheral units and of the localhealth authorities (ASL). In order to ensure a greaterproduct safety, the division participates in internationalprograms and initiatives such as those of CONCAWE (oilcompanies’ European organization for environmentaland health protection) aiming at detailing the riskassessment relating to the main oil products.

In the chemical sector, the commitment has continued toguarantee a safe use of the chemicals and, above all, of the55 products which fall within the sphere of applications ofthe forthcoming European regulation called Registration,Evaluation, and Authorization of Chemicals (REACH)which focuses on the integration, implementation andharmonization of the regulations in force and intends tosecure the safety of chemical substances with regard tohuman health and the environment. Since 1995, throughPolimeri Europa, Eni has been partaking in ResponsibleCare, a program of the global chemical industry intendedto put into effect the commitment of each company andof the entire sector in tackling the environmental, healthand safety issues. The objective is to achieve a continuous,significant and tangible improvement of the relationshipbetween chemicals and territory also through a productsustainability policy.

Additionally Eni participates in the internationalvoluntary ICCA-HPV (International Council of ChemicalAssociations - High Production Volume) program whichconcentrates on the analysis of high production volumechemicals. This program concerns the solvents used inthe R&M Division and certain substances produced byPolimeri Europa.

For an in-depth study on the Products, see page 88 j

Oil spills

2003 2004 2005Oil spills (number) 121 226 335Volumes (1) (barrels) 857 7,813 6,908

(1) The consolidation domain has widened since 2004.


46

TransportParticular attention is paid to the transport modalitiesof products, many of which fall into the category ofhazardous substances. A specific monitoring systemapplies to each modality. In all instances the besttransport technologies are adopted in order to ensurean efficient and valuable service, the lowest impact andthe highest safety of the carriers utilized.Pipelines represent the safest means of transport withthe lowest environmental impact and constitute thepreferred transport modality. In fact, 54.2% of Eni’sproducts are transported through gas and oil pipelines(against 53.2% in 2004). For a safe road transport of oiland chemical products, Intermode in collaboration withthe public administration, has set off on a series oftelecontrol initiatives such as the Integrated System forEnvironmental Monitoring and Emergency Management(SIMAGE - Sistema Integrato per il MonitoraggioAmbientale e per la Gestione delle Emergenze) and theNational Safety System for the Transport of HazardousGoods (SNSTMP - Sistema Nazionale di Sicurezza per ilTrasporto di Merci Pericolose).

A similar initiative has been undertaken by PolimeriEuropa and Syndial that have joined in the TransportEmergency Service (SET - Servizio Emergenze Trasporti),namely a voluntary program launched by Federchimicawhich is adhered to by enterprises and associationsinterested in cooperating with Public Authorities in themanagement of road and rail emergencies.In the maritime sector Eni has adopted tight criteria forthe selection of ships transporting hydrocarbons andchemicals.

The production, handling and transport of oil productscan entail various-sizable product spills. In 2005 335spills occurred totaling 6,908 barrels of oil spilt. The oilspills taken into consideration are only those caused byaccidents, whereas those prompted by acts of sabotageare excluded. In order to curb them, social initiatives areundertaken in the communities where thisphenomenon is widespread.

For an in-depth study on Transport, see page 82 j

Injury preventionEmployeesWith the purpose of increasing hazard prevention andmitigation capabilities, a meticulous analysis isperformed of the typology of recurrent injuries, ofoccurred accidents, of near-misses and of workconditions, i.e. environment, equipment used,individual protection devices and so forth.Together with the ongoing awareness campaign, this

course of actions has favored an incessant improvementof injury indexes.Safety indicators have highlighted a considerableamelioration compared to 2004. The frequency indexhas equated 3.17 with a drop of 29% in comparison withthe previous year; the severity index has equaled 0.10,i.e. 9% lower than in 2004.

In 2005 the staff attended numerous courses on healthand safety topics for a total of 820,376 hours of training,which represent 94.6% of the entire HSE training. Thetraining was prevailingly adhered to by the divisions andcompanies operating abroad with E&P and OilfieldServices Construction and Engineering, allocatingapproximately 70% of training hours.

Notwithstanding the attention paid to the carrying outof the production activities, regrettably Eni hasexperienced the fatal accidents of five employees(against 9 fatal accidents in 2004).

Eni’s employees’ injury indexes have improved while the contractors’ have hit historicalrecords

14.0 thousands of participants

10.5

7.0

3.5

2003 20052004

Eni - Participants in Health and Safety training


47

Contractors2005 was a crucial year for the safety performances ofthe contractors. The frequency index was equal to 2.59(against 7.84 in 2004) whereas the severity indexequated 0.072 (against 0.09 in 2004).

Eni makes use of a multitude of external individuals forthe supply of goods, services and work. The SupplyDepartment supervises the procedure for the selectionof suppliers and contractors while taking intoconsideration their capability to guarantee financial,

10.0

7.5

5.0

2.5

2003 20052004

Eni - Employees’ injury frequency index

0.12

0.09

0.06

0.03

2003 20052004

Eni - Employees’ injury severity index

2005 Employees’ injuries by sector of activity


37.7% Gas & Power


14.0% Petrochemicals



10.0

7.5

5.0

2.5

2003 20052004

Eni - Contractors’ injury frequency index

0.12

0.09

0.06

0.03

2003 20052004

Eni - Contractors’ injury severity index

2005 Contractors’ injuries by sector of activity


13.7% Gas & Power


7.5% Petrochemicals



So as to ensure that the protection of the worker rights is guaranteed to contractors, too,Eni has foreseen the extension to suppliers and contractors of the principles of theAgreement on Transnational Industrial Relations and Corporate Social Responsibility

technical, production and organizational requirementsas well as the appropriate criteria for safety in theworkplace, health protection, quality management,environmental safeguard and compliance with laborinternational standards.The checklists used appraise the most important HSEtopics, focusing on the adoption of managementsystems, their certification according to acknowledgedinternational standards (ISO 14001, EMAS, BS8800) andthe safety performances achieved.


48

To improve safety at work, the business units organizetailor-made courses addressed to suppliers orcontractors and concentrating on managementsystems, the use of individual protection devices, safetyinstruments and operational modalities.

With deep regret Eni has had to face the accidentaldeath of 13 contractors (26 in 2004).

Trade unionsAlong with the three-year renewal (2004-2007) of theEuropean Works Council, the organization representingEni’s employees within the European Union, theagreement has been renovated on the EuropeanObservatory on health and safety at work. The target isto strengthen the role played by this organizationcreated in 1996 with a view to safeguarding workers’health and safety and to reaching homogeneity in theprotection and prevention activities for all Eni’s workersemployed in the European Union.On the occasion of the 2005 annual meeting with theInternational Federation of Chemical, Energy, Mine andGeneral Workers’ Unions (ICEM), Eni presented the HSEperformance trends to trade unions in order to find acommon ground on interventions.

Divisions

Following the adoption of a dedicated procedure, ona monthly basis the E&P Division issues a report oninjuries, accidents and near-misses intended tounderscore and record each event altering the everydaywork activities. These actions are indispensable in theanalysis of the data relating to each incident and for theevaluation of the phenomenon and its evolution.

Since 2003 the Managing Directors of the foreign unitswere assigned specific targets for the improvement ofthe HSE performances and the drop in injury indexes.The adoption of performance indicators, theassignment of specific objectives, the auditing activity,the characterization and implementation of follow-upactions, the finalization of emergency plans and theorganization of emergency drills are some of theactivities carried out with a view to improve safety.The decrease in the number of injuries notified (68against 137 in 2004) is essentially due to thecontribution of Eni Iran.

40

30

20

10

2003 20052004

E&P - Injury frequency indexes

0.60

0.45

0.30

0.15

2003 20052004

E&P - Injury severity indexes

Employees

Contractors

Eni has been active in Iran since1957 and currently operates, inboth cases with a 60% sharing, inthe fields of Darquain, situatedin the region of Ahwaz, and ofSouth Pars (phases 4 and 5) inthe Iranian waters of the PersianGulf.It also partakes in the projects of

expansion of reserves and theproduction capabilities of theoffshore field of Dorood, off theisle of Kharg, where Eni’s sharingamounts to 45%, and of thedevelopment of the offshorefield of Balal, where Eni’s sharesrepresent 38.25%.As for the exploration and

production of hydrocarbons, in2005 very rewarding results wereattained in the field of safety asshown by the fact that the injuryfrequency index equaled 1.39(compared to 20.08 in 2004),with no death to record againstthe 11 fatal accidents in 2004.The improvement follows the

ENI IN IRAN


49

Construction activity of Italgas and Snam Rete Gasrelated to pipe assembly impacts on injury indexes ofG&P Division. In the 2005 the frequency and severityindexes have slightly improved with respect to bothEni’s employees and contractors. The intensification ofcontrol activities has brought about a rise in safetyexpenditure and the strengthening of training, whichhas increased of 32%.

The R&M Division has achieved the best result for thelast four years, characterized by the reduction nearly byhalf of the number of injuries (from 120 in 2004 to 64 in2005) and by a general improvement in theperformance indexes. A drop of 38% is also recorded inthe frequency injury index.In Italy the best result for the last four year has beenachieved, with a decrease of 37% in the number ofinjuries at work and when traveling to/from work (26against 41 in 2004).

40

30

20

10

2003 20052004

G&P - Injury frequency indexes

0.60

0.45

0.30

0.15

G&P - Injury severity indexes

Employees

Contractors

2003 20052004

40

30

20

10

2003 20052004

R&M - Injury frequency indexes

0.60

0.45

0.30

0.15

2003 20052004

R&M - Injury severity indexes

Employees

Contractors

adoption of a safety managementplan articulated as follows:• HSE management

responsibility of Eni Iran(taken away from contractors);

• implementation of an HSEmanagement system in linewith the directives of the E&PDivision;

• change in the typology ofactivities carried out from

construction (essentiallyperformed by contractors) toexploration and production(performed by Eni’s staff ). As amatter of fact, in 2005 thedevelopment has beencompleted of the South Parsfield, with the installation oftwo platforms with 24 wells,the laying of two undersea gaspipelines for the transport of

gas and the construction of anonshore gas processing plant;

• the launch of a major safetytraining program;

• the adoption of a number ofprocedures relating to workactivities;

• the improvement of safetycontrols in operating sites;

• the drawing up of emergencyplans.


50

For at least the last three years the zero operationalinjury trend has continued in 25 sites.As for the contractors the results achieved are betterthan in 2004, as proved by the decrease in the numberof injuries from 101 to 68.

Emergency management

The Model of Management System requests that thebusiness units carry out the actions necessary to planinterventions in emergency cases and to reduce theadverse consequences of accidents. Such actions areencoded in the internal emergency plan of each site andnotified to the public administration, which Eni works inclose collaboration with for the arrangement ofterritorial emergency plans, training activities and jointsimulations.

Corporate Emergency PlanEni Corporate is actively involved only in the instance ofthird-level emergencies, for which a CorporateEmergency Plan has been designed to control crises inany part of the world. The plan is based on a Crisis Unit,which is composed of experts from each business unitand is delegated with the coordination of internal andexternal staff, means and equipment.To increase the ability to cope with emergencies, thetwo emergency rooms of Rome and Milan have beenenhanced together with the management systems theyare equipped with. Above all, the information systemhas been developed which supports third-levelemergencies and is based on three integrated modules:

• Knowledge Management System for the structureddata collection, feeding the entire system;

• Geographic Information System for cartographicfunctionalities. A cartographic system usedworldwide and on nautical paper charts is able tomonitor the activities of Eni’s sites (wells, refineries,oil depots, chemical plants, pipelines, sealines etc.);

• Decision Support System for synchronization andassistance when decisions have to be made in relationto emergency cases.

Eni Corporate has also strengthened the operationalsystems for the management of information pertainingto sites and logistics, to the chemical and physicalfeatures of polluting products and to their eco-toxiceffects. The systems have been perfected for thesimulation of the spreading at sea of hydrocarbons andthe sampling of the atmospheric releases of toxicsubstances. Connections have also been activated withdatabanks regarding the chemical and physicalcharacteristics of polluting products and their eco-toxiceffects.

Agreements and co-operationsIn 2003 Eni entered in a framework agreement withCastalia Ecolmar, an Italian company specialized in theprevention of and the fight against sea pollution andprovided with an integrated system of response toemergencies at sea in the Mediterranean.

It is also a partner of Oil Spill Response Ltd (OSRL), anorganization founded in 1985 by the world most

2005 Safety indexes

Employees ContractorsFrequency Severity Frequency Severity

index index index indexExploration & Production (1) 1.53 0.03 1.34 0.03Gas & Power 10.83 0.34 21.28 0.49Refining & Marketing 3.94 0.14 5.25 0.19Petrochemicals 7.35 0.27 12.87 0.19Oilfield Services Construction and Engineering 1.45 0.05 2.11 0.07Other activities 2.70 0.08 14.08 0.25Eni total (1) 3.17 0.10 2.59 0.07

(1) The indexes refer to the number of working hours of the consolidated and non-consolidated subsidiaries’ staff.


51

important oil companies with the objective to ensurerapid intervention for its members for all accidentscenarios, in all locations. On 1 January 2000 OSRLstipulated an agreement with East Asia Response PteLtd (EARL), which allows the partners of bothorganizations to exchange resources and services inlight of events concerning East Asia.

Eni is also a member of the Mediterranean Oil IndustryGroup (MOIG), an organization constituted by therepresentatives of various oil companies operating inthe Mediterranean countries. The group, recognized bythe Petroleum Industry Environmental ConservationAssociation (IPIECA) and by the Regional MarinePollution Emergency Response Center (REMPEC), aimsat safeguarding the sea environment relating to oiltransport (all way from the production sites through tothe terminals), by promoting a number of initiativesranging from mutual aid in the event of accidents to thetraining of and co-operation with the coastal states.

DrillsTo maintain a high level of preparation for tacklingemergencies, periodical drills are organized. In 2005drills were promoted to simulate spills at sea andpotential catastrophes (earthquakes, big fires etc.) incollaboration with the Coast Guard, the Navy, the CivilProtection (Sea) and other local authorities. In OctoberEni, summoning all business units, adhered to the“EUROSOT”, organized by the Civil Protection incollaboration with the European Union, entailing thesimulation of a seismic event affecting the populationand the industrial plants in Eastern Sicily.

TrainingIn 2005 several training initiatives were promoted inrelation to offshore and onshore emergencies.Subsequent to the Eni/Castalia agreement and underthe sponsorship of the International MaritimeOrganization (IMO), workshops and seminars wereorganized in Italy (Venice, Cagliari, Brindisi) and abroad(Malta), focusing on the fight against sea pollution dueto hydrocarbons and other hazardous substances. As forthe fire prevention, seminars were held on “Fires ofLarge Tanks” (Livorno) and “Hazardous Land Transport”(Mantua).


52

Expenditure and investmentsSafety expenditure chiefly depends on the risk involvedin production activities and on the related preventionand protection activities, which is why the expenditurelevels of Eni’s divisions and companies may noticeablydiffer.In 2005 the overall safety expenditure equaled o391million with an increase of 33.8% compared to theprevious year. 57% of the total (o224 million) isrepresented by current expenditures which, weighedagainst 2004, have grown of 36%. Investments amountto o167 million, an increase of 31% compared to theprevious year.

54% of the total most important expenditures refer toequipment and tools for safety (o221 million) andsafety management (o120 million, equal to 30.6%).The distribution of safety expenditure among Eni’s sixoperational sectors shows the heavy share ofExploration & Production with 48% of the total whereasthe other two Divisions’ shares are lower (5.1% by Gas& Power and 16.3% by Refining & Marketing). Thepetrochemical sector’s contribution to the total safetyexpenditure is of 15.8% (o61.65 million) with OilfieldServices Construction and Engineering and the Otheractivities representing respectively 9.3% and 5.6% of theexpenditure (o36.2 and o21.9 million).

In 2005 the safety expenditure of the Exploration& Production Division amounted to o189 million, withan increase of 81% against the previous year. Theincrease is mainly due to the considerable growth ofinvestments, which have more than doubled comparedto 2004 (o135 million against o60 million of theprevious year). Current expenditures, too, equallingo54 million, have experienced an increase of 22%.The largest share of the Division’s safety expenditure isrelated to equipment and tools (67.6% of the totalexpenditure): in 2005 investments added up to o120million, equal to 63% of the total safety expenditure.

