Eni - Regulatory Filings 2006 | FinancialReports.eu

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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the month of November 2006

Eni S.p.A. (Exact name of Registrant as specified in its charter)

Piazzale Enrico Mattei 1 - 00144 Rome, Italy (Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F o

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)

Yes o No x

(If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )

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TABLE OF CONTENTS

Press Release dated November 29, 2006

Press Release dated November 24, 2006

Press Release dated November 14, 2006

Press Release dated November 10, 2006

Report on the Third Quarter of 2006 as of September 30, 2006

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/TOC

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.

Eni S.p.A.
Name: Fabrizio Cosco
Title:	Company Secretary

Date: November 30, 2006

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PRESS RELEASE

San Donato Milanese (Milan), 29 November 2006 With reference to the sanction given by the European Commission to some chemical companies including Eni and Polimeri Europa for participating in an alleged cartel in the BR/ESBR synthetic rubber market. Eni and Polimeri Europa reject the European Commissions charges and reserve the right to appeal to the European Court of First Instance. The alleged breaches of community antitrust regulations took place in the period between 1995 and 2001.

The EU Commission decision involves Eni as parent company of Polimeri Europa, and with no factual evidence presumes Eni to be guilty for the conduct of its subsidiaries. Eni believes that this application of the antitrust regulations is without precedent in European Commission rulings and attributes liability purely on the basis of corporate control.

Eni consequently reserves the right to appeal against the fine of Euro 272.25 million, holding that there are no factual and legal grounds for attributing liability to the parent company, which has never been involved, nor could have been involved, in the ordinary conduct of the businesses in question.

Eni believes, furthermore, that the sanctions imposed are entirely disproportionate and unjustified, in relation both to the gravity of the companies conduct even as reconstructed by the European Commission and to the fact that such conduct could in no way have had a negative effect on the end consumer.

Company contacts:

Press Office: Tel. +39 02.52031875 - +39 06.5982398 Freephone: 800940924 Switchboard: +39 0659821

[email protected]

Website: www.eni.it

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PRESS RELEASE

Roma, 24 November 2006 - With reference to market rumours in the French press today, following the request of the Italian Stock Exchange Authority, Eni states that it is not planning to launch a bid on Technip.

Company contacts:

Press Office: +39 02 52031875 - 06 5982398

Switchboard: +39 0659821

[email protected]

Website: www.eni.it

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PRESS RELEASE

Eni and Gazprom sign strategic agreement

San Donato Milanese (Milan), 14 November 2006 Eni CEO Paolo Scaroni and Gazprom CEO Alexey Miller signed today in Moscow a broad strategic agreement between Eni and Gazprom.

The agreement sets up an international alliance enabling the two companies to launch joint projects in the mid and downstream gas, in the upstream and in technological cooperation.

Mid and Downstream gas

Gazprom will extend the duration of its gas supply contracts to Eni until 2035, confirming Eni as the worlds single largest customer of Gazprom.

Through this agreement, starting from 2007, Gazprom will sell directly into the Italian market increasing volumes of gas (which are part of volumes currently sold to Eni), building up to some 3 billion cubic metres from 2010 for the entire duration of the long term supply contract.

Upstream

Eni and Gazprom have identified major projects (companies and assets) in Russia and outside of Russia that will be jointly owned by the two companies. Eni and Gazprom have agreed to work with each other on an exclusive basis on these projects, which are expected to be finalised by the end of 2007.

Technological Cooperation & Development

Eni and Gazprom will sign specific agreements in the following areas:

Long-distance gas transportation. In this sector Eni and Snam Rete Gas will provide their know-how and expertise, including proprietary transport technology TAP (high pressure transmission) for the development of Russias gas transportation system.
Development of LNG projects for the global gas market.

Commenting on the agreement Eni CEO Paolo Scaroni said: "This is a historic agreement. The new strategic alliance between Eni and Gazprom has been made possible by our unique relationship which dates back over 50 years and will encompass the next 30 years involving all the business areas of both companies. The agreement signed today is a major step towards the security of energy supply to our Country".

Company contacts:

Press Office: +39 02 52031875 - 06 5982398

Switchboard: +39 0659821

[email protected] [email protected] [email protected]

Website: www.eni.it

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PRESS RELEASE

Eni initiates arbitration proceedings to defend its interests in Venezuela

San Donato Milanese (Milan), 10 November 2006 - On April 1 st Venezuelan national oil company PDVSA terminated, unilaterally, the operating service contract for Enis mineral activities in the Dación area.

Eni considers this action a violation of its rights, which are protected by the Bilateral Treaty for the protection of investments between Venezuela and the Netherlands, where subsidiary Eni Dación B.V., holder of the operating service contract, is registered.

Eni has therefore initiated today arbitration proceedings against Venezuela before the International Centre for Settlement of Investment Dispute (ICSID), a World Bank organization which resolves disagreements in relation to the violation of bilateral treaties for the protection of investments.

Despite this action, Eni is still hopeful of negotiating a solution to obtain full compensation.

Company contacts:

Press Office: +39 02.52031875 - +39 06.5982398

Switchboard: +39 0659821

[email protected] [email protected] [email protected]

Website: www.eni.it

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ENI ANNOUNCES RESULTS FOR THE THIRD QUARTER AND THE NINE MONTHS OF 2006 STRONG GROWTH AND EXCELLENT PROFITABILITY

| | Reported
net profit: up 3.5% to euro 2.42 billion for the third
quarter and up 15.2% to euro 7.70 billion for the nine
months |
| --- | --- |
| | Adjusted
net profit: up 7.1% to euro 2.62 billion for the third
quarter and up 17.5% to euro 8.06 billion for the nine
months |
| | Cash
from operations: euro 4.56 billion for the third quarter
and euro 15.22 billion for the nine months |
| | Oil
and natural gas production substantially stable in the
quarter; forecast for 3% annual growth rate confirmed
assuming a Brent price of 55 $/bbl |
| | Gas
sales in Europe: up 7.6% in the quarter (up 6.2% for the
nine months) |

San Donato Milanese, 10 November 2006 - Eni, the international oil and gas company, today announces its group results for the third quarter and the nine months of 2006 (unaudited).

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 4,270 | 4,947 | 4,828 | 13.1 | Summary Group results (million
euro) — Reported
operating profit | 12,431 | 15,370 | 23.6 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 4,446 | 5,054 | 5,127 | 15.3 | Adjusted operating profit (1) | 12,627 | 15,714 | 24.4 |
| 2,340 | 2,301 | 2,422 | 3.5 | Net profit (2) | 6,683 | 7,697 | 15.2 |
| 0.62 | 0.62 | 0.66 | 5.7 | - per ordinary share (euro) (3) | 1.77 | 2.08 | 17.1 |
| 1.52 | 1.56 | 1.67 | 10.4 | - per ADS
($) (3) | 4.48 | 5.17 | 15.3 |
| 2,446 | 2,483 | 2,620 | 7.1 | Adjusted net profit (1) | 6,855 | 8,057 | 17.5 |

Paolo Scaroni, Chief Executive Officer, commented: Following third quarter results, I am confident Eni will deliver excellent profitability for the full year. Operating performance improved in virtually all of Enis business divisions, in a favourable trading environment with higher crude prices.

| (1) | For a
detailed explanation of adjusted operating profit and
adjusted net profit see page 16 . |
| --- | --- |
| (2) | Profit attributable to
Eni shareholders. |
| (3) | Fully diluted. Dollar
amounts are converted on the basis of the average EUR/USD
exchange rate quoted by the ECB for the periods
presented. |

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Quarterly financial highlights

| | Adjusted operating profit:
up 15.3% to euro 5.13 billion primarily reflecting an
improved operating performance of all Enis business
divisions compared to the third quarter of 2005. |
| --- | --- |
| | Adjusted net profit: up 7.1%
to euro 2.62 billion as a result of higher operating
profit partly offset by a higher Group tax rate on an
adjusted basis, up 4.3 percentage points (from 44.5% to
48.8%). |
| | Net cash generated by
operating activities 4 totalled euro 4.56
billion allocated as follows: euro 1.84 billion to
capital expenditure and euro 2.54 million to the
re-payment of debt. A further euro 158 million was spent
for the repurchase of 6.83 million of own shares. |
| | At period-end, the ratio of net borrowings to
shareholders equity including minorities decreased
from 0.27 at year-end 2005 to 0.09. |

Return on average capital employed (ROACE) 5 calculated for the twelve-month period ending 30 September 2006 was 21.8%.

Quarterly operational highlights and trading environment

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 1,715 | 1,748 | 1,709 | (0.3 | ) | Key operating data — Oil and
natural gas production (kboe/d) | 1,714 | 1,761 | 2.7 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 6,749 | 7,826 | 7,259 | 7.6 | | Natural gas sales in Europe (mmcf/d) | 8,573 | 9,107 | 6.2 | |
| 564 | 493 | 526 | (6.8 | ) | - of
which upstream sales | 574 | 534 | (7.0 | ) |
| | | | | | Retail sales of refined products in Europe | | | | |
| 261 | 252 | 260 | (0.4 | ) | (Agip
brand) (kbbl/d) | 249 | 250 | 0.4 | |
| 6.15 | 6.00 | 6.33 | 2.9 | | Electricity sold production (TWh) | 16.70 | 18.75 | 12.3 | |

| | Oil and natural gas
production for the quarter averaged 1.71 mmboe/d, almost
unchanged relative to the third quarter of 2005.
Production compared to a year ago, however, increased by
4.2%, excluding the impact of the loss of production at
the Venezuelan Dación oilfield (down 62 kbbl/d) as a
consequence of the unilateral cancellation of the service
contract for the Dación oilfield by the Venezuelan State
oil company PDVSA and the impact of lower entitlements in
certain Production Sharing Agreements (PSAs) 6 and buy-back contracts due to increased oil and gas
prices (down 16 kbbl/d). Libya, Angola and Egypt were the
main growth areas. |
| --- | --- |
| | Natural gas sales in Europe
were up 7.6% to 7,259 mmcf/d driven primarily by the
growth in sales in a number of target European markets
and the build-up of supplies of natural gas from Libya. |
| | The trading environment was supported by
higher oil prices with average Brent crude prices close
to $70 per barrel, up 12.9% compared to the third quarter
of 2005, and improved selling margins on natural gas and
products. These positives were offset in part by the
appreciation of the euro over the dollar (up 4.4%).
Refining margins achieved by Eni were higher compared to
the third quarter of 2005 in spite of a negative trend in
market benchmarks (Brent refining margins were down 39.2%
for the same period). The performance of Enis
refining margins was attributable to a better yield on
the spate of processed crude. |

(4)	See disclaimer below.
(5)	Non-GAAP financial
measures disclosed throughout this press release are
accompanied by explanatory notes and tables to help
investors to gain a full understanding of said measures
in line with guidance provided for by CESR recommendation
No. 2005-178b. See pages 21 and 23 for leverage and net borrowings and ROACE , respectively.
(6)	In PSAs the national oil company
awards the execution of exploration and production
activities to the international oil company (contractor).
The contractor bears the mineral and financial risk of
the initiative and, when successful, recovers capital
expenditure and costs incurred in the year (Cost oil) by
means of a share of production. This production share
varies along with international oil prices. In certain
PSAs changes in international oil prices also affect the
share of production to which the contractor is entitled
in order to remunerate its capital employed (Profit oil).
A similar scheme applies to buy-back contracts.

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Outlook

Eni reaffirms its 2006 outlook, with key business trends for the year as follows:

| - | production of
liquids and natural gas is forecast to continue
growing from 1.74 mmboe/d in 2005. Increases will be
achieved outside Italy, mainly in Libya, Angola and Egypt
due to the achievement of full production in fields which
started-up in 2005 and to new start-ups in 2006.
Production for the year is expected to be adversely
affected by the loss of the Venezuelan Dación oilfield,
the impact of security issues in Nigeria and natural
field decline, mainly in Italian fields. Despite the
adverse impact of the unforeseen events in Venezuela and
Nigeria, the production growth rate for the year is
expected to be approximately 3%, assuming a Brent crude
oil price of approximately $55 per barrel in the market
scenario for 2006; |
| --- | --- |
| - | sales volumes of
natural gas in Europe are forecast to increase
by more than 6% from 2005 levels (9,095 mmcf/d) with
major increases expected in volumes sold in the Iberian
Peninsula, German/Austrian, Turkish and French markets; |
| - | sold production of
electricity iis expected to increase by more
than 9% from 2005 levels (22.77 TWh) due to the
continuing ramp-up of new production capacity, offset in
part by higher levels of maintenance activity; |
| - | refining throughputs on
Enis account aare expected to decline
slightly from 2005 due to higher levels of maintenance
activity, with Enis refineries expected to run at
full capacity; |
| - | retail sales of refined products on the Agip branded network are expected to decline
slightly in Italy, while continuing their upward trend in
the rest of Europe, with major increases in the German,
Spanish, Austrian and French markets reflecting
contributions from new or purchased outlets. |

In 2006, capital expenditure is expected to amount to euro 8.7 billion, representing a 17% increase from 2005. Approximately 90% of capital expenditure is planned in Enis Exploration & Production, Gas & Power and Refining & Marketing divisions; increases are expected in exploration projects, development of oil and natural gas reserves, upgrading of refineries and upgrading of natural gas transport and import infrastructure. The Engineering and Construction segment is also expected to increase its capital expenditure by approximately 84.5% due to the construction of a new FPSO unit and upgrading of the fleet and logistic centres. The reduction in forecast capital expenditure for the year, compared to the guidance given at the end of the second quarter of 2006 (euro 9.1 billion) is due to a reduction of forecast amounts in the following business segments: (i) Exploration & Production, as a consequence of delays in a number of development projects; (ii) Refining & Marketing, as a consequence of delays in expenditure for certain refining projects. Management also expects net borrowings to increase from the current level, reflecting cash requirements for capital expenditure planned in the fourth quarter (approximately euro 3.8 billion) for the distribution to shareholders of the interim dividend of euro 0.60 per share for fiscal year 2006 (corresponding to approximately euro 2.2 billion) and the repurchase of own shares. At year-end, the ratio of net borrowings to shareholders equity including minorities is expected to reach 0.20.

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Disclaimer Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Enis operations, such as prices and margins of hydrocarbons and refined products, Enis results from operations and changes in average net borrowings for the nine months cannot be extrapolated for the full year. Cautionary statement This press release, in particular the statements under the section Outlook, contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sale growth, new markets, and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; managements ability in carrying out industrial plans and in succeeding in commercial transactions, future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; and other factors discussed elsewhere in this document.

Contacts e-mailbox: [email protected] Investor Relations e-mailbox: [email protected] Tel.: +39 0252051651 - fax: +39 0252031929 Eni Press Office: e-mailbox: [email protected] Tel.: +39 0252031287 - +39 0659822040 Eni Società per Azioni Rome, Piazzale Enrico Mattei, 1 Capital stock: euro 4,005,358,876 fully paid Registro Imprese di Roma, c. f. 00484960588 Tel. +39-0659821- Fax +39-0659822141

This press release and Enis Report on the Third Quarter of 2006 (unaudited) are also available on the Eni web site: www.eni.it. About Eni Eni is one of the leading integrated energy companies in the world operating in the oil and gas, power generation, petrochemicals, engineering and construction industries. Eni is present in 73 countries and is Italys largest company by market capitalisation.

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Summary results for the third quarter and the nine months of 2006 (all figures in euro millions, except per share data and where indicated)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 18,121 — 4,270 | | 20,739 — 4,947 | | 20,366 — 4,828 | | 12.4 — 13.1 | | Net sales from operations — Reported
operating profit | 52,222 — 12,431 | | 64,689 — 15,370 | | 23.9 — 23.6 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (505 | ) | (241 | ) | 82 | | | | Exclusion of inventory holding (gains) losses | (1,001 | ) | (253 | ) | | |
| 3,765 | | 4,706 | | 4,910 | | 30.4 | | Replacement
cost operating profit | 11,430 | | 15,117 | | 32.3 | |
| 3,682 | | 4,090 | | 4,041 | | 9.8 | | Exploration
& Production | 9,031 | | 12,439 | | 37.7 | |
| 460 | | 718 | | 586 | | 27.4 | | Gas
& Power | 2,585 | | 2,473 | | (4.3 | ) |
| 235 | | 159 | | 333 | | 41.7 | | Refining &
Marketing | 641 | | 534 | | (16.7 | ) |
| (63 | ) | (14 | ) | 36 | | .. | | Petrochemicals | 146 | | 44 | | (69.9 | ) |
| 60 | | 133 | | 145 | | 141.7 | | Engineering
and Construction | 172 | | 356 | | 107.0 | |
| (378 | ) | (151 | ) | (185 | ) | 51.1 | | Other
activities | (637 | ) | (401 | ) | 37.0 | |
| (125 | ) | (91 | ) | (65 | ) | 48.0 | | Corporate and
financial companies | (336 | ) | (207 | ) | 38.4 | |
| (106 | ) | (138 | ) | 19 | | | | Unrealized
profit in inventory (a) | (172 | ) | (121 | ) | | |
| 2,340 | | 2,301 | | 2,422 | | 3.5 | | Net profit (b) | 6,683 | | 7,697 | | 15.2 | |
| (317 | ) | (151 | ) | 30 | | | | Exclusion
of inventory holding (gains) losses | (628 | ) | (180 | ) | | |
| 2,023 | | 2,150 | | 2,452 | | 21.2 | | Replacement cost net profit (b) | 6,055 | | 7,517 | | 24.1 | |
| | | | | | | | | Exclusion
special items | | | | | | |
| | | | | | | | | of which: | | | | | | |
| | | | | 19 | | | | Non-recurring
items | | | 19 | | | |
| 423 | | 333 | | 149 | | | | Other special items | 800 | | 521 | | | |
| 2,446 | | 2,483 | | 2,620 | | 7.1 | | Adjusted
net profit (b) | 6,855 | | 8,057 | | 17.5 | |
| | | | | | | | | Per ordinary share data (euro) : | | | | | | |
| 0.62 | | 0.62 | | 0.66 | | 5.7 | | Reported
net profit | 1.77 | | 2.08 | | 17.1 | |
| 0.54 | | 0.58 | | 0.66 | | 23.8 | | Replacement cost net profit | 1.61 | | 2.03 | | 26.3 | |
| 0.65 | | 0.67 | | 0.71 | | 9.4 | | Adjusted
net profit | 1.82 | | 2.17 | | 19.6 | |
| | | | | | | | | Per
ADS data ($) : | | | | | | |
| 1.52 | | 1.56 | | 1.67 | | 10.4 | | Reported net profit | 4.48 | | 5.17 | | 15.3 | |
| 1.31 | | 1.46 | | 1.69 | | 29.3 | | Replacement
cost net profit | 4.06 | | 5.05 | | 24.3 | |
| 1.58 | | 1.68 | | 1.81 | | 14.2 | | Adjusted net profit | 4.60 | | 5.41 | | 17.7 | |
| 3,766.8 | | 3,709.1 | | 3,688.1 | | | | Weighted
average number of outstanding shares (c) | 3,770.4 | | 3,706.8 | | | |
| 4,251 | | 4,802 | | 4,555 | | 7.2 | | Net cash provided by operating activities | 12,864 | | 15,223 | | 18.3 | |
| 1,744 | | 1,714 | | 1,835 | | 5.2 | | Capital
expenditure | 4,950 | | 4,889 | | (1.2 | ) |
| | | | | | | | | Trading environment indicators | | | | | | |
| 61.54 | | 69.62 | | 69.49 | | 12.9 | | Average
price of Brent dated crude oil (1) | 53.54 | | 66.96 | | 25.1 | |
| 1.220 | | 1.256 | | 1.274 | | 4.4 | | Average EUR/USD exchange rate (2) | 1.264 | | 1.244 | | (1.6 | ) |
| 50.44 | | 55.43 | | 54.55 | | 8.1 | | Average
price in euro of Brent dated crude oil | 42.36 | | 53.82 | | 27.1 | |
| 7.02 | | 5.77 | | 4.27 | | (39.2 | ) | Average European refining margin (3) | 6.02 | | 4.33 | | (28.1 | ) |
| 5.75 | | 4.59 | | 3.35 | | (41.7 | ) | Average
European refining margin in euro | 4.76 | | 3.48 | | (26.9 | ) |
| 2.13 | | 2.89 | | 3.24 | | 52.1 | | Euribor - three-month rate (%) | 2.13 | | 2.91 | | 36.6 | |
| 3.74 | | 5.13 | | 5.41 | | 44.7 | | Libor -
three-month dollar rate (%) | 3.27 | | 5.11 | | 56.3 | |

| (a) | Unrealized
profit in inventory concerned intra-group sales of goods
and services recorded at period end in the equity of the
purchasing business segment. |
| --- | --- |
| (b) | Profit
attributable to Eni shareholders. |
| (c) | Assuming
diluition. |
| (1) | In US dollars
per barrel. Source: Platts Oilgram. |
| (2) | Source: ECB. |
| (3) | In US dollars
per barrel FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platts Oilgram
data. |

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Results for the third quarter of 2006 Bottom line Enis net profit for the third quarter of 2006 was euro 2,422 million, up euro 82 million from the third quarter of 2005, or 3.5%, reflecting an improved operating performance of all Enis business divisions, partially offset by a higher Group tax rate, from 46.0% to 50.4%. The increase in the tax rate was driven principally by two factors. Firstly, a higher share of profit before income taxes was earned by subsidiaries in the Exploration & Production division operating in countries where the statutory tax rate is higher than the average tax rate for the Group. Secondly, in July 2006 the British Government implemented an increase in the supplemental tax rate applicable to profit before taxes earned by the Exploration & Production segment in the North Sea. This increase, which is retroactive to the start of the year, affected both current taxes and deferred tax liabilities (for a total of euro 175 million). The impact on current taxes amounted to euro 84 million, of which euro 66 million pertained to the first quarter and second quarter of 2006. Adjusted net profit for the quarter was up 7.1% to euro 2,620 million. Adjusted net profit is calculated by excluding an inventory holding loss of euro 30 million and special charges of euro 168 million (both amounts net of the related tax effect) relating principally to asset impairments, risk provisions, environmental provisions, provisions for redundancy incentives and a one-time deferred tax-charge related to the supplemental tax rate of the North Sea. Divisional performance Replacement cost operating profit for the third quarter was euro 4,910 million, representing an increase of euro 1,145 million over the third quarter of 2005, or 30.4%, reflecting primarily the increase reported in the:

