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Investments

12 Months Ended

Dec. 31, 2017

20 Investments

Equity-accounted investments

	2017												2016
(€ million)	Investments in unconsolidated entities controlled by Eni			Joint ventures			Associates			Total			Investments in unconsolidated entities controlled by Eni			Joint ventures			Associates			Total
Book amount at the beginning of the year		168			2,675			1,197			4,040			175			1,275			1,403			2,853
Additions and subscriptions					63			444			507			8			1,085			63			1,156
Divestments and reimbursements								(462	)		(462	)								(138	)		(138	)
Share of profit of equity-accounted investments		9			49			66			124			10			50			17			77
Share of loss of equity-accounted investments		(7	)		(340	)		(6	)		(353	)		(8	)		(208	)		(154	)		(370	)
Deduction for dividends		(32	)		(41	)		(13	)		(86	)		(2	)		(45	)		(53	)		(100	)
Changes in the scope of consolidation		2									2			5			564						569
Currency translation differences		(13	)		(127	)		(128	)		(268	)		5			12			29			46
Other changes		(11	)		53			(35	)		7			(25	)		(58	)		30			(53	)
Book amount at the end of the year		116			2,332			1,063			3,511			168			2,675			1,197			4,040

In 2017, acquisitions and capital increases of €507 million mainly related to capital contributions to companies engaged in the execution of industrial projects in the interest of Eni: (i) Coral FLNG Ltd (€443 million) which is engaged in the development of a floating production and storage unit of LNG in natural gas-rich Area 4 offshore Mozambique; and (ii) Lotte Versalis Elastomers Co Ltd (€45 million) which is engaged in the production of premium elastomers in South Korea.

Divestments and reimbursements of €462 million related to: (i) the sale of a 25% stake in Coral FLNG SA for €222 million following closing of the sale to ExxonMobil of 50% of the interest held by Eni in Area 4 in Mozambique; and (ii) capital reimbursements of €165 million relating to Coral FLNG SA, €48 million relating to Angola LNG Ltd and €27 million relating United Gas Derivatives Co.

Eni’s share of profit of equity-accounted investments and deductions for dividends pertained to the following entities:

	2017						2016
(€ million)	Share of profit of equity- accounted investments		Deduction for dividends		% of the investment		Share of profit of equity- accounted investments		Deduction for dividends		% of the investment
Angola LNG Ltd		45				13.60
Eni BTC Ltd				27		100.00		6				100.00
PetroJunín SA		26				40.00		30				40.00
Unimar Llc		3		24		50.00				16		50.00
United Gas Derivatives Co		16		12		33.33		14		14		33.33
Gas Distribution Company of Thessaloniki – Thessaly SA		9		12		49.00		10		10		49.00
PetroSucre SA										30		26.00
Other investments		25		11				17		30
		124		86				77		100

Eni’s share of losses of equity-accounted investments related to the following entities:

	2017				2016
(€ million)	Share of loss of equity- accounted investments		% of the investment		Share of loss of equity- accounted investments		% of the investment
Cardón IV SA		184		50.00		20		50.00
Saipem SpA		101		31.00		144		30.76
Unión Fenosa Gas SA		28		50.00				50.00
Matrìca SpA		17		50.00		4		50.00
PetroSucre SA						92		26.00
Angola LNG Ltd						62		13.60
PetroBicentenario SA						26		40.00
Other investments		23				22
		353				370

Considering risks and uncertainties in connection with the financial outlook of Venezuela, the Company assessed the recoverability of the book value of two equity-accounted entities that are currently engaged in the execution of oil&gas projects in the Country. The two projects are the development of the Perla offshore gas field, operated by the local company Cardón IV, a joint venture with another international oil company, and of the PetroJunín crude oil onshore field, operated by PetroJunín, a joint venture with the state oil company PDVSA under the regime of “Empresa Mixta”. The carrying amounts before any valuation allowance of these two assets comprised current trade receivables and non-current activities, including tangible and intangible assets, equity investments and financing loans related to operations, for an amount of approximately €2 billion. To assess the recoverability of those assets, management performed a review based on empirical evidence and official statistics of the most recent financial crises of sovereign states. On this basis and considering that Eni's gas supplies are strategic and vital to the Country, in determining the recoverable value of the aforementioned assets, management carried out a risk appreciation by projecting a deferral in the timing of credit collection. Furthermore, considering the deterioration in the country's operating environment and the financial risks of recovering the invested capital, management reclassified the proved undeveloped reserves of Perla to the unproved category (315 mmBOE) in line with the US SEC rules on the recognition of proved reserves. Based on these drivers, in the 2017 financial statements management recorded impairment losses at Eni's above mentioned assets in Venezuela for an overall amount of €758 million.