E&P - Safety expenditure breakdown for 2005


1.4% Individual ProtectionDevices

21.9% Safety management


0.3% Insurances


0.2% Communication

0.9% Training

1.5% Other

200 million euro

150

100

50

2003 20052004

E&P - Safety Expenditure

Investments

Current expenditure

500 million euro

375

250

125

2003 20052004

Eni - Safety expenditure and investments

Investments

Current expenditure

Eni - Safety expenditure breakdown for 2005


3.4% Individual ProtectionDevices (DPI)

30.6% Safety Management


6.6% Insurances


0.2% Communication

1.0% Training

0.9% Other

200 million euro

150

100

50



Refining& Marketing

Other activitiesOilfieldServices


Safety expenditure by sector of activity

2004

2005


53

Also current expenditures in safety management, equalto o38 million, represent a considerable share of theexpenditure (20% of the total safety expenditure).

In 2005 the safety expenditure in the Gas & PowerDivision amounted to o20 million with an increase of11% compared to the previous year. The increase ismainly due to the growth of current expenditures(o12.3 million compared to o10.2 million in 2004),whereas investments have remained stable (o7.8million).The largest expenditure share of the Division was spenton safety management (o7.7 million, equal to 38.5%)and equipment and tools (o7.5 million, equal to 37.5%).A further important category of expenditures isrepresented by insurance (o2.2 million), constituting11% of the total safety expenditure.

In 2005 safety expenditure in the Refining& Marketing Division amounted to approximately o64million, in line with the expenditure values of theprevious year. The share of investments has raised(o53.5 million compared to o51.4 million in 2004) tothe detriment of current expenditures which, incontrast, have dropped of 20% (o10.3 million in 2005).The investments in equipment and tools (equal to o53million) represent the predominant share of safetyexpenditure of the Division (83% of the total). Thecurrent expenditures in safety management (o9.5million) represent, on the contrary, the second mostimportant category of expenditures (15% of the totalexpenditure).

25 million euro

20

15

10

5

2003 20052004

G&P - Safety expenditure

Investments

Current expenditure

G&P - Safety expenditure breakdown for 2005




11.1% Insurances


0.2% Communication

2.6% Training

0.1% Other

80 million euro

60

40

20

2003 20052004

R&M - Safety expenditure

Investments

Current expenditure

R&M - Safety expenditure breakdown for 2005





0.2% Training

0.7% Other

54

Energy and environmental sustainability

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / E N E R G Y A N D E N V I R O N M E N TA L S U S TA I N A B I L I T Y

EnergyEni’s total gross energy consumption in 2005 was16,021 ktoe, a 20% increase over the previous year.Direct consumption of primary sources amounted to14,106 ktoe, while purchases from third parties totaled1,915 ktoe. This consumption increase was partly due tothe start-up of new EniPower combined cyclecogeneration plants and partly to an increase inhydrocarbon production. The amount of net primaryenergy consumption is obtained by subtracting the

primary energy sold as final energy to third parties fromgross energy consumption; this gives 9,744 ktoe of netprimary energy consumption, a slight increase over theprevious year.

In 2005 the fuel mix used was made up of 58.5% naturalgas, 39.7% oil products (refinery and steam cracking gas,fuel oils and petcoke), and 1.9% other fuels. The share ofnatural gas increased over previous years (42.8% in 2003

10,000 ktoe

7,500

5,000

2,500

2003 20052004

Eni - Net energy consumption

80 4% tCO2/toe

60 3

40 2

20 1

2003 20052004

Eni - Share of gas and average emission factor

Share of natural gas in fuel mix

Average emission factor of CO2 per toe used


55

and 52.6% in 2004) which led to a further reduction inthe average CO2 emission factor per toe consumed (in2004 this factor was 2.71 tCO2/toe and in 2005 it was2.57).The principal end uses of energy are electric energy,steam, process heat and mechanical energy forpumping natural gas into the gas pipeline network andfor fuelling ships.Eni’s energy consumption is concentrated inthermoelectric and cogeneration plants (31.1%), inchemical and petrochemical plants (23.9%), inhydrocarbon extraction processing plants (19.3%) andin refineries (18.2%). The energy consumption in gascompression plants and LNG carriers is relatively low(4.9%).The company placed great emphasis on energy saving:projects mainly concerned the construction ofcogeneration power plants near its own refineries andchemical plants. Energy saving was also focused on thetransport and gas distribution sectors where the use ofnew highly efficient turbines for gas compressionresulted in a reduction of average specific energyconsumption.

Power generationIn 2005 EniPower’s natural gas cogeneration plantsproduced 22.77 TWh of electrical energy and 10.66million tonnes of steam. At the end of 2005 theinstalled capacity of the power plants was 4.5 gigawatts,an increase of 1.2 gigawatts over the preceding year. Inthe coming years Eni will reach 5.5 gigawatts of installedcapacity and will be able to produce 30 TWh ofelectricity and cover more than 10% of powergeneration in Italy.The power plants are located in industrial installations(with significant electric energy and heat consumption)

Eni’s consumption of primary energy in 2005 (ktoe)

ELECTRICENERGY5,949

STEAM

193

PRIMARYSOURCES

126

HEAT

9

NET CONSUMPTIONOF PRIMARY SOURCES

9,744

SALES TO THIRD PARTIES

6,277

OTHER FUELS

261

OIL PRODUCTS

5,672

NATURAL GAS

8,173

ELECTRICENERGY

1,706

STEAM

208

HEAT

1

GROSS CONSUMPTION OF PRIMARY SOURCES

14,106

PURCHASES FROM THIRD PARTIES

1,915

GROSS ENERGYCONSUMPTION

16,021

6.0 gigawatts

4.5

3.0

1.5

2003 20092002 20052004

Installed capacity of electricity generation


56

such as petrochemical plants and refineries, thusavoiding the energy loss from the transmission ofelectric energy through the network.All the power plants use combined cycle cogenerationtechnology and are therefore highly efficient in theconversion of electricity, compared to the averageefficiency of the national thermo-electric power plantsand also have lower emissions.The new plants are also characterized by very lowspecific CO2 and NOx emissions. The production of 30TWh expected to start in 2008 will cut downapproximately 11 million tonnes in emissions of CO2,compared to conventional plants.

In the E&P sector, energy is used for the extraction ofhydrocarbons and their separation by components, forthe power generation to run the plants and connectedservices, and for oil, water and gas treatment. Theenergy needed is produced on the spot generally usingextracted natural gas (90.4% of the total energyconsumption). The slight increase in the energyconsumption indicator is attributed to the aging of thereservoirs. However, the ratio between energyconsumed and energy produced is still less than 4%.Plans to reduce energy consumption are based mainlyon improving drilling techniques.

The EniPower power plant inMantua is located in themulti-company industrial areawith the same name and alsoincludes the Polimeri Europapetrochemical plant. The powerplant produces electric energyand steam in two new combinedcycle cogeneration plants, each

with a power capacity ofapproximately 390 MWe andfuelled by natural gas.The electric energy produced isfed into the RTN (the NationalTransmission Network) andpartly sold directly to plantslocated within the industrialcomplex.

When the new combined cycleplants became commerciallyoperational in 2005 it waspossible to close the old unitsrunning on fuel oil; this shouldresult in a reduction of about 1million tonnes per year of CO2

per cogeneration unit for thesame amount of electric energy

MANTOVA SpA POWER PLANT

40 toe/ktoe produced

30

20

10

2003 20052004

E&P - Energy consumption indicator


57

In the G&P sector, energy consumption is mainly dueto the power generation by the cogeneration plantsand, to a lesser extent, to gas compression in thepumping stations. With respect to the fuel mix used, in2005 the proportion of natural gas (87.1%) increasedover the previous years (58.1% in 2003 and 79.4% in2004). EniPower power plants are, in fact, progressivelyreplacing fuel oil with gas, thus increasing natural gasconsumption in the Division (+44.3% in 2005 over2004).Since the combined cycle cogeneration plants arehighly efficient, energy consumption per MWhgenerated is at the today minimum for thermoelectricgeneration.

The gross energy consumption in the R&M sector in2005 was 3.11 Mtoe, an increase of 4.7% over theprevious year. With respect to the energy efficiency ofrefinery operations, the Energy Intensity Index shows anet drop from the year 2000. Although that index waslower than the European average at the beginning ofthis period, refineries still managed to further reducespecific energy consumption by about 10% over the last6 years. This reduction is all the more significant in thelight of the increased energy consumption required toreduce the benzene and sulphur content in fuel.Compared to refinery production output, specificprimary energy consumption is about 9%.

produced by traditionalthermoelectric plants. An oldconventional unit of 56 MWe

fuelled by natural gas is kept as

cold reserve to be used duringmaintenance of the newcombined cycle plants. The newplants are equipped with a

condensed air cooling system,thus reducing the consumptionof freshwater drawn from localresources.

“Our audit of the Mantova plant allowed us to assess the benefits achieved in terms of overall energy efficiency of theplant, despite the fact that the combined cycles were not yet functioning at full capacity.The increase in efficiency is determined particularly by the heat recovered, which is subsequently used to producesteam sold to other plants and which, in future, will also be fed into the district heating network.”

URS Italia SpA

100 %

75

50

25

1999 2003 200520022000 2001 2004

Energy Intensity Index Eni Refineries

0.300 toe consumed/MWheq produced

0.225

0.150

0.075

2003 20052004

Energy performance indicator of power plants


58

AirIn 2005 greenhouse gas emissions increased slightlyover 2004 levels; the emissions of the major pollutants,however, remained in line with 2004 levels ordecreased.The relevant performance indicators, which compareabsolute emission values to associated energyconsumption, are falling, evidence of Eni’s commitmentto reduce its own emissions.

The emission factor of CO2 from energy consumptionper toe used is 2.57 t/toe, a decrease of 5.1% comparedto 2004, thanks to the greater proportion of gas used inthe fuel mix.

The acidification potential (aggregating NOx and SO2

emissions) was 142.3 kt of SO2 eq, a decrease of 15.7%with respect to the previous year, consequent upon thetwo plants for flue gas treatment in the refineries ofGela and Sannazzaro becoming fully operational.

The Sannazzaro Refinery of theRefining and Marketing Divisionis located 26 km from Pavia andoccupies an area ofapproximately 220 hectares inthe municipalities of Sannazzarode’ Burgondi and FerreraErbognone. Established in 1963with a capacity of 5 milliontonnes per year, it doubled itsproduction in 1975, wasrestructured in 1988 and 1992and in recent years madesignificant improvements to itsrefining technology. Today therefinery has a crude oilprocessing capacity of 10 milliontonnes per year and claims one ofthe highest levels of complexity

and conversion capacity of any inEurope.The refinery management policyis characterized by its constantattention to the needs of theterritory. In order to best managethe HSE impact of its ownactivities, it adopted a complexSafety management System andan Environmental ManagementSystem certified in December2002 according to the ISO 14001standard. Certification wasconfirmed at the end ofNovember 2004 after audit by thedesignated verifier. During 2006all steps for obtaining EMASregistration should becompleted.

In pursuit of its environmentalprotection goals, the refinery hasmade large investments aimed atreducing atmospheric emissions.These emissions are linked to therefinery’s need to cover part of itsenergy requirements by burninggas and fuel oil produced by itsown processing cycle. In order tominimize these emissions,refinery gases are desulphurizedin apposite washing units beforeuse, while smaller quantities offuel oil with relatively modestquantities of sulphur are used.Among the investments madewithin the framework of theRefinARS project, is theinnovative plant for the washing

THE SANNAZZARO REFINERY

200 kt SO2 eq

150

100

50

2003 20052004

Eni - Acidification potential

0.020 kt SO2 eq/ktoe consumed

0.015

0.010

0.005

2003 20052004

Eni - Acidification potential indicator


59

Particulate emissions (SPM) of 4,593 t remained in linewith 2004 levels.Emissions of non methane volatile organic compounds(NMVOC) decreased by 12.7% compared to theprevious year, especially because of the reduction ofventing emissions.

In 2005 total GHG emissions, including CO2 fromenergy consumption and the emissions of CO2 eq fromflaring and venting and methane (the latter calculatedaccording to its global warming potential of 21)amounted to 61.9 Mt of CO2 eq, an increase of 6% overthe previous year.

In particular, the emissions of CO2 eq from flaring andventing, representing 33.7% of total GHG emissions,decreased by 2% compared to 2004 despite a 7%increase in hydrocarbon production. This reduction isthe result of the continuing program of Zero Gas Flaringand the abatement of venting. In this framework Eniinaugurated the Okpai electricity generation plant in2005 in Nigeria, in line with its goal to reduce flaringemissions drastically by 2008.

of combustion gases produced bythe catalytic cracking for theabatement of stack emissions ofsulphur dioxide and thesubsequent recovery ofelemental sulphur to be sold.Equally important was thestart-up of the new plant, on17 April 2006, for the gasificationof heavy residues produced bythe refinery; this will lead to anincrease in conversion capacity

and to the elimination of theproduction of fuel oil. The planthas an annual capacity of 400thousand tonnes and producesannually 900 million cubicmeters of synthetic gas (Syngas).This is to be used to fuel a powergeneration capacity of 200 MW atthe nearby EniPower plant, withefficiency much higher thanthose obtainable from fuel oil.The plant also produces annually

300 million cubic meters ofhydrogen used in hydroprocessing, particularly toproduce diesel fuel with a verylow sulphur content. Theelimination of fuel oilproduction will also result in areduction in the traffic of theapproximately 20,000 tankertrucks leaving the refinery everyyear.

“The containment of atmospheric emissions is central to HSE commitments made by the Sannazzaro Refinery withrespect to the territory in which it is located.During inspection we were able to assess the benefits obtained in terms of reducing SOx emissions following thestart-up in September 2003 of the plant for treating flue gases produced by fluid catalytic cracking. In this “RefinARS”project, technology is applied to treat combustion gases produced by the regeneration of the catalyst, a “Best AvailableTechnology” for which the refinery has received funding from the “EC Life Environment” fund.”

URS Italia SpA

6.0 kt CO2 eq/ktoe consumed

4.5

3.0

1.5

2003 20052004

Eni - GHG indicator

80 Mt CO2 eq

60

40

20

2003 20052004

Eni - Total GHG emissions

including: flaring and venting


60

GHG emissions in the E&P sector were 32.95 Mt ofCO2 eq in line with 2004 levels, despite the increase of5.3% in net operated hydrocarbon production over theprevious year. Emissions of SO2 and NOx (aggregated inthe acidification potential) were 63.7 kt of SO2 eq.The largest proportion of atmospheric emissions (about2/3 of the total) is the result of gas flaring and venting.In order to reduce these emissions, plants for gasliquefaction and reinjection of associated gases will bebuilt.Plans are going ahead for the sequestration of CO2 insaline aquifers or depleted reservoirs with long termmonitoring systems.

In 2005 GHG emissions in the G&P sector were 13.7Mt of CO2 eq, an increase of 31% over 2004. This increaseis to be linked to increased electricity generation by theEniPower power stations. The specific emission factor of2.37 tCO2/toe used has decreased by 4.5% from 2004,because the new combined cycles of the power plantsuse natural gas as a primary fuel.The acidification potential of 19.4 kt of SO2 eq has fallenby 5.6% from the previous year, again as a result of theuse of a fuel mix with a high proportion of gas (79.4%)and fuel oil with low sulphur content.

Eni has operated in Tunisia sincethe sixties when it set up a jointcompany with the TunisianGovernment for the exploitationof the onshore field of el Borma.Today, through the Eni Tunisiacompany controlled by theExploration & ProductionDivision, it operates threeconcessions for the explorationand production of both crude oil

and gas.In the Oued Zar and Adamconcessions, where explorationand production activities areunder way, there are 18production wells: 16 oil and gaswells and 2 gas wells. Oil and gasare processed in three oilseparation lines and at a plant forthe processing and compressionof gas. At the Djebel Grouz

concession (the most recent)today there is only one active oiland gas well and a hydrocarbonprocessing plant.At the Oued Zar field, the oilproduced (around 80% of thetotal hydrocarbon production) isstored in 2 above ground storagetanks and piped to the Trapsacompany (managed by theTunisian Government). 60% of the

E&P IN TUNISIA

Sulphur balance in refining

2003 2004 2005Incoming sulphur (t) 402,323 467,913 506,352Sulphur in SO2 emissions (%) 4.0 3.4 2.6Sulphur in products (%) 42.1 41.5 42.1Elemental sulphur (%) 53.1 55.2 55.0Unaccounted quantities (%) 0.9 (0.1) 0.4

40 Mt CO2 eq

30

20

10

2003 20052004

E&P - Total GHG emissions

including: flaring and venting

40 Mt CO2 eq

30

20

10

2003 20052004

G&P - Total GHG emissions


61

Atmospheric emissions of CO2 in the R&M sectoramounted to 8.12 Mt of CO2 eq in line with 2004 levels.The total emissions derive from refinery combustionprocesses and emissions from storage and producthandling, from effluent processing and fugitiveemissions from processing plants.In recent years the emissions of SO2 and NOx have beendrastically reduced. The RefinARS project, aimed atreducing the environmental impact of the fluid catalyticcracking plants (FCC - Fluid Catalytic Cracking) byprocessing flue gases, has managed to halve thenitrogen oxide and sulphur emissions from FCC. In 2005the total acidification potential was 32.9 kt of SO2 eq, a17% decrease from the previous year.