Exploration & Production division (up euro 359 million or 9.8%), reflecting higher realisations in dollars (oil up 16.5%; natural gas up 19.2%), offset in part by increased production costs and amortisation charges, and increased exploration expenses. Profit for the quarter was also adversely impacted by the appreciation of the euro over the dollar for an approximate euro 190 million charge, related in part to currency translation effects;
Gas & Power division (up euro 126 million, or 27.4%), reflecting primarily higher natural gas selling margins, supported by a favourable trading environment. Moreover, the adverse impact of tariff regulation enacted by the Authority for Electricity and Gas with resolution No. 248/2004 for the nine months of 2005 was incurred in full in the third quarter of 2005 on the basis that developments in the proceeding with the Authority occurred in that period. Other positives include an increase in volumes of natural gas sold by consolidated subsidiaries (up 399 mmcf/d). On the negative side, transport tariffs of natural gas in Italy were lower than in the same period a year ago as a consequence of a tariff regime enacted by the Italian Authority for Electricity and Gas with resolution No. 166/2005. Selling margins on electricity were also lower;

| - | Refining &
Marketing division (up euro 98 million or
41.7%), reflecting primarily higher realised refining
margins attributable to an improved yield of the slate of
processed crude, in spite of a negative trend in market
benchmarks (Brent margins were down 2.75 $/bbl or 39.2%
from a year ago). The operating profit of the refining
business was adversely affected by the appreciation of
the euro over the dollar and lower refining throughputs.
Other positives of the quarter included lower special
charges related in particular to lower environmental
provisions and the improved operating results of
marketing activities in Italy; |
| --- | --- |
| - | Petrochemical division, which achieved a replacement cost operating
profit of euro 36 million as compared to an operating
loss of euro 63 million a year ago. The euro 99 million
improvement in operating performance reflected a recovery
in product selling margins; |
| - | Engineering and Construction division (up euro 85 million or 141.7%), reflecting
favourable trends in demand for oilfield services. |

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Results for the nine months Bottom line Enis net profit for the nine months of 2006 was euro 7,697 million, up euro 1,014 million compared to the same period of 2005 (up 15.2%), reflecting the higher operating profit (up euro 2,939 million, or 23.6%), partially offset by a higher Group tax rate, which increased from 45.6% to 49.9%. Return on average capital employed (ROACE) calculated on the twelve-month period ending on 30 September 2006 was 21.8%. Enis results benefited from a favourable trading environment , with a higher Brent crude oil price (up 25.1% compared to the same period of 2005) and a depreciation of the euro versus the dollar (down 1.6%). These positives were partially offset by declining refining margins (margin on Brent were down 28.1%) and lower selling margins on refined and petrochemical products. Selling margins on natural gas were underpinned by a favourable trading environment. Adjusted net profit for the period was up 17.5% to euro 8,057 million. Divisional performance Replacement cost operating profit was euro 15.117 million, representing an increase of euro 3,687 million from the nine months of 2005, reflecting primarily the increases achieved in the:

| - | Exploration &
Production division (up euro 3,408 million or
37.7%), reflecting higher realisations in dollars (oil up
28.8% and natural gas up 20.6%) combined with increased
production volumes sold (up 11.9 mmboe), and the
favourable impact of the depreciation of the euro versus
the dollar (approximately euro 180 million). These
positives were offset in part by higher operating costs
and amortisation charges, and increased exploration
expenses; |
| --- | --- |
| - | Engineering and
Construction division (up euro 184 million or
107%), due to favourable trends in demand for oilfield
services. |

These increases were partly offset by lower replacement cost operating profit in the:

| - | Gas & Powe r
division (down euro 112 million or 4.3%), due to: (i)
lower selling margins on natural gas reflecting higher
purchase prices attributable to the gas shortage occurred
earlier in the year and the impact of the tariff regime
enacted by the Authority for Electricity and Gas with
resolution No. 248/2004, partly offset by a favourable
trading environment; (ii) lower operating results of
transportation activities in Italy primarily attributable
to the tariff regime enacted by the Authority for
Electricity and Gas with resolution No. 166/2005; (iii)
higher special charges related mainly to asset
impairments and environmental provisions. On the positive
side, natural gas sales by consolidated subsidiaries were
up 472 mmcf/d, or 6.3%, and electricity production sold
was up 2.05 TWh, or 12.3%. Natural gas volumes
transported outside Italy were also higher, reflecting
volumes transported through the GreenStream pipeline from
Libya coming on line; |
| --- | --- |
| - | Refining & Marketing division (down euro 107 million or 16.7%), due to
declining refining margins and the impact of the higher
level of planned maintenance activities, whose effects
were offset in part by the depreciation of the euro over
the dollar. Replacement cost operating profit was also
adversely impacted by the weak performance of marketing
activities in Italy attributable to lower retail margins
and the effect of the divestment of Italiana Petroli (IP)
in September 2005. On a positive note, special charges
decreased from a year ago and marketing activities in the
rest of Europe posted improved results; |
| - | Petrochemical segment
(down euro 102 million or 69.9%), due to lower selling
margins resulting from the significantly higher cost of
oil-based feedstocks which was only partially passed onto
selling prices. In addition production volumes were
adversely impacted by the outage of the Priolo cracker
due to the accident occurred to the nearby refinery late
in April 2006. |

Net borrowings and cash flow Net borrowings as of 30 September 2006 amounted to euro 3,850 million, representing a decrease of euro 6,625 million from 31 December 2005. Cash flow from operations totalled euro 15,223 million benefiting also from seasonality factors. Main cash outflows were: (i) financial requirements for capital expenditure and investments for euro 4,965 million; (ii) dividend payments amounting to euro 2,620 million, of which euro 2,400 million pertained to the payment of the balance of the dividend for fiscal year 2005 by the parent company Eni SpA; and (iii) the repurchase of own shares for euro 1,136 million by Eni SpA and euro 324 million by Snam Rete Gas SpA and Saipem SpA. Cash from divestments (euro 128 million) and currency translation effects (approximately euro 450 million) also contributed to the reduction in net borrowings. Leverage , the ratio of net borrowings to shareholders equity including minority interests decreased to 0.09, from 0.27 at 31 December 2005.

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Net borrowings decreased by euro 2,544 million from 30 June 2006 (euro 6,394 million) as cash inflow generated by operating activities (euro 4,555 million) covered financial requirements for capital expenditure amounting to euro 1,835 million and the repurchase of own shares for euro 158 million. Cash flow was also used to repay debt. Repurchase of own shares In the period from 1 January to 30 September 2006, a total of 48.80 million own shares were purchased by the company for a total cost of euro 1,136 million (representing an average cost of euro 23.265 per share). Since the inception of the share buy-back programme (1 September 2000), Eni has repurchased 331 million shares, equal to 8.26% of outstanding capital stock, at a total cost of euro 5,407 million (representing an average cost of euro 16.352 per share). Capital expenditure Capital expenditure in the nine months of 2006 amounted to euro 4,889 million (euro 4,950 million in the nine months of 2005) and was primarily related to:

| - | the development of oil and
gas reserves (euro 2,573 million) in particular in
Kazakhstan, Angola, Egypt and Italy and exploration
projects (euro 642 million) particularly in Egypt, Italy,
Nigeria and the United States; |
| --- | --- |
| - | the upgrading and
maintenance of Enis natural gas transport and
distribution networks in Italy (euro 478 million); |

| - | ongoing construction of
combined cycle power plants (euro 139 million); |
| --- | --- |
| - | projects aimed at improving
flexibility and yields of refineries, including the
construction of a new hydrocracking unit at the
Sannazzaro refinery, and upgrading the refined product
distribution network in Italy and in the rest of Europe
(overall euro 373 million); |
| - | the construction of a new FPSO unit and
upgrading of the fleet and logistic centres in the
Engineering and Construction segment (euro 403 million). |

Financial and operating information by division for the third quarter and the nine months of 2006 is provided in the following pages.

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Exploration & Production

(all figures in euro millions, except where indicated)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 6,058 | 7,045 | 6,562 | 8.3 | | Results — Net sales
from operations | 16,112 | 21,021 | 30.5 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3,682 | 4,090 | 4,041 | 9.8 | | Operating profit | 9,031 | 12,439 | 37.7 | |
| | | | | | Exclusion
of inventory holding (gains) losses | | | | |
| 3,682 | 4,090 | 4,041 | 9.8 | | Replacement cost operating profit | 9,031 | 12,439 | 37.7 | |
| 132 | 132 | 54 | | | Exclusion
of special items: | 291 | 129 | | |
| 132 | 132 | 48 | | | - asset impairments | 290 | 180 | | |
| | | 3 | | | -
gains on disposal of assets | | (54 | ) | |
| | | 3 | | | - provision for redundancy incentives | 1 | 3 | | |
| 3,814 | 4,222 | 4,095 | 7.4 | | Adjusted
operating profit | 9,322 | 12,568 | 34.8 | |
| | | | | | Results also include: | | | | |
| 1,013 | 1,157 | 1,106 | 9.2 | | Amortisations
and depreciations | 2,836 | 3,358 | 18.4 | |
| 126 | 214 | 255 | 102.4 | | - of which amortisations of exploration
expenditure | 344 | 656 | 90.7 | |
| 1,228 | 1,153 | 1,152 | (6.2 | ) | Capital
expenditure | 3,448 | 3,266 | (5.3 | ) |
| | | | | | Production (a) (b) | | | | |
| 1,106 | 1,056 | 1,041 | (5.9 | ) | Total
liquids (c) (kbbl/d) | 1,104 | 1,080 | (2.2 | ) |
| 3,496 | 3,991 | 3,849 | 10.1 | | Natural gas (mmcf/d) | 3,496 | 3,920 | 12.1 | |
| 1,715 | 1,748 | 1,709 | (0.3 | ) | Total
hydrocarbons (kboe/d) | 1,714 | 1,761 | 2.7 | |
| | | | | | Average realisations | | | | |
| 55.96 | 64.33 | 65.20 | 16.5 | | Liquids (c) ($/bbl) | 47.98 | 61.81 | 28.8 | |
| 4.56 | 5.15 | 5.44 | 19.2 | | Natural gas ($/mmcf) | 4.37 | 5.27 | 20.6 | |
| 45.72 | 51.24 | 52.21 | 14.2 | | Total
hydrocarbons ($/boe) | 40.17 | 50.00 | 24.5 | |
| | | | | | Average oil marker prices | | | | |
| 61.54 | 69.62 | 69.49 | 12.9 | | Brent
($/bbl) | 53.54 | 66.96 | 25.1 | |
| 50.44 | 55.43 | 54.55 | 8.1 | | Brent (euro/bbl) | 42.36 | 53.82 | 27.1 | |
| 63.05 | 70.40 | 70.38 | 11.6 | | West Texas
Intermediate ($/bbl) | 55.26 | 68.02 | 23.1 | |
| 9.65 | 6.54 | 6.07 | (37.1 | ) | Gas Henry Hub ($/mmbtu) | 7.67 | 6.77 | (11.7 | ) |

| (a) | Supplementary
operating data is provided on page 25 . |
| --- | --- |
| (b) | Includes
Enis share of production of equity-accounted
entities. |
| (c) | Includes
condensates. |

The replacement cost operating profit of the Exploration & Production division totalled euro 4,041 million, up euro 359 million or 9.8% from the third quarter of 2005 reflecting primarily higher realisations in dollars (oil up16.5%, natural gas up 19.2%). On the negative side, we would highlight the following:

| - | higher operating costs and
amortisation charges attributable to higher costs for the
development of new fields and for the maintenance of
production levels in certain mature fields, as well as
sector specific inflationary pressure; |
| --- | --- |
| - | an increased exploration
expense (up euro 129 million; euro 134 million on a
constant exchange rate basis); |
| - | a charge of approximately euro 190
million, resulting from the appreciation of the euro over
the dollar, also reflecting currency translation effects. |

Replacement cost operating profit for the nine months increased by euro 3,408 to euro 12,439 million, up 37.7%, reflecting higher realisations in dollar terms combined with higher sold production volumes (up 11.9 mmboe or 2.6%). A gain of approximately euro 180 million, attributable to a different trend in the euro/dollar exchange rate in the first nine months of the year compared to the third quarter, also contributed to the improved result. On the negative side the result was affected by higher production costs and amortisation charges and an increased exploration expense.

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Special charges of euro 54 million (euro 129 million in the first nine months) related primarily to asset impairments were also accounted for in the third quarter of 2006. Oil and natural gas production in the third quarter of 2006 averaged 1,709 kboe/d, virtually unchanged from the third quarter of 2005 (down 0.3%). Production for the quarter improved by 4.2% when excluding the impact of the unilateral cancellation of the Dación field contract by the Venezuelan state company PDVSA with effect from 1 April 2006 (down 62 kboe/d) and lower entitlements in certain PSAs and buy-back contracts (down 16 kboe/d) due to higher oil prices. Production increases were driven primarily by start-ups/full production of large gas projects (Libya, Australia, Egypt and Croatia) and organic growth in Libya and Angola, whose positive contribution was offset in part by field declines in mature areas and the impact of outages and disruptions in Nigeria due to security issues. Daily production of oil and condensates for the quarter (1,041 kbbl) increased mainly in Libya and Angola due to coming on stream of new production as well as in the United States due to the near recovery of production at facilities damaged by hurricanes in the third and fourth quarters of 2005. Production decreased in Venezuela and Nigeria due to unforeseen events, as described above, and the United Kingdom and Italy due to the production decline of mature fields. Daily production of natural gas for the quarter (3,920 mmcf/d) increased mainly in Libya (achievement of full production at the Bahr Essalam field), Nigeria (start-up of trains 4 and 5 of the Bonny LNG plant), Australia (start-up of the gas phase of the Bayu Undan field), Egypt (achievement of full production at the Barboni field, increase in the number of production wells at eI Temsah field and increased supplies to the Damietta LNG plant), Croatia (start-up of the Ika, Ida and Ivana C-K fields). Declines in production were attributable mainly to mature fields in Italy. In the first nine months of 2006 daily production of oil and gas averaged 1,761 kboe/d, increasing by 47 kboe/d from the first nine months of 2005 (up 2.7%). Excluding the impact of the loss of production of the Dación oil field in Venezuela and of adverse entitlement effects, oil and natural gas production increased by 6.7%. Libya, Angola and Egypt were the main growth areas, while decreases in production were recorded in Nigeria and Italy. During the third quarter, Enis main E&P development projects made good progress. In Kazakhstan, drilling operations at the Kashagan offshore field yielded two more successfully tested wells, confirming the promising production results achieved with the completion of the first well during the second quarter. In Angola engineering and procurement activities are underway as part of phase three of the development of oil reserves discovered in the Kizomba structure, offshore Block 15. In September, processing facilities have been halted at the Karachaganak gas and condensates field, onshore Kazakhstan, due to scheduled maintenance activity. Operations have been resumed at the beginning of October, reaching full course by mid October. In the quarter condensates were shipped for the first time via the Atyrau-Samara pipeline linked to the Russian pipeline network, marking the start-up of the Baltic route for the exportation of production to western markets. In October, Eni made two relevant discoveries: (i) in the Gulf of Mexico, in the Mississippi Canyon Block 502 (Enis interest 100%), the Longhorn North discovery well drilled at a depth of 3,400 meters highlighted the presence of a sand layer containing natural gas and condensates with higher than expected extension and quality. This discovery, along with the recent adjacent Longhorn discovery, has allowed delineation of a field which Eni is planning to develop in the short term; and (ii) Algeria, in onshore Block 404a (Enis interest 12.25%) the Bir Berkine Sud-1 discovery well drilled at a depth of about 3,500 meters highlighted the presence of oil yielding approximately 700 bbl/d of light oil in test production. In September Eni purchased further interests in two exploration licenses off the coast of Norway: (i) in the PL221 permit (Enis interest 30%) where the Victoria gas field, holding recoverable reserves of 1,250 bcf net to Eni, had previously been discovered; (ii) in the PL264 permit (Eni operator with a 40% interest) where the Hvitveis gas field, holding recoverable reserves of 311 bcf net to Eni, had previously been discovered.

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Gas & Power

(all figures in euro millions, except where indicated)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 4,388 | | 5,799 | 5,265 | 20.0 | | Results — Net sales
from operations | 15,550 | | 20,198 | 29.9 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 525 | | 708 | 592 | 12.8 | | Operating profit | 2,680 | | 2,499 | (6.8 | ) |
| (65 | ) | 10 | (6 | ) | | Exclusion
of inventory holding (gain) loss | (95 | ) | (26 | ) | |
| 460 | | 718 | 586 | 27.4 | | Replacement cost operating profit | 2,585 | | 2,473 | (4.3 | ) |
| 8 | | 73 | 33 | | | Exclusion
of special items | 56 | | 140 | | |
| | | | | | | of which: | | | | | |
| | | | 24 | | | Non-recurring
(income) charges | | | 24 | | |
| 8 | | 73 | 9 | | | Other special charges | 56 | | 116 | | |
| | | 51 | | | | -
impairments | | | 51 | | |
| 6 | | 19 | 3 | | | - environmental provisions | 28 | | 42 | | |
| 2 | | 3 | 5 | | | -
provision for redundancy incentives | 5 | | 22 | | |
| | | | 1 | | | - other | 23 | | 1 | | |
| 468 | | 791 | 619 | 32.3 | | Adjusted
operating profit | 2,641 | | 2,613 | (1.1 | ) |
| 220 | | 259 | 311 | 41.4 | | Capital expenditure | 741 | | 721 | (2.7 | ) |
| 468 | | 791 | 619 | 32.3 | | Adjusted
operating profit by business | 2,641 | | 2,613 | (1.1 | ) |
| (15 | ) | 339 | 186 | .. | | Market and Distribution | 1,261 | | 1,230 | (2.5 | ) |
| 293 | | 266 | 230 | (21.5 | ) | Transport
in Italy | 908 | | 801 | (11.8 | ) |
| 119 | | 141 | 140 | 17.6 | | Transport outside Italy | 339 | | 435 | 28.3 | |
| 71 | | 45 | 63 | (11.3 | ) | Power
generation | 133 | | 147 | 10.5 | |
| | | | | | | Natural gas sales (a) (mmcf/d) | | | | | |
| 3,655 | | 3,878 | 3,605 | (1.4 | ) | Italy to
third parties (1) | 4,760 | | 4,767 | 0.1 | |
| 568 | | 625 | 576 | 1.4 | | Own consumption (1) | 526 | | 592 | 12.5 | |
| 1,551 | | 2,294 | 2,038 | 31.4 | | Rest of
Europe (1) | 2,121 | | 2,560 | 20.7 | |
| 150 | | 81 | 104 | (30.7 | ) | Outside Europe | 123 | | 83 | (32.5 | ) |
| 5,924 | | 6,878 | 6,323 | 6.7 | | Sales
to third parties and own consumption of consolidated
companies | 7,530 | | 8,002 | 6.3 | |
| 472 | | 641 | 621 | 31.6 | | Natural gas sales of affiliates (net
to Eni) | 650 | | 734 | 12.9 | |
| | | | | | | Italy (1) | 5 | | 1 | (80.0 | ) |
| 411 | | 536 | 514 | 25.1 | | Rest of Europe (1) | 587 | | 653 | 11.2 | |
| 61 | | 105 | 107 | 75.4 | | Outside
Europe | 58 | | 80 | 37.9 | |
| 6,396 | | 7,519 | 6,944 | 8.6 | | Total natural gas sales and own
consumption | 8,180 | | 8,736 | 6.8 | |
| 6,749 | | 7,826 | 7,259 | 7.6 | | Sales
of natural gas in Europe (mmcf/d) | 8,573 | | 9,107 | 6.2 | |
| 6,185 | | 7,333 | 6,733 | 8.9 | | G&P in Europe (1) | 7,999 | | 8,573 | 7.2 | |
| 564 | | 493 | 526 | (6.8 | ) | Upstream
in Europe | 574 | | 534 | (7.0 | ) |
| 7,010 | | 8,394 | 7,301 | 4.2 | | Transport of natural gas in Italy (mmcf/d) | 8,156 | | 8,479 | 4.0 | |
| 4,480 | | 5,398 | 4,641 | 3.6 | | Eni | 5,191 | | 5,449 | 5.0 | |
| 2,530 | | 2,996 | 2,660 | 5.1 | | On behalf of third parties | 2,965 | | 3,030 | 2.2 | |
| 6.15 | | 6.00 | 6.33 | 2.9 | | Electricity
production sold (TWh) | 16.70 | | 18.75 | 12.3 | |

(a) Supplementary operating data is provided on page 26.

The replacement cost operating profit of the Gas & Power division was euro 586 million, up euro 126 million, or 27.4%, reflecting primarily:

higher natural gas selling margins supported by a favourable trading environment. Moreover, the adverse impact of tariff regulation enacted by the Authority for Electricity and Gas with resolution No. 248/2004 for the nine months of 2005 was incurred in full in the third quarter 2005 on the basis of developments of the proceeding with the Authority occurred in said quarter;
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increasing natural gas sales by consolidated subsidiaries (up 399 mmcf/d or 6.7%), including own consumption, and higher natural gas volumes transported outside Italy.

On the negative side:

| - | the lower operating results
for the transportation activity in Italy as a consequence
of lower tariffs resulting from the implementation of
resolution No. 166/2005 by the Italian Authority for
Electricity and Gas; |
| --- | --- |
| - | the weaker operating results
generated from power generation activities due to lower
selling margins, offset in part by an increase in volumes
sold (up 0.18 TWh or 2.9%). |

Despite the positive trend of the third quarter, replacement cost operating profit for the nine months of 2006 (euro 2,473 million) was down euro 112 million, or 4.3%, due mainly to weaker natural gas selling margins affected by higher purchase prices attributable to the gas shortage occurred earlier in the year and the impact of sector regulation in Italy, partly offset by a favourable trading environment, in particular in the thermoelectric sector. Results for the nine months were also adversely impacted by lower transportation tariffs in Italy and higher special charges. On the positive side, natural gas volumes sold increased by 472 mmcf/d or 6.3% and electricity volumes sold increased by 2.05 TWh, or 12.3%. Gas volumes transported outside Italy also increased. Special charges for the quarter (euro 33 million) included euro 24 million of non-recurring charges, as well as redundancy incentives and environmental provisions. Special charges for the nine months of 2006 (euro 140 million) included the impairments of intangible assets. Natural gas sales in Europe for the third quarter amounted to 7,259 mmcf/d (including own consumption and sales by affiliates), up 510 mmcf/d from the third quarter of 2005 primarily reflecting growth in target markets of the rest of Europe, up 552 mmcf/d or 21.9%, in particular of:

| - | sales under long-term supply
contracts to Italian importers (up 284 mmcf/d); |
| --- | --- |
| - | supplies to the Iberian
Peninsula, Turkey, Austria and Germany. |

On the negative side:

sales in Italy including own consumption decreased by 42 mmcf/d due to weaker sales to the industrial sector (down 142 mmcf/d), partially offset by higher sales to wholesalers (up 84 mmcf/d) and to the residential and commercial sector (up 23 mmcf/d).

In the nine months of 2006, natural gas sales in Europe increased by 534 mmcf/d to 9,107 mmcf/d, reflecting: (i) growth in the rest of Europe (up 465 mmcf/d or 14.2%), particularly sales to Italian importers and sales to Turkey, the Iberian Peninsula, Austria and Germany; and (ii) increased sales in Italy including own consumption (up 69 mmcf/d or 1.3%), benefiting from growth in the industrial sector and from the build up of supplies to feed Enis own power plants. On the negative side, supplies to third party power plants decreased as a consequence of the gas shortage experienced during last winter that led to the substitution of natural gas with fuel oil as feedstock for power generation. In the third quarter of 2006, electricity production sold increased by 0.18 TWh to 6.33 TWh (up 2.9%), reflecting the continuing ramp-up of new production capacity, in particular at the Brindisi plant (up 0.74 TWh), whose effects were offset in part by the standstill of the Ravenna plant (down 0.46 TWh). In the nine months of 2006, electricity production sold increased by 2.05 TWh (up 12.3%).