The accounting under the equity method of Saipem SpA resulted in a loss of €101 million due to the recognition by the investee of restructuring costs, losses from legal proceedings and impairment losses of tangible assets mainly in the offshore drilling business which is impacted by the oil scenario. As of December 31, 2017, the net book value of Eni’s investment in Saipem of €1,413 million was aligned with the corresponding share of the equity of the investee. However, the book value exceeded by about 20% the fair value represented by the market capitalization of Saipem. This impairment indicator is reflective of investor uncertainty about the rebalancing of the fundamentals in the oil sector and the timing of recovery in capital expenditures plans by the clients of the Engineering & Construction sector. The reasonableness of the evaluation was stress-tested applying contingencies to turnover levels and contract margins that confirmed the outcomes of the assessment.

Currency translation differences of €268 million were primarily related to translation of entities accounts denominated in U.S. dollar (€189 million).

Other changes related to the impairment of Unión Fenosa Gas SA for €35 million (€84 million in 2016) due to lower profitability prospects.

The net carrying amount of equity-accounted investments was related to the following entities:

	December 31, 2017						December 31, 2016
(€ million)	Net carrying amount		Number of shares held		% of the investment		Net carrying amount		Number of shares held		% of the investment
Investments in unconsolidated entities controlled by Eni
Eni BTC Ltd		63		34,000,000		100.00		106		34,000,000		100.00
Other investments (*)		53						62
		116						168
Joint ventures
Saipem SpA		1,413		308,767,968		31.00		1,497		3,087,679,689		30.76
Unión Fenosa Gas SA		350		273,100		50.00		434		273,100		50.00
PetroJunín SA		210		96,084,000		40.00		211		96,084,000		40.00
Gas Distribution Company of Thessaloniki – Thessaly SA		137		121,092,526		49.00		150		130,491,508		49.00
Lotte Versalis Elastomers Co Ltd		114		30,179,999		50.00		74		19,200,000		50.00
AET – Raffineriebeteiligungsgesellschaft mbH		32		1		33.33
Cardón IV SA								197		8,605		50.00
Unimar Llc								42		50		50.00
Other investments (*)		76						70
		2,332						2,675
Associates
Angola LNG Ltd		802		1,483,352,000		13.60		916		1.551.760.000		13.60
United Gas Derivatives Co		82		2,600,000		33.33		117		950,000		33.33
Novamont SpA		71		6,667		25.00		77		6,667		25.00
Coral FLNG SA		54		2,500,000		25.00
AET – Raffineriebeteiligungsgesellschaft mbH								34		1		33.33
Other investments (*)		54						53
		1,063						1,197
		3,511						4,040

_________

(*)

Each individual amount included herein was lower than €25 million.

Equity-accounted investments by industry segment are disclosed in note 46 — Information by industry segment and by geographical area.

Carrying amounts of equity-accounted investments included differences between the purchase price of the interest acquired and the book value of the corresponding fraction of net equity amounting to €70 million related to Novamont SpA for €43 million and Unión Fenosa Gas SA for €27 million. These surpluses are due to the long-term profitability outlook of these companies.

As of December 31, 2017, the market value of the investments listed in stock markets was as follows:

		Number of shares held				% of the investment				Share price (€)				Market value (€ million)
Saipem SpA			308,767,968				31.00				3.806				1,175

The table below sets out the provisions for losses included in the provisions for contingencies of €182 million (€151 million at December 31, 2016), primarily related to the following equity-accounted investments:

(€ million)	December 31, 2017		December 31, 2016
Industria Siciliana Acido Fosforico – ISAF – SpA (in liquidation)		95		95
Matrìca SpA		38
VIC CBM Ltd		30		34
PetroBicentenario SA		12		6
Société Centrale Eletrique du Congo SA		6		7
Other investments		1		9
		182		151

Other investments

	2017												2016
(€ million)	Investments in unconsolidated entities controlled by Eni			Associates			Other investments - valued at cost			Total			Investments in unconsolidated entities controlled by Eni			Associates			Other investments - valued at fair value			Other investments - valued at cost			Total
Net book amount at the beginning of the year		29			10			237			276			25			10			368			257			660
Additions and subscriptions								3			3			5			3									8
Divestments and reimbursements		(6	)					(13	)		(19	)								(368	)		(31	)		(399	)
Currency translation differences					(1	)		(22	)		(23	)					(2	)					6			4
Other changes		(9	)		(4	)		(5	)		(18	)		(1	)		(1	)					5			3
Value at the end of the year		14			5			200			219			29			10						237			276
Gross book amount at the end of the year		15			5			207			227			30			10						240			280
Accumulated impairment charges		1						7			8			1									3			4

The net carrying amount of other investments of €219 million (€276 million at December 31, 2016) was related to the following entities:

	December 31, 2017						December 31, 2016
(€ million)	Net carrying amount		Number of shares held		% of the investment		Net carrying amount		Number of shares held		% of the investment
Investments in unconsolidated entities controlled by Eni *^()**		14						29
Associates		5						10
Other investments:
- Nigeria LNG Ltd		99		118,373		10.40		112		118,373		10.40
- Darwin LNG Pty Ltd		32		213,995,164		10.99		49		213,995,164		10.99
- other ^(*)		69						76
		200						237
		219						276

__________

(*)

Each individual amount included herein was lower than €25 million.

Additional information is included in note 48 — Other information about investments.