The production of fuels with ever decreasing sulphurcontent has meant that refineries must improve theefficiency of the desulphurization process, withoutincreasing SO2 emissions into the atmosphere.

gas extracted is sent by gaspipeline to Transmed and 10% isused as fuel gas for the fieldproduction plants and the final

remaining 30% is flared off.In order to reduce the quantity offlared gas, Eni is conducting testson the reinjection of gas with

positive results and there areplans to double the gas pipelineconnecting Oued Zar to el Bormain the next two years.

“The channeling of the gas generated by hydrocarbon extraction to storage structures and transport is not only asolution for the rational and efficient use of natural resources but is also an instrument for the curbing of flaring. Arecent World Bank study estimated that CO2 emissions from flaring account for about 13% of the reductioncommitments of the industrialized countries under the Kyoto Protocol for the 2008-2012 period. Checks carried out atthe Oued Zar field verified Eni’s commitment to limit atmospheric emissions by controlling the proportion of gas flaredand its progressive abatement through management projects of the gas produced.”

URS Italia SpA

Atmospheric emissions in 2005

GHG Acidification SPM NMVOCpotential

(MtCO2 eq) (t SO2 eq) (t) (t)

Exploration & Production 32.95 63,710 2,245 92,359Gas & Power 13.74 19,433 490 196Refining & Marketing 8.12 32,881 1,099 13,653Petrochemicals 4.04 5,071 134 5,299Oilfield Services Construction and Engineering 0.95 13,005 537 1,024Other activities 2.13 8,236 88 172Eni total 61.93 142,336 4,593 112,703% Variation with respect to 2004 6.1 (15.7) 2.0 (12.7)

40 Mt CO2 eq

30

20

10

2003 20052004

R&M - Total GHG emissions


62

WaterEni’s total consumption in 2005 was 3,105 Mm3, a 6.0%drop from the levels of the previous year. 92% of thewater was seawater used mainly for thermal exchangesin production processes (condensers in thethermoelectrical plants, regasification of LNG, etc.).Freshwater consumption of 256 Mm3 fell 6.4% from2004.With regard to water treatment, the volumes treated in2005 amounted to 232 Mm3, a decrease of 9.6% fromthe previous year because of the closing of someproduction activities. The water purified internally at Enibusiness units amounting to 170 Mm3, represented 73%of the total while the remaining 27% was treated byservice companies.The COD parameter increased by 14% over the previousyear.

In the E&P sector most of the water consumption isassociated with extraction activities where water isinjected into the oilfields to guarantee an adequatepressure level. About 42% of the water drawn is seawaterused for cooling the torches of some offshore plants.

For the purpose of reducing the consumption offreshwater, a project is underway in Libya for thereinjection of formation water after it has been treatedinternally.Overall water consumption in 2005 amounted to 77.7Mm3.The formation oily water (water associated with oilextraction) is the main waste to be disposed of. During2005 more than 40% of this oily water was reinjectedback into the oilfield from which it came or intogeological strata suitable for such storage. The totalvolume of water treated was 26.7 Mm3, a drop of 8.6%from the year 2004.

The offshore platform “BarbaraC”, managed by the UGIT unit ofthe Exploration & ProductionDivision is located in theAdriatic Sea about 60 km off thecoast from Ancona. Theinstallation includes the motherplatform of the production fieldfor gas called “Barbara”, to whichgas extracted from the 17connecting platforms is

transferred.The gas collected is sent to theplant in Falconara via sealine fedby two compression terminals.The energy requirements of thecompression terminals and ofsome of the platform equipmentare met by the same extractedgas.In 2005 the E&P Division began aproject of applied research and

development of measurementtechniques of fugitiveemissions, in order to accountfor the quantities of methaneand other volatile hydrocarbons(VOC) emitted into theatmosphere and to improve theestimation methods currently inuse. The first measurementcampaign took place at theproduction sites of Fano and Val

E&P IN THE ADRIATIC SEA

4,000 million m3

3,000

2,000

1,000

2003 20052004

Eni - Water consumption

Freshwater

Seawater

80 million m3

60

40

20

2003 20052004

E&P - Water consumption

Freshwater

Seawater (1)

(1) No data available for 2003.

20 thousand tonnes

15

10

5

2003 20052004

Eni - Water discharged - COD


63

Seawater accounted for 95.2% of water consumptionin the G&P sector, used mostly to cool the powerstations of EniPower and as ballast water for LNGcarriers. The total consumption in 2005 was 515.5 Mm3,a reduction of 4.1% compared to the previous year.In 2005, a volume of 34.0 Mm3 of water was discharged,a 9.8% drop from the previous year as a consequence ofthe sale to third parties of water purification activity.The discharges mainly concerned the treatment of shipballast water and waters used for cooling power plants.

The main water withdrawals in the R&M sector wereseawater (97.3% of all water withdrawn) used in thecooling of refinery thermoelectric plants. The totalconsumption decreased by 5.2% compared to theprevious year. With respect to water discharge, in 2005its volume was 109.6 Mm3, an increase of 19.8% over2004, following the start-up of groundwater treatmentplants. The pollutants contained in the wastewater werefound to be very limited because of the adoption ofefficient effluent treatment plants.

Water consumption and treatment 2005 (million cubic meters)

Total water including including Treatedconsumption seawater freshwater water

Exploration & Production 77.68 32.48 45.20 26.70Gas & Power 515.53 490.53 25.00 34.02Refining & Marketing 1,022.46 994.85 27.61 109.59Petrochemicals 1,067.17 948.84 118.33 30.19Oilfield Services Construction and Engineering 28.08 24.12 3.96 0.01Other activities 394.12 357.90 36.20 31.49Eni total 3,105.03 2,848.72 256.30 232.00% Variation with respect to 2004 (6.0) (6.0) (6.4) (9.6)

d’Agri and in the Barbara field.The purpose of the study is toimprove both the standardmethodologies (EPA21) and theinnovative ones based on optic

remote sensing systems. Thedevelopment of remotemeasuring techniques willsimplify and make emissionmeasuring more economically

feasible. Measuring and controlwill then be done morefrequently and included in theHSE activities programs of theproduction sites.

“Offshore discharges of process liquids are among the main points of HSE focus for operational activities on offshoreplatforms. The inspection on the “Barbara C” revealed the presence of an active carbon treatment plant, whichseparates hydrocarbons from suspended materials. Water is discharged into the sea after filtration and reaches qualitystandards higher than the limits prescribed by law. The discharges are periodically monitored by ICRAM andLegambiente.”

URS Italia SpA

700 million m3

525

350

175

2003 20052004

G&P - Water consumption

Freshwater

Seawater

1,200 million m3

900

600

300

2003 20052004

R&M - Water consumption

Freshwater

Seawater


64

Habitat, territory and landscape

WasteEni produced 4,883 kt of hazardous and non hazardouswaste in 2005, a 23.5% increase over the previous year.It should be noted, however, that waste productioncomes from two distinctly different sources.

The production of waste deriving from industrialactivities was 1,551 kt (32% of the total) and ispractically identical to that of the previous year.There is a net increase, on the contrary, in theproduction of waste deriving from Eni’s remediation

The Praoil company of theRefining and Marketing Divisionoperates in the overlandtransport sector for crude andfinished products, through anintegrated system composed of anetwork of its own and thirdparty oil pipelines, pumpingstations and depots. Among thelatter is the coastal depot atGenoa Pegli built in the Sixtiesand composed of an active tanksgroup (the Fondega north area)

and of one which is beingdismantled (the Fondega southarea), with a total capacity of390,000 m3 covering a surfacearea of 280,000 m2 in a highlyurbanized context.The depot is one of the terminalsinvolved in the “GenoaDebottlenecking” project aimedat rationalizing the oil transportsystem by setting up a new linkbetween the depot and thePetroli Port of Genoa Multedo.

The link consists of a bundle ofpipes with 6 new steel pipes anda new Booster pump room toprovide enough pressure toovercome the difference inheight between the two depots.The new pipes have now beenlaid, for the first time in Europe,inside a curved microtunnel640-meters long with an internaldiameter of 2.60 meters, usingadvanced civil and mechanicalengineering technology.

PRAOIL - MICROTUNNEL

Waste 2005 (tonnes)

Hazardous waste Non hazardous waste Total wasteExploration & Production 150,628 715,026 865,654Gas & Power 21,269 129,666 150,935Refining & Marketing 1,169,409 104,006 1,273,415Petrochemicals 317,703 77,666 395,369Oilfield Services Construction and Engineering 17,611 47,070 64,681Other activities 337,093 1,796,194 2,133,287Eni total 2,013,713 2,869,628 4,883,341

3,000 thousand tonnes

2,250

1,500

750

2003 20052004

Eni - Total waste

Non hazardous

Hazardous

including remediation and groundwater

including remediationand groundwater

Eni - Final destination of wastefrom production activities 2005

Non hazardous

19.4% Reused

0.8% Incinerated

42.8% Disposed of in landfills

37.0% Other

Hazardous

Reused 17.2%

Incinerated 20.6%

Disposed of in landfills 17.2%

Other 45.0%


65

activities and groundwater treatment, even on siteswhich Eni has purchased from other companies andwhere it had never been involved directly. 3,332 kt wereproduced in 2005, an increase of 34% over the previousyear.

Remediation and restorationEni has launched a demanding plan for territorialprotection, decontamination of soil and groundwater,which includes recourse to the best availabletechnologies. Remediation activities are broken downinto the following phases:• project definition, through preliminary environmental

analysis, the characterization plan, the drafting ofpreliminary and final plans;

• obtaining authorizations from public authorities;• carrying out the project, taking into account all

prescriptions received during the course of thepreliminary phase;

• obtaining certification on completion of remediation;• reporting and control in all phases of the process.

Specific experience has been acquired in the finalizationof innovative technologies for preventing pollution anddecontamination of soil and groundwater, throughactions ranging from the determination of the state ofsite contamination to sanitary and environmental riskassessment and remediation actions. In this field suchinnovative techniques as phytoremediation, reactivepermeable barriers, wind bioventing andbioaugmentation were developed.

Just as important is Eni’s commitment in the sector ofenvironmental restoration. On completion of activities –the closing of an oil well, or a construction site, or layinga pipeline – or plant decommissioning, Eni fulfills itscommitment to restoring the territory to itspre-existent state and, where possible, todecontaminate the industrial area and requalify theenvironment.

The Trenchless technology forthe laying of the pipes allowedwork to proceed withoutdisturbing other works inprogress in that area andovercame any possiblemorphological and urban

difficulties. Social costs andenvironmental problems usuallyassociated with the carrying outof important civil works wereeliminated through the use ofthis technology. Life in thewestern part of Genoa proceeded

normally while, deep under theearth, bundles of pipes werebeing laid which theenvironment will benefit from,as the old structures aredismantled.

“The territory’s acceptance of big infrastructural works is strongly limited today by the possibility of minimizing socialand environmental impact.We are convinced that in the case of the Genoa Debottlenecking project, the innovative technologies employed incarrying out the works were a determining factor in overcoming considerable morphological, urbanistic andenvironmental difficulties in the rationalization and modernization of pre-existing structures.”

URS Italia SpA

Expenditure for soil protection 2005 (million euro)

Remediation Restoration TotalExploration & Production 12.6 4.4 17.0Gas & Power 12.3 47.6 59.9Refining & Marketing 121.1 7.1 128.2Petrochemicals 22.4 0.0 22.4Oilfield Services Construction and Engineering 0.2 0.1 0.3Other activities 164.4 0.0 164.4Eni total 333.0 59.2 392.2


66

In the field of environmental restoration Eni has gaineda large experience in laying methane gas pipelineswhich foresees the combined actions of mitigation andenvironmental restoration to respect the local habitat.The route planned for the gas pipeline takes intoconsideration various alternatives based onenvironmental impact, transport safety and technicaland economic feasibility. Once the pipeline is laid, acareful restoration takes place to return the site to itsoriginal state.

In 2005 soil protection expenditure amounted too392.2 million, a 52% increase over 2004. Expenditurefor remediation activities accounted for o333 millionand environmental restoration expenditure for o59.2million. The major expenditures relate to the activitiesof the R&M and “Other activities” sectors forremediation and to the Gas & Power sector forenvironmental restoration.In terms of remediation activities, the demandingremediation projects initiated at the active sites ofSyndial at Assemini, Porto Torres and Porto Margheraand for the decommissioned site of Cengio caused alarge increase over 2004 (+42%) in remediationexpenditure sustained by Syndial.

In 2005 waste production in the E&P Division rose by25.5% over 2004, due to greater quantities of wastecoming from building sites for new plants inKazakhstan. In order to reduce the amount of wasteresulting from production activities, which includeswaste from the decommissioning of platforms, the E&PDivision is studying uses for platforms alternative toremoving them. As far as drilling wastes are concerned,technologies are used such as slim hole drilling andclosed circuit systems in perforation plants for theseparation, treatment and recycling of water derivingfrom mud dehydration and recovery of water-basedmud and inert cuttings.

The remediation of the ACNA ofCengio is one of the mostdemanding remediation projects.Industrial activity began on thissite at the end of 1800 withvarious types of industrialproduction over the years(explosives, chemicalintermediates for dyes andpharmaceuticals). Eni came intopossession of the site in 1989through the merger withMontedison. Since 1999 the sitehas been inactive and a SpecialCommissioner was nominatedthat year to deal with the socio-

environmental emergency of thearea. In 2000 a ProgramAgreement was signed by thecompany, by the regions of Liguriaand Piedmont, and by theMinistries for the Environment,for Industry and for InternalAffairs. The Agreement establishesthe timing for site environmentalrestoration, re-industrializationand new job creation in theBormida Valley, and sets thepriorities for implementingemergency safety measures andguidelines for fundamentalintervention in the areas in which

the site is divided up, according tothe type of end use foreseen. Theseactivities include remediation ofcontaminated areas and disposingof saline wastes stored in lagoonsin the industrial area of Cengio.The site was initially characterizedthrough soil and groundwateranalysis in order to evaluate thedegree and extent ofcontamination.The remediation was divided intothe following activities:• the implementation of

emergency safety measuresrelating to the storage basins of

REMEDIATION OF CENGIO

1.00 million tonnes

0.75

0.50

0.25

2003 20052004

E&P - Waste produced

Non hazardous

Hazardous


67

In 2005 the G&P Division showed a considerable dropin waste production (-34.2%) mostly as a result of thecompletion of construction works for the new turbogasunits for EniPower plants. In 2004, this work involvedthe production of great quantities of earth and rocksfrom excavations. Among the particularly important soilprotection actions of the Division is the restorationafter the laying of the gas pipelines, in order to returnthe site to its original state. In 2005 restoration workcontinued following the laying of gas pipelines of earlieryears and there was consequently a large increase(+67.9%) in expenditure related to this work.

Total waste production for the R&M Division in 2005increased by 25.6% over 2004 levels. This increase wascaused by remediation activities and orders issued byauthorities monitoring the works in progress. At theGela refinery a groundwater treatment plant started upand this meant the production of a large amount ofhazardous waste. The expenditure sustained forremediation and restoration was double compared to2004, reaching o128 million, following the start-up oflarge remediation projects for the decommissionedsites of Rho, Ravenna, Bari and Fornovo and for formersales points of the network and environmentalinterventions at refineries.

saline waste accumulated onsite, by means of a specifictreatment of the salts andsubsequent transport of theresulting product to its finaldestination, a salt mine inGermany. This activity isexpected to be completed by2006;

• implementation of on-sitesafety measures againsthydraulic risk by installing asystem of containment toprotect the site from unusualflooding, and for offtakes ofunderground waters andsubsequent channeling ofpercolate to the on-site water

treatment plant. The activitieswere finished in October 2005;

• implementation of emergencysafety measures for industrialwastes deposited in the riverbedagainst the containment wall ofthe plant, with transfer of thesame together with thecontaminated soil to a suitablearea within the site;

• implementation of permanentsafety measures in an area,characterized by the presence ofwastes accumulated over time,including wastes andcontaminated soil originatingfrom remediation works in otherareas of the site. In 2006 the final

project for this intervention wasapproved and is expected to becompleted in 4 years;

• remediation with safetymeasures for an area dividedinto lots so that individual areaswill become progressivelyusable and assigned toindustrial production use. Plantdecommissioning is nowunderway and buildingsdemolition should becompleted by 2006.Remediation of the first lot hasalready been accomplished andit is now occupied by CESTA, aresearch center forenvironmental studies.