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Refining & Marketing

(all figures in euro millions, except where indicated)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 9,430 | | 10,166 | | 10,185 | 8.0 | | Results — Net sales
from operations | 24,177 | | 29,631 | 22.6 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 663 | | 366 | | 250 | (62.3 | ) | Operating profit | 1,528 | | 705 | (53.9 | ) |
| (428 | ) | (207 | ) | 83 | | | Exclusion
of inventory holding (gain) loss | (887 | ) | (171 | ) | |
| 235 | | 159 | | 333 | 41.7 | | Replacement cost operating profit | 641 | | 534 | (16.7 | ) |
| 113 | | 31 | | 30 | | | Exclusion
of special items: | 194 | | 108 | | |
| | | 17 | | | | | - impairments | | | 1 | | |
| 118 | | 6 | | 23 | | | -
environmental charges | 180 | | 84 | | |
| 2 | | | | 6 | | | - provision for redundancy incentives | 9 | | 17 | | |
| 14 | | 2 | | 1 | | | -
provision to the reserve for contingencies | 31 | | 4 | | |
| (21 | ) | 6 | | | | | - other | (26 | ) | 2 | | |
| 348 | | 190 | | 363 | 4.3 | | Adjusted
operating profit | 835 | | 642 | (23.1 | ) |
| 123 | | 137 | | 141 | 14.6 | | Capital expenditure | 339 | | 373 | 10.0 | |
| | | | | | | | Global indicator refining margin | | | | | |
| 7.02 | | 5.77 | | 4.27 | (39.2 | ) | Brent
($/bbl) | 6.02 | | 4.33 | (28.1 | ) |
| 5.75 | | 4.58 | | 3.35 | (41.7 | ) | Brent (euro/bbl) | 4.76 | | 3.48 | (26.9 | ) |
| 9.05 | | 8.46 | | 6.82 | (24.6 | ) | Ural
($/bbl) | 8.53 | | 7.04 | (17.5 | ) |
| | | | | | | | Refining throughputs and sales (kbbl/d) | | | | | |
| 727 | | 662 | | 679 | (6.6 | ) | Refining
throughputs on own account Italy | 674 | | 650 | (3.6 | ) |
| 93 | | 92 | | 97 | 4.3 | | Refining throughputs on own account rest of
Europe | 89 | | 93 | 4.5 | |
| 588 | | 543 | | 570 | (3.1 | ) | Refining
throughputs of wholly-owned refineries | 537 | | 529 | (1.5 | ) |
| 100 | | 100 | | 100 | | | Utilisation rate of balanced capacity (%) | 100 | | 99 | (1.0 | ) |
| 182 | | 176 | | 178 | (2.2 | ) | Retail
Italy Agip brand | 175 | | 174 | (0.6 | ) |
| 27 | | | | | | | Retail Italy IP brand | 35 | | | | |
| 79 | | 76 | | 82 | 3.8 | | Retail
rest of Europe | 74 | | 76 | 2.7 | |
| 205 | | 199 | | 195 | (4.9 | ) | Wholesale Italy | 204 | | 200 | (2.0 | ) |
| 83 | | 83 | | 85 | 2.4 | | Wholesale
rest of Europe | 80 | | 83 | 3.8 | |
| 7 | | 10 | | 8 | 14.3 | | Wholesale rest of World | 8 | | 9 | 12.5 | |
| 462 | | 463 | | 491 | 6.3 | | Other
sales | 439 | | 473 | 7.7 | |
| 1,045 | | 1,007 | | 1,039 | (0.6 | ) | Sales | 1,015 | | 1,015 | .. | |
| | | | | | | | Refined
product sales by region (kbbl/d) | | | | | |
| 612 | | 597 | | 593 | (3.1 | ) | Italy | 599 | | 596 | (0.5 | ) |
| 162 | | 159 | | 167 | 3.1 | | Rest of
Europe | 154 | | 159 | 3.2 | |
| 271 | | 251 | | 279 | 3.0 | | Rest of World | 262 | | 260 | (0.8 | ) |

The replacement cost operating profit of the Refining & Marketing division was euro 333 million, up euro 98 million or 41.7% from the third quarter of 2005 reflecting primarily:

| - | higher realised refining
margins attributable to the difference in prices of light
and heavy crude, which has been captured by Enis
refining system due to its high conversion rate, in spite
of a negative trend in market benchmarks (Brent margins
were down 2.75 $/bbl or 39.2% from a year ago). Results
for the refining business were adversely affected by the
appreciation of the euro over the dollar and lower
refining throughputs; |
| --- | --- |
| - | lower special charges due to
lower environmental provisions; |
| - | the improved performance of marketing
activities in Italy attributable to higher retail margins
offset in part by lower volumes sold and the effect of
the divestment of Italiana Petroli in September 2005; |
| - | higher retail margins and volumes sold
in marketing activities in the rest of Europe. |

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Despite the positive trend of the third quarter, replacement cost operating profit for the nine months of 2006 declined by euro 107 million from the nine months of 2005 (down 16.7%) reflecting in particular:

| - | the decline in operating
performance of the refining business, reflecting the
unfavourable trading environment and refinery outages,
the effects of which were partially offset by the
depreciation of the euro over the dollar; |
| --- | --- |
| - | the decline in operating
performance of Italian marketing activities due to lower
retail margins registered in the first and second
quarter, and the effects of competitive pressures in
terms of lower volumes sold and the divestment of
Italiana Petroli. |

On the positive side, special charges were lower than a year ago and marketing activities in the rest of Europe performed well. Special charges for the third quarter of 2006 amounted to euro 30 million (euro 108 million in the nine months) relating primarily to environmental provisions and provisions for redundancy incentives. Refining throughputs on Enis own account for the third quarter of 2006 in Italy and outside Italy were down 44 kbbl/d to 776 kbbl/d or 5.3%, due principally to operational issues at the Gela refinery, planned maintenance at the Sannazzaro refinery and the outage of the Erg Priolo refinery due to the accident occurred late in April. Increased volumes were processed at the Livorno, Taranto and Venice refineries. Refining throughputs were down 20 kbbl/d to 743 kbbl/d in the nine months of 2006 compared to the nine months of 2005 (down 2.6%). In the first nine months refineries ran at full capacity. Sales of refined products for the third quarter decreased by 6 kbbl/d to 1,039 kbbl/d, compared to the third quarter of 2005, due to lower sales on the Agip branded network and on the wholesale markets in Italy (down 14 kbbl/d), whilst sales in the rest of Europe increased by 4 kbbl/d. The 27 kbbl/d impact in terms of lost retail sales in Italy due to the divestment of Italiana Petroli was partially offset by Enis ongoing supply of significant volumes of fuels and other products to the divested company under a five-year supply contract. Sales of refined products on the Agip branded network in Italy declined by 4 kbbl/d to 178 kbbl/d, due to competitive pressures. Sales of refined products on the retail markets in the rest of Europe (82 kbbl/d) increased principally in Central Eastern Europe in connection with the purchase and lease of service stations. Sales of refined products for the first nine months of 2006 reached 1,015 kbbl/d were in line with the first nine months of 2005. In particular retail sales on the Agip branded network and wholesale sales in Italy declined by 5 kbbl/d and were offset by higher sales in the rest of Europe (5 kbbl/d).

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Summarised Group profit and loss account

(million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 18,121 — 163 | | 20,739 — 163 | | 20,366 — 109 | | 12.4 — (33.1 | ) | Net sales from operations — Other
income and revenues | 52,222 — 480 | | 64,689 — 481 | | 23.9 — 0.2 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (12,607 | ) | (14,380 | ) | (14,147 | ) | (12.2 | ) | Operating expenses | (36,234 | ) | (45,266 | ) | (24.9 | ) |
| | | | | (24 | ) | .. | | of
which non-recurring items | | | (24 | ) | .. | |
| (1,407 | ) | (1,575 | ) | (1,500 | ) | (6.6 | ) | Depreciation, amortisation and writedowns | (4,037 | ) | (4,534 | ) | (12.3 | ) |
| 4,270 | | 4,947 | | 4,828 | | 13.1 | | Operating
profit | 12,431 | | 15,370 | | 23.6 | |
| (60 | ) | 109 | | (42 | ) | 30.0 | | Net financial (expense) income | (268 | ) | 109 | | .. | |
| 355 | | 227 | | 279 | | (21.4 | ) | Net income
from investments | 768 | | 746 | | (2.9 | ) |
| 4,565 | | 5,283 | | 5,065 | | 11.0 | | Profit before income taxes | 12,931 | | 16,225 | | 25.5 | |
| (2,101 | ) | (2,800 | ) | (2,553 | ) | (21.5 | ) | Income
taxes | (5,891 | ) | (8,100 | ) | (37.5 | ) |
| 2,464 | | 2,483 | | 2,512 | | 1.9 | | Net profit | 7,040 | | 8,125 | | 15.4 | |
| | | | | | | | | of
which: | | | | | | |
| 2,340 | | 2,301 | | 2,422 | | 3.5 | | - net profit pertaining to Eni | 6,683 | | 7,697 | | 15.2 | |
| 124 | | 182 | | 90 | | (27.4 | ) | - net
profit of minorities | 357 | | 428 | | 19.9 | |
| 2,340 | | 2,301 | | 2,422 | | 3.5 | | Net profit pertaining to Eni | 6,683 | | 7,697 | | 15.2 | |
| (317 | ) | (151 | ) | 30 | | | | Exclusion
of inventory holding (gain) loss | (628 | ) | (180 | ) | | |
| 2,023 | | 2,150 | | 2,452 | | 21.2 | | Replacement cost net profit pertaining
to Eni (1) | 6,055 | | 7,517 | | 24.1 | |
| | | | | | | | | Exclusion
special items: | | | | | | |
| | | | | 19 | | | | - non-recurring items | | | 19 | | | |
| 423 | | 333 | | 149 | | | | - other
special items | 800 | | 521 | | | |
| 2,446 | | 2,483 | | 2,620 | | 7.1 | | Adjusted net profit pertaining to Eni (1) | 6,855 | | 8,057 | | 17.5 | |

(1) Adjusted operating profit and net profit are before inventory holding gains or losses and special items. For an explanation of these measures and a reconciliation of adjusted operating profit and net profit to reported operating profit and net profit see below.

15 -

Table of Contents

Non-GAAP measures

Reconciliation of reported operating profit and net profit to results on a replacement cost basis and on an adjusted basis

Adjusted operating profit and net profit are before inventory holding gains or losses and special items. Information on adjusted operating profit and net profit is presented to help distinguish the underlying trends for the companys core businesses and to allow financial analysts to evaluate Enis trading performance on the basis of their forecasting models. These financial measures are not GAAP measures under either IFRS or U.S. GAAP; they are used by management in evaluating the performance of the Group and its Divisions. Replacement cost net profit and operating profit reflect the current cost of supplies. The replacement cost net profit for the period is calculated by excluding from the historical cost net profit the inventory holding gain or loss, which is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold in the period calculated using the weighted-average cost method of inventory accounting. Special items include certain relevant incomes or charges pertaining to: (i) either infrequent or unusual events and transactions, being identified as non recurring items under such a circumstance; or (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past exercises or are likely to occur in future ones. As provided for in Decision No. 15519 of 27 July 2006 of the Italian market regulator (CONSOB), non recurring material income or charges are reported in single line items in profit and loss accounts and in the following tables. For a reconciliation of adjusted operating profit and net profit to reported operating profit and net profit see tables below.

| Third
quarter 2006 |
| --- |
| (million
euro) |

Reported operating profit	4,041	592		250	31		(185	)	(65	)	19	4,828
Exclusion
of inventory holding (gains) losses		(6	)	83	5							82
Replacement cost operating profit	4,041	586		333	36	145	(185	)	(65	)	19	4,910
Exclusion
of special items
of which:
Non-recurring
(income) charges		24										24
Other special charges:	54	9		30	1		91		8			193
environmental
charges		3		23			12					38
asset impairments	48						6					54
gains
on disposal of assets	3											3
provisions to the
reserve for contingencies				1			53					54
provision
for redundancy incentives	3	5		6	4		15		2			35
other		1			(3	)	5		6			9
Special
items of operating profit	54	33		30	1		91		8			217
Adjusted operating profit	4,095	619		363	37	145	(94	)	(57	)	19	5,127
Reported
net profit pertaining to Eni												2,422
Exclusion of inventory holding (gains) losses												30
Replacement
cost net profit pertaining to Eni												2,452
Exclusion non-recurring (income) charges												19
Exclusion
other special charges												149
Adjusted net profit pertaining to Eni												2,620

16 -

Table of Contents

| Third
quarter 2005 |
| --- |
| (million
euro) |

Reported operating profit	3,682	525		663		(51	)	60	(378	)	(125	)	(106	)	4,270
Exclusion
of inventory holding (gains) losses		(65	)	(428	)	(12	)								(505	)
Replacement cost operating profit	3,682	460		235		(63	)	60	(378	)	(125	)	(106	)	3,765
Exclusion
of special items
of which:
Non-recurring
(income) charges
Other special charges:	132	8		113		20			283		125				681
environmental
charges		6		118					173						297
asset impairments	132								24						156
gains
on disposal of assets
provisions to the
reserve for contingencies				14		25			87		119				245
provision
for redundancy incentives		2		2					3		6				13
other				(21	)	(5	)		(4	)					(30	)
Special
items of operating profit	132	8		113		20			283		125				681
Adjusted operating profit	3,814	468		348		(43	)	60	(95	)			(106	)	4,446
Reported
net profit pertaining to Eni															2,340
Exclusion of inventory holding (gains) losses															(317	)
Replacement
cost net profit pertaining to Eni															2,023
Exclusion of special items															423
Adjusted net profit pertaining to Eni															2,446

| Second
quarter 2006 |
| --- |
| (million
euro) |

Reported operating profit	4,090	708	366		30		133	(151	)	(91	)	(138	)	4,947
Exclusion
of inventory holding (gains) losses		10	(207	)	(44	)								(241	)
Replacement cost operating profit	4,090	718	159		(14	)	133	(151	)	(91	)	(138	)	4,706
Exclusion
of special items
of which:
Non-recurring
(income) charges
Other special charges:	132	73	31		19			86		7				348
environmental
charges		19	17					52						88
asset impairments	132	51	1					1						185
provisions
to the reserve for contingencies			2		18			22						42
provision for
redundancy incentives		3	6		1			1		7				18
other			5					10						15
Special items of operating profit	132	73	31		19			86		7				348
Adjusted operating profit	4,222	791	190		5		133	(65	)	(84	)	(138	)	5,054
Reported
net profit pertaining to Eni														2,301
Exclusion of inventory holding (gains) losses														(151	)
Replacement
cost net profit pertaining to Eni														2,150
Exclusion of special items														333
Adjusted net profit pertaining to Eni														2,483

17 -

Table of Contents

| Nine
months 2006 |
| --- |
| (million
euro) |

Reported operating profit	12,439			705		100		(401	)	(207	)	(121	)	15,370
Exclusion
of inventory holding (gains) losses		(26	)	(171	)	(56	)							(253	)
Replacement cost operating profit	12,439	2,473		534		44	356	(401	)	(207	)	(121	)	15,117
Exclusion
of special items
of which:
Non-recurring
(income) charges		24												24
Other special charges:	129	116		108		21		179		20				573
environmental
charges		42		84				64						190
asset impairments	180	51		1				10						242
gains
on disposal of assets	(54	)												(54	)
provisions to the
reserve for contingencies				4		20		75						99
provision
for redundancy incentives	3	22		17		5		16		14				77
other		1		2		(4	)	14		6				19
Special
items of operating profit	129	140		108		21		179		20				597
Adjusted operating profit	12,568	2,613		642		65	356	(222	)	(187	)	(121	)	15,714
Reported net profit pertaining to Eni														7,697
Exclusion of inventory holding (gains) losses														(180	)
Replacement cost net profit pertaining to Eni														7,517
Exclusion non-recurring (income) charges														19
Exclusion other special charges														521
Adjusted net profit pertaining to Eni														8,057

| Nine
months 2005 |
| --- |
| (million
euro) |

Reported operating profit	9,031	2,680		1,528		165		(637	)	(336	)	(172	)	12,431
Exclusion
of inventory holding (gains) losses		(95	)	(887	)	(19	)							(1,001	)
Replacement cost operating profit	9,031	2,585		641		146	172	(637	)	(336	)	(172	)	11,430
Exclusion
of special items
of which:
Non-recurring
(income) charges
Other special charges:	291	56		194		41		433		182				1,197
environmental
charges		28		180				267		46				521
asset impairments	290					18		28						336
gains
on disposal of assets
provisions to the
reserve for contingencies				31		30		130		119				310
provision
for redundancy incentives	1	5		9				3		17				35
other		23		(26	)	(7	)	5						(5	)
Special
items of operating profit	291	56		194		41		433		182				1,197
Adjusted operating profit	9,322	2,641		835		187	172	(204	)	(154	)	(172	)	12,627
Reported net profit pertaining to Eni														6,683
Exclusion
of inventory holding (gains) losses														(628	)
Replacement cost net profit pertaining to Eni														6,055
Exclusion
of special items														800
Adjusted net profit pertaining to Eni														6,855

18 -

Table of Contents

Analysis of special items

(million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 2005 2006

						Exclusion of special items
						of
which:
				24		Non-recurring (income) charges			24
681		348		193		Other
special charges	1,197		573
297		88		38		Environmental charges	521		190
156		185		54		Asset
impairments	336		242
				3		Gains on disposal of assets, net			(54	)
245		42		54		Provisions
to the reserve for contingencies	310		99
13		18		35		Provision for redundancy incentives	35		77
(30	)	15		9		Other	(5	)	19
681		348		217		Special items of operating profit	1,197		597
						Financial expense (income) and
(107	)	(15	)	(70	)	expense
(income) from investments	(105	)	(84	)
574		333		147		Non-recurring items before income taxes	1,092		513
(151	)			21		Income taxes	(292	)	27
423		333		168		Total
special items	800		540

Adjusted operating profit

(million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

| 3,814 | | 4,222 | | 4,095 | | 7.4 | Adjusted operating profit — Exploration
& Production | 9,322 | | 12,568 | | 34.8 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 468 | | 791 | | 619 | | 32.3 | Gas & Power | 2,641 | | 2,613 | | (1.1 | ) |
| 348 | | 190 | | 363 | | 4.3 | Refining
& Marketing | 835 | | 642 | | (23.1 | ) |
| (43 | ) | 5 | | 37 | | .. | Petrochemicals | 187 | | 65 | | (65.2 | ) |
| 60 | | 133 | | 145 | | 141.7 | Engineering
and Construction | 172 | | 356 | | 107.0 | |
| (95 | ) | (65 | ) | (94 | ) | 1.1 | Other activities | (204 | ) | (222 | ) | (8.8 | ) |
| | | (84 | ) | (57 | ) | .. | Corporate
and financial companies | (154 | ) | (187 | ) | (21.4 | ) |
| (106 | ) | (138 | ) | 19 | | | Unrealized profit in inventory | (172 | ) | (121 | ) | | |
| 4,446 | | 5,054 | | 5,127 | | 15.3 | | 12,627 | | 15,714 | | 24.4 | |

19 -

Table of Contents

Summarised Group balance sheet

Summarised group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this Summarised group balance sheet is useful information in assisting investors to assess Enis capital structure and to analyse its sources of funds and investments in fixed assets and working capital. Management uses the Summarised group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders equity (leverage) intended to evaluate whether Enis financing structure is sound and well-balanced. Summarised Group balance sheet 1

(million euro)

31.12.2005 30.06.2006 30.09.2006

| Fixed assets — Property,
plant and equipment, net | 45,013 | | 43,051 | | 43,408 | |
| --- | --- | --- | --- | --- | --- | --- |
| Other tangible assets | | | 654 | | 656 | |
| Inventories
- compulsory stock | 2,194 | | 1,866 | | 1,962 | |
| Intangible assets, net | 3,194 | | 3,172 | | 3,285 | |
| Investments,
net | 4,311 | | 4,267 | | 4,234 | |
| Accounts receivable financing and securities
related to operations | 775 | | 626 | | 640 | |
| Net
accounts payable in relation to capital expenditure | (1,196 | ) | (916 | ) | (912 | ) |
| | 54,291 | | 52,720 | | 53,273 | |
| Net
working capital | | | | | | |
| Inventories | 3,563 | | 4,387 | | 4,440 | |
| Trade
accounts receivable | 14,101 | | 13,359 | | 12,858 | |
| Trade accounts payable | (8,170 | ) | (8,747 | ) | (8,136 | ) |
| Taxes
payable and reserve for net deferred income tax
liabilities | (4,857 | ) | (6,320 | ) | (6,867 | ) |
| Reserve for contingencies | (7,679 | ) | (7,640 | ) | (7,741 | ) |
| Other
operating assets and liabilities (2) | (526 | ) | (462 | ) | (553 | ) |
| | (3,568 | ) | (5,423 | ) | (5,999 | ) |
| Employee
termination indemnities and other benefits | (1,031 | ) | (1,040 | ) | (1,054 | ) |
| Capital employed, net | 49,692 | | 46,257 | | 46,220 | |
| Shareholders
equity including minority interests | 39,217 | | 39,863 | | 42,370 | |
| Net borrowings | 10,475 | | 6,394 | | 3,850 | |
| Total
liabilities and shareholders equity | 49,692 | | 46,257 | | 46,220 | |

| (1) | For a
reconciliation of the summarised group balance sheet to
the statutory balance sheet see Enis Report on the
first half of 2006 Reconciliation of Summarised
group balance sheet and statement of cash flows to
statutory schemes pages 45 and 46. |
| --- | --- |
| (2) | Includes operating
financing receivables and securities related to
operations for euro 261 million (492 and 45 million at 31
December 2005 and 30 June 2006 respectively) and
securities covering technical reserves of Padana
Assicurazioni SpA for euro 550 million (the same amount
as of 30 June 2006, euro 453 million at 31 December
2005). |

20 -

Table of Contents

Leverage and Net Borrowings

Leverage is a measure of a companys level of indebtedness, calculated as the ratio between net borrowings which is calculated at by excluding cash and cash equivalents and certain very liquid assets from financial debt and shareholders equity, including minority interests. Management makes use of leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards. In the medium term, management plans to maintain a strong financial structure targeting a level of leverage up to 0.40.

(million euro)

31.12.2005 30.06.2006 30.09.2006

| Debts and bonds (gross debt) — Cash and
cash equivalents | 12,998 — (1,333 | ) | 11,560 — (4,478 | ) | 11,006 — (6,459 | ) |
| --- | --- | --- | --- | --- | --- | --- |
| Securities not related to operations | (931 | ) | (419 | ) | (418 | ) |
| Non-operating
financing receivable | (259 | ) | (269 | ) | (279 | ) |
| Net borrowings | 10,475 | | 6,394 | | 3,850 | |
| Shareholders equity including minority
interests | 39,217 | | 39,863 | | 42,370 | |
| Leverage | 0.27 | | 0.16 | | 0.09 | |

Changes in shareholders equity

(million euro)

| Shareholders equity at 31 December 2005 — Net profit
for the period | 8,125 | |
| --- | --- | --- |
| Dividends to shareholders | (2,400 | ) |
| Shares
repurchased | (1,136 | ) |
| Issue of ordinary share capital for employee
share schemes | 48 | |
| Dividends
to shareholders paid by consolidated subsidiaries | (220 | ) |
| Effect on equity of the shares repurchased by
consolidated subsidiaries (Snam Rete Gas/Saipem) | (214 | ) |
| Exchange
differences from translation of financial statements
denominated in currencies other than euro | (797 | ) |
| Other changes | (253 | ) |
| Total changes | | 3,153 |
| Shareholders equity at 30 September
2006 | | 42,370 |

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Table of Contents

Summarised Group cash flow statement

Enis summarised group cash flow statement derives from the statutory statement of cash flows. It allows to create a link between changes in cash and cash equivalents (deriving from the statutory cash flows statement) occurred from the beginning of period to the end of period and changes in net borrowings (deriving from the summarised cash flow statement) occurred from the beginning of period to the end of period. The measure enabling to make such a link is represented by free cash flow which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders equity and the effect of changes in consolidation and of exchange differences.

