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Derivative financial instruments
 12 Months Ended
Dec. 31, 2018
Disclosure Of Derivative Financial Instruments [Abstract]  
Disclosure Of Detailed Information Of Derivative Financial Instruments [Text Block]
23 Derivative financial instruments
 
 
 
December 31, 2018
 
 
December 31, 2017
 
(€ million)
 
Fair value
asset
 
 
Fair value
liability
 
 
Level of Fair
value
 
 
Fair value
asset
 
 
Fair value
liability
 
 
Level of Fair
value
 
Non-hedging derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives on exchange rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Currency swap
 
 
99
 
 
 
46
 
 
 
2
 
 
 
170
 
 
 
86
 
 
 
2
 
- Interest currency swap
 
 
14
 
 
 
71
 
 
 
2
 
 
 
41
 
 
 
45
 
 
 
2
 
- Outright
 
 
3
 
 
 
5
 
 
 
2
 
 
 
3
 
 
 
5
 
 
 
2
 
 
 
 
116
 
 
 
122
 
 
 
 
 
 
 
214
 
 
 
136
 
 
 
 
 
Derivatives on interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Interest rate swap
 
 
18
 
 
 
6
 
 
 
2
 
 
 
9
 
 
 
5
 
 
 
2
 
 
 
 
18
 
 
 
6
 
 
 
 
 
 
 
9
 
 
 
5
 
 
 
 
 
Derivatives on commodities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Future
 
 
1,060
 
 
 
1,107
 
 
 
1
 
 
 
796
 
 
 
771
 
 
 
1
 
- Over the counter
 
 
306
 
 
 
284
 
 
 
2
 
 
 
81
 
 
 
97
 
 
 
2
 
- Other
 
 
1
 
 
 
5
 
 
 
2
 
 
 
1
 
 
 
2
 
 
 
2
 
 
 
 
1,367
 
 
 
1,396
 
 
 
 
 
 
 
878
 
 
 
870
 
 
 
 
 
 
 
 
1,501
 
 
 
1,524
 
 
 
 
 
 
 
1,101
 
 
 
1,011
 
 
 
 
 
Trading derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives on commodities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Over the counter
 
 
992
 
 
 
1,031
 
 
 
2
 
 
 
683
 
 
 
829
 
 
 
2
 
- Future
 
 
367
 
 
 
263
 
 
 
1
 
 
 
395
 
 
 
390
 
 
 
1
 
- Options
 
 
80
 
 
 
71
 
 
 
2
 
 
 
133
 
 
 
114
 
 
 
2
 
 
 
 
1,439
 
 
 
1,365
 
 
 
 
 
 
 
1,211
 
 
 
1,333
 
 
 
 
 
Cash flow hedge derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives on commodities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Over the counter
 
 
311
 
 
 
196
 
 
 
2
 
 
 
227
 
 
 
21
 
 
 
2
 
- Future
 
 
26
 
 
 
15
 
 
 
1
 
 
 
35
 
 
 
 
 
 
 
1
 
 
 
 
337
 
 
 
211
 
 
 
 
 
 
 
262
 
 
 
21
 
 
 
 
 
Option embedded in convertible bonds
 
 
21
 
 
 
21
 
 
 
2
 
 
 
16
 
 
 
16
 
 
 
2
 
Gross amount
 
 
3,298
 
 
 
3,121
 
 
 
 
 
 
 
2,590
 
 
 
2,381
 
 
 
 
 
Offsetting
 
 
(1,636
)
 
 
(1,636
)
 
 
 
 
 
 
(1,279
)
 
 
(1,279
)
 
 
 
 
Net amount
 
 
1,662
 
 
 
1,485
 
 
 
 
 
 
 
1,311
 
 
 
1,102
 
 
 
 
 
Of which:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- current
 
 
1,594
 
 
 
1,445
 
 
 
 
 
 
 
1,231
 
 
 
1,011
 
 
 
 
 
- non-current
 
 
68
 
 
 
40
 
 
 
 
 
 
 
80
 
 
 
91
 
 
 
 
 
Derivative fair values were estimated on the basis of market quotations provided by primary info-provider or, alternatively, appropriate valuation techniques generally adopted in the marketplace.
Fair values of non-hedging derivatives consisted of derivatives that did not meet the formal criteria to be designated as hedges under IFRS.
Fair values of trading derivatives consisted of derivatives entered for trading purposes and proprietary trading.
Fair value of cash flow hedge derivatives related to commodity hedges entered by the Gas & Power segment. These derivatives were entered into to hedge variability in future cash flows associated with highly probable future sale transactions of gas or electricity or on already contracted sales due to different indexation mechanism of supply costs versus selling prices. A similar scheme applies to exchange rate hedging derivatives. The effects of the measurement at fair value of cash flow hedge derivatives are given in note
25
 — Shareholders’ equity and in note
29
 — Operating expenses. Information on hedged risks and hedging policies is disclosed in note
27
 — Guarantees, commitments and risks — Risk factors.
Options embedded in convertible bonds of  €
21
million related to equity-linked cash settled.
More information is disclosed in note 18 — Financial liabilities.
The offsetting of financial derivatives related to the Gas & Power segment.
During the
2018
, there were no transfers between the different hierarchy levels of fair value.
Hedging derivative instruments are disclosed below:
 