240 thousand tonnes

180

120

60

2003 20052004

G&P - Waste produced

Non hazardous

Hazardous

1.40 million tonnes

1.05

0.70

0.35

2003 20052004

R&M - Waste produced

Non hazardous

Hazardous


68

Expenditure and investmentsIn 2005 environmental expenditure amounted too1,066 million, a considerable increase over 2004(33%). This increase was due to growing commitmentsin environmental protection and especially to intenseremediation activities, but also to improvements in theaccounting system, which resulted in more completeaccount.The current expenditure amounted to o690 million(65% of the total) of which the many remediationprojects accounted for 41% (o285 million for 2005).

There were also high expenditures for waste treatment(around o155 million), water treatment (o83 million)and for environmental management and relatedactivities (o125 million).Investments amounted to over o375 million,representing an increase of 47% over 2004. The mostimportant investments regarded water management(o60 million) and soil and subsoil protection (o49million).A sector breakdown of environmental expenditureshows “Other activities” accounting for 31% of the totalexpenditure, as it includes the Syndial activities, whichin 2005 sustained expenditures of almost o319 millionfor environmental protection (especially siteremediation activities).

In 2005 environmental expenditure for theexploration & production sector ran to o232 million, a49% increase over 2004. This increase is attributed toinvestments (about o148 million) which rose by 85%.As previously emphasized, there was an improvementduring 2005 in the accounting of environmentalexpenditure in some of the subsidiary companiesabroad. Part of the investments for the construction ofnew plants was allocated to environmental protection.

1,200 million euro

900

600

300

2003 20052004

Eni - Environmental expenditure and investments

Investments

Current expenditure

360 million euro

270

180

90



Refining& Marketing

Other activitiesOilfieldServices


Eni - Environmental expenditure

2004

2005

Eni - Environmental expenditure breakdown for 2005

5.8% Air

13.5% Water

15.6% Waste

31.2% Soil and remediation

0.4% Noise

5.6% Environmentalrestoration

1.2% R&D

7.6% Environmentalmanagement

0.1% Communication

0.1% Training

18.9% Other

320 million euro

240

160

80

2003 20052004

E&P - Environmental expenditure and investments

Investments

Current expenditure

E&P - Environmental expenditure breakdown for 2005

4.6% Air

5.9% Water

11.3% Waste


0.1% Noise


1.5% R&D


0.2% Communication

0.5% Training

53.1% Other


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There were significant expenditures for environmentalmanagement (o36 million), for waste management(o26 million) and water management (almost o14million) and for air protection (about o11 million).

In the gas & power sector, environmental protectionexpenditure was approximately o98 million in 2005, arise of 24% over the previous year. This increase isattributed to investments which rose from o56 millionin 2004 to o75 million in 2005 and account for 77% ofthe total environmental expenditure. The mostimportant investments (55% of the total) relate toactivities for landscape protection and environmentalrestoration carried out by Snam Rete Gas after thelaying and maintenance of gas pipelines. Another largeitem covers interventions for the protection andprevention of contamination of soil and subsoil (15% ofthe total investment) mostly carried out by Italgas,which is remediating several sites within the frameworkof the project for the requalification of industrial areasused in the past for the production of “town gas”.The current expenditure of about o23 million remainedstable with respect to 2004 and is mostly representedby management expenditure (30%) and landscapeprotection expenditure (28%).

The economic commitment of the refining& marketing sector for environmental protection washigh again in 2005, with expenditures of o293 million,representing 27% of Eni’s total environmentalprotection expenditure. This represents an increase of24% over 2004 and is particularly due to the increase incurrent expenditure relating to intense soil andgroundwater remediation and to the installation ofdouble walls for tanks. This item accounts for 41% of thetotal environmental expenditure of the division. Alsosignificant are the expenditures for wastewatermanagement for which investments of o52 millionwere made. Also noteworthy is the sector’scommitment to air protection measures (o20 millioninvestment and o4 million for current expenditure).

320 million euro

240

160

80

2003 20052004

G&P - Environmental expenditure and investments

Investments

Current expenditure

G&P - Environmental expenditure breakdown for 2005

10.6% Air

1.7% Water

3.6% Waste


1.1% Noise


0.2% R&D


0.1% Communication

0.2% Training

13.8% Other

320 million euro

240

160

80

2003 20052004

R&M - Environmental expenditure and investments

Investments

Current expenditure

R&M - Environmental expenditure breakdown for 2005

8.5% Air

21.1% Water

5.4% Waste



1.9% R&D


19.4% Other

Titolo 1° livello

E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / C A P I TO LO

Our commitments

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E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O RT 2 0 0 5 / O U R C O M M I T M E N T S

Climate change and energy

Climate change and possible solutionsThe environment is becoming an increasingly importantfactor in the evolution of energy systems, withpredictable impact on the mix of primary sources andon the quality of end energy products as well as on thedevelopment of conversion technologies and energyuse.The environmental factor must be reconciled withother goals of energy policy, in particular, with thereliability and reasonable costs of supply. Theinteractions among these factors are complex and candetermine, depending on the circumstances, synergiesor conflicts. For example, if the security of supply wereconsidered at risk, a greater demand for environmentalquality, while reducing the cost differential compared tocleaner alternative sources, could stimulatediversification towards those sources.In the energy context, the environmental driver hasmany facets (climate change, the environmentalfootprint of the entire production-end use cycle, airquality in large metropolitan areas, etc.) and each onehas its own degree of importance.Climate change and greenhouse gases (GHG), amongwhich the main role is attributed to carbon dioxide(CO2) produced by the combustion of fossil fuels,represent a global environmental issue, both becausethey involve the atmosphere – a global public asset –and because they can impact heavily upon theecosystem, on economies, on populations and onfuture generations.It is for this reason that climate change has become ahigh priority issue on the international environmentaland energy agendas regardless of energy crises and theinevitable reactions generated by response policies toglobal challenges. In fact, plans for response to climatechange affect fossil fuels which, for the near future, willremain the largest component of world energyconsumption, in order to guarantee the consumer’sstandard of living.Climate change appeared on the international agenda afew decades ago. After the Kyoto Protocol took effecton 16 February 2005 and following decisions made bythe Conference of the Parties in Montreal lastDecember, it can be stated that climate change hasbecome, and will remain, the most importantenvironmental issue for the evolution of the energysector.As far as the energy sector is concerned, responsepolicies to climate change are based on theinternalization of CO2 emissions generated by thecombustion of fossil fuels since, in order to reduce these

emissions, market instruments can be more effectivethan the traditional command & control.To this end, in addition to the classic instruments – taxesand incentives – innovative market instruments arebeing introduced with the aim of placing limits on theemissions of the great “emitters” (both countries andindustrial installations) and of reducing the cost gap ofthe sources with the lowest emissions of CO2.

There are numerous new market instruments beingintroduced or proposed.• CARBON EMISSION RIGHTS Attributed by the Kyoto

Protocol to the individual countries listed in Annex Iwhich have committed to limiting emissions in thefirst compliance period of 2008-2012. For thispurpose the Kyoto Protocol introduced the so-called“Kyoto values”, all expressed in tCO2: AAU (AssignedAmount Units); CER (Certified Emission ReductionUnits) and ERU (Emission Reduction Units), which canbe acquired through projects of greenhouse gasreduction through the flexible CDM (CleanDevelopment Mechanism) and JI (JointImplementation) mechanisms and the RMU (ReMovalUnit) obtainable through forestation andreforestation projects. To fulfill the Kyotocommitments, CER, ERU and RMU have the samevalue as AAU.

• EMISSION TRADING Some of the countries listed inAnnex I, and, in particular, the European Union,introduced a system of Emission Trading based onthe cap and trade mechanism for installations insome energy intensive industrial sectors. EUAllowances (EUA) for emissions equal to cap areassigned annually to individual installations and eachyear they must return EUA equal to the amount ofactual emissions verified by an independent certifier.If the actual emissions are lower than the cap, theunused EUA remaining after restitution acquires aneconomic value. In the opposite case, when actualemissions are higher than the cap, the installationmust buy the missing EUA in the market in order tosurrender them.

• AUCTIONING EMISSION RIGHTS Current systems ofEmission Trading initially provide for the freeassignment of emission quotas. In a second phase,however, part of this quota could be assigned throughauction whereby an upfront cost for emissions isattributed regardless of whether or not it respects thecap.

• GREEN CERTIFICATES Green certificates were introducedin some countries for the purpose of fostering growth

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of production quotas from renewable sources andhigh efficiency cogeneration. Electricity producers areasked to hold a quantity of green certificatescommensurate with their own production capacity.These must be purchased in the market if they are notacquired through the installation of electric capacitythat entitles the producers to green certificates.

• WHITE CERTIFICATES White certificates cover thedistribution of electric energy and natural gas.Distributors are requested to hold a number of whitecertificates commensurate with the energydistributed. These must be acquired on the market ifthey are not acquired through energy saving projectswith end users.

• “YELLOW” CERTIFICATES These certificates do not yetexist but they have been postulated to ensure that afuel quota for road transport is covered by biofuels.

• VOUCHERS - TAXES This mechanism is at the proposalstage. It is aimed at encouraging maximum efficiencyin the end use of energy and is based on theassignment of a coupon for those who chose themost efficient technology (for example, class Arefrigerators or low emission cars) and it can be usedto reduce taxable income for value-added taxcalculations or income tax.

• GREEN PRICING Through this mechanism a pricedifferential is attributed to an energy productaccording to its source.

Greenhouse gases (GHG)As the name suggests, the action of greenhouse gases isto trap heat in the earth’s atmosphere and thereforeaffect its average temperature with a global warmingpotential depending upon the nature of gas. Therelevant greenhouse gases for the energy sector are, inorder, CO2, CH4 and N2O. As their concentrationincreases in the atmosphere, so does their contributionto raising the average global temperature.The concentration of greenhouse gases in theatmosphere has risen constantly since the beginning ofthe industrial revolution and, together with this, so hasthe average global temperature. In the past it was thedeveloped countries that contributed to this rise but, infuture, the contribution of the developing countries willgrow and become predominant.In the Third Assessment Report (2000) the IPCCdeclared that “there is new and stronger evidence thatthe greater part of global warming observed over thelast 50 years is attributable to human activities”. Theaverage global temperature rose by 0.6 °C in the lastcentury. The later emissions of CO2 already in theatmosphere, following the delayed response of theclimate system, suggest that the increase will inevitablyrise to 1.3 °C.Compared to other greenhouse gases, CO2 isresponsible for about 80% of global warming and thispercentage is bound to increase if the use of fossil fuels

Eni began research operations inthe Niger Delta as far back as1962 and, in 1973, was the firstcompany to set up a joint venturewith the national government forthe exploitation of oilconcessions. Since then it hasbeen active in the country inhydrocarbon exploration andproduction operations throughits NAOC, NAE and AENRsubsidiaries controlled by theExploration & ProductionDivision.NAOC, in particular, is involvedin exploration and productionoperations in two areas called

Land Area and Swamp Area, andin 4 oil concessions: OML 60,OML 61, OML 62 and OML 63.Within the framework of theZero Gas Flaring program is theNigerian government and Eniproject for the Okpai electricpower plant (Delta State) in jointventure with the Nigerian statecompany, NNPC, and withConocoPhillips, in which Eniparticipates as operator with a20% share. Inaugurated on 1 April2005 the plant is a 480 MWe

combined cycle fuelled byassociated gas coming from theKwale Gas Plant and provides the

electric energy to the nationalgrid from the Onitsha (AnambraState) power station. The powerplant allows an annual globalreduction of CO2 of about 1.5 Mt(a quantity corresponding to theEni share of 0.3 Mt of CO2). Theenergy supplied represents 13%of the energy produced inNigeria.From 2002 to 2005 NAOC wentfrom 2 to 5 gas liquefactiontrains in the Land Area becomingproductive in November 2005and February 2006 respectively.This brings the total capacity ofthe Bonny liquefaction plant to

ENI IN NIGERIA

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continues at it present rate. The concentration of CO2 inthe atmosphere has reached 379 ppm compared to thepre-industrial value of 280 ppm, it increases byapproximately 2 ppm per year and to it must be addedthe annual increase of 1 ppm of the other greenhousegases.Scientists agree that it is necessary to keep the rise inaverage global temperature under 2 °C, whichcorresponds to a concentration of CO2 of no more than550 ppm.

Implementation of the Kyoto ProtocolThe regulatory process in support of the mitigation ofGHG emissions is a continuous and ongoing process, inwhich the fundamental phases are:• 1992: Signature of the Framework Convention on

Climate Change (UNFCCC), which sets the objectiveof “the stabilization of concentration of greenhousegases in the atmosphere at a level such as to preventanthropogenic damage to the climate” (art. 2);

• 1997: Signature of the Kyoto Protocol, which setsquantitative objectives for the reduction orlimitation of GHG emissions for the countriesincluded in Annex I;

• 2002: The Marrakech Agreements (COP 7), initiatingthe implementation of the Flexible Mechanisms ofthe Kyoto Protocol (in particular, the CleanDevelopment Mechanism);

• 16 February 2005: the Kyoto Protocol becameeffective following ratification by Russia;

• 2006: the Montreal Conference (COP 11), actuatingthe Joint Implementation flexible mechanism anddialogue among the Parties on the objectives for thesecond commitment period 2013-2017.

Dialogue on the second period (post Kyoto) can befacilitated if fairness of commitments and gradualinvolvement of non Annex I countries can beguaranteed and if instruments which will not inhibiteconomic growth can be identified.The convergence of intents is more easily achievable onno-regret measures characterized by specific low costsper unit for emission reduction (for example, energyefficiency).The new market instruments mentioned above, andespecially the flexible mechanisms, can play animportant role in fostering consensus on commitmentswhich will, in any case, be onerous.

Possible reductions in GHG emissionsThe main actions for the reduction of greenhouse gasemissions and of CO2 in particular are the following:• use of fossil fuels with lower carbon content;• CO2-free energy sources;• more efficient energy technologies for conversion

and end use;• Emission Trading;

16.8 Mt per year of LNG. Theproject aims to recover the flaredgas associated with theproduction of crude oil currentlynot used. The start-up of newplants allows a reduction inflared gas and guaranteesconsiderable benefit to the

environment as well as aneconomic advantage to theproject stakeholders, due to thevalorization of the associated gasand the sales of LNG.In 2006 these new projects willbring a daily reduction of flaredgas of 2.1 Mm3. In terms of

environmental impact, inaddition to the Zero Gas Flaringprogram, gas reinjectionoperations are underway withthe goal of reducing flare gas andCO2 emissions into theatmosphere.

“The World Bank estimates that there are 100 billion cubic meters of flared and vented natural gas at the global level.This is a volume equal to the combined annual consumption of France and Germany. The flaring in Africa, in particular,could produce enough electric energy to satisfy 50% of the current consumption of the continent.The Okpai plant is a concrete example of Eni’s commitment to rational and efficient use of natural resources. During ameeting with NAOC management we were able to verify the data on quantities relating to the reduction of gas flaringachieved through the channeling of gas associated with the extraction of crude oil. This system makes possible directuse of secondary raw materials, not valorized so far, in operations producing economic and environmental benefits andimprovements in the standard of living in the local communities involved.”

URS Italia SpA

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• projects for acquiring carbon credits;• capture and permanent geological storage of CO2;• CO2 sinks: forestation and reforestation;• abatement of GHG emissions other than CO2.

USE OF FOSSIL FUELS WITH LOWER CARBON INTENSITY Fossilfuels, for the same amount of energy, have CO2 emissionfactors proportionate to their carbon content. Naturalgas, with a lower carbon content and a higher hydrogencontent, has the lowest emission factor(2.35 t CO2/toe), followed by oil with 3.1 t CO2/toe andcoal with approximately 4 tCO2/toe.Therefore, in view of the restraints on CO2 emissions,natural gas is preferred to other fossil fuels. There is areduction of 1.65 Gt CO2 with the substitution ofnatural gas for 1 Gtoe of coal, whereas if the gasreplaces oil, the reduction is 0.75 GtCO2.The advantage of natural gas is greater in terms ofelectricity production, since the gas is more efficient ingenerating electricity. In combined cycles, theconversion yield recently reached 60%, against a yield of45% in the case of coal. For the same quantity of powerproduced, natural gas can bring a reduction of 0.64MtCO2/TWh compared to coal and of 0.29 MtCO2/TWhcompared to fuel oil.CO2-FREE ENERGY SOURCES In a full analysis, covering thewhole production chain and use, there is no energysource completely free of CO2. The Life Cycle Analysisshows that even the sources conventionally accreditedas “zero emission” prove to have some CO2 emissionfactors.As attention gradually shifts to emission reductions,evaluation of indirect emissions will also be consideredimportant. The choices of new energy sources to bedeveloped and the relevant technologies cannotdisregard LCA evaluations.MORE EFFICIENT ENERGY TECHNOLOGIES FOR CONVERSION

AND END USES Energy efficiency is a must for themitigation of emissions and is also economical in thecurrent context of high energy prices.Many studies confirm the great potential of energysaving (measured in “negajoules” to emphasize energysaving) but also the need to find effective instrumentsfor guidance and promotion. Maximum energyefficiency must be pursued throughout the entireproduction cycle and use of energy sources.