Summarised Group cash flow statement 1

(million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 2005 2006

2,464		2,483		2,512		Net profit before minority interest	7,040		8,125
						Adjustments
to reconcile to cash generated from operating income
before changes in working capital:
1,979		1,254		1,610		- amortisation and depreciation and other non
monetary items	4,467		4,185
(171	)	3		5		- net
gains on the disposal of assets	(190	)	(55	)
2,199		2,723		2,538		- dividends, interest, taxes and other changes	6,092		8,121
6,471		6,463		6,665		Cash generated from operating income before
changes in working capital	17,409		20,376
(1,107	)	892		(1,181	)	Changes in
working capital related to operations	(747	)	(177	)
(1,113	)	(2,553	)	(929	)	Dividends received, taxes paid, interest (paid)
received	(3,798	)	(4,976	)
4,251		4,802		4,555		Net cash provided by operating activities	12,864		15,223
(1,744	)	(1,714	)	(1,835	)	Capital
expenditure	(4,950	)	(4,889	)
(13	)	(38	)	(19	)	Investments	(61	)	(76	)
229		19		23		Disposals	502		127
62		188		(126	)	Other cash flow related to capital expenditure,
investments and disposals	38		(46	)
2,785		3,257		2,598		Free cash flow	8,393		10,339
(145	)	86		(3	)	Borrowings
(repayment) of debt related to financing activities	(60	)	463
(1,461	)	753		(378	)	Changes in short and long-term financial debt	(3,039	)	(1,521	)
(17	)	(3,422	)	(253	)	Dividends
paid and changes in minority interests and reserves	(3,846	)	(4,031	)
35		(109	)	17		Effect of changes in consolidation and exchange
differences	75		(124	)
1,197		565		1,981		Net cash flow for the period	1,523		5,126

(1) For a reconciliation of the summarised group cash flow statement to the statutory cash flow statement see Enis Report on the first half of 2006 Reconciliation of summarised group balance sheet and cash flow statement to statutory schemes pages 46 and 47.

Change in net borrowings

(million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 2005 2006

2,785		3,257		2,598		Free cash flow	8,393	10,339
						Net
borrowings of acquired companies
		1				Net borrowings of divested companies	21	1
289		61		199		Exchange
differences on net borrowings and other changes	(479	)	316
(17	)	(3,422	)	(253	)	Dividends paid and changes in minority interests
and reserves	(3,846	)	(4,031	)
3,057		(103	)	2,544		Change
in net borrowings	4,089		6,625

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Table of Contents

ROACE (Return On Average Capital Employed)

Return on Average Capital Employed, is the return on average capital invested, calculated as the ratio between net profit before minority interests, plus net financial charges on net financial debt, less the related tax effect and net average capital employed.

(million euro)

Calculated on a 12-month period ending on: 30.09.2005 31.12.2005 30.09.2006

Replacement cost net profit for the period	8,630	8,488	10,021
Exclusion
of after tax financial expenses	46	60	25
Replacement cost net profit unlevered	8,676	8,548	10,046
Capital employed, net
At the
beginning of period	45,879	45,983	46,438
At the end of period (1)	45,784	48,933	45,909
Average
capital employed, net	45,832	47,458	46,174
ROACE (%)	18.9	18.0	21.8

(1) Net capital employed at replacement cost (excluding after tax inventory holding gain/loss for the period amounting to euro 654 million, euro 759 million and euro 311 million for the twelve-month periods ending respectively 30 September 2005, 31 December 2005 and 30 September 2006.

23 -

Table of Contents

Capital expenditure by business

Exploration & Production (million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

100	4	10	(90.0	)	Acquisitions of proved and unproved property	267	13	(95.1	)
		10	..		North
Africa		10	..
52			..		West Africa	52		..
48	4		..		Rest of
world	215	3	..
149	205	263	76.5		Exploration	335	642	91.6
9	34	33	..		Italy	20	90	..
39	59	72	84.6		North Africa	68	179	..
10	47	11	10.0		West
Africa	30	105	..
12	28	56	..		North Sea	65	99	52.3
79	37	91	15.2		Rest of
world	152	169	11.2
972	934	862	(11.3	)	Development	2,815	2,573	(8.6	)
108	89	96	(11.1	)	Italy	270	270	..
262	163	189	(27.9	)	North Africa	732	492	(32.8	)
179	235	197	10.1		West
Africa	635	570	(10.2	)
110	93	98	(10.9	)	North Sea	298	285	(4.4	)
313	354	282	(9.9	)	Rest of
world	880	956	8.6
7	10	17	..		Other	31	38	..
1,228	1,153	1,152	(6.2	)		3,448	3,266	(5.3	)

Gas & Power (million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

211	208	269	27.5		Italy	700	617	(11.9	)
9	51	42	..		Outside
Italy	41	104	..
220	259	311	41.4			741	721	(2.7	)
9	6	28	..		Market	21	41	95.2
					Italy	2		..
9	6	28	..		Outside
Italy	19	41	..
43	40	37	(14.0	)	Distribution	102	104	2.0
122	161	185	51.6		Transport	448	437	(2.5	)
122	116	171	40.2		Italy	426	374	(12.2	)
	45	14	..		Outside
Italy	22	63	..
46	52	61	32.6		Power generation	170	139	(18.2	)
220	259	311	41.4			741	721	(2.7	)

Refining & Marketing (million euro)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

108	118	109	0.9		Italy	302	306	1.3
15	19	32	..		Outside
Italy	37	67	81.1
123	137	141	14.6			339	373	10.0
79	95	75	(5.1	)	Refining
and logistics	195	237	21.5
79	95	75	(5.1	)	Italy	195	237	21.5
44	42	66	50.0		Marketing	111	133	19.8
29	23	34	17.2		Italy	74	66	(10.8	)
15	19	32	..		Outside
Italy	37	67	81.1
					Other	33	3	(90.9	)
123	137	141	14.6			339	373	10.0

24 -

Table of Contents

Exploration & Production

Combined liquids and natural gas production by region

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

1,715	1,748	1,709	(0.3	)	Production of oil and natural gas (1) (kboe/d)	1,714	1,761	2.7
256	237	235	(8.2	)	Italy	263	239	(9.1	)
502	555	554	10.4		North Africa	467	550	17.8
347	368	365	5.2		West
Africa	333	372	11.7
265	284	254	(4.2	)	North Sea	280	279	(0.4	)
345	304	301	(12.8	)	Rest of
world	371	321	(13.5	)
152.5	154.1	152.3	(0.1	)	Oil and natural gas production sold (1) (mmboe)	453.9	465.9	2.6

Liquids production by region

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

1,106	1,056	1,041	(5.9	)	Production of liquids (1) (kbbl/d)	1,104	1,080	(2.2	)
84	77	77	(8.3	)	Italy	87	79	(9.2	)
318	327	330	3.8		North Africa	306	327	6.9
317	322	315	(0.6	)	West
Africa	301	325	8.0
171	178	164	(4.1	)	North Sea	180	177	(1.7	)
216	152	155	(28.2	)	Rest of
world	230	172	(25.2	)

Natural gas production by region

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

3,496	3,991	3,849	10.1		Production of natural gas (1) (mmcf/d)	3,496	3,920	12.1
989	918	918	(7.2	)	Italy	1,024	918	(10.4	)
1,059	1,307	1,271	20.0		North Africa	918	1,271	38.5
176	283	282	60.2		West
Africa	177	283	59.9
530	600	530	..		North Sea	565	600	6.2
742	883	848	14.3		Rest of
world	812	848	4.4

(1) This includes Enis share of production of equity-accounted entities.

25 -

Table of Contents

Gas & Power Natural gas sales (mmcf/d)

Nine months

Third quarter 2005 Second quarter 2006 Third quarter 2006 % Ch. 3Q 06 vs 05 2005 2006 % Ch.

3,655	3,878	3,605	(1.4	)	Italy to third parties (1)	4,760	4,767	0.1
438	648	522	19.2		Wholesalers
(selling companies)	1,041	1,047	0.6
123	210	119	(3.3	)	Gas release	180	186	3.3
3,094	3,020	2,964	(4.2	)	End
customers	3,539	3,534	(0.1	)
1,194	1,277	1,052	(11.9	)	Industrial
users	1,208	1,272	5.3
1,727	1,409	1,716	(0.6	)	Power
generation	1,669	1,600	(4.1	)
173	334	196	13.3		Residential	662	662	..
568	625	576	1.4		Own
consumption (1)	526	592	12.5
1,551	2,294	2,038	31.4		Rest of Europe (1)	2,121	2,560	20.7
150	81	104	(30.7	)	Outside
Europe	123	83	(32.5	)
5,924	6,878	6,323	6.7		Sales and own consumption of subsidiaries	7,530	8,002	6.3
472	641	621	31.6		Sales
of affiliates (Enis share)	650	734	12.9
					Italy (1)	5	1	(80.0	)
411	536	514	25.1		Rest of
Europe (1)	587	653	11.2
61	105	107	75.4		Outside Europe	58	80	37.9
6,396	7,519	6,944	8.6		Total
natural gas sales and own consumption	8,180	8,736	6.8
6,749	7,826	7,259	7.6		Sales
of natural gas in Europe	8,573	9,107	6.2
6,185	7,333	6,733	8.9		G&P sales in Europe (1)	7,999	8,573	7.2
564	493	526	(6.8	)	Upstream
sales in Europe	574	534	(7.0	)

26 -

Table of Contents

Contents

Table of Contents

Report on the Third Quarter of 2006

Contents

| | 1 | Summary
data |
| --- | --- | --- |
| | 2 | Basis of
presentation |
| Financial
review | 3 | Profit
and loss account |
| | 4 | Operating profit |
| | 6 | Analysis of profit and loss account items |
| | 10 | Summarized
group consolidated balance sheet |
| | 13 | Summarized
group cash flow statement |
| | 16 | Outlook
for 2006 |
| Operating
review | 17 | Exploration & Production |
| | 20 | Gas & Power |
| | 23 | Refining & Marketing |
| | 25 | Petrochemicals |
| | 26 | Engineering and Construction |
| Non-GAAP
measures | 28 | Reconciliation of reported operating profit
and net profit to results on a replacement cost basis
and on an adjusted basis |

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

Summary financial data

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

18,121	20,366	2,245	12.4	Net sales from operations	52,222	64,689	12,467		23.9
4,270	4,828	558	13.1	Operating
profit	12,431	15,370	2,939		23.6
4,446	5,127	681	15.3	Adjusted operating profit (1)	12,627	15,714	3,087		24.4
2,340	2,422	82	3.5	Net profit
pertaining to Eni	6,683	7,697	1,014		15.2
0.62	0.66	0.04	5.7	- per ordinary share (euro) (2)	1.77	2.08	0.31		17.1
1.52	1.67	0.15	10.4	- per ADS
($) (2)	4.48	5.17	0.69		15.3
2,446	2,620	174	7.1	Adjusted net profit pertaining to Eni (1)	6,855	8,057	1,202		17.5
4,251	4,555	304	7.3	Net cash
provided by operating activities	12,864	15,223	2,359		18.3
1,744	1,835	91	5.2	Capital expenditure	4,950	4,889	(61	)	(1.2	)

| (1) | For a
detailed explanation of adjusted operating profit and net
profit see page 28 . |
| --- | --- |
| (2) | Fully diluted. Dollar amounts are
converted on the basis of the average EUR/USD exchange
rate quoted by the ECB for the periods presented. |

Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Enis operations, such as prices and margins of hydrocarbons and refined products, Enis results of operations and changes in average net borrowings for the first nine months of the year cannot be extrapolated for the full year.

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

61.54	69.49	7.95		12.9		Average price of Brent dated crude oil (1)		53.54	66.96	13.42		25.1
1.220	1.274	0.054		4.4		Average
EUR/USD exchange rate (2)		1.264	1.244	(0.020	)	(1.6	)
50.44	54.55	4.11		8.1		Average price in euro of Brent dated crude oil		42.36	53.82	11.46		27.1
7.02	4.27	(2.75	)	(39.2	)	Average
European refining margin (3)		6.02	4.33	(1.69	)	(28.1	)
5.75	3.35	(2.40	)	(41.7	)	Average European refining margin in euro		4.76	3.48	(1.28	)	(26.9	)
2.13	3.24	1.11		52.1		Euribor -
three-month rate	(%)	2.13	2.91	0.78		36.6
3.74	5.41	1.67		44.7		Libor - three-month dollar rate	(%)	3.27	5.11	1.84		56.3

| (1) | In US dollars
per barrel. Source: Platts Oilgram. |
| --- | --- |
| (2) | Source: ECB. |
| (3) | In US dollars
per barrel FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platts Oilgram
data. |

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,106	1,041	(65	)	(5.9	)	Daily production: — oil	(kbbl)	1,104	1,080	(24	)	(2.2	)
99	109	10		10.1		natural gas (1)	(mmcm)	99	111	12		12.1
1,715	1,709	(6	)	(0.3	)	hydrocarbons (1)	(kboe)	1,714	1,761	47		2.7
17.58	18.91	1.33		7.6		Natural gas sales in
Europe	(bcm)	66.29	70.41	4.12		6.2
1.47	1.37	(0.10	)	(6.8	)	- of
which upstream sales	(bcm)	4.44	4.13	(0.31	)	(7.0	)
6.15	6.33	0.18		2.9		Electricity production sold	(TWh)	16.70	18.75	2.05		12.3
13.16	13.09	(0.07	)	(0.5	)	Sales of
refined products	(mmtonnes)	37.97	37.95	(0.02	)	(0.1	)
1,414	1,261	(153	)	(10.8	)	Sales of petrochemicals products	(ktonnes)	4,087	3,941	(146	)	(3.6	)

(1) Includes own consumption of natural gas (50,000 and 43,000 boe/day in the third quarter of 2006 and 2005, respectively; 50,000 and 42,000 boe/day in the first nine months of 2006 and 2005, respectively).

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

BASIS OF PRESENTATION Enis accounts at 30 September 2006, unaudited, have been prepared in accordance with the criteria defined by the Commissione Nazionale per le Società e la Borsa (CONSOB) in its regulation for companies listed on the Italian Stock Exchange. Financial information relating to the profit and loss account are presented for the first nine months and third quarter of 2006 and for the first nine months and third quarter of 2005. Financial information relating to balance sheet data are presented at 30 September 2006, 30 June 2006 and 31 December 2005. Tables are comparable with those of 2005 financial statements and first half report. Enis accounts at 30 September 2006 have been prepared in accordance with the evaluation and measurement criteria contained in the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of 19 July 2002. Accounts for the third quarter and first nine months of 2005 have been changed following the inclusion in the scope of consolidation of Saipem SpA and its subsidiaries; the reasons of the inclusion in consolidation are described in 2005 Consolidated Financial Statements in the chapter Effects of the adoption of IFRS - Inclusion of Saipem in consolidation. Non-GAAP financial measures disclosed throughout this report are accompanied by explanatory notes and tables to help investors to gain a full understanding of said measures in line with guidance provided for by recommendation CESR/05-178b. Disclaimer This report contains certain forward-looking statements, in particular in the Outlook section those regarding capital expenditure, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sale growth, new markets, and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; managements ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply, demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors.

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

Financial review PROFIT AND LOSS ACCOUNT

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 18,121 — 163 | | 20,366 — 109 | | 2,245 — (54 | ) | 12.4 — (33.1 | ) | Net sales from operations — Other
income and revenues | 52,222 — 480 | | 64,689 — 481 | | 12,467 — 1 | | 23.9 — 0.2 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (12,607 | ) | (14,147 | ) | (1,540 | ) | (12.2 | ) | Operating expenses | (36,234 | ) | (45,266 | ) | (9,032 | ) | (24.9 | ) |
| | | (24 | ) | (24 | ) | | | of
which non recurring items | | | (24 | ) | (24 | ) | | |
| (1,407 | ) | (1,500 | ) | (93 | ) | (6.6 | ) | Depreciation, amortization and writedowns | (4,037 | ) | (4,534 | ) | (497 | ) | (12.3 | ) |
| 4,270 | | 4,828 | | 558 | | 13.1 | | Operating profit | 12,431 | | 15,370 | | 2,939 | | 23.6 | |
| (60 | ) | (42 | ) | 18 | | 30.0 | | Net financial income (expense) | (268 | ) | 109 | | 377 | | .. | |
| 355 | | 279 | | (76 | ) | (21.4 | ) | Net income
from investments | 768 | | 746 | | (22 | ) | (2.9 | ) |
| 4,565 | | 5,065 | | 500 | | 11.0 | | Profit before income
taxes | 12,931 | | 16,225 | | 3,294 | | 25.5 | |
| (2,101 | ) | (2,553 | ) | (452 | ) | (21.5 | ) | Income
taxes | (5,891 | ) | (8,100 | ) | (2,209 | ) | (37.5 | ) |
| 2,464 | | 2,512 | | 48 | | 1.9 | | Net profit | 7,040 | | 8,125 | | 1,085 | | 15.4 | |
| | | | | | | | | of
which: | | | | | | | | |
| 2,340 | | 2,422 | | 82 | | 3.5 | | - net profit pertaining
to Eni | 6,683 | | 7,697 | | 1,014 | | 15.2 | |
| 124 | | 90 | | (34 | ) | (27.4 | ) | - net
profit of minorities | 357 | | 428 | | 71 | | 19.9 | |
| 2,340 | | 2,422 | | 82 | | 3.5 | | Net profit pertaining to
Eni | 6,683 | | 7,697 | | 1,014 | | 15.2 | |
| (317 | ) | 30 | | 347 | | | | Exclusion
of inventory holding (gains) losses | (628 | ) | (180 | ) | 448 | | | |
| 2,023 | | 2,452 | | 429 | | 21.2 | | Replacement cost net
profit pertaining to Eni | 6,055 | | 7,517 | | 1,462 | | 24.1 | |
| | | | | | | | | Exclusion
of special items: | | | | | | | | |
| | | 19 | | 19 | | | | - non recurring items | | | 19 | | 19 | | | |
| 423 | | 149 | | (274 | ) | | | - other
special items | 800 | | 521 | | (279 | ) | | |
| 2,446 | | 2,620 | | 174 | | 7.1 | | Adjusted net profit
pertaining to Eni | 6,855 | | 8,057 | | 1,202 | | 17.5 | |

Third quarter Net profit pertaining to Eni for the third quarter of 2006 was euro 2,422 million, up euro 82 million from the third quarter of 2005, or 3.5%, reflecting primarily an improved operating performance of all Enis business divisions, partially offset by a higher Group tax rate, from 46.0% to 50.4%. Two factors contributed mainly to the increase in Group tax-rate. Firstly, a higher share of profit before income taxes was earned by subsidiaries in the Exploration & Production division operating in countries where the statutory tax rate is higher than the average tax rate for the Group. Secondly, in July 2006 by the British Government enacted an increase in the supplemental tax rate applicable to profit before taxes earned by the Exploration & Production segment in the North Sea. This increase, which is retroactive to 1 January 2006, affected both current taxes and deferred tax liabilities (for an overall amount of euro 175 million). Impact on current taxes amounted to euro 84 million, of which euro 66 million pertaining to the first half of 2006. Adjusted net profit for the quarter was up 7.1% to euro 2,620 million which is calculated at by excluding an inventory holding loss of euro 30 million and special charges of euro 168 million (both amounts net of the related tax effect) relating principally to asset impairments, risk provisions, environmental provisions, provisions for redundancy incentives and a one-time deferred tax charge related to the supplemental tax rate of the North Sea.

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

Operating profit

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

4,270		4,828		558	13.1	Operating profit	12,431		15,370	2,939		23.6
(505	)	82		587		Exclusion
of inventory holding (gains) losses	(1,001	)	(253	)	748
3,765		4,910		1,145	30.4	Replacement cost
operating profit	11,430		15,117		3,687		32.3
						Break down
by segment:
3,682		4,041		359	9.8	Exploration &
Production	9,031		12,439		3,408		37.7
460		586		126	27.4	Gas
& Power	2,585		2,473		(112	)	(4.3	)
235		333		98	41.7	Refining &
Marketing	641		534		(107	)	(16.7	)
(63	)	36		99	..	Petrochemicals	146		44	(102	)	(69.9	)
60		145		85	141.7	Engineering and
Construction	172		356		184		107.0
(378	)	(185	)	193	51.1	Other
activities	(637	)	(401	)	236		37.0
(125	)	(65	)	60	48.0	Corporate and
financial companies	(336	)	(207	)	129		38.4
(106	)	19		125		Unrealized
profit in inventory (1)	(172	)	(121	)	51
3,765		4,910		1,145	30.4		11,430		15,117	3,687		32.3

(1) Unrealized profit in inventory concerned intragroup sales of goods and services recorded at 30 September in the equity of the purchasing company.

