…to the Eni 2020 Strategy Update and First Half Results Conference Call and Q&A session hosted by Mr. Claudio Descalzi, Eni’s CEO and top management. Through the duration of the call, you will be in listen-only mode. [Operator Instructions] I am now handing you over to your host to begin today’s conference call. Thank you..

firstly, we acted strongly to protect the health of our people, contractors, in-house communities; and secondly, we continue to implement our strategy. In terms of our businesses, in the first half, we discovered almost 200 million barrel of resources in Angola, Mexico and the UAE.

The recent Egyptian discovery and appraisal, in Vietnam will further improve this figure. Upstream production was 1.74 million barrel per day minus 5% year-on-year. The reduction was mainly driven by COVID-19 impact and OPEC+ cuts.

Portfolio, price effect and other positive elements were offset by lower gas demand, in particular, in Egypt and the effect of contractual trigger and force majeure in Libya. Mid-downstream performance proved to be robust.

Notwithstanding the COVID-19 impact, both Gas & Power and R&M improved year-on-year, thanks to asset optimization, retail and marketing standardizations and the growing contribution of low-carbon product.

The Gas & Power result was driven by the wholesale business and portfolio optimization, which counterbalance the weakness in LNG demand related to COVID. Retail also performed well even in the context of lower demand and higher default risk.

The R&M result was linked to the optimization of our industrial setup and the growth of biofuel, thanks to the Gela ramp up, while marketing performance was impacted by lockdown. In Renewables, we started the Badamsha wind farm in Kazakhstan, expanded in the U.S., and made our first steps in the wind generation in Italy.

Installed capacity at the end of the first semester was about 250-megawatt. Versalis experienced lower demand and assuming lower margins due to the pandemic. Turning to financials. The company remained free cash positive with adjusted cash flow in excess of capital expenditure by €0.4 billion.

In terms of economic results, upstream EBIT in the first half was €0.2 billion down by €4.2 billion compared to 2019. This reduction is almost entirely explained by the scenario accounting for €3.6 billion, while €0.5 billion is due to the volume mix effect.

Production in 2020 is confirmed at around 1.71 million to 1.76 million barrel of oil equivalent per day. After the OPEC cuts that account for around 40,000 barrel per day in line with previous guidance. In the second half of this year, we will continue the drilling of near-field exploration wells, mainly in Egypt and Norway.

In total, we expect to discover over 300 million barrel of resources at less than $2 per barrel this year. Moving to mid-downstream. The overall result have been very strong, improving by almost 70% compared to last year, more than doubling, excluding scenario and COVID impact.

In particular, our Gas & Power EBIT was robust at €650 million, showing the best first half result over the last 11 years, up about 70% year-on-year driven mainly by the GLP business unit with result of €466 million, more than double versus last year’s.

Thanks to contract optimization, which benefited from high price volatility and a higher contribution for the power business. This strong performance was only partially offset by the lower contribution of LNG business.

In retail, Eni gas e luce delivered a result over €180 million, plus 10% in the period, driven by the growth of the customer base and the higher contribution from non-commodity activities, which more than offset COVID, and mild climate that impacted for more than €60 million.

Overall, the impact of the scenario and COVID on Gas & Power was around €100 million in the period. The Refining & Marketing result was €174 million, almost 2/3rds higher than last year, despite the challenging scenario both in term of margin and lower demand.

In particular, refining was at breakeven due to the positive contribution of around €50 million from the bio business. Thanks to the Gela plant ramp-up. And the resilient marketing result that helped counterbalance the demand reduction related to the lockdown measures.

Finally, the Versalis result was impacted by the plastic demand, in particular, in the automotive sector by lower plant availability. Versalis’s first half result was negative for €130 million. Overall, we expect for 2020 in EBIT contribution of around €800 million from these 3 businesses together, 1/3rd higher than the previous guidance.

Gas & Power guidance increases by over 60%, thanks to the strong performance in the first half. The second half result is expected to be broadly neutral, given a positive retail contribution, where non-commodity business will reach 20% of EBIT.

This will be offset by a weaker result from GLP business, impacted by reduced optimization opportunity as these were realized in the first half.

R&M’s guidance will improve to around €350 million, in particular, thanks to the resilient result from the bio-refineries, while Versalis results will be impacted negatively by the depressed scenario for an additional €100 million.

Turning now to the cash position, in the first half, the adjusted cash flow from operation before working capital was at €3.3 billion, exceeding our CapEx. Excluding scenario in COVID, our cash flow would have improved year-on-year by €0.8 billion.

Looking at 2020, with the new – with new scenario assumptions, we expect a cash flow from operation before working capital in the range of €6.5 billion, in line with our previous guidance. This cash flow generation will more than cover our 2020 CapEx.