EMISSION TRADING The broadest and most rigorousEmission Trading system was launched on 1 January2005 in Europe. The first period of 2005-2007 can beconsidered a “learning” phase, even if it is already inearnest and the CO2 price reached high levels. Thesecond period, 2008-2012, promises to be much morerigorous since national caps must be defined, that takeinto account the national targets of the Kyoto Protocol,actions for reduction in non-trading sectors andprojects based on CDM and JI flexible mechanisms.The development of ET through CO2 pricing shouldstimulate reduction emission projects and, to thispurpose, it is necessary to include the valorization ofCO2 in the assessment of investments.PROJECTS FOR ACQUISITION OF CARBON CREDITS The role ofcarbon credits purchasable through CDM and JI projectsis gradually gaining importance as Annex I countriesrealize that the gap with respect to the objectivesassigned by the Kyoto Protocol for the 2008-2012period cannot be met only by internal measures. In Italy,for example, it is estimated that the gap forecast for2010 will be approximately 95 MtCO2 per year and thatat least half of it must be covered by CDM and JIprojects.These mechanisms should become increasinglyimportant, both to facilitate Annex I countries inreaching their targets, and to allow countries whereprojects are being carried out to develop energysystems with the best available technologies and thehighest degree of efficiency.CAPTURE AND PERMANENT GEOLOGICAL STORAGE OF CO2 Thegeological storage of CO2 is an important transitionaltechnology which can reduce the negative impact thatemission reduction may have on economic growth.The cost of the entire chain – separation of CO2,transport, injection into the geological formation,monitoring and control – is in the order of 40 o/t CO2.It is, however, considerably lower in the most favorablecases, that is, where there is no need for separationbecause the CO2 is already separated (for example,natural gas decarbonization before feeding into the gaspipelines; hydrogen plants; tar gasification plants) orbecause the injection of CO2 is accompanied byenhanced recovery of oil. All the demonstrationprojects currently underway fall into the category offavorable cases.The importance of this technology was recognized bythe IPCC in a recent report. Furthermore, at theMontreal Conference, the CDM Executive Board wasasked to define a methodology to assess the reduction

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of emissions of these projects. European EmissionTrading also provides for the deductibility of permanentCO2 storage.CO2 SINKS: FORESTATION AND REFORESTATION Theabsorption of CO2 in forestation and reforestationprojects has long been the subject of debate regardingthe extent and persistence of reductions. At theMontreal Conference a reduction assessmentmethodology was approved but it is too early to saywhether it will be enough to stimulate new projects.The first objective to pursue is to stop deforestationthrough appropriate incentives.ABATEMENT OF GHG EMISSIONS OTHER THAN CO2 Many CDMprojects implemented so far related to GHG other thanCO2: the recovery of biogas from landfills, recovery ofN2O from adipic acid production processes, recovery ofHFC gas (hydrofluorocarbons) and recovery of coal-bedmethane.However interesting they may be from the point of viewof the credits generated, because of higher globalwarming potential, the potential volume of credits islimited and can contribute only partially to thereduction needed to cover the large gap of the Annex Icountries.It will be necessary to recur to an integrated use of theoptions mentioned above in order to achieve theobjective of stabilizing concentrations of CO2.

Eni’s response plan and resultsCARBON MANAGEMENT STRATEGY For many years now Enihas singled out the factors in climate change and GHGemissions important to the evolution of the sector andconsequently to the company’s strategic choices.With this in mind, some years ago Eni initiated athorough and systematic analysis of climate change forthe purpose of developing short and long termstrategies for carbon management, of developing themethodological and operative instruments needed andof designing a more sustainable energy systemcompatible with mitigation of greenhouse gasemissions.This analysis is constantly updated as scientificknowledge evolves and political decisions are taken onthe matter.Eni’s Carbon Management strategy set the followingobjectives:• preferential development of low carbon content fossil

fuels, and natural gas in particular;• gas-electricity integration, in order to exploit the high

efficiency of gas in electricity generation andcogeneration;

• active participation in Emission Trading, promotingemission reductions in its own industrial plants;

• carrying out reduction projects based on the CDM and JIflexible mechanisms of the Kyoto Protocol to developenergy systems with the best available technologies andhighest efficiency in host countries;

Mitigation of climate change

CO2 emissions

SOURCES WITHLOWER CARBONCONTENT

CONVERSIONTECHNOLOGIESAND MOREEFFICIENT USE

EMISSION TRADING,CDM AND JI

CAPTUREAND PERMANENTSTORAGE OF CO2

CO2-FREE ENERGYSOURCES

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• the progressive reduction of the flaring of the gasassociated with oil production, developing local andinternational market outlets;

• development of technologies for the separation andgeological storage of CO2;

• development of more efficient technologies forhydrogen production;

• design of a sustainable energy system based on aplurality of high efficiency sources and technologies.

GHG EMISSIONS Eni’s CO2 emissions can be divided intothree categories:• direct emissions from its own industrial plants related

to its internal energy consumption (for example, oiland gas centers, refineries, petrochemical plants,distribution of energy products to the final market).In 2005 this energy consumption was 13.98 Mtoe andthe corresponding CO2 emissions were 35.96 Mt CO2

with an average emission factor of 2.57 tCO2/toe. Thelow emission factor, falling between those of oil andnatural gas, was due to substantial recourse to the useof natural gas and refinery and petrochemical gas,which have a significant hydrogen content;

• direct emissions from thermoelectric plants forenergy production and steam used internally andexternally. 26.73 TWh of electricity and 23.28 Mt ofsteam were produced in 2005 with a primary energyconsumption of 4.23 Mtoe and CO2 emissions of10.05 MtCO2. Attributing to steam cogenerationemissions that would have been generated if the heathad been produced separately, it is found that theaverage electricity generation emission factor was0.34 tCO2/MWh, one of the lowest values that can beobtained from fossil fuels. Again in this case, the lowemission factor is due to the preferential use ofnatural gas and to the extremely efficient conversionof combined cycle cogeneration;

• emissions from the use of fuels sold by Eni to itsclients. In 2005, in the aggregate, Eni sold 43.66 Mtoeof oil products and 61.66 Mtoe of natural gas to itscustomers which, in terms of emissions, amounted toa total of 279 MtCO2. The average emission factor was2.65 tCO2/toe, closer to that of natural gas than to oiljust because Eni has been promoting thedevelopment of natural gas for years.

Eni’s organization and management of Emission Trading

63 INSTALLATIONS

GHG MANAGER ON SITEGHG TEAM

ACCOUNTINGREPORTINGAUDITREDUCTION MEASURES

8 BUSINESS UNITS

GHG MANAGERFOR THE BUSINESS UNIT

GHG COORDINATOROPERATING SECTOR

ENI CORPORATE

DIHSE

GREENHOUSE GASMANAGEMENT TEAM

ENIFIN

Eni direct and indirect CO2 emissions in 2005

For internal energyconsumption:

13.98 Mtoe35.96 MtCO2

Average emissionfactor:

2.57 tCO2/toe

For electric energyand steam productionon behalf of third parties:

4.23 Mtoe10.05 MtCO2

Average emissionfactor:

2.37 tCO2/toe

Natural gas 61.66 Mtoe144.90 MtCO2

Oil products 43.66 Mtoe134.02 MtCO2

Total 105.32 Mtoe278.92 MtCO2

Average emission factor: 2.65 tCO2/toe

ENI CUSTOMERS EMISSIONSDIRECT EMISSIONS

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EMISSION TRADING MANAGEMENT Eni is one of the majorItalian and European players in the Emission Tradingsystem. First in Italy, for the number of plants involved(61 plants representing 7% of the total installationssubject to Emission Trading) and second in terms of EUAassigned by the National Allocation Plan (22.4 MtCO2 in2005 or 10% of the total allowances assigned).In order to prepare for Emission Trading, Eni developeda series of coordinated actions with the following scope:• introduction of a uniform group protocol for

monitoring and accounting for emissions, in line withthe European guidelines for monitoring andreporting;

• implementation of a web-based database in all thegroup worldwide installations, capable of ensuring anaccurate, reliable and transparent accounting for GHGemissions of each source of emission of each plant;

• verification of the suitability of Eni’s managementsystem to respond to the requirements of EuropeanDirectives and guidelines for monitoring andreporting, in advance of the first Emission Tradingdeadlines;

• sharing of knowledge and best practices within theentire organization, involving more than 200 people,including those involved only part time.

It was necessary to develop a group-wide organizationfor the management of Emission Trading, which startedwith the individual installations, through the businessunits and finally consolidated at the corporate level.In Eni, Emission Trading is coordinated by the Corporate,which draws up both a budget forecast for each quarterand the final balance for the Balancing Plan for thepositions of the individual installations and the businessunits. It is thus possible to foresee any complianceproblems which may occur and find timely solutions bytaking steps to reduce emissions or to resort to themarket.The final balancing is managed by Enifin, Eni’s financeand trading company, through a series of internaltransactions within the same business units and amongbusiness units with resort to the external market whennecessary.Since the organization and integration of all theseactivities is complex, a Greenhouse Gas ManagementTeam (TGGG) was set up in Eni with the followingfunctions:• coordination of Emission Trading management

activities of the business units and the individualinstallations involved;

• drafting of plans for the GHG emissions compliancewith the Emission Trading system and the relatedtotal figures at Eni level, identifying lines of action toguarantee the balancing among short and long termconsolidated commitments;

• identification of transactions to be made by eachinstallation in fulfillment of its obligations tosurrender emission allowances;

• approval of the Balancing Plans, both forecast andfinal version, of Eni’s consolidated position in theEmission Trading system.

The complex organization which was developedsuccessfully passed its first test in the early months of2006 when the 2005 emissions were audited and thefirst surrender of EUA took place.Participation in the Emission Trading system requiresnot only accurate accounting but also a continuousassessment of possible reduction projects in terms ofthe market value of CO2.Since CO2 has acquired a market price, it will be given avalue in the assessment of investments to promotethose involving lower emissions. This is all the moreimportant in the light of the national allocation plansfor the second compliance period, 2008-2012, whichwill be much more severe and tied to nationalcommitments of the Kyoto Protocol.

CDM AND JI FLEXIBLE MECHANISMS In addition toparticipating in the European Emission Trading system,Eni is developing a portfolio of reduction projects basedon the other flexible mechanisms of the Kyoto Protocol.It has already submitted to the CDM Executive Boardthe electricity generation project completed at Okpai inNigeria, which uses associated gas previously flared off,with an annual emission reduction of 1.5 MtCO2.The Okpai project, the first in a larger and alreadydefined portfolio, is part of the cooperation which Enihas established with the Italian Ministry for theEnvironment and Protection of the Territory through aVoluntary Agreement signed during the COP9 held inMilan in December 2003. In its widespread industrialactivities abroad, Eni can, in fact, through GHGreduction projects, make a substantial contribution tothe achievement of the Italian objective of greenhousegas emission reduction assigned by the Kyoto Protocol.

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The Voluntary Agreement between Eni and the Ministryfor the Environment provides that the latter authorizeEni to operate as a legal entity in implementing theseprojects. In order to facilitate the carrying out of theseprojects, bilateral agreements can be made withinterested countries. As an example, a bilateralagreement was signed between the Nigerian Ministryfor the Environment and the Italian Ministry for theEnvironment for the purpose of promoting closercooperation and to identify and carry out CDM projects.The Voluntary Agreement is not limited to CDMprojects but also aims at utilizing Joint Implementation.For this purpose, Eni has launched a study ofopportunities for JI projects in the most promisingcountries. The prospects are very encouraging, sincethere are many countries where great emissionreductions can be achieved through increasingefficiency in their energy systems.

DESIGN OF A MORE SUSTAINABLE ENERGY SYSTEM

Technological innovation plays a very important role inthe development of a more sustainable energy systemcompatible with the objective of stabilizingconcentrations of GHG in the atmosphere.Eni’s commitments to this objective are prevalentlyfocused on the capture and permanent storage of CO2

in geological formations and in energy uses of biomass,both for production of electric energy and for use ofbiofuel in road transport.

Eni, together with other oil companies, participates inthe CO2 Capture Project, which foresees thedevelopment of innovative technologies for the captureof CO2 and risk analysis for long term storage of CO2 ingeological structures.In addition to participating in the CCP project, Eni haslaunched an internal strategic project to provegeological storage of CO2, using already separated CO2

available in Italy or abroad.With regard to the energy use of biomass, technicaleconomic feasibility studies have been done on theproduction of electric energy from vegetable oils andbiofuel substitutes for diesel fuel, obtainable throughhydrotreatment of vegetable oils.

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E N I H E A LT H SA F E T Y E N V I RO N M E N T R E P O R T 2 0 0 5 / O U R C O M M I T M E N T S

BiodiversityEni operates on a global scale and is in contact with agreat variety of natural environments, from desert totundra, from jungle to the Arctic and Antarctic poles,from Mediterranean maquis to coral reefs. Many ofthese habitats belong to the category of ecologicallycritical areas where the potential impact of activities onthe biodiversity can occur at any stage of theproduction phase – from exploration to production,from transport to refining, from distribution to the useby the end user.Biodiversity plays an essential role in the properfunctioning and integrity of ecosystems and is aninstrument for assessing their state of health and theimpact of human activities on them.Eni has initiated assessment programs and projects forthe mitigation of the potential impact of its ownactivities, considering the conservation of biodiversityone of the objectives of environmental protection. Itsapproach is directed at both safeguarding species andhabitats and identifying bio indicators that will allow itto constantly monitor the impact of human activities onthe environment.

Terrestrial habitatEXPLORATION AND PRODUCTION ACTIVITIES In Val d’Agri theAgriBiodiversity Project monitored the biodiversityintegrating the ecological surveys with the study of thesocio-economic context of the site. The salientcharacteristics of the local ecosystem were identified

and these cast light upon the changeswhich occurred over extended periods oftime owing to external factors and to theeffects of oil activities. The monitoringfocused on areas selected duringexploratory visits, taking into account theindications that emerged from

consultations with local stakeholders. The bio-indicators used included species of flora and fauna, bothdomestic and wild, among which lichens, beech trees,

salamanders, woodpeckers, hymenoptera and grazinganimals. The socio-economic indicators included theecological footprint of the population and long termtrends in the use of environmental resources.In parallel, workshops were conducted for operativepersonnel and staff for the purpose of illustrating theimportance of biodiversity for the oil & gas sector.Particular emphasis was placed on the effects ofoperational activities on ecosystems, with a view tointegrating conservation of biodiversity withoperational and management processes.

In collaboration with the Biomarker Laboratory of theDepartment of Environmental Sciences of the Universityof Siena, the E&P Division promoted the “AdvancedProcesses for Oily Water Treatment” project with theobjective of assessing the quality of wastewatertreatment, through biomarker methodology. In order toachieve a good balancing between environmentalsafeguarding and economy of the technologyemployed, toxicological tests were done on the waterssubjected to traditional treatments and on thosepurified by innovative methods. The bio indicatororganisms used were the common carp for waterscoming from onshore sites and the common sole foroffshore waters; both had already been tested in Bioagriand Biomare projects respectively.

LAYING OF METHANE PIPELINES After an environmentalimpact assessment had been made,Snamprogetti was assigned the task by SnamRete Gas of carrying out a study to analyzedisturbances to the Marsican brown bear(Ursus arctos) caused by the laying of theSulmona-Oricola methane pipeline in theareas where it crosses the Regional NaturalPark of Sirente-Velino and the special protection zone ofthe Simbruini Mountains. The study was conductedalong three lines:

BIOMARKERSIn the framework of assessingbiodiversity one signal ofcontamination levels is thebiomarker, an indicator of theeco-toxicological risk levels.Monitoring through biomarkerssupplies information on actualbiological damage, and on in vivo

assessments, even in situations ofchronic pollution, ofenvironmental impact onnaturally occurring organismspresent in the ecosystem underexamination. Biomarkers aretherefore real and proper indicesof molecular, biochemical andphysiological stress which allow

an assessment of biochemicalresponses generated by anorganism in reaction to achemical agent. Continuousprogress in this field will makeavailable a growing range ofbiomarkers as sensors of the stateof the ecosystem.