Replacement cost operating profit for the third quarter was euro 4,910 million, an increase of euro 1,145 million over the third quarter of 2005, or 30.4%, reflecting primarily the increase reported in the: Exploration & Production division (up euro 359 million or 9.8%), reflecting higher realizations in dollars (oil up16.5%; natural gas up 19.2%), offset in part by increased production costs and amortization charges, and increased exploration expense. Profit for the quarter was also adversely impacted by the appreciation of the euro over the dollar for an approximate euro 190 million charge, related in part to currency translation effects; Gas & Power division (up euro 126 million or 27.4%), reflecting primarily higher natural gas selling margins supported by a favorable trading environment. Moreover, the adverse impact of a tariff regulation enacted by the Authority for Electricity and Gas with resolution No. 248/2004 for the nine months of 2005 was incurred in full in the third quarter 2005 on the basis that developments of the proceeding with the Authority occurred in that period. Other positives included an increase in volumes of natural gas sold by consolidated subsidiaries (up 1.04 bcm). On the negative side, transport tariffs of natural gas in Italy were lower than in the same period a year ago as a consequence of a tariff regime enacted by the Italian Authority for Electricity and Gas with resolution No. 166/2005. Selling margins on electricity were also lower; Refining & Marketing division (up euro 98 million or 41.7%), reflecting primarily higher realized refining margins attributable to an improved yield of the slate of processed crude, in spite of a negative trend in market benchmarks (Brent margins were down 2.75 $/bbl or 39.2% from a year ago). Operating profit of the refining activity was adversely affected by the appreciation of the euro over the dollar and lower refining throughputs. Other positives of the quarter included lower special charges related in particular to lower environmental provisions and the improved operating results of marketing activities in Italy; Petrochemical segment which recorded a replacement cost operating profit of euro 36 million as compared to an operating loss of euro 63 million a year ago. The euro 99 million improvement in operating performance reflected a recovery in product selling margins; Engineering and Construction segment (up euro 85 million or 141.7%) reflecting favorable trends in the demand for oilfield services. Nine months Enis net profit for the first nine months of 2006 was euro 7,697 million, up euro 1,014 million from the first nine months of 2005 (up 15.2%), reflecting higher operating profit (up euro 2,939 million or 23.6%), partially offset by a higher Group tax rate from 45.6% to 49.9%, due primarily to a higher share of profit before income taxes earned by subsidiaries in the Exploration & Production division operating in countries where the statutory tax rate is higher than the average tax rate for the Group. This higher Group of tax rate was also due to an increase in the supplemental tax rate applicable to profit before

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

taxes earned by the Exploration & Production segment in the North Sea enacted by the British Government in July 2006 with effect from 1 January 2006. Enis results benefited from a favorable trading environment with a higher Brent crude oil price (up 25.1%) and a depreciation of the euro versus the dollar (down 1.6%). These positives were partially offset by declining refining margins (margin on Brent down 28.1%) and lower selling margins on refined and petrochemical products. Selling margins on natural gas were supported by a favorable trading environment for energy parameters in which natural gas purchase and selling prices have been determined reflecting trends in the underlying commodities to which natural gas purchase and selling prices are contractually indexed, also benefiting from time lag effects. Net profit for the first nine months includes an inventory holding gain of euro 180 million (net of the fiscal effect) and special charges of euro 540 million (net of the fiscal effect) relating principally to asset impairments in the Exploration & Production and Gas & Power divisions, environmental provisions, risk provisions and provisions for redundancy incentives in addition to an increase in deferred tax liabilities related to the supplemental tax rate in the United Kingdom, partially offset by gains on the divestment of mineral properties. Excluding these items, adjusted net profit for the period was up 17.5% to euro 8,057 million. Replacement cost operating profit was euro 15,117 million which is calculated by excluding an inventory holding gain of euro 253 million representing an increase of euro 3,687 million from the first nine months of 2005 or 32.3%, reflecting primarily the increase reported in the: Exploration & Production division (up euro 3,408 million or 37.7%) reflecting higher realizations in dollars (oil up 28.8% and natural gas up 20.6%) combined with increased production volumes sold (up 11.9 mmboe), and the favorable impact of the depreciation of the euro over the dollar (approximately euro 180 million). These positives were offset in part by higher operating costs and amortization charges, and increased exploration expense; Engineering and Construction segment (up euro 184 million or 107%) due to favorable trends in the demand for oilfield services. These increases were partly offset by lower replacement cost operating profit in the: Gas & Power division (down euro 112 million or 4.3%), due to: (i) lower selling margins on natural gas reflecting higher purchase prices attributable to the gas shortage occurred earlier in the year and the impact of the tariff regime enacted by the Authority for Electricity and Gas with resolution No. 248/2004, partly offset by a favorable trading environment; (ii) lower operating results of transportation activities in Italy primarily attributable to the tariff regime enacted by the Authority for Electricity and Gas with resolution No. 166/2005; (iii) higher special charges related mainly to asset impairments and environmental provisions. On the positive side, natural gas sales by consolidated subsidiaries were up 3.64 bcm (corresponding to 472 mmcf), or 6.3%, and electricity production sold was up 2.05 TWh, or 12.3%. Natural gas volumes transported outside Italy were also higher reflecting volumes transported through the GreenStream pipeline from Libya coming on line; Refining & Marketing division (down euro 107 million or 16.7%), due to declining refining margins and the impact of the higher level of planned maintenance activities, whose effects were offset in part by the depreciation of the euro over the dollar. Replacement cost operating profit was also adversely impacted by the weak performance of marketing activities in Italy attributable to lower retail margins and the effect of the divestment of Italiana Petroli (IP) in September 2005. On a positive note, special charges decreased from a year ago and marketing activities in the rest of Europe posted improved results; Petrochemical segment (down euro 102 million or 69.9%), due to lower selling margins resulting from the significantly higher cost of oil-based feedstocks which was only partially passed onto selling prices. In addition production volumes were adversely impacted by the outage of the Priolo cracker due to the accident occurred to the nearby refinery late in April 2006.

Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

Analysis of profit and loss account items

Net sales from operations

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 6,058 — 4,388 | | 6,562 — 5,265 | | 504 — 877 | | 8.3 — 20.0 | | Exploration & Production — Gas &
Power | 16,112 — 15,550 | | 21,021 — 20,198 | | 4,909 — 4,648 | | 30.5 — 29.9 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 9,430 | | 10,185 | | 755 | | 8.0 | | Refining & Marketing | 24,177 | | 29,631 | | 5,454 | | 22.6 | |
| 1,599 | | 1,743 | | 144 | | 9.0 | | Petrochemicals | 4,598 | | 5,083 | | 485 | | 10.5 | |
| 1,568 | | 1,930 | | 362 | | 23.1 | | Engineering and Construction | 3,924 | | 5,010 | | 1,086 | | 27.7 | |
| 45 | | 197 | | 152 | | 337.8 | | Other
activities | 641 | | 662 | | 21 | | 3.3 | |
| 533 | | 224 | | (309 | ) | (58.0 | ) | Corporate and financial companies | 967 | | 829 | | (138 | ) | (14.3 | ) |
| (5,500 | ) | (5,740 | ) | (240 | ) | (4.4 | ) | Consolidation
adjustment | (13,747 | ) | (17,745 | ) | (3,998 | ) | (29.1 | ) |
| 18,121 | | 20,366 | | 2,245 | | 12.4 | | | 52,222 | | 64,689 | | 12,467 | | 23.9 | |

Third quarter Enis net sales from operations for the third quarter of 2006 were euro 20,366 million, a euro 2,245 million increase from the third quarter of 2005, or 12.4%, primarily reflecting higher realized prices in Enis main operating divisions, offset in part by the appreciation of the euro over the dollar (up 4.4%). Nine months Enis net sales from operations for the first nine months of 2006 were euro 64,689 million, a euro 12,467 increase from the first nine months of 2005, or 23.9%, primarily reflecting higher realized prices in euro in Enis main operating divisions and higher sales volumes of hydrocarbons and natural gas, as well as higher activity levels in the Engineering and Construction segment. Net sales from operations generated by the Exploration & Production segment (euro 21,021 million) increased by euro 4,909 million, up 30.5%, essentially due to higher prices realized in dollars (oil up 28.8%, natural gas up 20.6%), higher hydrocarbon production sold (11.9 mmboe, up 2.6%) and the impact of the depreciation of the euro over the dollar (down 1.6%). Net sales from operations generated by the Gas & Power segment (euro 20,198 million) increased by euro 4,648 million, up 29.9%, essentially due to: (i) increased natural gas prices, due to a favorable trading environment in which natural gas selling and purchase prices have been determined reflecting trends in the underlying commodities to which natural gas purchase and selling prices are contractually indexed, also benefiting from time lag effects; (ii) increased natural gas volumes sold by subsidiaries (up 3.64 bcm or 6.3%); (iii) higher electricity production sold (2.05 TWh, up 12.3%). Net sales from operations generated by the Refining & Marketing segment (euro 29,631 million) increased by euro 5,454 million, up 22.6%, essentially due to higher international prices for oil and refined products. Net sales from operations generated by the Petrochemical segment (euro 5,083 million) increased by euro 485 million, up 10.5%, essentially due to an average 13% increase in selling prices. Net sales from operations generated by the Engineering and Construction segment (euro 5,010 million) increased by euro 1,086 million, up 27.7%, due to increased activity levels in the Offshore and Onshore areas and a higher utilization rate of vessels and higher tariffs in the Offshore Drilling area.

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ENI REPORT ON THE THIRD QUARTER OF 2006

Net sales from operations by geographic area

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

7,641	8,059	418		5.5		Italy	23,126	26,988	3,862	16.7
4,119	4,512	393		9.5		Rest of
European Union	12,740	15,820	3,080	24.2
2,390	2,840	450		18.8		Rest of Europe	5,036	6,882	1,846	36.7
1,171	1,525	354		30.2		Africa	3,808	5,175	1,367	35.9
1,765	1,596	(169	)	(9.6	)	Americas	4,254	4,600	346	8.1
1,005	1,612	607		60.4		Asia	3,049	4,555	1,506	49.4
30	222	192		640.0		Other areas	209	669	460	220.1
10,480	12,307	1,827		17.4		Total outside Italy	29,096	37,701	8,605	29.6
18,121	20,366	2,245		12.4			52,222	64,689	12,467	23.9

Operating expenses

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

11,736	13,210	1,474	12.6	Purchases, services and other	33,729	42,593	8,864	26.3
	24			of
which non recurring items		24
871	937	66	7.6	Payroll and related costs	2,505	2,673	168	6.7
12,607	14,147	1,540	12.2		36,234	45,266	9,032	24.9

Operating expenses for the first nine months of 2006 (euro 45,266 million) increased by euro 9,032 million from the first nine months of 2005, up 24.9%, essentially due to: (i) higher prices for oil-based and petrochemical feedstocks and for natural gas, affected also by higher charges related to the gas shortage occurred earlier in the year; (ii) currency translation effects; (iii) higher operating costs and royalties in the Exploration & Production segment, in particular the increase in operating costs resulted from the higher share of development projects in hostile environments and reflected sector-specific inflation; (iv) higher costs for refinery maintenance. These negative factors were offset in part by lower provisions to the risk reserve (euro 289 million as compared to euro 831 million in the first nine months of 2005), reflecting lower environmental provisions recorded by Enis subsidiary Syndial and the Refining & Marketing division and the circumstance that in 2005 certain insurance charges were recorded in connection with an extra premium due for 2005 and for future years related to the participation of Eni to Oil Insurance Ltd. Such charges were due to the exceptionally high rate of accidents occurred in the 2004-2005 two-year period. Labor costs (euro 2,673 million) increased by euro 168 million, up 6.7%, due mainly to an increase in unit labor cost in Italy. Higher labor costs were due also to the increase in the number of employees outside Italy and currency translation effects.

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Employees

31.12.2005 30.09.2006 Change % Ch.

Exploration & Production	8,030	8,082	52		0.6
Gas &
Power	12,324	12,101	(223	)	(1.8	)
Refining & Marketing	8,894	9,585	691		7.8
Petrochemicals	6,462	6,418	(44	)	(0.7	)
Engineering and Construction	28,684	30,374	1,690		5.9
Other
activities	2,636	2,462	(174	)	(6.6	)
Corporate and financial companies	5,228	4,580	(648	)	(12.4	)
Total at period end	72,258	73,602	1,344		1.9

As of 30 September 2006, employees were 73,602, with an increase of 1,344 employees from 31 December 2005 (up 1.9%). Employees in Italy were 40,270. The 78 employee increase was related mainly to the positive balance of hiring and dismissals (201 employees) offset in part by a decrease in the number of employees related to changes in consolidation (a total of 104 employees) resulting from: (i) the conferral of Fiorentina Gas to the newly incorporated Enis affiliate Toscana Gas (Enis interest 48.7%); (ii) the sale of water treatment activities in Ferrara; (iii) the purchase of Siciliana Gas SpA and Siciliana Gas Vendite SpA. In the first nine months of 2006 a total of 1,637 employees was hired, of these 1,107 on open-end contracts and 1,436 employees were dismissed (of these 992 employees on open-end contracts). Outside Italy employees were 33,332, with a 1,266 employee increase resulting from the hiring of fixed-term staff by Saipem in Kazakhstan.

Depreciation, amortization and impairments

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

924	1,108	184		19.9		Exploration & Production	2,620	3,228	608		23.2
171	181	10		5.8		Gas &
Power	515	502		(13	)	(2.5	)
107	114	7		6.5		Refining & Marketing	339	333	(6	)	(1.8	)
30	30	0		0.0		Petrochemicals	88	91	3		3.4
50	52	2		4.0		Engineering and Construction	132	139	7		5.3
4	1	(3	)	(75.0	)	Other
activities	12	4		(8	)	(66.7	)
18	12	(6	)	(33.3	)	Corporate and financial companies	69	49	(20	)	(29.0	)
						Unrealized
profit in inventory		(2	)	(2	)
1,304	1,498	194		14.9		Total depreciation and
amortization	3,775	4,344		569		15.1
103	2	(101	)	(98.1	)	Impairments	262	190	(72	)	(27.5	)
1,407	1,500	93		6.6			4,037	4,534	497		12.3

Depreciation and amortization charges (euro 4,344 million) increased by euro 569 million from the first nine months of 2005, up 15.1% mainly in the Exploration & Production segment (euro 608 million) related to increased development costs incurred for developing new fields and for maintaining production levels in mature fields, higher exploration costs, in addition to currency translation effects. Impairments for the first nine months (euro 190 million) concerned mainly mineral assets in the Exploration & Production segment and intangible assets in the Gas & Power segment.

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ENI REPORT ON THE THIRD QUARTER OF 2006

Net financial income (expense) In the first nine months of 2006 net financial income (euro 109 million) increased by euro 377 million from the first nine months of 2005, when net financial charges of euro 268 million were recorded. This improvement resulted from: (i) the positive change in the fair value evaluation of financial derivative instruments recorded in the profit and loss account instead of being recognized in connection with related assets, liabilities and committments because Enis financial derivative instruments do not meet the criteria to be assessed as hedging instruments under IFRS; (ii) a decrease in average net borrowings, whose effects were offset in part by higher interest rates, particularly on dollar loans on the London interbank market (Libor up 1.8 percentage points).

Net income from investments

(million euro) Nine months

2005 2006 Change

| Effect of the application of the equity method
of accounting | 566 | 631 | 65 | |
| --- | --- | --- | --- | --- |
| Dividends | 29 | 94 | 65 | |
| Net gains from disposal | 173 | 21 | (152 | ) |
| | 768 | 746 | (22 | ) |

Net income from investments in the first nine months of 2006 amounted to euro 746 million and concerned: (i) Enis share of earnings of affiliates accounted for with the equity method (euro 689 million), in particular in the Gas & Power and Refining & Marketing segments, offset in part by the impairment of an affiliate in the Engineering and Construction segment related to a contract loss in connection with the construction of a gas to liquids plant in Nigeria (euro 58 million). Under the equity method of accounting, Enis share of earnings of Galp Energia SGPS SA for the period comprised a gain (of euro 73 million net to Eni) recorded by Galp itself on the divestment of certain regulated assets to Rede Electrica Nacional; (ii) dividends from subsidiaries accounted for at cost (euro 94 million, of which euro 57 million from Nigeria LNG); (iii) net gains from the sale of investments (euro 21 million). The euro 22 million decrease from the same period in 2005 related primarily to lower gains on disposal due to the fact that in the same period of 2005 the gain from the divestment of Italiana Petroli was recorded for euro 132 million and was offset in part by higher results of Blue Stream Pipeline Co and Unión Fenosa Gas in the Gas & Power segment and higher dividends paid by Nigeria LNG. Income taxes Income taxes were euro 8,100 million, up euro 2,209 million, or 37.5%, due primarily to higher income before taxes (euro 3,294 million). The 4.3 percentage points increase in Group tax rate (from 45.6 to 49.9%) was related principally to: (i) a higher share of profit before income taxes earned by subsidiaries in the Exploration & Production division operating in countries where the statutory tax rate is higher than the average tax rate for the Group; (ii) an increase in the supplemental tax rate applicable to profit before taxes earned by the Exploration & Production segment in the North Sea imposed by the British Government which affected both current taxes and deferred tax liabilities (for an overall amount of euro 175 million); (iii) provisions for the settlement of a tax claim in Venezuela (euro 75 million) which required also the revision of deferred tax liabilities pertaining to Venezuelan activities. Minority interests Minority interests were euro 428 million and concerned primarily Snam Rete Gas SpA (euro 218 million) and Saipem (euro 206 million of which euro 29 million related to the purchase of 100% of Snamprogetti by Saipem).

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ENI REPORT ON THE THIRD QUARTER OF 2006

SUMMARIZED GROUP CONSOLIDATED BALANCE SHEET

Summarized group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this summarized group balance sheet is useful information in assisting investors to assess Enis capital structure and to analyze its sources of funds and investments in fixed assets and working capital. Management uses the summarized group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders equity (leverage) intended to evaluate whether Enis financing structure is sound and well-balanced.

Summarized Group consolidated balance sheet (1)

(million euro) 31.12.2005 30.06.2006 30.09.2006 Change vs 31.12.2005 Change vs 30.06.2006

| Fixed assets — Property,
plant and equipment, net | 45,013 | | 43,051 | | 43,408 | | (1,605 | ) | 357 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other tangible assets | | | 654 | | 656 | | 656 | | 2 | |
| Inventories
- compulsory stock | 2,194 | | 1,866 | | 1,962 | | (232 | ) | 96 | |
| Intangible assets, net | 3,194 | | 3,172 | | 3,285 | | 91 | | 113 | |
| Investments,
net | 4,311 | | 4,267 | | 4,234 | | (77 | ) | (33 | ) |
| Accounts receivable financing and securities
related to operations | 775 | | 626 | | 640 | | (135 | ) | 14 | |
| Net
accounts payable in relation to capital expenditure | (1,196 | ) | (916 | ) | (912 | ) | 284 | | 4 | |
| | 54,291 | | 52,720 | | 53,273 | | (1,018 | ) | 553 | |
| Net working capital | | | | | | | | | | |
| Inventories | 3,563 | | 4,387 | | 4,440 | | 877 | | 53 | |
| Trade
accounts receivable | 14,101 | | 13,359 | | 12,858 | | (1,243 | ) | (501 | ) |
| Trade accounts payable | (8,170 | ) | (8,747 | ) | (8,136 | ) | 34 | | 611 | |
| Taxes
payable and reserve for net deferred income tax
liabilities | (4,857 | ) | (6,320 | ) | (6,867 | ) | (2,010 | ) | (547 | ) |
| Reserve for contingencies | (7,679 | ) | (7,640 | ) | (7,741 | ) | (62 | ) | (101 | ) |
| Other
operating assets and liabilities (2) | (526 | ) | (462 | ) | (553 | ) | (27 | ) | (91 | ) |
| | (3,568 | ) | (5,423 | ) | (5,999 | ) | (2,431 | ) | (576 | ) |
| Employee
termination indemnities and other benefits | (1,031 | ) | (1,040 | ) | (1,054 | ) | (23 | ) | (14 | ) |
| Capital employed, net | 49,692 | | 46,257 | | 46,220 | | (3,472 | ) | (37 | ) |
| Shareholders
equity including minority interests | 39,217 | | 39,863 | | 42,370 | | 3,153 | | 2,507 | |
| Net borrowings | 10,475 | | 6,394 | | 3,850 | | (6,625 | ) | (2,544 | ) |
| Total liabilities and shareholders
equity | 49,692 | | 46,257 | | 46,220 | | (3,472 | ) | (37 | ) |

| (1) | For a
reconciliation to the statutory balance sheet see Eni's
Report on the first half of 2006 "Reconciliation of
summarized group balance sheet and statement of cash
flows to statutory schemes" pages 45 and 46. |
| --- | --- |
| (2) | Include
operating financing receivables and securities related to
operations for euro 261 million (euro 492 million and
euro 215 million at 31 December 2005 and 30 June 2006
respectively) and securities covering technical reserves
of Padana Assicurazioni SpA for euro 550 million (the
same amount as of 30 June 2006, euro 453 million at 31
December 2005). |

The appreciation of the euro over other currencies, in particular the dollar (at 30 September 2006 the EUR/USD exchange rate was 1.266 as compared to 1.180 at 31 December 2005, up 7.3%) determined with respect to 2005 year-end an estimated decrease in the book value of net capital employed of about euro 1,250 million, in net equity of about euro 800 million and in net borrowings of about euro 450 million as a result of currency translations at 30 June 2006. At 30 September 2006, net capital employed totalled euro 46,220 million, representing a decrease of euro 3,472 million from 31 December 2005. Fixed assets (euro 53,273 million) decreased by euro 1,018 million from 31 December 2005, due mainly to depreciation, amortization and impairment charges for the period (euro 4,534 million) and currency translation effects deriving from the appreciation of the euro over

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the dollar (approximately euro 1,250 million) offset in part by capital expenditure (euro 4,889 million). Fixed assets included under the heading Other fixed assets, for a book value of dollar 831 million (corresponding to euro 656 million at the EUR/USD exchange rate of 30 September 2006) the assets related to the service contract for mining activities in the Dación area of the Venezuelan branch of Enis subsidiary Eni Dación BV. With effective date 1 April 2006, the Venezuelan State oil company Petróleos de Venezuela SA (PDVSA) unilaterally terminated the service contract governing activities at the Dación oil field where Eni acted as a contractor, holding a 100% working interest. As a consequence, starting on the same day, operations at the Dación oil field are conducted by PDVSA. On the basis of advice from its legal advisors, Eni believes that it is entitled to a market value compensation for the cancellation of the Dación field service contract. On this basis, Eni is available to reach an agreement with the Venezuelan authorities. In case an amicable settlement is not possible, Eni will take any other action in order to protect its interest in Venezuela. Based on internal and external independent evaluation, Eni is confident that a fair market compensation will not be lower than the book value of the Dación related assets. Accordingly, management decided not to impair the book value of Enis Dación assets. In 2005 and in the first quarter 2006, the Dación field production rate was about 60 kbbl/d. At 31 December 2005 Enis proved reserves of hydrocarbons booked to the Dación field amounted to 175 mmbbl. Net working capital (euro 5,999 million) decreased by euro 2,431 million from 31 December 2005 due mainly to higher taxes payable and deferred tax liabilities (euro 2,010 million) and the fact that excise taxes on oil products sold in Italy the first 15 days of December are paid in the same month, instead of being paid in the following month as in the rest of the year. This decrease was offset in part an increase in inventories of oil, refined products and natural gas reflecting seasonality in the demand for natural gas and an increase in prices of oil and refined products affecting the evaluation of inventories under the weighted-average cost method of inventory accounting. The share of the Exploration & Production, Gas & Power and Refining & Marketing segments on net capital employed was 89.4% (90.9% as at 31 December 2005).

Return On Average Capital Employed (ROACE) It is a measure of the return on average capital invested, calculated as the ratio between net income before minority interests, plus net financial charges on net financial debt, less the related tax effect and net average capital employed.

ROACE

| (million
euro) — Calculated
with reference to the twelve months ending: | 30.09.2005 | 31.12.2005 | 30.09.2006 |
| --- | --- | --- | --- |

| Replacement cost net
profit for the period | 8,630 | 8,488 | 10,021 |
| --- | --- | --- | --- |
| Exclusion
of after tax financial expenses | 46 | 60 | 25 |
| Replacement cost
unlevered net profit | 8,676 | 8,548 | 10,046 |
| Capital employed, net: | | | |
| - at the beginning of period | 45,879 | 45,983 | 46,438 |
| - at the
end of period (1) | 45,784 | 48,933 | 45,909 |
| Average capital
employed, net | 45,832 | 47,458 | 46,174 |
| ROACE (%) | 18.9 | 18.0 | 21.8 |

(1) Net capital employed at replacement cost (excluding after tax inventory holding gain/loss for the period amounting to euro 654 million, euro 759 million and euro 311 million for the twelve-month periods ending 30 September 2005, 31 December 2005 and 30 September 2006, respectively).