 
 
December 31, 2018
 
(€ million)
 
Nominal
amount of the
hedging
instrument
 
 
Change in fair
value
(effective hedge)
 
 
Change in fair
value
(ineffective
hedge)
 
Cash flow hedge derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives on commodity
 
 
 
 
 
 
 
 
 
 
 
 
- Over the counter
 
 
3,528
 
 
 
404
 
 
 
2
 
- Future
 
 
71
 
 
 
(6
)
 
 
(2
)
 
 
 
3,599
 
 
 
398
 
 
 
 
 
 
In
2018
, the exposure to the exchange rate risk deriving from securities denominated in U.S. dollars included in the strategic liquidity portfolio amounting to €
1,154
million was hedged by using, in a fair value hedge relationship, negative exchange differences for €
35
 
m
illion resulting on a portion of bonds denominated in U.S. dollars amounting to €
1,140
million.
The breakdown of the underlying asset or liability by type of risk hedged under cash flow hedge is provided below:
 
 
December 31, 2018
 
(€ million)
 
Change of the underlying
asset used for the
calculation of 
hedging ineffectiveness
 
 
CFH reserve
 
 
Reclassification
adjustments
 
Cash flow hedge
 
 
 
 
 
 
 
 
 
 
 
 
Commodity price risk
 
 
 
 
 
 
 
 
 
 
 
 
- Forecast sales
 
 
(389)
 
 
(13)
 
 
642
 
 
 
 
(389
)
 
 
(13
)
 
 
642
 
 
 
Eni’s results of operations are affected by fluctuations in the price of commodities. In order to manage commodity price risk, Eni uses derivatives traded on the organized markets MTF, OTF and derivatives traded over the counter (swaps, forward, contracts for differences and options on commodities) with the underlying commodities being crude oil, gas, refined products, electricity or emission certificates that are not settled through physical delivery of the underlying asset but are designated as hedging instruments in a cash flow hedge relation.
The existence of a relationship between hedged item and hedging instrument aimed to compensate its changes in value and the relating hedging capability not affected by the level of credit risk of the counterparty are verified for qualifying the operation as hedge.
The definition of the relationship between the quantity of the hedged item and the quantity of the hedging instrument (the so-called hedge ratio) is defined consistently with the entity’s risk management objectives, under a defined risk management strategy.
The hedging relationship is discontinued when it ceases to meet the qualifying criteria and the risk management objectives on the basis of which it was qualified as for hedge accounting.
More information is reported in note
27
 — Guarantees, Commitments and Risks — Risk factors.
Effects recognized in other operating profit (loss)
Other operating profit (loss) related to derivative financial instruments on commodity was as follows:
(€ million)
 
2018
 
 
2017
 
 
2016
 
Net income (loss) on cash flow hedging derivatives
 
 
 
 
 
 
12
 
 
 
(1
) 
Net income (loss) on other derivatives
 
 
129
 
 
 
(44
)
 
 
17
 
 
 
 
129
 
 
 
(32
)
 
 
16
 
 
Net income (loss) on cash flow hedging derivatives related to the ineffective portion of the hedging relationship on commodity derivatives was recognized through profit and loss in the Gas & Power segment.
Net income (loss) on other derivatives included: (i) the fair value measurement and settlement of commodity derivatives which do not meet the formal criteria to be treated in accordance with hedge accounting under IFRS as they related to net exposure to commodity risk and derivatives for trading purposes and proprietary trading amounting to a net income of  €
129
million (net loss of  €
44
million in
2017
and net income of  €
36
million in
2016)
; and (ii) the fair value valuation at certain derivatives embedded in the pricing formulas of long-term gas supply contracts of the Exploration & Production segment amounting to a net loss of  €
19
million in
2016
.
Effects recognized in finance income (loss)
Finance income (loss) on derivative financial instruments consisted of the following:
(€ million)
 
2018
 
 
2017
 
 
2016
 
Derivatives on exchange rate
 
 
(329
)
 
 
809
 
 
 
(494
)
Derivatives on interest rate
 
 
22
 
 
 
28
 
 
 
(12
)
Options
 
 
 
 
 
 
 
 
 
 
24
 
 
 
 
(307
)
 
 
837
 
 
 
(482
)
Net income from derivatives was recognized in connection with fair value valuation of certain derivatives which do not meet the formal criteria to be treated in accordance with hedge accounting under IFRS as they are entered into for amounts equal to the net exposure to exchange rate risk and interest rate risk, and as such, they cannot be referred to specific trade or financing transactions. Exchange rate derivatives were entered into in order to manage exposures to foreign currency exchange rates arising from the pricing formulas of commodities in the Gas & Power segment.
Finance income (expense) with related parties is disclosed in note
36
 — Transactions with related parties.