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• analysis of the potential distribution of the Marsicanbear based on three indicators; environmentalsuitability (linked to the presence or absence of theanimal in the area), connection and permeability ofthe territory and interference in the movements ofthe bear in its range and in its hibernation zones;

• assessment of potential impact of the works on thespecies;

• identification of the best mitigation measures for theprotection of the species.

Through superimposing the range of the constructionsite over the spatial distribution of the three indicatorsof the species, the following mitigation measures wereidentified:• minimization of any disorientation factors potentially

affecting the bear during its movements, byconcentrating work sites in short stretches andkeeping trenches open only for the time strictlynecessary to finish the job (preparation of the trenchfloor, pipe positioning and welding) so as to restorethe site to its original profile in as short a period aspossible;

• the creation of a shallow slope at one end of the twoends of the trench, to allow the bear to continue itsroute if, when it encountered the excavation, itdecided to cross it rather than go around it;

• the protection of the bear, should it get caught in anexcavation trench, using emergency procedures toliberate the animal;

• planning of construction site works so as not todisturb the hibernation of bears.

REMEDIATION ACTIVITIES The Syndial company hassubmitted a project for the remediation of the Mantuaplant located inside the Vallazza site now designated aSite of Community Importance according to theparameters of the 92/43/EEC directive on the protectionof habitat and animal and vegetable species worthy ofpreservation. The remediation project provides for

taking soil samples based on a specificsampling grid in order to find variouschemical pollution parameters. Probing willbe done using both traditional probes ontrack-mounted or wheeled vehicles, andGeoprobes, mounted also on floats. In orderto reach the sampling spots, trails must be

made, with the consequent cutting of vegetation andalteration of the current habitat. The analysis done bySnamprogetti on the state of conservation of the site,confirms the primary importance of the habitat and therichness of ornithological species that also spend thewinter there, such as the great white heron, dwarfherons and cattle egrets.

The disruptive sampling activities can affect thebiological cycle of the birds in critical phases whiledrilling can affect the invertebrate land fauna andvegetation. In the March to mid-August period whenthe reproduction of many species birds and amphibianstakes place, the degree of environmental value is veryhigh almost everywhere.In order to limit the impact and preserve the delicateenvironmental equilibrium of Vallazza, severalmitigation measures were identified. December andJanuary were found to be the best periods for sampling.Although the planned number of samplings remainedunchanged, it was necessary to find new sampling spotsand an area characterized by swamp vegetation in thecentral sector was excluded from the sampling area,since it was the wintering-over rest site of the birdpopulation.

Marine habitatEXPLORATION AND HYDROCARBON PRODUCTION TheBiomare Project developed by the E&P Divisionconcluded with the development of a protocol for theeco-toxicological monitoring of production areas. Theproject drew up a program of environmentalmonitoring based on the use of animals as biomarkersfor the assessment of potential eco-toxicological effectsof activities in the marine environment of theMediterranean.The biomarkers most sensitive to contaminants typicalof the oil industry and the bio indicatorsrepresentative of the area are the commonsole (Solea vulgaris) since it is an organismliving in contact with sediment andtherefore representative of that part of theenvironment, and acorn barnacles alsoknown as dogs teeth (Balanus perforatusand Balanus trigonus), crustaceans that live onplatforms pylons and are therefore organismsrepresentative of seawater column. The levels ofcontaminants found in biomarkers in the water columnand in sediment, showed no ecologically toxicalterations that could be attributed to offshoreactivities.

In line with this approach was the project for the“Characterization of biodiversity and monitoring of therole of offshore platforms in the ecosystem”. Researchfocused on the ecosystems around the gaseoushydrocarbon extraction platforms operating in theIonian Sea (Hera Lacinia, Hera Lacinia 14, Luna and LunaB) and in the Adriatic (Cervia B, Antonella, Eleonora,Squalo, Giovanna, Fratello Nord, Fratello Est and Fratello

81


Cluster). The first year of monitoring focused onoceanographic research (water and sediment), fishing,visual census (the technique of taking a census by directobservation), trophic interaction, the state of health offish species and ROV (Remotely Operated Vehicle)exploration, which enables a surface operator tointeract with the marine environment without diving.The second phase foresees sighting through remotesensing cameras placed on the platforms. Thecombination of these tested techniques should lead toa definition of an optimum methodological approach tocharacterization of the biodiversity in offshoreenvironments.Moreover, Snamprogetti is conducting a project, in theexperimental stage, based on the Polymerase ChainReaction method, which is studying the variations in theDNA genome of phytoplankton induced byenvironmental stress caused by such phenomena ascoastal human waste discharges and platform oil spills.The first samplings from offshore platforms in theAdriatic for testing this method should be available inearly 2006.

OFFSHORE PIPELINES Saipem is participating in theSakhalin II project for the transport of natural gasthrough pipelines and LNG plants to new markets inEast Asia.In this undertaking, Saipem, for the first time, facedtechnological challenges in the production of naturalgas in remote and critical areas, in compliance withstringent environmental requirements.Climatic difficulties are such that oil and gas productsextracted by the fixed platform located about 20 kmfrom the coast must be able to be transported even inwinter when the sea is frozen, through offshorepipelines connected to the coast. These pipelines mustbe protected from icebergs which drift and run agroundduring the thaw, causing deep furrows in the sandy soil.The protection of these pipelines is secured by buryingthem at such a depth as to minimize any possibleeffects of interaction with ice.The onshore pipeline project involves crossing morethan 1,000 rivers, a good number of which are territorywhere salmon lay their eggs, an important natural andeconomic resource for the island. There are, moreover,many species of birds, some of which are in theendangered category which must be protected throughenvironmental monitoring programs so that the projectdoes not endanger their survival.The offshore projects, on the other hand, must protectthe grey whales present in the sea surrounding theisland and in danger of extinction. Various coastal areas

on the east side of the island are the feeding andreproduction grounds for these animals.To this end, Saipem guarantees the presenceon the ships used in building offshorepipelines of expert observers to watch overthe whales (of which it is estimated there areonly one hundred left) and over the measuresin place which provide for:• the carrying out of operations far from the

routes of the animals;• the minimization of underwater noise and actions

that would disturb the known habitats;• a ban on fishing, photographing and discharging

anything into the sea in the feeding grounds;• specific training for the crew in the protection of grey

whales.The Dolphin Project is also of great interest; it concernsthe transport and storage of natural gas from Qataroffshore. The extraction zone is in the Arabian Gulfnorth east of Raf Laffan and the gas extracted will betransported through a series of pipelines, both offshoreand onshore, some of which were laid by Saipem.Following a series of Environmental Impact Assessmentsand the environmental baseline, Saipem fine-tuned aplan for environmental protection and measures formitigating the interactions between construction worksand the marine environment, which is of high value dueto the presence of a coral reef, of dugongs (anendangered Cetacea species), dolphins and turtles.The building of pipelines could increase the degree ofturbidity in the water. Saipem consequently introduceda water sediment monitoring system and withsimulations models proved that hydrotesting activitiesdid not interfere with the environment. In planning theroute for the pipeline which must intersect the coralreef (an important indicator of environmental quality inthe marine habitat) a corridor was found where thecoral was, for the most part, dead. To protectthe habitat and ensure that constructionwork does not disturb whales and turtles,there is a Marine Mammal Observer on boardSaipem ships, while on land a biologistmonitors the coastline south of Abu Dhabinear the link with the onshore pipeline wherethe turtles nest.

82


Transport systemFor the transport of crude, gas, oil products andpetrochemicals, Eni uses a logistics structure made upof a pipeline network, oil pipelines, a fleet of fourmethane tankers, chartered tankers, and a fleet of roadtankers to distribute its products to the retail andwholesale markets.54.2% of the products is transported through pipelines(oil pipelines and gas pipelines) which are considered tobe the safest method of transport with the highestenergy efficiency and least environmental impact.

In Italy the system of gas supply and distribution iscomposed of the transport network and a regasifyingplant. The network extends over a total of 32,500 km,

30,712 of which are owned by Eni. In addition, Eni ownsfour methane tankers to transport LNG and deliver gasto the regasifying plant at Panigaglia managed by SnamRete Gas, the sole operator in Italy for LNG regasifying.The national gas system is 80% fed by gas importedthrough an international system of high pressurepipelines over 5,300-km long for which Eni holds rightsof transport. A secondary network operated by Italgas isconnected to the primary network and extends over48,000 km, serving more than 1,400 Italianmunicipalities.

At the national level, Eni is leader in oil product transportand has an integrated logistics structure composed of asystem of 12 depots managed directly and locatedthroughout Italy, as well as a network of oil pipelines. Thelogistics structure uses also rented tankers for seatransport of crude and oil and chemical products, and ofa fleet of its own road tankers and those of externaltransport companies for secondary distribution ofproducts to the retail and wholesale markets.

Gas pipelinesThe network of gas pipelines is fed by pipelinesimporting natural gas from Russia, Northern Europe andNorth Africa, by the terminal for regasifying atPanigaglia and by production and storage centerslocated throughout Italy. 85.1 Gm3 of natural gas werefed into the network during 2005, an increase of 5.8%over the previous year.Abroad Eni holds rights of transport in a network ofapproximately 5,300 km with direct operatingresponsibility for 3,058 km.In Italy, the transport system of the PRIMARY NETWORK

managed by Snam Rete Gas is composed of pipes of a

32 thousand km

24

16

8

2003 20052004

Length of gas pipelines of Snam Rete Gas

100 Gm3

75

50

25

2003 20052004

Gas fed into the gas pipeline network

Products transported

Natural LNG Crude Oil Chemical Totalgas products products

2003 (Mt) 54.2 4.1 45.6 40.5 9.8 154.22004 (Mt) 57.3 2.7 51.2 41.9 10.2 163.42005 (Mt) 62.2 2.8 62.8 46.3 10.0 184.1Distribution of products transported in 2005 (%) 33.8 1.5 34.1 25.1 5.4

Methods of transport

Gas Ships Oil Road Rail Intermodal Totalpipelines pipelines

2003 (Mt) 54.20 53.78 28.63 17.06 0.22 0.33 154.22004 (Mt) 57.34 58.20 29.58 17.10 0.29 0.89 163.42005 (Mt) 62.19 65.58 37.63 17.13 0.77 0.80 184.1Distribution of methods of transportused in 2005 (%) 33.8 35.6 20.4 9.3 0.4 0.4

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diameter up to 1,200 mm at pressures from 4 to 75 barand of 11 compression stations and 562 pressureregulation and reduction plants.The most important environmental aspects concern thetemporary use of the soil during the construction ofinfrastructures and the atmospheric emissions from gasturbines installed in compression plants duringoperation. During construction, trenches are dug forpipe laying using technologies that interfere as little aspossible with the surrounding environment. Once thisoperation has been completed, careful restoration workis done to return the site to its original condition.In recent years, some turbines have been modified andsome new high performance units have been installed,which have led to a reduction in both energyconsumption and emissions deriving from gascombustion. A program is underway that provides for:• adoption of safety valves with a signaling device for

reporting of possible leaks consequent upon partialor accidental aperture;

• start-up of gas turbines using electric or hydraulicstart-up systems.

Plants and pipes are periodically inspected andmaintained to ensure high standards of safety. Theintegrity of the pipes is checked by an “intelligent pig”, adevice which travels through the pipes capable ofidentifying possible defects. In 2005 more than 1,650km of network were inspected by “intelligent pigs” andapproximately 11,800 km of network by helicopter inaddition to checks carried out by vehicle and on foot, tocheck potentially dangerous situations such as thirdparty works near the pipelines.

SECONDARY DISTRIBUTION in Italy is managed by Italgaswith a network of 48,471 km. In 2005 in Italy 8.5 Gm3 of

gas were distributed and 5.35 Gm3 abroad. The mostsignificant impacts derived from:• atmospheric emissions from combustion processes

and fugitive emissions from the grid;

8.0 t/Mm3

6.0

4.0

2.0

2003 20052004

CO2 emissions/gas distributed by Italgas

0.05 kWh/(t*km)

0.04

0.03

0.02

0.01

2003 20052004

Energy performance of Praoil oil pipelines

TENP

TAG

TTPC

TRANSITGAS

Panigaglia

Gela

Baumgarten

BocholtzBlarigniesDunkerque

TMPC

Third party gas pipelines

FRANCEAUSTRIA

CROATIA

TUNISIA

SWITZERLAND

SLOVAKIA

UKRAINE

RUSSIA

GERMANY

NETHERLAND

S

NORWAY

ALGERIA

LNG

LIBYA

Greenstream

Saf Saf

INFRASTRUCTURES OF GAS TRANSPORT

8.0 t/Mm3

6.0

4.0

2.0

2003 20052004

CO2 emissions from transport/gas transported by Snam Rete Gas

84

along the route. The pipes are checked by “intelligentpigs” which periodically inspect parts of the network.Each oil pipeline is equipped with interception valves atappropriate points in order to allow interruption of theflow in case of accidental breaks in the line. Leakdetection instruments are installed to monitor anypossible leaks occurring during operation. Thefunctioning principle of this instrument is based on flowmeasurement by means of ultrasound detection.

Road transportIn 2005, 14.8 Mt of crude oil and oil products and 2.3Mt of chemical products were transported. The HSEprogram adopted to improve environmentalperformance and road transport safety provides for theuse of security and control systems of transport vehiclesand a series of initiatives for drivers, which call upontechnological innovations, training and health


• waste produced by construction work and pipelinemaintenance and by remediation of decommissionedsites;

• use of hazardous substances such as odorants.The efficiency of a gas distribution network is measuredby its ability to satisfy the demands of the customers byproviding continuous and safe service. In addition toproper planning and plant building, this objective isguaranteed by controls, analysis and interventions inthe distribution network. Control programs concern theodorization of gas, verification of the distributionparameters, scheduled inspections of the distributionnetwork, cathodic protection of the steel pipes, thefunctional testing of equipment, remote supervision ofplants and the network and immediate interventionand emergency response plans.

Oil pipelinesThe Eni network of oil pipelines is over 2,400-km longand serves the four depots in Pegli (province of Genoa),Ferrera (province of Pavia), Civitavecchia (province ofRome) and Pantano di Grano (province of Rome). 37.6Mt of crude (75%) and oil and chemical products (25%)were handled in 2005. The depot and the oil pipelinenetwork management systems have been ISO 14001certified since 1999.The oil pipelines are made of steel and protected frommechanical interference by plastic and/or bituminouscoating and, where they cross major highways orrailways, additional thicker protective sheathing isprovided. The lines are shielded againstelectro-chemical corrosion by means of impressedcurrent cathodic protection and are posted with signs

1.5 number of accidents/million km traveled

1.2

0.9

0.6

0.3

2003 20052004

Road transport accidents in Intermode

LNG Shipping is the Eni companyoperating four methane carriersfor the transport of LiquefiedNatural Gas by sea to the Italianterminal at Panigaglia and at thesame time offers a rental servicefor other operators in the sector.In 2005, in collaboration withEni’s HSE staff and with thecompany responsible for thetechnical and administrative

management of the fleet and itsmerchant seamen, LNG Shippingdevoted great efforts toimproving and harmonizing itsHSE accounting system. Theresult of this process was thepublication of the company’s firstHSE Report, presented atPortovenere in September 2005.The Report describes the impactof ship transport of liquefied

natural gas according to anintegrated approach, taking intoaccount the problems relating tothe product, to the modality oftransport and legislation valid forthe maritime sector. Thedocument describes the “shipsystem” taken not only in terms ofa grouping of plants, processesand operative modes, but also interms of quality of life on board,

LNG SHIPPING


85

monitoring. Intermode, Eni’s operating company in thissector, has launched a series of projects for remotecontrol of transport vehicles. As an experiment, 70vehicles operating in the Venice and Brindisi areas havebeen equipped with GPS devices and GPRS modemswhich enable the company to monitor the position,direction and speed of the vehicle, all the data from theelectronic control board (type and quantity of producttransported) and from the instruments of the vehicleand a series of information related to externalconditions (weather, traffic conditions, etc.), which isentered manually.An internet portal (www.masterdrive.info) withinter-functional services accessible to personnel andexternal transport companies has been activated totank truck drivers. Through it, HSE can deliver itstraining and sensitizing programs and involveemployees in order to improve transport safety andminimize accidents. The portal will have a Safety Gamemodule for continuous checking on learning progressand will interface with palmtops provided to drivers.In collaboration with the Sleep Physiopathology Centerat the University of Genoa, a program has beenlaunched to study and treat the precursors ofsomnolence at the wheel. The pilot study involved 300drivers in the north and will be successively applied tothe entire group of drivers who work for Eni.