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Net borrowings and leverage Leverage is a measure of a companys level of indebtedness, calculated as the ratio between net borrowings which is calculated at by excluding cash and cash equivalents and certain very liquid assets from financial debt and shareholders equity, including minority interests. Management makes use of leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards. In the medium term, management plans to maintain a strong financial structure targeting a level of leverage up to 0.40.

(million euro) 31.12.2005 30.06.2006 30.09.2006 Change vs 31.12.2005 Change vs 30.06.2006

Debts and bonds	12,998		11,560		11,006		(1,992	)	(554	)
Cash and
cash equivalents	(1,333	)	(4,478	)	(6,459	)	(5,126	)	(1,981	)
Securities not related to operations	(931	)	(419	)	(418	)	513		1
Non-operating
financing receivables	(259	)	(269	)	(279	)	(20	)	(10	)
Net borrowings	10,475		6,394		3,850		(6,625	)	(2,544	)
Shareholders equity including
minority interest	39,217		39,863		42,370		3,15		2,507
Leverage	0.27		0.16		0.09		(0.18	)	(0.07	)

Debts and bonds amounted to euro 11,006 million, of which euro 3,637 million were short-term (including the portion of long-term debt due within twelve months for euro 411 million) and euro 7,369 million were long-term. Net borrowings at 30 September 2006 were euro 3,850 million, representing a decrease of euro 6,625 million from 31 December 2005. Cash inflow generated by operating activities, also benefiting from seasonality factors and cash from divestments, was partly offset by financial requirements for capital expenditure and investments, dividend payments for fiscal year 2005 and the repurchase of own shares by Eni SpA (euro 1,136 million) and by Snam Rete Gas SpA and Saipem SpA (euro 324 million). Currency translation effects also contributed to the reduction in net borrowings. Net borrowings as of 30 September 2006 decreased by euro 2,544 million from the level as of 30 June 2006 to euro 6,394 million, as cash inflow generated by operating activities (euro 4,555 million) was offset in part by financial requirements for capital expenditure and investments for euro 1,835 million and the repurchase of own shares for euro 158 million by Eni SpA. At 30 September 2006, leverage was 0.09, compared with 0.27 at 31 December 2005.

Changes in shareholders equity

| (million
euro) — Shareholders
equity at 31 December 2005 | | 39,217 |
| --- | --- | --- |
| Net
profit for the period | 8,125 | |
| Dividends to
shareholders | (2,400 | ) |
| Shares
repurchased | (1,136 | ) |
| Issue of ordinary
share capital for employee share schemes | 48 | |
| Dividends
paid by consolidated subsidiaries to shareholders | (220 | ) |
| Effect on equity
of the shares repurchased by consolidated subsidiaries
(Snam Rete Gas/Saipem) | (214 | ) |
| Exchange
differences from translation of financial statements
denominated in currencies other than euro | (797 | ) |
| Other changes | (253 | ) |
| Total changes | | 3,153 |
| Shareholders
equity at 30 September 2006 | | 42,370 |

Shareholders equity at 30 September 2006 (euro 42,370 million) increased by euro 3,153 million from 31 December 2005, due essentially to net profit before minority interest (euro 8,125 million) whose effects were offset in part by the payment of dividends for 2005, the purchase of own shares and currency translation effects (approximately euro 797 million).

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SUMMARIZED GROUP CASH FLOW STATEMENT

Enis summarized group cash flow statement derives from the statutory statement of cash flows. It allows to create a link between changes in cash and cash equivalents (deriving from the statutory cash flows statement) occurred from the beginning of period to the end of period and changes in net borrowings (deriving from the summarized cash flow statement) occurred from the beginning of period to the end of period. The measure enabling to make such a link is represented by free cash flow which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders equity and the effect of changes in consolidation and of exchange differences.

Summarized Group cash flow statement (1)

Third quarter (million euro) Nine months

2005 2006 Change 2005 2006 Change

| 2,464 | | 2,512 | | 48 | | Net profit before
minority interest | 7,040 | | 8,125 | | 1,085 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | Adjustments
to reconcile to cash generated from operating income
before changes in working capital: | | | | | | |
| 1,979 | | 1,610 | | (369 | ) | - amortization and depreciation and other non
monetary items | 4,467 | | 4,185 | | (282 | ) |
| (171 | ) | 5 | | 176 | | - net
gains on disposal of assets | (190 | ) | (55 | ) | 135 | |
| 2,199 | | 2,538 | | 339 | | - dividends, interest, taxes and other changes | 6,092 | | 8,121 | | 2,029 | |
| 6,471 | | 6,665 | | 194 | | Cash generated from operating income
before changes in working capital | 17,409 | | 20,376 | | 2,967 | |
| (1,107 | ) | (1,181 | ) | (74 | ) | Changes in working capital related to operations | (747 | ) | (177 | ) | 570 | |
| (1,113 | ) | (929 | ) | 184 | | Dividends
received, taxes paid, interest (paid) received | (3,798 | ) | (4,976 | ) | (1,178 | ) |
| 4,251 | | 4,555 | | 304 | | Net cash provided by
operating activities | 12,864 | | 15,223 | | 2,359 | |
| (1,744 | ) | (1,835 | ) | (91 | ) | Capital
expenditure | (4,950 | ) | (4,889 | ) | 61 | |
| (13 | ) | (19 | ) | (6 | ) | Investments | (61 | ) | (76 | ) | (15 | ) |
| 229 | | 23 | | (206 | ) | Disposals | 502 | | 127 | | (375 | ) |
| 62 | | (126 | ) | (188 | ) | Other cash flow related to capital expenditure,
investments and disposals | 38 | | (46 | ) | (84 | ) |
| 2,785 | | 2,598 | | (187 | ) | Free cash flow | 8,393 | | 10,339 | | 1,946 | |
| (145 | ) | (3 | ) | 142 | | Borrowings (repayment) of debt related to
financing activities | (60 | ) | 463 | | 523 | |
| (1,461 | ) | (378 | ) | 1,083 | | Changes in
short and long-term financial debt | (3,039 | ) | (1,521 | ) | 1,518 | |
| (17 | ) | (253 | ) | (236 | ) | Dividends paid and changes in minority interests
and reserves | (3,846 | ) | (4,031 | ) | (185 | ) |
| 35 | | 17 | | (18 | ) | Effect of
changes in consolidation and exchange differences | 75 | | (124 | ) | (199 | ) |
| 1,197 | | 1,981 | | 784 | | NET CASH FLOW FOR THE
PERIOD | 1,523 | | 5,126 | | 3,603 | |

Third quarter (million euro) Nine months

2005 2006 Change 2005 2006 Change

2,785		2,598		(187	)	Change in net borrowings — Free cash flow	8,393	10,339	1,946
						Net borrowings of acquired companies
						Net
borrowings of divested companies	21		1		(20	)
289		199		(90	)	Exchange differences on net borrowings and other
changes	(479	)	316		795
(17	)	(253	)	(236	)	Dividends
paid and changes in minority interests and reserves	(3,846	)	(4,031	)	(185	)
3,057		2,544		(513	)	CHANGE IN NET BORROWINGS	4,089	6,625	2,536

(1) For a reconciliation of the summarized group cash flow statement to the statutory cash flow statement see Enis Report on the first half of 2006 "Reconciliation of summarized group balance sheet and cash flow statement to statutory schemes" pages 46 and 47.

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Capital expenditure

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,228	1,152	(76	)	(6.2	)	Exploration & Production	3,448	3,266	(182	)	(5.3	)
220	311	91		41.4		Gas &
Power	741	721	(20	)	(2.7	)
123	141	18		14.6		Refining & Marketing	339	373	34		10.0
27	18	(9	)	(33.3	)	Petrochemicals	79	52	(27	)	(34.2	)
98	179	81		82.7		Engineering and Construction	235	403	168		71.5
18	20	2		11.1		Other
activities	26	34	8		30.8
30	14	(16	)	(53.3	)	Corporate and financial companies	82	40	(42	)	(51.2	)
1,744	1,835	91		5.2		Capital expenditure	4,950	4,889	(61	)	(1.2	)

Cash generated by operating activities came in at euro 15,223 million, also benefiting from seasonality factors and cash from divestments (euro 128 million, including net borrowings transferred of euro 1 million) and currency translation effects of approximately euro 450 million, and was partly offset by: (i) financial requirements for capital expenditure and investments for euro 4,965 million; (ii) dividend payments for fiscal year 2005 amounting to euro 2,620 million, of which euro 2,400 million pertaining to the payment of the balance of the dividend for fiscal year 2005 by the parent company Eni SpA; and (iii) the repurchase of own shares for euro 1,136 million by Eni SpA and for euro 324 million by Snam Rete Gas SpA and Saipem SpA. From 1 January to 30 September 2006 a total of 48.80 million Eni shares were purchased by the company for a total cost of euro 1,136 million (representing an average cost of euro 23.265 per share). Since the inception of the share buy-back programme (1 September 2000), Eni has repurchased 331 million shares, equal to 8.26% of its share capital, at a total cost of euro 5,407 million (representing an average cost of euro 16.352 per share). In the first nine months of 2006 capital expenditure amounted to euro 4,889 million, of which 89% related to the Exploration & Production, Gas & Power and Refining & Marketing segments.

Exploration & Production

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 100 | 10 | (90 | ) | (90.0 | ) | Capital expenditure — Acquisition of proved and unproved
property | 267 | 13 | (254 | ) | (95.1 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 10 | 10 | | .. | | North Africa | | 10 | 10 | | .. | |
| 52 | | (52 | ) | .. | | West
Africa | 52 | | (52 | ) | .. | |
| 48 | | (48 | ) | .. | | Rest of world | 215 | 3 | (212 | ) | .. | |
| 149 | 263 | 114 | | 76.5 | | Exploration | 335 | 642 | 307 | | 91.6 | |
| 9 | 33 | 24 | | .. | | Italy | 20 | 90 | 70 | | .. | |
| 39 | 72 | 33 | | 84.6 | | North
Africa | 68 | 179 | 111 | | 163.2 | |
| 10 | 11 | 1 | | 10.0 | | West Africa | 30 | 105 | 75 | | .. | |
| 12 | 56 | 44 | | .. | | North Sea | 65 | 99 | 34 | | 52.3 | |
| 79 | 91 | 12 | | 15.2 | | Rest of world | 152 | 169 | 17 | | 11.2 | |
| 972 | 862 | (110 | ) | (11.3 | ) | Development | 2,815 | 2,573 | (242 | ) | (8.6 | ) |
| 108 | 96 | (12 | ) | (11.1 | ) | Italy | 270 | 270 | 0 | | .. | |
| 262 | 189 | (73 | ) | (27.9 | ) | North
Africa | 732 | 492 | (240 | ) | (32.8 | ) |
| 179 | 197 | 18 | | 10.1 | | West Africa | 635 | 570 | (65 | ) | (10.2 | ) |
| 110 | 98 | (12 | ) | (10.9 | ) | North Sea | 298 | 285 | (13 | ) | (4.4 | ) |
| 313 | 282 | (31 | ) | (9.9 | ) | Rest of world | 880 | 956 | 76 | | 8.6 | |
| 7 | 17 | 10 | | .. | | Other | 31 | 38 | 7 | | .. | |
| 1,228 | 1,152 | (76 | ) | (6.2 | ) | | 3,448 | 3,266 | (182 | ) | (5.3 | ) |

Capital expenditure of the Exploration & Production segment (euro 3,266 million) concerned essentially development directed mainly outside Italy, in particular Kazakhstan, Angola and Egypt. Development expenditure in Italy concerned in particular the continuation of work for well drilling, plant and infrastructure in VaI dAgri and

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sidetrack and infilling work in mature areas. About 86% of exploration expenditure was directed outside Italy in particular Egypt, Nigeria, the United States and Norway. In Italy essentially the offshore of Sicily, the Po valley and the Adriatic Sea. The decline from the first nine months of 2005 (euro 182 million, down 5.3%) was due mainly to the completion of relevant projects in Libya (Bahr Essalam) and Angola (Block 15 and Benguela/Belize/Lobito/ Tomboco), delays in a number of development projects in Italy and outside Italy and the purchase of an additional 1.85% interest in the Kashagan field in the first quarter of 2005 (euro 169 million) whose effects were offset in part by a more than doubled exploration expenditure in Egypt and Nigeria.

Gas & Power

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

211	269	58		27.5		Capital expenditure — Italy	700	617	(83	)	(11.9	)
9	42	33		..		Outside Italy	41	104	63		..
220	311	91		41.4			741	721	(20	)	(2.7	)
9	28	19		..		Market	21	41	20		95.2
						Italy	2		(2	)	..
9	28	19		..		Outside Italy	19	41	22		..
43	37	(6	)	(14.0	)	Distribution	102	104	2		2.0
122	185	63		51.6		Transport	448	437	(11	)	(2.5	)
122	171	49		40.2		Italy	426	374	(52	)	(12.2	)
	14	14		..		Outside Italy	22	63	41		..
46	61	15		32.6		Power generation	170	139	(31	)	(18.2	)
220	311	91		41.4			741	721	(20	)	(2.7	)

Capital expenditure in the Gas & Power segment totalled euro 721 million and related essentially to: (i) development and maintenance of Enis primary transmission network in Italy (euro 374 million); (ii) development and maintenance of Enis natural gas distribution network in Italy (euro 104 million); (iii) the continuation of the construction of combined cycle power plants (euro 139 million) in particular at Ferrara and Brindisi. The euro 20 million decline from the first nine months of 2005 (down 2.7%) was due essentially to the conclusion of the plan for electricity generation expansion.

Refining & Marketing

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

108	109	1		0.9		Capital expenditure — Italy	302	306	4		1.3
15	32	17		..		Outside Italy	37	67	30		81.1
123	141	18		14.6			339	373	34		10.0
79	75	(4	)	(5.1	)	Refining and Logistics	195	237	42		21.5
79	75	(4	)	(5.1	)	Italy	195	237	42		21.5
44	66	22		50.0		Marketing	111	133	22		19.8
29	34	5		17.2		Italy	74	66	(8	)	(10.8	)
15	32	17		..		Outside Italy	37	67	30		81.1
						Other	33	3	(30	)	(90.9	)
123	141	18		14.6			339	373	34		10.0

Capital expenditure in the Refining & Marketing segment amounted to euro 373 million and concerned: (i) refining and logistics in Italy (euro 237 million), in particular actions for improving flexibility and yields of refineries, among which the construction of a new hydrocracking and a new deasphalting unit at the

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Sannazzaro refinery; (ii) the upgrade of the refined product distribution network and the purchase of service stations in the rest of Europe (euro 67 million); (iii) the upgrade of the distribution network in Italy (euro 66 million). Capital expenditure in the Engineering and Construction segment amounted to euro 403 million and concerned: (i) the conversion of the Margaux tanker ship into an FPSO 1 vessel that will operate in Brazil on the Golfinho 2 field; (ii) maintenance and upgrading of equipment; (iii) beginning of fabrication and installation of facilities in the offshore phase of the Kashagan project in Kazakhstan. Capital expenditure in the Petrochemical segment amounted to euro 52 million and concerned mainly environmental protection actions and compliance with safety and health regulations. OUTLOOK FOR 2006 Eni reaffirms its 2006 outlook, with key business trends for the year as follows: production of liquids and natural gas is forecast to continue growing from 1.74 mmboe/d in 2005. Increases will be achieved outside Italy, mainly in Libya, Angola and Egypt due to the achievement of full production in fields which started-up in 2005 and to new start-ups in 2006. Production for the year is expected to be adversely affected by the loss of the Venezuelan Dación oilfield, the impact of security issues in Nigeria and natural field decline mainly in Italian fields. Despite the adverse impact of the unforeseen events in Venezuela and Nigeria, production growth rate for the year is expected to be approximately 3% assuming a Brent crude oil price of approximately $55 per barrel in the market scenario for 2006; sales volumes of natural gas in Europe are forecast to increase more than 6% from 2005 levels (94 bcm corresponding to 9,095 mmcf/d) with major increases expected in volumes sold in the Iberian Peninsula, German/Austrian, Turkish and French markets; s old production of electricity is expected to increase more than 9% from 2005 levels (22.77 TWh) due to the continuing ramp-up of new production capacity, offset in part by higher levels of maintenance activity; refining throughputs on Enis account are expected to decline slightly from 2005 due to higher levels of maintenance activity, with Enis refineries expected to run at full capacity; retail sales of refined products on the Agip branded network in Italy are expected to decline slightly. In the rest of Europe an upward trend of sales is expected to continue; in particular higher sales are expected in Germany, Spain, Austria and France also due to construction/ acquisition of service stations. In 2006, capital expenditure is expected to amount euro 8.7 billion, representing a 17% increase from 2005. Approximately 90% of capital expenditure is planned in Enis Exploration & Production, Gas & Power and Refining & Marketing divisions. Main increases are expected in exploration projects, the development of oil and natural gas reserves, upgrading of refineries and upgrading of natural gas transport and import infrastructure. Also the Engineering and Construction segment is expected to increase capital expenditure by 84.5% due to the construction of a new FPSO unit and upgrading of the fleet and logistic centers. The reduction in forecast capital expenditure for the year, compared to the guidance given at the end of the second quarter of 2006 (euro 9.1 billion) is due mainly to a reduction of forecast amounts in the following business segments: (i) Exploration & Production due to delays in a number of development projects; (ii) Refining & Marketing due to delayed expenditure in certain refining projects. Management also expects net borrowings to increase from the current level, reflecting cash requirements for capital expenditure planned in the fourth quarter (approximately euro 3.8 billion), for the distribution to shareholders of the interim dividend of euro 0.60 per share for fiscal year 2006 (corresponding to approximately euro 2.2 billion) and repurchase of own shares. At year-end, the ratio of net borrowings to shareholders equity including minorities is expected to reach 0.20.

(1) Floating Production Storage Offloading.

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Operating review EXPLORATION & PRODUCTION

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 6,058 | 6,562 | 504 | | 8.3 | | Results — Net sales
from operations | (million euro) | 16,112 | 21,021 | | 4,909 | | 30.5 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3,682 | 4,041 | 359 | | 9.8 | | Operating profit | | 9,031 | 12,439 | | 3,408 | | 37.7 | |
| | | | | | | Exclusion
of inventory holding (gain) loss | | | | | | | | |
| 3,682 | 4,041 | 359 | | 9.8 | | Replacement cost operating profit | | 9,031 | 12,439 | | 3,408 | | 37.7 | |
| 132 | 54 | (78 | ) | | | Exclusion
of special items: | | 291 | 129 | | (162 | ) | | |
| 132 | 48 | (84 | ) | | | - asset impairments | | 290 | 180 | | (110 | ) | | |
| | 3 | 3 | | | | -
gains on disposal of assets | | | (54 | ) | (54 | ) | | |
| | 3 | 3 | | | | - provision for redundancy incentives | | 1 | 3 | | 2 | | | |
| 3,814 | 4,095 | 281 | | 7.4 | | Adjusted operating profit | | 9,322 | 12,568 | | 3,246 | | 34.8 | |
| | | | | | | Results also include: | | | | | | | | |
| 1,013 | 1,106 | 93 | | 9.2 | | Depreciations
and amortizations | | 2,836 | 3,358 | | 522 | | 18.4 | |
| 126 | 255 | 129 | | 102.4 | | - of which exploration expenditure | | 344 | 656 | | 312 | | 90.7 | |
| | | | | | | Average realizations | | | | | | | | |
| 55.96 | 65.20 | 9.24 | | 16.5 | | Liquids (1) | ($/bbl) | 47.98 | 61.81 | | 13.83 | | 28.8 | |
| 161.21 | 192.14 | 30.93 | | 19.2 | | Natural gas | ($/kmc) | 154.32 | 186.17 | | 31.85 | | 20.6 | |
| 45.72 | 52.21 | 6.49 | | 14.2 | | Total hydrocarbons | ($/boe) | 40.17 | 50.00 | | 9.83 | | 24.5 | |
| | | | | | | Average oil marker prices | | | | | | | | |
| 61.54 | 69.49 | 7.95 | | 12.92 | | Brent | ($/bbl) | 53.54 | 66.96 | | 13.42 | | 25.1 | |
| 50.44 | 54.55 | 4.11 | | 8.1 | | Brent | (euro/bbl) | 42.36 | 53.82 | | 11.46 | | 27.1 | |
| 63.05 | 70.38 | 7.33 | | 11.6 | | West Texas Intermediate | ($/bbl) | 55.26 | 68.02 | | 12.76 | | 23.1 | |
| 340.79 | 214.36 | (126.43 | ) | (37.1 | ) | Gas Henry
Hub | ($/kmc) | 270.87 | 239.08 | | (31.78 | ) | (11.7 | ) |

(1) Includes condensates.

Results Third quarter Replacement cost operating profit for the third quarter of 2006 was euro 4,041 million, up euro 359 million or 9.8% from the third quarter of 2005, reflecting primarily higher realizations in dollars (oil up 16.5%, natural gas up 19.2%) offset in part by: (i) higher operating costs and amortization charges attributable to higher costs for the development of new fields and the maintenance of production levels in certain mature fields, as well as sector specific inflationary pressure; (ii) increased exploration expense (up euro 129 million; euro 134 million on a constant exchange rate basis); (iii) a charge of approximately euro 190 million resulting from the appreciation of the euro over the dollar, also reflecting currency translation effects. In the third quarter of 2006 special charges of euro 54 million related primarily to asset impairments. Nine months Operating profit for the first nine months was euro 12,439 million, up euro 3,408 million, or 37.7% from the first nine months of 2005, reflecting primarily: (i) higher realized prices in dollars (oil up 28.8%; natural gas up 20.6%); (ii) higher sold production volumes (up 11.9 mmboe or 2.6%); (iii) a gain of approximately euro 180 million attributable to a different trend in the euro/dollar

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exchange rate in the nine months as compared to the third quarter. On the negative side the result was affected by higher production costs and amortization charges and an increased exploration expense. Special charges for the first nine months of 2006, represented by net charges of euro 129 million, concerned the impairment of mineral assets, offset in part by gains on the disposal of mineral assets.

Production

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,715 | 1,709 | (6 | ) | (0.3 | ) | Daily production of
hydrocarbons (1) | (kboe) | 1,714 | 1,761 | 47 | | 2.7 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 256 | 235 | (21 | ) | (8.2 | ) | Italy | | 263 | 239 | (24 | ) | (9.1 | ) |
| 502 | 554 | 52 | | 10.4 | | North Africa | | 467 | 550 | 83 | | 17.8 | |
| 347 | 365 | 18 | | 5.2 | | West
Africa | | 333 | 372 | 39 | | 11.7 | |
| 265 | 254 | (11 | ) | (4.2 | ) | North Sea | | 280 | 279 | (1 | ) | (0.4 | ) |
| 345 | 301 | (44 | ) | (12.8 | ) | Rest of
world | | 371 | 321 | (50 | ) | (13.5 | ) |
| 152.5 | 152.3 | (0.2 | ) | (0.1 | ) | Production sold (1) | (mmboe) | 453.9 | 465.9 | 12.0 | | 2.6 | |
| 1,106 | 1,041 | (65 | ) | (5.9 | ) | Daily production of oil
and condensates (1) | (kbbl) | 1,104 | 1,080 | (24 | ) | (2.2 | ) |
| 84 | 77 | (7 | ) | (8.3 | ) | Italy | | 87 | 79 | (8 | ) | (9.2 | ) |
| 318 | 330 | 12 | | 3.8 | | North Africa | | 306 | 327 | 21 | | 6.9 | |
| 317 | 315 | (2 | ) | (0.6 | ) | West
Africa | | 301 | 325 | 24 | | 8.0 | |
| 171 | 164 | (7 | ) | (4.1 | ) | North Sea | | 180 | 177 | (3 | ) | (1.7 | ) |
| 216 | 155 | (61 | ) | (28.2 | ) | Rest of
world | | 230 | 172 | (58 | ) | (25.2 | ) |
| 99 | 109 | 10 | | 10.1 | | Daily production of
natural gas (1) | (mmcm) | 99 | 111 | 12 | | 12.1 | |
| 28 | 26 | (2 | ) | (7.1 | ) | Italy | | 29 | 26 | (3 | ) | (10.3 | ) |
| 30 | 36 | 6 | | 20.0 | | North Africa | | 26 | 36 | 10 | | 38.5 | |
| 5 | 8 | 3 | | 60.0 | | West
Africa | | 5 | 8 | 3 | | 60.0 | |
| 15 | 15 | | | .. | | North Sea | | 16 | 17 | 1 | | 6.3 | |
| 21 | 24 | 3 | | 14.3 | | Rest of
world | | 23 | 24 | 1 | | 4.3 | |

(1) Includes Enis share of production of joint ventures accounted for with the equity method of accounting.

Third quarter Oil and natural gas production in the third quarter of 2006 averaged 1,709 kboe/d, barely unchanged from the third quarter of 2005 (down 0.3%). Production for the quarter scored a 4.2% increase when excluding the impact of the unilateral cancellation of the contract by the Venezuelan state company PDVSA concerning the Dación field with effect from 1 April 2006 (down 62 kboe/d) and lower entitlements in certain Production Sharing Agreements (PSAs) 2 and buy-back contracts (down 16 kboe/d) due to higher oil prices. Production increases were driven essentially by start-ups/full production of relevant gas projects (Libya, Australia, Egypt and Croatia) and organic growth in Angola and Libya, whose effects were offset in part by field declines in mature areas and the impact of outages and disruptions in Nigeria because of security issues. Daily production of oil and condensates for the quarter (1,041 kbbl) increased mainly in: (i) Libya for the full production of the Bahr Essalam (Enis interest 50%) and el Feel (Enis interest 23.3%) fields; (ii) Angola due to the full production of fields in Phase B of the development of Kizomba in Block 15 (Enis interest 20%) and the

(2) In PSAs the national oil company awards the execution of exploration and production activities to the international oil company (contractor). The contractor bears the mineral and financial risk of the initiative and, when successful, recovers capital expenditure and costs incurred in the year (Cost oil) by means of a share of production. This production share varies along with international oil prices. In certain PSAs changes in international oil prices also affect the share of production to which the contractor is entitled in order to remunerate its expenditure (Profit oil). A similar scheme applies to buy-back contracts.

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start-up of the Benguela/Belize/Lobito/Tomboco fields in Block 14 (Enis interest 20%); (iii) the United States due to the nearly total recovery of production at facilities damaged by hurricanes in the third and fourth quarter of 2005. Decreases concerned Venezuela and Nigeria due to unforeseen events as described, and the United Kingdom and Italy due to the production decline of mature fields. Daily production of natural gas for the quarter (109 mmcm) increased mainly in Libya (reaching of full production at the Bahr Essalam field), Nigeria (start-up of trains 4 and 5 of the Bonny LNG plant), Australia (start-up of the gas phase of the Bayu Undan field), Egypt (reaching of full production at the Barboni field, increase in the number of production wells at the eI Temsah 4 platform and an increased supplies to the Damietta LNG plant), Croatia (start-up of the Ika, Ida and Ivana C-K fields). Main declined concerned mature fields in Italy. Nine months In the first nine months of 2006 daily production of oil and gas amounted to 1,761 kboe, increasing by 47 kboe from the first nine months of 2005 (up 2.7%). Excluding the impact of the loss of production of the Dación field in Venezuela (down 40 kbbl/d) and of adverse entitlement effects in certain PSAs and buy-back contracts (down 27 kbbl/d) related to increased oil prices, oil and natural gas production increased by 6.7%. In particular organic growth concerned the start-up/reaching full production of relevant gas projects (Libya, Australia, Nigeria, Egypt and Croatia) and higher oil production in Angola and Libya. Production for the quarter was adversely impacted by field declines in mature areas and the impact of outages and disruptions in Nigeria due to social unrest. Production outside Italy covered 86% of the total (85% in the first nine months of 2005). Daily production of oil and condensates (1,080 kbbl) increased in particular in: (i) Angola, due to the reaching of full production of fields in Phase B of the Kizomba project in Block 15 (Kissanje and Dikanza, Enis interest 20%) and North Sanha/Bomboco fields in Block 0 (Enis interest 9.8%), as well as the integrated start-up of the Benguela/Belize-Lobito/Tomboco fields in Block 14 (Enis interest 20%); (ii) Libya, due to the reaching of full production at the Bahr Essalam offshore field (Enis interest 50%) as part of the Western Libyan Gas Project and the El Feel field (Enis interest 23.3%). Decreases concerned: (i) Venezuela, due to the unilateral cancellation of the contract with the Venezuelan state company PDVSA concerning the Dación field with effect from 1 April 2006; (ii) Nigeria, due to outages and disruptions related to social unrest in the country, offset in part by the reaching of full production of the Bonga field in OML 118 permit (Enis interest 12.5%); (iii) Italy, due to technical problems at the FPSO unit on the Aquila field. Daily production of natural gas (111 mmcm) increased mainly in: (i) Libya, due to the reaching of full production at the Bahr Essalam field (Enis interest 50%); (ii) Egypt, for the increase in the number of production wells at the eI Temsah 4 platform and the Barboni field in the offshore of the Nile Delta and increased supplies to the Damietta liquefaction plant (Enis interest 40%); (iii) Nigeria, due to increased supplies to the Bonny LNG plant (Enis interest 10.4%) related to the start-up of trains 4 and 5; (iv) Australia, due to the start-up of supplies to the Darwin liquefaction plant linked to the Bayu Undan liquid and gas field (Enis interest 12.04%); (v) Croatia, due to the start-up of the Ika, Ida and Ivana C-K fields (Enis interest 50%) in the Adriatic offshore. These increases were offset in part by a decline registered in Italy resulting from the production decline of mature fields. Hydrocarbon production sold amounted to 465.9 million boe. The 14.9 million boe difference over production was due essentially to own consumption of natural gas (13.7 million boe).

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GAS & POWER

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 4,388 | | 5,265 | | 877 | | 20.0 | | Results — Net sales
from operations | 15,550 | | 20,198 | | 4,648 | | 29.9 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 525 | | 592 | | 67 | | 12.8 | | Operating profit | 2,680 | | 2,499 | | (181 | ) | (6.8 | ) |
| (65 | ) | (6 | ) | 59 | | | | Exclusion
of inventory holding (gain) loss | (95 | ) | (26 | ) | 69 | | | |
| 460 | | 586 | | 126 | | 27.4 | | Replacement cost
operating profit | 2,585 | | 2,473 | | (112 | ) | (4.3 | ) |
| 8 | | 33 | | 25 | | | | Exclusion
of special items: | 56 | | 140 | | 84 | | | |
| | | | | | | | | of which: | | | | | | | | |
| | | 24 | | 24 | | | | Non-recurring
(income) charges | | | 24 | | 24 | | | |
| 8 | | 9 | | 1 | | | | Other special charges | 56 | | 116 | | 60 | | | |
| | | | | | | | | -
impairments | | | 51 | | 51 | | | |
| 6 | | 3 | | (3 | ) | | | - environmental provisions | 28 | | 42 | | 14 | | | |
| 2 | | 5 | | 3 | | | | -
provision for redundancy incentives | 5 | | 22 | | 17 | | | |
| | | 1 | | 1 | | | | - other | 23 | | 1 | | (22 | ) | | |
| 468 | | 619 | | 151 | | 32.3 | | Adjusted operating profit | 2,641 | | 2,613 | | (28 | ) | (1.1 | ) |
| 468 | | 619 | | 151 | | 32.3 | | Adjusted operating profit by business | 2,641 | | 2,613 | | (28 | ) | (1.1 | ) |
| (15 | ) | 186 | | 201 | | .. | | Market and Distribution | 1,261 | | 1,230 | | (31 | ) | (2.5 | ) |
| 293 | | 230 | | (63 | ) | (21.5 | ) | Transport
in Italy | 908 | | 801 | | (107 | ) | (11.8 | ) |
| 119 | | 140 | | 21 | | 17.6 | | Transport outside Italy | 339 | | 435 | | 96 | | 28.3 | |
| 71 | | 63 | | (8 | ) | (11.3 | ) | Power
generation | 133 | | 147 | | 14 | | 10.5 | |

Results Third quarter Replacement cost operating profit for the third quarter of 2006 was euro 586 million, up euro 126 million, or 27.4%, reflecting primarily: (i) higher natural gas selling margins supported also by a favorable trading environment. Moreover the adverse impact of tariff regulation enacted by the Authority for Electricity and Gas with resolution No. 248/2004 3 for the nine months of 2005 was incurred in full in the third quarter 2005 on the basis of developments of the proceeding with the Authority occurred in said quarter; (ii) an increase in sales of natural gas by consolidated subsidiaries (up 1.04 bcm or 6.7%), including own consumption and higher natural gas volumes transported outside Italy. These positives were offset in part by lower operating results for the transportation activity in Italy as a consequence of lower tariffs resulting from the implementation of resolution No. 166/2005 by the Italian Authority for Electricity and Gas. Power generation activities reported operating profit of euro 62 million, with a euro 9 million decline, down 12.7%, due primarily to lower selling margins related to the different trends in energy parameters used for the determination of selling prices and purchase prices of fuels, offset in part by increased volumes sold (up 0.18 TWh or 2.9%). Special charges for the quarter included euro 33 million of non-recurring charges, and redundancy incentives and environmental provisions. Nine months Replacement cost operating profit for the first nine months of 2006 (euro 2,473 million) was down euro 112 million, or 4.3%, due mainly to weaker natural gas selling margins affected by higher purchase prices attributable to the gas shortage occurred earlier in the year and the impact of sector regulation in Italy, partly offset by a favourable trading environment, in particular in the thermoelectric sector. Results for the nine months were also adversely impacted by lower transportation tariffs in Italy and higher special charges. On the positive side, natural gas volumes sold by consolidated subsidiaries increased by 3.64 bcm (corresponding to 472 mmcf) or 6.3% including own consumption. Gas volumes

(3) For further information on resolution No. 248/2004 of the Authority for Electricity and Gas see Enis First Half Report - Operating Review - Regulation.

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transported outside Italy also increased in particular on the GreenStream pipeline. Power generation activities generated a replacement cost operating profit of euro 146 million, with an increase of euro 20 million, or 15.9%, due mainly to an increase in electricity production sold (2.05 TWh, up 12.3%). Special charges for the first nine months of 2006 (euro 140 million) included impairments of intangible assets, environmental and redundancy provisions, as well as non-recurring charges (euro 24 million).

Sales

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

9.52	9.39	(0.13	)	(1.4	)	Natural gas sales — Italy to third parties (1)	(bcm)	36.80	36.85	0.05		0.1
1.14	1.36	0.22		19.3		Wholesalers (selling companies)		8.05	8.09	0.04		0.5
0.32	0.31	(0.01	)	(3.1	)	Gas
release		1.39	1.44	0.05		3.6
8.06	7.72	(0.34	)	(4.2	)	End customers		27.36	27.32	(0.04	)	(0.1	)
3.11	2.74	(0.37	)	(11.9	)	Industrial
users		9.34	9.83	0.49		5.2
4.50	4.47	(0.03	)	(0.7	)	Power
generation		12.90	12.37	(0.53	)	(4.1	)
0.45	0.51	0.06		13.3		Residential		5.12	5.12			..
1.48	1.50	0.02		1.4		Own consumption (1)		4.07	4.58	0.51		12.5
4.04	5.31	1.27		31.4		Rest of Europe (1)		16.40	19.79	3.39		20.7
0.39	0.27	(0.12	)	(30.8	)	Outside Europe		0.95	0.64	(0.31	)	(32.6	)
15.43	16.47	1.04		6.7		Sales and own consumption of
subsidiaries		58.22	61.86	3.64		6.3
1.23	1.62	0.39		31.7		Sales of affiliates (Enis share)		5.03	5.68	0.65		12.9
						Italy (1)		0.04	0.01	(0.03	)	(75.0	)
1.07	1.34	0.27		25.2		Rest of Europe (1)		4.54	5.05	0.51		11.2
0.16	0.28	0.12		75.0		Outside
Europe		0.45	0.62	0.17		37.8
16.66	18.09	1.43		8.6		Total natural gas sales
and own consumption	(bcm)	63.25	67.54	4.29		6.8
18.26	19.02	0.76		4.2		Transport of natural gas in Italy	(bcm)	63.05	65.54	2.49		3.9
11.67	12.09	0.42		3.6		Eni		40.13	42.12	1.99		5.0
6.59	6.93	0.34		5.2		On behalf
of third parties		22.92	23.42	0.50		2.2
6.15	6.33	0.18		2.9		Electricity production
sold	(TWh)	16.70	18.75	2.05		12.3
17.58	18.91	1.33		7.6		Sales of natural gas in
Europe	(bcm)	66.29	70.41	4.12		6.2
16.11	17.54	1.43		8.9		G&P
sales in Europe (1)		61.85	66.28	4.43		7.2
1.47	1.37	(0.10	)	(6.8	)	Upstream sales in Europe		4.44	4.13	(0.31	)	(7.0	)

Third quarter Natural gas sales volumes for the third quarter of 2006 (including own consumption and sales of affiliates) were 18.09 bcm, 1.43 bcm higher, or 8.6% from the third quarter of 2005, primarily reflecting higher sales in the rest of Europe (up 1.54 bcm, or 30.1%) offset in part by lower sales in Italy (down 0.13 bcm, or 1.4%). The decline in natural gas sales in Italy reflected mainly lower sales to the industrial sector (down 0.37 bcm) offset in part by higher sales to wholesalers (up 0.22 bcm) and to residential and commercial users (up 0.06 bcm).

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ENI REPORT ON THE THIRD QUARTER OF 2006

Sales volumes in the rest of Europe (5.31 bcm) of consolidated subsidiaries were 1.27 bcm higher, or 31.4%, reflecting increases registered in: (i) sales under long-term supply contracts to Italian importers (up 0.74 bcm) for the progressive reaching of full supplies from Libyan fields; (ii) supplies to the Turkish market (up 0.22 bcm); (iii) sales in Spain (up 0.16 bcm) related to higher supplies to Iberdrola and the start-up of supplies to Hydrocantabrico; (iv) sales in Germany and Austria (up 0.16 bcm). Sales of natural gas by Enis affiliates in the rest of Europe, net to Eni and net of Enis supplies, amounted to 1.34 bcm, increasing by 0.27 bcm from the third quarter of 2005, mainly to Unión Fenosa Gas and concerned: (i) Unión Fenosa Gas (Enis interest 50%) with 0.51 bcm; (ii) Galp Energia (Enis interest 33.34%) with 0.47 bcm; (iii) GVS (Enis interest 50%) with 0.35 bcm. Electricity production sold (6.33 TWh) was up to 0.18 TWh, or 2.9%, reflecting the continuing ramp-up of new production capacity, in particular for the start-up of the third power unit at the Brindisi plant (up 0.74 TWh), offset in part by the effects of planned maintenance standstills at Ravenna (down 0.46 TWh). Nine months Natural gas sales for the first nine months of 2006 were 67.54 bcm (including own consumption and Enis share of affiliates sales), up 4.29 bcm, from the first nine months of 2005, or 6.8%, primarily reflecting higher sales in the rest of Europe, up 3.9 bcm, or 18.6%, and higher natural gas supplies to Enis wholly-owned subsidiary EniPower for power generation up 0.51 bcm, or 12.5%. Despite an increasingly competitive market, natural gas sales in Italy (36.85 bcm) were in line with the first nine months of 2005 (increasing by 0.05 bcm, or 0.1%), reflecting higher sales volumes to the industrial sector (up 0.49 bcm) and to wholesalers (up 0.04 bcm) were offset in part by lower sales to the power generation segment (down 0.53 bcm) related to the switch from natural gas to fuel oil as feedstock for power plants during the gas shortage occurred earlier in the year. Sales under the so called gas release 4 (1.44 bcm) increased by 0.05 bcm from the first nine months of 2005. Own consumption 5 was 4.58 bcm, up 0.51 bcm, or 12.5%, reflecting primarily higher supplies to EniPower due to the coming on stream of new generation capacity. Sales of consolidated subsidiaries in the rest of Europe (19.79 bcm) were 3.39 bcm higher, up 20.7%, reflecting increases registered in: (i) sales under long-term supply contracts to Italian importers (up 1.93 bcm) for the progressive reaching of full supplies from Libyan fields; (ii) supplies to the Turkish market (up 0.90 bcm); (iii) Germany and Austria (0.42 bcm) essentially due to increased spot sales to Gaz de France and Econgas and higher supplies to Enis affiliate GVS (Enis interest 50%); (iv) France (up 0.32 bcm) relating to higher supplies to industrial operators. Sales of natural gas by Enis affiliates in the rest of Europe, net to Eni and net of Enis supplies, amounted to 5.05 bcm, up 0.51 bcm mainly to Unión Fenosa Gas and concerned: (i) GVS (Enis interest 50%) with 2.15 bcm; (ii) Unión Fenosa Gas (Enis interest 50%) with 1.54 bcm; (iii) Galp Energia (Enis interest 33.34%) with 1.28 bcm. Eni transported 23.42 bcm of natural gas on behalf of third parties in Italy, an increase of 0.50 bcm from the first nine months of 2005, up 2.2%. Electricity production sold (18.75 TWh) was up to 2.05 TWh, or 12.3%, reflecting the continuing ramp-up of new production capacity, in particular the third unit at the Brindisi (up 2.79 TWh) and higher production at the Mantova (up 1.19 TWh) plants, offset in part by the effects of planned maintenance standstills at Ferrera Erbognone and Ravenna.

| (4) | In June 2004
Eni agreed with the Antitrust Authority to sell a total
volume of 9.2 bcm of natural gas (2.3 bcm/y) in the four
thermal years from 1 October 2004 to 30 September 2008 at
the Tarvisio entry point into the Italian network. |
| --- | --- |
| (5) | In accordance with
Article 19, paragraph 4 of Legislative Decree No.
164/2000, the volumes of natural gas consumed in
operations by a company or its subsidiaries are excluded
from the calculation of ceilings for sales to end
customers and from volumes input into the Italian network
to be sold in Italy. |

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REFINING & MARKETING

Third quarter Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 9,430 | | 10,185 | 755 | | 8.0 | | Results — Net sales
from operations | (million euro) | 24,177 | | 29,631 | | 5,454 | | 22.6 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 663 | | 250 | (413 | ) | (62.3 | ) | Operating profit | | 1,528 | | 705 | | (823 | ) | (53.9 | ) |
| (428 | ) | 83 | 511 | | | | Exclusion
of inventory holding (gain) loss | | (887 | ) | (171 | ) | 716 | | | |
| 235 | | 333 | 98 | | 41.7 | | Replacement cost
operating profit | | 641 | | 534 | | (107 | ) | (16.7 | ) |
| 113 | | 30 | (83 | ) | | | Exclusion
of special items: | | 194 | | 108 | | (86 | ) | | |
| 118 | | 23 | (95 | ) | | | - environmental provisions | | 180 | | 84 | | (96 | ) | | |
| 2 | | 6 | 4 | | | | -
provision for redundancy incentives | | 9 | | 17 | | 8 | | | |
| 14 | | 1 | (13 | ) | | | - provision to the reserve for contingencies | | 31 | | 4 | | (27 | ) | | |
| | | | | | | | -
impairments | | | | 1 | | 1 | | | |
| (21 | ) | | 21 | | | | - other | | (26 | ) | 2 | | 28 | | | |
| 348 | | 363 | 15 | | 4.3 | | Adjusted operating profit | | 835 | | 642 | | (193 | ) | (23.1 | ) |
| | | | | | | | Global Indicator Refining Margin | | | | | | | | | |
| 7.02 | | 4.27 | (2.75 | ) | (39.2 | ) | Brent | ($/bbl) | 6.02 | | 4.33 | | (1.69 | ) | (28.1 | ) |
| 5.75 | | 3.35 | (2.40 | ) | (41.7 | ) | Brent | (euro /bbl) | 4.76 | | 3.48 | | (1.28 | ) | (26.9 | ) |
| 9.05 | | 6.82 | (2.23 | ) | (24.6 | ) | Ural | ($/bbl) | 8.53 | | 7.04 | | (1.49 | ) | (17.5 | ) |

Results Third quarter Replacement cost operating profit for the third quarter of 2006 was euro 333 million, up euro 98 million or 41.7% from the third quarter of 2005 resulting from: (i) higher realised refining margins attributable to the difference in prices of light and heavy crude, which has been captured by Enis refining system due to its high conversion rate, in spite of a negative trend in market benchmarks (Brent margins were down 2.75 $/bbl or 39.2% from a year ago). Results for the refining business were adversely affected by the appreciation of the euro over the dollar and lower refining throughputs; (ii) lower special charges due to lower environmental provisions; (iii) the improved performance of marketing activities in Italy attributable to higher retail margins offset in part by lower volumes sold and the effect of the divestment of Italiana Petroli (IP) in September 2005; (iv) higher retail margins and volumes sold in marketing activities in the rest of Europe. The third quarter result included special charges of euro 30 million related primarily to environmental provisions and provisions for redundancy incentives. Nine months Replacement cost operating profit for the first nine months of 2006 of euro 534 million declined by euro 107 million from the first nine months of 2005 (down 16.7%) reflecting in particular: (i) the decline in operating performance of the refining business, reflecting the unfavourable trading environment and refinery outages, the effects of which were partially offset by the depreciation of the euro over the dollar; (ii) the decline in operating performance of Italian marketing activities due to lower retail margins registered in the first and second quarter, and the effects of competitive pressures in terms of lower volumes sold and the divestment of Italiana Petroli. On the positive side, special charges were lower than a year ago and marketing activities in the rest of Europe performed well. Special charges for the first nine months of 2006 of euro 108 million concerned essentially provisions to the environmental risk reserve and employee redundancy incentives.