Sea transportEni operates four METHANE carriers for the transport ofLNG. In 2005, these ships carried 2.8 million tonnes ofLNG from the ports of Arzew and Skikda in Algeria tothe Panigaglia LNG terminal in Italy, to the Enargas plantin Barcelona, Spain, and to the Gas de France terminal atFos sur Mer in France. The ships were designed, built andmanaged according to HSE standards set by Eni. Thetechnologies used in each ship were the best availableones in the market at the time of building. The ships areequipped with steam turbine engines and four cargotanks. The temperature of the gas transported ismaintained at almost atmospheric pressure by means ofevaporation control and an efficient system of thermalinsulation, and by using the boil off gas in the boilers.Boil off gas is thus used as fuel to run the ships.To protect cargo tanks, methane carriers have ballasttanks, a cargo monitoring system with sensors and gasdetector alarms.A study in 2005 of the environmental impact ofmethane carriers on the marine environment has beenconducted, which allowed to update the atmosphericemission factors, relating them to the technologicalcharacteristics of the four methane carriers.

crew health and safety and thesecurity measures adopted. Themain impacts illustrated andaccounted for through specific

physical indicators, werecommensurate with the activityand quite contained, andconcerned greenhouse gas and

nitrogen and sulphur oxideemissions, the production ofwastes (similar to urban waste),bilge and ballast water.

“The initiative of LNG Shipping in publishing the HSE Report is, to our knowledge, a first in the shipping sector, at least inthe Mediterranean area. The audit made of the LNG carrier, Elba, in the careening basin of Trieste is, first of all, a meritpoint for LNG Shipping and for Eni since it carries on the work started last year with the audit of the LNG Portovenereship at the docks in the port of Barcelona. From the point of view of content, the audit this year provided theopportunity to assess the management of HSE impacts generated in another important phase of the operating cycle ofa methane carrier, that of periodic maintenance.”

URS Italia SpA


86

Approximately 58 Mt of crude oil and oil products wereshipped by sea in 2005.The Shipping Department of the R&M Division, whichoperates in full respect of ISO 9001 QualityManagement System norms, uses a fleet of tankerswhich completed 1,060 hauls using 30 time chartertankers (67%) and 415 hauls with spot charter tankers(33%); the tankers, on the average, were approximately5 years old.The time charter tankers are all double hulled with aninertization system for the tanks in line with the mostadvanced safety and environmental protectionstandards.

In its selection of charter ships, Eni decided to applyeven more stringent standards than internationalregulations, adopting its Minimum Safety Criteria; thesecriteria and limits must be respected by all charter shipsand by anyone working in any ship terminals where Enihas an interest.The vetting system used to choose tankers is based ontechnical aspects and quality and also takes into

account the companies managing them. This is done toensure that vessels are suitable and adequatelyequipped to perform the service and that they operatein accordance with standards for safety, healthprotection and pollution prevention.Inspection and screening are carried out by a staff of Eniinspectors and by a network of independent inspectorsfor foreign port inspections, all of whom are accreditedto OCIMF.There were 298 inspection visits made in 2005 and2,799 checks on documentation complying withinternational legislation and Eni guidelines.

There is also an assessment process of technical aspectsand quality of the tankers used to transport chemicalproducts (in 2005 5 Mt). The following databanks areused to check on the suitability of a ship; CDI (ChemicalDistribution Institute, an organization of CEFIC), SIRE;Lloyds Maritime Information Services; PSIX (US ShipInformation Exchange); McKenzie Tanker Register. Incases where there are insufficient data or in doubtfulcases, CDI inspections are carried out on individual ships.

87


LNG Shipping sea transport of LNG in methane carriers

2003 2004 2005Hauls (number) 182 110 120Miles hauled (nautical miles) 130,274 77,833 79,884

Total consumption (toe) 93,336 75,159 83,342including:

Fuel consumption natural gas (toe) 56,943 48,050 55,337diesel fuel (toe) 233 283 221

high sulphur content fuel oil (toe) 36,160 26,826 27,784SO2 (t) 2,339 1,738 1,798

Atmospheric emissions SPM (t) 169 126 131CO2 (t) 256,066 203,886 223,978

CO2 emissions/miles hauled (t/miles) 1.97 2.62 2.80

Sea transport of crude and oil products by external transport companies

2003 2004 2005

ShipsTime charter ships (number) 30 30 29

Spot ships (number) 354 343 415

HaulsTime charter ships (number) 1,252 1,168 1,060

Spot ships (number) 354 343 415Miles hauled by time charter ships (nautical miles) 1,218,052 931,587 662,440

Total consumption (toe) 183,742 189,518 167,703

Fuel consumption (1) including:marine diesel fuel (toe) 9,790 11,351 9,960

high sulphur content fuel oil (toe) 173,952 178,167 157,743SO2 (t) 11,514 11,832 10,473

Atmospheric emissions (2) SPM (t) 803 823 729CO2 (t) 617,774 636,831 563,551

CO2 emissions/miles hauled (t/miles) 0.51 0.68 0.85

(1) Fuel consumption refers to time charter vessels.(2) Emissions were estimated by Eni on the basis of literature emission factors.


88

Eco-friendly productsDownstream from exploration and hydrocarbonproduction, Eni sells oil products and natural gas,produces electric energy and sells chemical products.These products are sold to customers underwell-known brand names in Italy and abroad.The offer of refinery products, natural gas, electricenergy and chemicals comes complete with technicalconsulting services. End product quality together withits eco-compatibility is one of the main objectives thatEni has pursued for years.Refinery products are distributed under the Agip brandname and are the fruit of considerable research anddevelopment. Automotive and industrial vehicle fuelsand lubricants, special products for industry, grease andother products come from refineries where hightechnological and environmental standards are in place.

Automotive fuelsThe distribution network of the Agipbrand sells high quality fuels with reducedenvironmental impact. Eni was the first oilcompany to sell automotive gasoline in

the market through the “Linea Blu Carburanti” whoseenvironmental characteristics had anticipated the limitsimposed by European legislation; its octane value,higher than that of normal automotive gasoline,improves motor efficiency. “BluSuper” in particular, hasan aromatic content lower than 35%, benzene less than1% and sulphur is less than 10 mg/kg. The almost totalabsence of sulphur in gasoline eliminates emissionscontaining sulphur such as sulphur dioxide andsulphates, which are responsible for acid rain, improvesvehicle catalyzer efficiency and consequently reducesthe pollutant emissions from combustion. In 2005, the

In line with current sustainableenergy and transport policies,the R&M Division, together withsome Italian regions, is buildingnew generation multienergysupply plants to satisfy the newdemand for alternative fuelsfrom fuel cell mini fleets for thetransport of persons and goods.In 2003 the first multienergyservice station was inauguratedunder the Agip brand name,

distinguished for its reducedenvironmental impact. Locatedon the west ring road aroundMilan, in the municipality ofAssago, this multienergy servicestation is eco-efficient andself-sufficient for its own energyneeds. A series of built-inphotovoltaic panels in thebuilding exploit solar energy tosupply the station with most ofthe energy needed to run it. The

photovoltaic plant composed of270 modules covering a totalarea of 180 m2 can produceelectric energy to a peak powerof 20 kWh. In addition totraditional fuel, the station alsosells the Blu fuel line, LPG andmethane.Eni has launched for the period2006-2009 a solarizationprogram for the service stationsof the Agip group, with a view to

MULTIENERGY STATIONS

12 million tonnes

9

6

3

Gasoline includingBluDiesel

includingBluSuper

Diesel Marinefuel oil

Jet FuelLPG

Automotive fuels sold in 2005

2.0 million tonnes

1.5

1.0

0.5

Diesel fuelfor heating

LPGcombustion

Diesel and LPG for residential use sold in 2005


89

share of BluSuper sold over the Agip network amountedto 2% of total fuel distributed.2002 saw the beginning of sales of automotive dieselfuel, BluDiesel, also a low environmental impact fuelwith a polyaromatics percentage lower than 11% and aquantity of sulphur lower than 10 mg/kg, which givesbetter motor performance than normal diesel fuelthanks to special additives. The market share ofBluDiesel sold through the Agip network in 2005 was9% of all diesel fuel sold.To meet the needs of those consumers who drive oldercars, “AdvanceDiesel”, a product with minimum

environmental impact, was madeavailable. In fact, thanks toAdvanceDiesel sulphur dioxide was

eliminated and particulate and CO2 emissions werereduced.

Aviation and marine fuelsFuel for civilian light aviation such as light aircraft andCivil Protection aircraft, jet fuel (used in aircraft turbinemotors) and fuel oil for large marine diesel motorscomplete the range of fuels distributed by Eni.Jet fuel meets the requisites demanded by the JointFuelling System Check List for Jet A-1, current edition,which includes the most restrictive technical limits laiddown by the major international standards. Through itsown website, Eni supplies a series of technical andoperational assistance relating to the supply cycle ofthis fuel.

Automotive methaneEni sells automotive methane. This fuel isused in Italy by more than 400,000 vehicles,the first methane powered fleet in Europeand third in the world after Argentina and

Brazil. Methane fuel gives excellent motor performanceat a lower consumption rate, with lower atmosphericemissions than gasoline or diesel motors and there is analmost complete absence of carbon residues in themotor. Currently 400 of the 500 methane servicestations in Italy are supplied by Eni. Through its internet

energy saving andself-sufficiency and to reducingemissions.The first multifuel service areawith hydrogen produced fromrenewable resources is in thefinal stages of completion andshould be inaugurated in June2006 at Collesalvetti (province ofLivorno) on the Florence-Pisa-Livorno super highway. Theimportant innovations, uniquein the global panorama ofinfrastructures with low/zero

impact supply, include energyself-sufficiency and productionof H2 from renewable sources.The station is equipped with:• an approximately 20 kW

photovoltaic installation(annual production estimatedat 24,000 kWh);

• a 60 kW wind poweredinstallation (three small 20 kWgenerators with an annualestimated production of84,000 kWh);

• a cogeneration plant with a 30

kW methane micro turbine forthe production of 188,000 kWand 85,000 kWh saved fromheat recovery;

• an electrolyzer productionplant for the supply ofhydrogen for a mini fleet ofinternal combustion cars.

The environmental benefitsgained from this investment area reduction of 135 t in CO2

emissions and an energy savingof approximately 40 toe.


90

site, www.gasandpower.eni.it, Eni offers a series ofservices related to the distribution of natural gas: fromfeasibility studies on construction of new methanedistributors to project technical assistance, from plantsafety analysis to communication and specificconsulting services.

LubricantsLubricants complete the range of automotive products.Eni supplies its clients with a vast range of high quality,low environmental impact lubricants.The motor oils sold under the Agip brand nameguarantee high performance for all types of motors.Transmission oils, antifreeze, brake fluid and grease forframes complete the range of automotive productsdistributed by Eni.Eni was one of the first oil companies in 2003 to launchlow environmental impact PET (polyethyleneterephthalate) containers for the sale of lubricants. Allthe components of the containers (including bottle, capand label) have characteristics of inertia and resistanceand can be recycled.

Fuels for residential useWith regard to fuels for residential use, Eni suppliesdiesel fuel for heating, LPG and natural gas.Natural gas for residential use is distributed by Enithrough Italgas Più and sold by the Gas & PowerDivision. Compared to other fuels for residential use,natural gas is the energy source with the lowestenvironmental impact: its emission of pollutingsubstances generated during combustion is lower thanthat of diesel or LPG.This commercial commodity is complemented by aseries of services offered to end user clients to assistthem from the phase of replacing domestic boilers tosupply of information on safety and energy saving.

Natural gas for industrial usersIn addition to residential clients, Eni supplies natural gasto medium-sized and large companies, for the mostpart, those who distribute gas and wholesalers. In Italymore than 4,000 clients rely on an articulated offeringwith different types of standardized or customizedcontracts.The supply of natural gas to industrial users isaccompanied by a technical consultation service: fromtechnical economic feasibility to energy diagnosis, toplant and internal gas distribution network check-ups,always with a view to safety, the environment andenergy savings.

Electric energyEniPower, controlled by Eni, supplies electric energy tobusiness clients. The offering of electric energy variesaccording to the size, thus distinguishing between large,medium and small businesses. The variousindividualized commercial proposals succeed insatisfying the different requests, with the commitmentto an offering that will optimize the energy costs to theclient.

12 million tonnes

9

6

3

2003 20052004

Steam sold

24 terawatthour

18

12

6

2003 20052004

Electric energy production sold


91

Electric energy is produced by combined cyclecogeneration plants fuelled by natural gas. Thetechnology and the fuel used result in the highestenergy production efficiency (electricity and steam) atlow environmental impact: CCGT technology for theproduction of 30 terawatthour brings a reduction ofapproximately 11 Mt in CO2 emissions compared toconventional thermoelectric plants.

Chemical productsThrough its controlled company, Polimeri Europa, withadvanced plants and technology and an extendedefficient distribution network, Eni produces and sellschemical products.The products sold can be classified as intermediateproducts (used all along the production chain typical ofchemical and manufacturing industries) and polymers(plastic materials and rubber), which are subsequentlytransformed into objects and components in everydayuse.Polimeri Europa subscribed in 1995 to the ResponsibleCare program, a worldwide chemical industrycommitment plan relating to the themes ofenvironment, health and safety.

The average electricity generation emission factor of 0.34 tCO2/MWh is among thelowest attainable from fossil fuels

Eni Group 2003 2004 2005

Employee injury frequency index 3.79 4.47 3.17Employee injury severity index 0.09 0.11 0.10Contractor injury frequency index 4.12 7.84 2.59Contractor injury severity index 0.07 0.09 0.07Health expenditure/employee (o/employee) 425 429 553HSE expenditure/revenues (%) 1.80 1.95 2.03HSE current expenditure/operating costs (%) 1.66 1.69 1.73HSE investments/capital expenditure (%) 3.37 5.61 8.11HSE staff/thousands of employees 27.9 36.3 36.2Auditor/thousands of employees 9.6 12.6 15.2Health care staff/thousands of employees 10.5 12.3 14.0HSE training hours/employee 6.4 15.9 12.0Attendance to HSE courses/employee 1.0 2.1 1.8NOx emissions/toe consumed (kg/toe) 9.22 8.10 6.71SO2 emissions/toe consumed (kg/toe) 8.91 8.59 5.49Water treatment expenditure/total treated water (o/thousand m3) 358 504 618

Exploration & Production 2003 2004 2005

Injury frequency index 2.17 3.34 1.53Injury severity index 0.04 0.04 0.03HSE training hours/employee 5.8 76.1 10.3HSE expenditure/hydrocarbon production (1) (o/toe) 2.11 2.40 3.75Health expenditure/employee (o/employee) 1,529 957 1,838HSE investments/capital expenditure (%) 1.2 2.9 5.7Fuel consumption/ktoe produced (1) (toe/ktoe) 27.2 27.7 28.9GHG emissions/ktoe produced (1) (tCO2 eq/ktoe) 0.27 0.27 0.26Oil concentration in water discharges (mg/l) 50 38 30Re-injected water/production discharges + re-injected water (m3/m3) 0.52 0.45 0.46

Gas & Power 2003 2004 2005

Injury frequency index 12.93 14.27 10.83Injury severity index 0.35 0.37 0.34HSE training hours/employee 2.9 3.0 4.4HSE expenditure/sales of natural gas to third partiesand own consumption (o/103 m3) 1.10 1.31 1.47Health expenditure/employee (o/employee) 168 240 283HSE investments/capital expenditure (%) 2.41 4.44 7.22CO2 emissions/toe consumed (tCO2/toe) 2.61 2.49 2.37NOx emissions/kWheq produced (EniPower) (g/kWheq) 0.802 0.468 0.331SO2 emissions/kWheq produced (EniPower) (g/kWheq) 1.551 0.574 0.251CO2 emissions/transported gas- transport activities (Snam Rete Gas) (t/Mm3) 4.7 6.0 7.1NOx emissions/transported gas - transport activities (Snam Rete Gas) (t/Mm3) 0.012 0.014 0.017Natural gas emissions/transported gas- transport activities (Snam Rete Gas) (%) 0.048 0.058 0.052GHG emissions/transported gas - transport activities (Snam Rete Gas) (tCO2 eq/Mm3) 11.2 13.8 13.8Natural gas emissions/distributed gas (Italgas) (%) 0.66 0.61 0.62NOx emissions/distributed gas (Italgas) (kg/Mm3) 16.8 16.5 17.1

(1) Data refer to 100% of net production from activities under Eni’s operational control and exclude Stogit’s activities.