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Refining throughputs and sales

Third quarter (mmtonnes) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 10.33 | 9.78 | (0.55 | ) | (5.3 | ) | Refining throughputs on
own account | 28.54 | 27.79 | (0.75 | ) | (2.6 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 9.16 | 8.56 | (0.60 | ) | (6.6 | ) | Refining
throughputs on own account in Italy | 25.21 | 24.30 | (0.91 | ) | (3.6 | ) |
| | | | | | | Refining throughputs on own account | | | | | | |
| 1.17 | 1.22 | 0.05 | | 4.3 | | in rest of
Europe | 3.33 | 3.49 | 0.16 | | 4.8 | |
| 13.16 | 13.09 | (0.07 | ) | (0.5 | ) | Sales | 37.97 | 37.95 | (0.02 | ) | .. | |
| 2.29 | 2.24 | (0.05 | ) | (2.2 | ) | Retail
Italy Agip brand | 6.55 | 6.50 | (0.05 | ) | (0.8 | ) |
| 0.34 | | (0.34 | ) | .. | | Retail Italy IP brand | 1.30 | | (1.30 | ) | .. | |
| 0.99 | 1.03 | 0.04 | | 4.0 | | Retail
rest of Europe | 2.76 | 2.85 | 0.09 | | 3.3 | |
| 2.58 | 2.46 | (0.12 | ) | (4.7 | ) | Wholesale Italy | 7.65 | 7.48 | (0.17 | ) | (2.2 | ) |
| 1.05 | 1.07 | 0.02 | | 1.9 | | Wholesale
rest of Europe | 3.01 | 3.13 | 0.12 | | 4.0 | |
| 0.09 | 0.10 | 0.01 | | 11.1 | | Wholesale rest of World | 0.29 | 0.31 | 0.02 | | 6.9 | |
| 5.82 | 6.19 | 0.37 | | 6.4 | | Other
sales | 16.41 | 17.68 | 1.27 | | 7.7 | |
| 13.16 | 13.09 | (0.07 | ) | (0.5 | ) | Refined product sales by region | 37.97 | 37.95 | (0.02 | ) | .. | |
| 7.71 | 7.47 | (0.2 | ) | (3.1 | ) | Italy | 22.42 | 22.31 | (0.11 | ) | (0.5 | ) |
| 2.04 | 2.10 | 0.06 | | 2.9 | | Rest of
Europe | 5.77 | 5.98 | 0.21 | | 3.6 | |
| 3.41 | 3.52 | 0.11 | | 3.2 | | Rest of World | 9.78 | 9.66 | (0.12 | ) | (1.2 | ) |

Third quarter Refining throughputs on own account for the third quarter of 2006 in Italy and outside Italy (9.78 mmtonnes) declined by 550 ktonnes (down 5.3%) from the first nine months of 2005, reflecting lower throughputs at the Gela refinery due to technical issues, in addition to the accident occurred at the Priolo refinery and Sannazzaro refinery due to longer maintenance standstill. These declines were partially offset by higher throughputs at the Livorno, Taranto and Venice refineries. Sales of refined products for the third quarter were 13.09 mmtonnes, down 70 ktonnes from the third quarter of 2005, or 0.5%, due to lower sales on Agip branded retail and wholesale markets in Italy (down 0.17 mmtonnes) partially offset by higher retail and wholesale sales in the rest of Europe (up 60 ktonnes or 2.9%). The 340 ktonnes impact on retail sales in Italy due to the divestment of Italiana Petroli was partially offset by Enis ongoing supply of significant volumes of fuels and other products to the divested company under a five-year supply contract. Sales of refined products on the Agip branded network in Italy (2.24 mmtonnes) declined by 50 ktonnes due to competitive pressures. Sales of refined products on the retail markets in the rest of Europe (1.03 mmtonnes) increased principally in Central Eastern Europe in connection with the acquisition and lease of service stations. Nine months Refining throughputs on own account for the first nine months of 2006 in Italy and outside Italy (27.79 mmtonnes) declined 750 ktonnes (down 2.6%) from the first nine months of 2005, reflecting lower throughputs at the Sannazzaro and Livorno refineries due to planned maintenance standstills and for the accident occurred at Priolo in April. These declines were partially offset by higher throughputs at the Gela and Venice refineries. In the first nine months refineries worked at full capacity. Sales of refined products for the first nine months were 37.95 mmtonnes, in line with the first nine months of 2005, the 220 ktonnes decline on retail and wholesale markets in Italy was offset by the 210 ktonnes increase in the rest of Europe. The 1.3 mmtonnes reduction in retail sales volumes due to the divestment of the entire share capital of Italiana Petroli which occurred in September 2005 was offset by Enis ongoing supply of significant volumes of fuels and other products to the divested company under a five-year supply contract. Sales on the Agip branded network in Italy were 6.50 mmtonnes, down 50 ktonnes due to competitive pressure. Market share of the Agip branded network (29.4% in the first nine months of 2006) declined slightly from the first nine months of 2005 (29.6%). Sales volumes of refined products on retail markets in the rest of Europe increased by 90 ktonnes, or 3.3%,

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reflecting principally higher sales volumes in Germany and Spain. Sales on wholesale markets in Italy (7.48 mmtonnes) declined by 170 ktonnes from the first nine months of 2005, in particular in fuel oil and diesel fuel. Sales on wholesale markets in the rest of Europe increased by 100 ktonnes, up 3.3%, due to higher volumes sold in Germany and Spain.

PETROCHEMICALS

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,599 — (51 | ) | 1,743 — 31 | | 144 — 82 | .. | Net sales from operations — Operating
profit | 4,598 — 165 | | 5,083 — 100 | | 485 — (65 | ) | 10.5 — (39.4 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (12 | ) | 5 | | 17 | | Exclusion of inventory holding (gain) loss | (19 | ) | (56 | ) | (37 | ) | | |
| (63 | ) | 36 | | 99 | .. | Replacement cost operating profit | 146 | | 44 | | (102 | ) | (69.9 | ) |
| 20 | | 1 | | (19 | ) | Exclusion of special items: | 41 | | 21 | | (20 | ) | | |
| | | 4 | | 4 | | -
provision for redundancy incentives | | | 5 | | 5 | | | |
| 25 | | | | (25 | ) | - provision to the reserve for contingencies | 30 | | 20 | | (10 | ) | | |
| | | | | | | -
impairments | 18 | | | | (18 | ) | | |
| (5 | ) | (3 | ) | 2 | | - other | (7 | ) | (4 | ) | 3 | | | |
| (43 | ) | 37 | | 80 | .. | Adjusted operating profit | 187 | | 65 | | (122 | ) | (65.2 | ) |

Results Third quarter In the third quarter of 2006 replacement cost operating income amounted to euro 36 million as compared to a replacement cost operating loss of euro 63 million in the third quarter of 2005. The euro 99 million improvement was due to higher product selling margins, mainly the cracker margin, and, to a lower extent, the aromatics business. These positive factors were offset in part by the impact of the accident occurred at the Priolo refinery in April in terms of lower production. Nine months In the first nine months of 2006 replacement cost operating profit amounted to euro 44 million with a euro 102 million decline (down 69.9%) from the first nine months of 2005, due mainly to lower product selling margins in the first and second quarter affecting all businesses with the exception of the polyethylene business. Such trend in selling margins was due to increases in the cost of oil-based feedstocks not transferred to selling prices. Results for the nine months were also adversely impacted by the accident occurred at the Priolo refinery in April resulting in lower product availability. These negative factors were offset in part by the positive effect of Enis sales mix along with an improved industrial and commercial performance. Special charges for the first nine months of 2006 of euro 21 million concerned essentially provisions to the risk reserve.

Product availability and sales

Third quarter (ktonnes) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,824	1,728	(96	)	(5.3	)	Production	5,403	5,283	(120	)	(2.2	)
1,414	1,261	(153	)	(10.8	)	Sales	4,087	3,941	(146	)	(3.6	)
757	680	(77	)	(10.2	)	Basic petrochemicals	2,276	2,100	(176	)	(7.7	)
256	248	(8	)	(3.1	)	Styrene
and elastomers	774	763	(11	)	(1.4	)
401	333	(68	)	(17.0	)	Polyethylene	1,037	1,078	41		4.0

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Third quarter In the third quarter of 2006 sales of petrochemical products (1,261 ktonnes) decreased by 153 ktonnes from the third quarter of 2005 (down 10.8%), due mainly to lower product availability related to the slow recovery of the Priolo cracker resulting from the accident occurred in April 2006 to the nearby refinery which also led to a decline in polyethylene production in Sicily. These negatives were offset in part by positive sales in intermediates (cycloexanol) and styrenes. Petrochemical production (1,728 ktonnes) declined by 96 ktonnes from the third quarter of 2005 (or 5.3%) in particular due to the slow recovery of the Priolo cracker, offset by higher production at Porto Marghera and Feluy. Nine months In the nine months of 2006 sales of petrochemical products (3,941 ktonnes) declined from the nine months of 2005 (down 3.6%). Declines concerned basic petrochemicals (down 7.7%), due to lower feedstock availability, resulting from the outage of the Priolo cracker as a consequence of the accident occurred in late April at the nearby refinery, and styrenes (down 2.1%) related to the shutdown of the Ravenna ABS plant in the second quarter of 2005 and to weak demand. Increases concerned polyethylene (up 4%) and aromatics (in particular xylenes up 8.4%) due to higher demand. Petrochemical production (5,283 ktonnes) declined from the first nine months of 2005 (down 2.2%). Lower cracker production due to the standstill of the Priolo refinery was offset in part by higher production at Porto Marghera, Sarroch and Dunkerque.

ENGINEERING AND CONSTRUCTION

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,568	1,930	362	23.1	Net sales from operations	3,924	5,010	1,086	27.7
60	145	85	141.7	Operating
profit	172	356	184	107.0
				Exclusion of special items
60	145	85	141.7	Adjusted operating profit	172	356	184	107.0

Results Third quarter Operating profit for the third quarter of 2006 was euro 145 million, up euro 85 million from the second quarter of 2005. This increase was recorded in particular in the following areas: (i) Onshore, due to higher activity related essentially to the start-up of some large projects acquired in 2005; (ii) Offshore drilling, due to higher tariffs for the Scarabeo 3 and Scarabeo 5 semisubmersible platforms and higher activity levels of the Saipem 10000 drilling ship and Perro Negro 5 jack-up. Nine months Operating profit for the first nine months of 2006 was euro 356 million, up euro 184 million from the first nine months of 2005. This increase was recorded in particular in the following areas: (i) Onshore due to higher activity related essentially to the start-up of some large projects acquired in 2005; (ii) Offshore, due to higher activity in the Caspian region; (iii) Offshore drilling, due to higher tariffs for the Scarabeo 3 and Scarabeo 5 semisubmersible platforms and higher activity levels of the drilling vessel Saipem 10000 and Perro Negro 5 jack-up. Among the main orders acquired in the first nine months of 2006 were: an EPC contract for Saudi Aramco for the construction of four trains for gas and crude separation with a total capacity of 1,200 kbbl/d and facilities for production within the development of the onshore Khursaniyah field in Saudi Arabia; a contract for the conversion of an oil tanker into an FPSO unit with production capacity of 60 kbbl/d and storage capacity of 1,800 kbbl for the development of the Gimboa field offshore Angola at a depth of 700 meters for Sonangol P&P; an EPIC contract for Burullus Gas Co for the construction of underwater systems for the development of eight new wells within the expansion plan of the Scarab/Saffron and Simian fields offshore the Nile Delta;

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(million euro) Nine months

2005 2006 Change % Ch.

Orders acquired (1)	6,815	8,604	1,789	26.3
Offshore
construction	2,442	2,860	418	17.1
Onshore construction	4,058	4,179	121	3.0
Offshore
drilling	186	1,264	1,078	579.6
Onshore drilling	129	301	172	133.3
Eni	623	1,578	955	153.3
Third parties	6,192	7,026	834	13.5
Italy	544	700	156	28.7
Outside Italy	6,271	7,904	1,633	26.0

(million euro) Nine months

31.12.2005 30.09.2006 Change % Ch.

Order backlog (1)	10,122	12,914	2,792	27.6
Offshore
construction	3,721	4,268	547	14.7
Onshore construction	5,721	6,852	1,131	19.8
Offshore
drilling	382	1,381	999	261.5
Onshore drilling	298	413	115	38.6
Eni	695	1,885	1,190	171.2
Third parties	9,427	11,029	1,602	17.0
Italy	1,209	1,362	153	12.7
Outside Italy	8,913	11,552	2,639	29.6

(1) Includes the Bonny project for euro 5 million in orders acquired and euro 110 million in order backlog.

a 16-month long contract for the use of the semisubmersible drilling platform Scarabeo 7 in Nigeria for Exxon Mobil. Orders acquired amounted to euro 8,604 million, of these projects to be carried out outside Italy represented 92%, while orders from Eni companies amounted to 18% of the total. Enis order backlog was euro 12,914 million at 30 September 2006 (euro 10,122 million at 31 December 2005). Projects to be carried out outside Italy represented 89% of the total order backlog, while orders from Eni companies amounted to 15% of the total.

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Non-GAAP measures Reconciliation of reported operating profit and net profit to results on a replacement cost basis and on an adjusted basis

Adjusted operating profit and net profit are before inventory holding gains or losses and special items. Information on adjusted operating profit and net profit is presented to help distinguish the underlying trends for the companys core businesses and to allow financial analysts to evaluate Enis trading performance on the basis of their forecasting models. These financial measures are not GAAP measures under either IFRS or U.S. GAAP; they are used by management in evaluating Group and Divisions performance. Replacement cost net profit and operating profit reflect the current cost of supplies. The replacement cost net profit for the period is calculated by excluding from the historical cost net profit the inventory holding gain or loss, which is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold in the period calculated using the weighted-average cost method of inventory accounting. Certain infrequent or unusual incomes or charges are recognized as special items because of their significance. Special items include also certain amounts not reflecting the ordinary course of business, such as environmental provisions or restructuring charges, and asset impairments or write ups and gains or losses on divestments even though they occurred in past exercises or are likely to occur in future ones. For a reconciliation of adjusted operating profit and net profit to reported operating profit and net profit see tables below.

(million euro)
Third
quarter 2006

E&P G&P R&M Petrochemicals Engineering and Construction Other activities Corporate and financial companies Unrealized profit in inventory Group

| Reported operating
profit | 4,041 | 592 | | 250 | 31 | | (185 | ) | (65 | ) | 19 | 4,828 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Exclusion
of inventory holding (gains) losses | | (6 | ) | 83 | 5 | | | | | | | 82 |
| Replacement cost
operating profit | 4,041 | 586 | | 333 | 36 | 145 | (185 | ) | (65 | ) | 19 | 4,910 |
| Exclusion
of special items | | | | | | | | | | | | |
| of which: | | | | | | | | | | | | |
| Non-recurring (income) charges | | 24 | | | | | | | | | | 24 |
| Other special
charges: | 54 | 9 | | 30 | 1 | | 91 | | 8 | | | 193 |
| environmental
charges | | 3 | | 23 | | | 12 | | | | | 38 |
| asset impairments | 48 | | | | | | 6 | | | | | 54 |
| gains
on disposal of assets | 3 | | | | | | | | | | | 3 |
| provisions to the
reserve for contingencies | | | | 1 | | | 53 | | | | | 54 |
| provision
for redundancy incentives | 3 | 5 | | 6 | 4 | | 15 | | 2 | | | 35 |
| other | | 1 | | | (3 | ) | 5 | | 6 | | | 9 |
| Special items of operating profit | 54 | 33 | | 30 | 1 | | 91 | | 8 | | | 217 |
| Adjusted operating
profit | 4,095 | 619 | | 363 | 37 | 145 | (94 | ) | (57 | ) | 19 | 5,127 |
| Reported net profit pertaining to Eni | | | | | | | | | | | | 2,422 |
| Exclusion of inventory holding (gains) losses | | | | | | | | | | | | 30 |
| Replacement cost net profit
pertaining to Eni | | | | | | | | | | | | 2,452 |
| Exclusion non-recurring (income) charges | | | | | | | | | | | | 19 |
| Exclusion
other special charges | | | | | | | | | | | | 149 |
| Adjusted net profit
pertaining to Eni | | | | | | | | | | | | 2,620 |

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Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

(million euro)
Third
quarter 2005

E&P G&P R&M Petrochemicals Engineering and Construction Other activities Corporate and financial companies Unrealized profit in inventory Group

Reported operating profit	3,682	525		663		(51	)	60	(378	)	(125	)	(106	)	4,270
Exclusion
of inventory holding (gains) losses		(65	)	(428	)	(12	)								(505	)
Replacement cost operating
profit	3,682	460		235		(63	)	60	(378	)	(125	)	(106	)	3,765
Exclusion of special items
of which:
Non-recurring (income) charges
Other special charges:	132	8		113		20			283		125				681
environmental
charges		6		118					173						297
asset impairments	132								24						156
gains
on disposal of assets
provisions to the
reserve for contingencies				14		25			87		119				245
provision
for redundancy incentives		2		2					3		6				13
other				(21	)	(5	)		(4	)					(30	)
Special items of operating profit	132	8		113		20			283		125				681
Adjusted operating profit	3,814	468		348		(43	)	60	(95	)			(106	)	4,446
Reported net profit pertaining to Eni															2,340
Exclusion of inventory holding (gains) losses															(317	)
Replacement cost net profit pertaining to Eni															2,023
Exclusion of special items															423
Adjusted net profit
pertaining to Eni															2,446

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Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

(million euro)
Nine
months 2006

E&P G&P R&M Petrochemicals Engineering and Construction Other activities Corporate and financial companies Unrealized profit in inventory Group

Reported operating profit	12,439			705		100		(401	)	(207	)	(121	)	15,370
Exclusion
of inventory holding (gains) losses		(26	)	(171	)	(56	)							(253	)
Replacement cost operating
profit	12,439	2,473		534		44	356	(401	)	(207	)	(121	)	15,117
Exclusion of special items
of which:
Non-recurring (income) charges		24												24
Other special charges:	129	116		108		21		179		20				573
environmental
charges		42		84				64						190
asset impairments	180	51		1				10						242
gains
on disposal of assets	(54	)												(54	)
provisions to the
reserve for contingencies				4		20		75						99
provision
for redundancy incentives	3	22		17		5		16		14				77
other		1		2		(4	)	14		6				19
Special items of operating profit	129	140		108		21		179		20				597
Adjusted operating profit	12,568	2,613		642		65	356	(222	)	(187	)	(121	)	15,714
Reported net profit
pertaining to Eni														7,697
Exclusion of inventory holding (gains) losses														(180	)
Replacement cost net profit
pertaining to Eni														7,517
Exclusion non-recurring (income) charges														19
Exclusion other special charges														521
Adjusted net profit
pertaining to Eni														8,057

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Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

(million euro)
Nine
months 2005

E&P G&P R&M Petrochemicals Engineering and Construction Other activities Corporate and financial companies Unrealized profit in inventory Group

Reported operating profit	9,031	2,680		1,528		165		(637	)	(336	)	(172	)	12,431
Exclusion
of inventory holding (gains) losses		(95	)	(887	)	(19	)							(1,001	)
Replacement cost operating
profit	9,031	2,585		641		146	172	(637	)	(336	)	(172	)	11,430
Exclusion of special items
of which:
Non-recurring (income) charges
Other special charges:	291	56		194		41		433		182				1,197
environmental
charges		28		180				267		46				521
asset impairments	290					18		28						336
gains
on disposal of assets
provisions to the
reserve for contingencies				31		30		130		119				310
provision
for redundancy incentives	1	5		9				3		17				35
other		23		(26	)	(7	)	5						(5	)
Special items of operating profit	291	56		194		41		433		182				1,197
Adjusted operating profit	9,322	2,641		835		187	172	(204	)	(154	)	(172	)	12,627
Reported net profit
pertaining to Eni														6,683
Exclusion
of inventory holding (gains) losses														(628	)
Replacement cost net profit
pertaining to Eni														6,055
Exclusion
of special items														800
Adjusted net profit
pertaining to Eni														6,855

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Contents

ENI REPORT ON THE THIRD QUARTER OF 2006

Special items

Third quarter (million euro) Nine months

2005 2006 2005 2006

| | | | | Exclusion of special
items: | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | of
which: | | | | |
| | | 24 | | Non-recurring (income)
charges | | | 24 | |
| 681 | | 193 | | Other special charges | 1,197 | | 573 | |
| 297 | | 38 | | environmental
charges | 521 | | 190 | |
| 156 | | 54 | | asset
impairments | 336 | | 242 | |
| | | 3 | | gains on disposal
of assets | | | (54 | ) |
| 245 | | 54 | | provisions
to the reserve for contingencies | 310 | | 99 | |
| 13 | | 35 | | provision for
redundancy incentives | 35 | | 77 | |
| (30 | ) | 9 | | other | (5 | ) | 19 | |
| 681 | | 217 | | Special items of
operating profit | 1,197 | | 597 | |
| (107 | ) | (70 | ) | Financial
expense (income) and expense (income) from investments | (105 | ) | (84 | ) |
| 574 | | 147 | | Non-recurring items
before income taxes | 1,092 | | 513 | |
| (151 | ) | 21 | | Income
taxes | (292 | ) | 27 | |
| 423 | | 168 | | Total special items | 800 | | 540 | |

Adjusted operating profit

Third quarter (million euro) Nine months

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 3,814 | | 4,095 | | 281 | | 7.4 | Adjusted operating
profit — Exploration
& Production | 9,322 | | 12,568 | | 3,246 | | 34.8 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 468 | | 619 | | 151 | | 32.3 | Gas & Power | 2,641 | | 2,613 | | (28 | ) | (1.1 | ) |
| 348 | | 363 | | 15 | | 4.3 | Refining
& Marketing | 835 | | 642 | | (193 | ) | (23.1 | ) |
| (43 | ) | 37 | | 80 | | .. | Petrochemicals | 187 | | 65 | | (122 | ) | (65.2 | ) |
| 60 | | 145 | | 85 | | 141.7 | Engineering
and Construction | 172 | | 356 | | 184 | | 107.0 | |
| (95 | ) | (94 | ) | 1 | | 1.1 | Other activities | (204 | ) | (222 | ) | (18 | ) | (8.8 | ) |
| | | (57 | ) | (57 | ) | .. | Corporate
and financial companies | (154 | ) | (187 | ) | (33 | ) | (21.4 | ) |
| (106 | ) | 19 | | 125 | | | Unrealized profit in inventory | (172 | ) | (121 | ) | 51 | | | |
| 4,446 | | 5,127 | | 681 | | 15.3 | | 12,627 | | 15,714 | | 3,087 | | 24.4 | |

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Contents

| ● |
| --- |
| Società per Azioni Headquarters: Rome, Piazzale Enrico Mattei, 1 Capital Stock: euro 4,005,358,876 fully paid Tax identification number 00484960588 Branches: San Donato Milanese (Milan) - Via Emilia, 1 San Donato Milanese (Milan) - Piazza Ezio Vanoni, 1 |
| Investor Relations Piazza Ezio Vanoni, 1 - 20097 San Donato Milanese (Milan) Tel. +39-0252051651 - Fax +39-0252031929 e-mail: [email protected] Internet Home page: http://www.eni.it Rome office telephone : +39-0659821 Toll-free number: 800940924 e-mail: [email protected] ADRs/Depositary Morgan Guaranty Trust Company of New York ADR Department 60 Wall Street (36 th Floor) New York, New York 10260 Tel. 212-648-3164 ADRs/Transfer agent Morgan ADR Service Center 2 Heritage Drive North Quincy, MA 02171 Tel. 617-575-4328 Design: Opera Cover: Grafica Internazionale - Rome Layout and supervision: Studio Joly Srl
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