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Tables and glossary

HSE key performance indicators

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Gas & Power 2003 2004 2005

CO2 emissions/distributed gas (Italgas) (t/Mm3) 4.7 4.1 4.2Energy consumption/transported energy - transport activities (Snam Rete Gas) (%) 0.25 0.31 0.36Energy consumption/(transported energy*average distance) - transport activities (Snam Rete Gas) (%/103 km) 0.52 0.63 0.70Re-gasification energy consumption/LNG fed into the network (GNL Italia) (%) 1.64 1.68 1.63Energy consumption/distributed energy - gas distribution (Italgas) (%) 0.26 0.22 0.23Energy performance index (EniPower) (toe/MWheq) 0.203 0.180 0.166

Refining & Marketing 2003 2004 2005

Injury frequency index 5.17 6.36 3.94Injury severity index 0.12 0.14 0.14HSE training hours/employee 5.0 6.2 4.9Health expenditure/employee (o/employee) 165 276 364HSE expenditure/sales of oil products (o/t) 4.28 5.65 6.97HSE investments/capital expenditure (%) 13.06 21.99 24.37CO2 emissions/toe consumed (tCO2/toe) 2.95 3.10 2.96SO2 emissions/processed crude oil (t/kt) 1.20 1.13 0.90NOx emissions/processed crude oil (t/kt) 0.37 0.34 0.30Energy intensity index (%) 89.9 89.6 89.1

Petrochemicals 2003 2004 2005

Injury frequency index 6.88 7.21 7.35Injury severity index 0.17 0.21 0.27HSE expenditure/productions (o/t) 24.65 22.50 22.73HSE investments/capital expenditure (%) 48.25 27.72 22.52

Oilfield Services Construction and Engineering 2003 2004 2005

Injury frequency index 1.78 1.90 1.45Injury severity index 0.04 0.06 0.05HSE expenditure*100/year-end order backlog (%) 0.41 0.44 0.62HSE investments/capital expenditure (%) 2.3 5.2 3.6

Other activities 2003 2004 2005

Injury frequency index 6.15 6.07 2.70Injury severity index 0.21 0.18 0.08Energy consumption indicator (EniTecnologie) (toe/kW) 0.52 0.28 0.21Supplied water indicator (EniTecnologie) (m3/kW) 23 15 19Net specific consumption (Syndial) (toe/t) 0.379 0.366 0.329


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Units of measurement, symbolsand acronyms

Units of measurement

bbl barrelboe barrel of oil equivalentg gramG 109 giga (billion)GJ giga JouleGWe electric gigawattGWh gigawatthourk 103 kilo (thousand)kg kilogramkWh kilowatthourl literm3 cubic meterM 106 mega (million)MWe electric megawattppm parts per milliont metric tonT 1012 tera (thousand billion)toe ton of oil equivalentTWh terawatthoury year

Symbols

CH4 methaneCO carbon monoxideCO2 carbon dioxideCO2 eq CO2 equivalent (weighed sum

of carbon dioxide and methane)O euroH2 hydrogenNOx nitrogen oxidesN2O nitrogen protoxideSO2 sulfur dioxide


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Acronyms

APAT Italian National Agency for the Protectionof the Environment and the Territory

ASL Italian Local Health-Care UnitCCGT Combined Cycle Gas TurbineCCP CO2 Capture ProjectCDI Chemical Distribution InstituteCDM Clean Development MechanismCEFIC European Chemical Industry CouncilCIRM Italian Consortium for Medical ResearchCNIT Italian National Toxicological Information

CenterCOD Chemical Oxygen DemandCONCAWE CONservation of Clean Air and Water

in EuropeCOP Conference of the PartiesDIHSE Health Safety and Environment

DepartmentDPI Individual Protection DeviceEARL East Asia Response Pte LtdE&P Exploration & ProductionEIA Environmental Impact AssessmentEMAS EcoManagement and Audit SchemeET Emission TradingEU European UnionFCC Fluid Catalytic CrackingFEEM Enrico Mattei Eni FoundationFPSO Floating Production, Storage and OffloadingGAAP Generally Accepted Accounting PrinciplesG&P Gas & PowerGHG Greenhouse GasGIPSI Computerized Management of Individual

Health-Care Service ProvisionGNL Liquified Natural GasGPRS General Packet Radio ServiceGPS Global Positioning SystemGRI Global Reporting InitiativeHIV/AIDS Human Immunodeficiency Virus/Acquired

Immune Deficiency SyndromeHPV High Production VolumeHSE Health Safety EnvironmentICCA International Council of Chemical

AssociationsICRAM Central Institute for Sea Applied Research

(Ministry for the Environmentand Protection of the Territory)

IFRS International Financial Reporting StandardIMO International Maritime OrganizationIPIECA International Petroleum Industry

Environmental Conservation AssociationIPPC Integrated Pollution Prevention and

Control

ISM International Safety ManagementISO International Standard OrganizationISVAP Italian Institution for Surveillance on

Collective-Interest and Private InsurancesJI Joint ImplementationKCO Kazakhstan North Caspian Operating

CompanyLCA Life Cycle AnalysisLNG Liquefied Natural GasLPG Liquefied Petroleum GasMEDEA Master in Management and Economics

of Energy and the EnvironmentMOIG Mediterranean Oil Industry GroupMSG Management System Model for the

protection of health, safety, environmentand public safety

NMVOC Non Methane Volatile Organic CompoundsNNPC Nigerian National Petroleum CorporationOCIMF Oil Company International Marine ForumOHSAS Occupational Health and Safety

management Assessment SystemOSRL Oil Spills Response LtdPAH Poli-cyclical Aromatic HydrocarbonsREACH Registration, Evaluation and Authorisation

of ChemicalsR&M Refining & MarketingREMPEC Regional Marine Pollution Emergency

Response Centre for the MediterraneanSea

ROACE Return On Average Capital ExpenditureSARS Severe Acute Respiratory SyndromeSCI Site of Community ImportanceSET Transportation Emergency ServiceSIMAGE Integrated System for Environmental

Monitoring and Emergency ManagementSIRE Ship Inspection Report ProgrammeSMIL Industrial Medicine and Hygiene

Information SystemSNSTMP Italian National Safety System

for Transportation of Hazardous GoodsSPM Suspended Particulate MatterTAG Trans Austria GasleitungTENP Trans Europa Naturgas PipelineTGGG Team for Greenhouse Gas ManagementTMPC Transmediterranean Pipeline CompanyTTPC Trans Tunisian Pipeline Co LtdUNFCCC United Nations Framework Convention on

Climate ChangeUNICEF United Nations International Emergency

Children’s FundWWF World Wildlife Fund


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Glossary

Average residual life of reservesRatio between year-end reserves and production of thesame year.

BarrelUnit of volume equal to 159 liters. One barrel of crudeoil corresponds to approximately 0.137 tonnes.

BoeUnit of measure for both oil and natural gas. The latter isconverted from cubic meters into barrels of oilequivalent using a multiplying coefficient of 0.00615.

CDM - Clean Development MechanismFlexible mechanism introduced by the Kyoto Protocolwhich allows governments and private organizations inindustrialized countries to implement projects aimed atreducing emissions in developing countries in order toreach the established reduction targets. Those investingin such projects are entitled to carbon credits in theform of Certified Emission Reductions (CERs).

CrackingProcesses aimed at breaking down large molecules ofhydrocarbons that make up the medium-heavy fractionsobtained from primary distillation of crude oil in orderto transform them into light and medium distillates.

FPSO vesselFloating system for the production, storage, and transfermade up of a high-capacity oil tanker that can beequipped with a large-size hydrocarbon processingsystem. Such system, which is moored at the bow inorder to keep a geostationary position, is in fact atemporarily fixed platform that connects underwaterrig heads via risers from the sea bottom to the on-boardprocessing, storage, and transfer systems.

GeoprobeHydraulic machine equipped with a dry, direct(penetration-based or direct-push) sinkingadvancement system, specifically designed for thecharacterization of the soil, subsoil, interstitial gases,and underground water, of contaminated andnon-contaminated sites.

International Emission TradingFlexible Mechanism introduced by the Kyoto Protocolallowing an industrialized country to sell to anothercountry the AAU in excess of the threshold that thecountry undertook to reach.

Jet FuelKerosene used in aviation turbine engines. The jet fuelsupplied by Agip complies with the requirementsestablished by the “Joint Fuelling System check List forJet A-1, current edition” which includes the mostrestrictive limits set by the following two specifications:• British MoD DEF STAN 91-91 (DERD 2494);• ASTM Standard Specification D1655-99 for Aviation

Turbine Fuels “Jet A-1”.

JI - Joint ImplementationFlexible mechanism introduced by the Kyoto Protocolallowing industrialized countries to cooperate forreaching the emission reduction targets. The hostcountry may purchase “Emission Reduction Units”(ERUs) resulting from emission-reduction projectsimplemented in another industrialized country and usesuch units to comply with its obligations.

LeverageIt measures the degree of indebtedness of the companyand is calculated as the ratio between net financialindebtedness and shareholders’ equity including theinterests of third-party shareholders.

Mineral storageIt is necessary for technical and economic reasons inorder to allow for optimal exploitation of natural gasfields.

Modulation storageAimed at meeting the modulation requirement of thehourly, daily, and seasonal demand trends.

Offshore/OnshoreThe term offshore means a stretch of open sea and, byextension, the activities carried out there. Onshorerefers to the mainland and, by extension, the activitiescarried out there.

PetcokeSolid product obtained from the thermal crackingcondensation process of heavy petroleum and oilresidues until residues of different texture – spongy orcompact – are obtained.

Proved reservesThese are the estimated quantities of hydrocarbonsthat, based on available geological and reservoirengineering data, can be commercially produced withreasonable certainty under the technical, contractual,


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economic, and operating conditions existing at aspecific point in time. Proved reserves may be dividedinto:• developed proved reserves: quantities of

hydrocarbons that are estimated to be obtained fromexisting wells, facilities and operating methods;

• undeveloped proved reserves: quantities ofhydrocarbons that are estimated to be obtainedthrough new drillings, facilities and operatingmethods where the company already has a specificinvestment plan for or shows a clear intention fortheir future implementation.

Refinery gasesMixture of non-condensable gases (hydrogen, methane,ethane, ethylene, propylene, butylenes, and sometimesalso CO2 and N2) produced in refineries duringdistillation of crude oil or processing of oil products.

ROACEReturn on average capital expenditure calculated as theratio of net profit before interests of third-partyshareholders, plus net financial charges relating to netfinancial indebtedness, minus the applicable taxes, andthe average net invested capital.

ShipperCompanies that produce and purchase natural gas tore-sell it to end users (industries and thermo-electricpower plants), wholesalers, local distributioncompanies, or other shippers.

Steam crackingThermal cracking process carried out in the presence ofsteam mixed to the hydrocarbon feed at approximately800°C and at low pressure. It is the key process in thepetrochemical sector. The raw material used is virginnaphtha or condensed gas and provides the basicintermediate products for further processing.

Strategic storageAimed at tackling any shortage of or reduction insupplies from non-EU imports or crises in the gassystem.

TarHeavy refinery residues, particularly those that are veryrich in carbon pitch, which are obtained from thermalconversion processes (visbreaking) of heavy fractions.

Time Charter shipCharter contract by which the ship owner provides thecharterer (i.e. the entity chartering the ship) with a shipfor a specific period of time against payment of freight.For the whole charter contract term, which mayamount to as many as 20 years, the charterer becomesthe disponent owner and may use the ship at willprovided that the charter party is complied with. Theship owner in general provides for crew, on-boardsupplies, maintenance and insurance contracts. Thecharterer bears the costs of fuel, port fees, and all othercosts relating to the operational activities of the ship.An oil company charters third-party ships when thefleet it manages, is not sufficient to meet itstransportation needs.

Upstream/DownstreamThe term upstream means hydrocarbon explorationand production activities. Downstream means activitiesrelating to the oil sector which take place downstreamexploration and production.

Wholesale marketSet of marketing activities of petroleum products on thenational market aimed at selling to wholesalers/retailers(mainly gasoil), to public administrations andconsumers, such as industries, thermo-electric powerplants (fuel oil), airlines (jet fuel), carriers,condominiums and private parties. Sales through thenetwork of fuel distributors, maritime bunkers, sales tooil and petrochemical companies, to importers andinternational entities are excluded.

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Verification of the Report

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Methodological remarks

Economic dataThe economic and financial data are derived from Eni’s Annual Report, prepared by the Administrative Department.Data on current expenditures and investments on health, safety and environment are directly acquired from theheadquarters’ HSE departments and consolidated by Eni’s Environment - Analysis and Reporting unit responsible formonitoring and controlling HSE final results at the end of each accounting period. HSE economic accounting is compliant withISTAT (the Italian Statistics Institute) classification. Expenditure is subdivided into investments, operating expenses for thereference year, and provisions. HSE investments refer to the gross composition of fixed capital specifically used for health,safety, environmental protection activities such as plants, equipment, and devices. Operating costs include costs for goodsand services produced in-house or externally that are necessary for HSE activities, and other environmental costs relating totaxes and contributions paid to the public administration.

HealthThe accounting system for health (called SCS), which was fully updated in 2005, is broken down into several sections: sanitarysurveillance, healthcare abroad, health risk assessments, well-being status and health promotion activities for employees.

SafetySafety performance is measured through the injury frequency index and injury severity index, both for employees andcontractors. The frequency index is the ratio between the number of injuries causing absence of over one day and millions ofworked hours. The severity index is the ratio between days of absence due to injuries and thousands of worked hours. Themortality index is the ratio between the number of deadly injuries and billions of worked hours.

EnvironmentThe major environmental impacts on the atmosphere due to Eni’s activities involve acid emissions (oxygenated compounds ofsulfur and nitrogen) and greenhouse gas (GHG) emissions.NOx and SO2 emissions were aggregated in the acidification potential expressed in t of SO2 eq.In 2005, the Eni Protocol for reporting GHG emissions was developed. It provides a guidance for developing and maintaining aGHG inventory in compliance with the current best practices (API Compendium, WRI Protocol, etc.). The Protocol presentlyconsiders CO2 and CH4 emissions which are the most relevant greenhouse gases for the Oil & Gas sector and requirescollection of absolute data and data expressed in CO2 eq (methane has a CO2 equivalence factor of 21). Data on waste involveboth remediation and production activities: in the dedicated paragraph they are presented separately with their specific finaldestinations.

Human resourcesStaff accounting refers to personnel in service, given by the sum of the personnel on the company’s register of employees andthe personnel on loan from another Eni’s business unit. HSE staff data refer to the total HSE staff of subsidiaries (consolidatedand non-consolidated in Eni’s annual report). Following to a review of the HSE training reporting system, global data refer to2003-2005 as in the previous years accounting records only involved HSE training initiatives in Italy.

Constant updating of the accounting systems has enhanced accounting procedures in terms both of the comprehensivenessof the area of consolidation and accuracy of measurements. If required, the historical series were updated using the samemethods.

Mentioned countries

AlgeriaAngolaArgentinaAustraliaAustriaAzerbaijanBelgiumBrazil

CanadaChinaCongoCzech RepublicEcuadorEgyptFranceGermanyHungaryIndia

IndonesiaIranItalyKazakhstanLibyaMaltaMexicoNigeriaNorwayPakistan

PortugalQatarRussiaSaudi ArabiaSpainThe NetherlandsTunisiaTurkeyUnited Arab EmiratesVenezuela

Società per AzioniHeadquarters: Rome, Piazzale Enrico Mattei, 1Capital Stock:o 4,005,358,876 fully paidTax identification number 00484960588Branches:San Donato Milanese (MI) - Via Emilia, 1San Donato Milanese (MI) - Piazza Ezio Vanoni, 1

Prepared by:Eni - Health Safety Environment Department

Thanks go to all Eni functions, the Divisions and the companiesinvolved in drawing up this Report

Design: OperaCover: Grafica Internazionale - Rome - ItalyLayout and supervision: Studio Joly Srl - Rome - ItalyPrinting: Marchesi Grafiche Editoriali SpA - Rome - ItalyPrinted on environment friendly paper: Fedrigoni SymbolFreelife Satin

For further information, contact:Eni SpAHealth Safety Environment Department - DIHSE - EnvironmentVia Laurentina, 449 - 00142 RomeTel. +39 0659885850 - Fax +39 0659885358

[email protected]

Società per AzioniPiazzale Enrico Mattei 1 - 00144 RomeTel +39.0659821 • Fax +39.0659822141www.eni.it

Rapporto Eni Hse2005 En

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