We will maintain sizable reserves on liquidity, which are currently around €18 billion, almost 4 times our short-term debt. Our balance sheet remains robust with a leverage at 37% at the end of June. To conclude, this year, we have set out a clear strategic framework for the new Eni to maximize value through the energy transition towards 2050.

We have a new organizational framework and a motivated and highly skilled team that will enable us to deliver this strategy, with Natural Resources focused on selective and sustainable production and Energy Evolution transforming its product mix to sell more decarbonized products to more customers.

And we now have a new financial framework that is resilient in a weaker environment and progressive as we execute our strategy and as Brent recovers. Together, the strategic, organizational and financial framework set out this year will create more sustainable value for our company and all our stakeholders. Thank you very much.

Now, we are ready to answer your question..

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question comes from Oswald Clint of Bernstein. Please go ahead, sir..

Oh, hi, good morning. Thank you. Yeah, just 2 questions, please. First, I mean, I guess when you think about dividends, I imagine you’re looking at buckets like the macro-environment, your own liquidity and underlying business performance, so perhaps, those 3 areas.

So I just wondered, in terms of the change in the dividend today, was it one of those in particular that’s forced this action or all 3 of them that’s caused this change in the policy? And then secondly, you mentioned the variable component, you’ll decide that in July, if oil is above $45.

But in terms of the floor dividend and the progressive nature of that, when do you decide on the shift in the €0.36, please? Thank you..

Thank you. I think that as you mentioned, there are all the [countries] [ph]. All the different variables clearly gave us the opportunity to create a new dividend policy.

Clearly, the forecast for the next 2 years and the best prices that that is for the next 2 years and the COVID impact and the uncertainty on the demand will create altogether the need to review our dividend. But clearly, we didn’t just review our dividend.

That is a process that we started at the end of February, when we changed and we improved our strategy looking at the long term and create value in the long term.

And then, immediately during the COVID, we reacted very rapidly, and we improved our efficiency in terms of CapEx, in terms of OpEx, in terms of variable, fixed cost, G&G, so we had opportunity to have an overall revision of all our cost base.

And only after that, considering this scenario, considering the context, considering the pandemic, we structure this new dividend policy.

For the – Massimo, maybe you can answer for the floor dividend, the timing for the floor?.

Okay. So, Oswald, the timing now, we envisage is July. So as far as the variable component, the Brent price, the average Brent price, each year, we envisage in July, it will be the reference to calculate variable component. And as Claudio said, in the speaking notes, the variable component will be paid entirely in the year, in which it can be accrued.

So if for 2021, for example, the average Brent price we envisage in 2021 sitting at July is $60. We will pay entirely the variable component in September the same year, so 2021.

And even the fixed component that is progressive as it was in the past, in the previous version in our dividend, related mainly to the strategic progress in our – in the implementation in our business plan will be assessed at the same time. So to cut the long story short, in July we will define the dividend that will be paid in the same year..

Okay, super, thank you..

Next question comes from Alastair Syme of Citi. Please go ahead..

Thank you. I just wanted to ask about the impairments and the price revisions you made. And one observation I had is that the price revision you made on gas was about 30%, whereas the price revision you made on oil was about 15%.

So I just wanted to sort of understand why the cut to gas was much deeper? And just to try and relate that back to the point you made earlier and also back in February around the business increasingly migrating the waiting towards gas? How can we sort of align this business? You have deeper gas cuts.

You get more capital going into gas development? Thank you..

Okay. The market is to the fact that on the Brent scenario there is, let’s say, a sustain which is coming from the OPEC activity, which is sustaining the Brent. And this is actually giving us confidence on the Brent scenario.

On the gas, the current supply and demand dynamics, as you can appreciate are broadly indicating, at least for the next couple of years difficult gas scenario. And you see also that from the cut in the LNG exporting from U.S.

because, I mean, the price in this environment is such that even the lower, even the lowest, I would say, cost gas-producing country needs to cut back on the production in order to be sustainable. So let’s say, that is actually explaining why in the short to medium term, we have, let’s say, a lower gas price scenario..

Can I ask on the CapEx and the full year plan? Are the cuts on gas in the upstream not much deeper than the cuts in oil? In terms of the $6 billion cut to upstream?.

Sandro Puliti will answer the question..

Okay. Regarding the cuts on the CapEx that had been applied in 2020, they are mainly located in our projects in Mozambique. So they are certainly related to the gas. And – but in regards also several other projects in most of our countries where there is a mix of gas and oil..

Just to complete the answer. Clearly, we had a mix of cuts in our capital revision. And we reduced or we postponed the giant or the big projects where we have a strong capital allocation. And if you look at our discoveries, see our recent discoveries, all the big giant projects are gas. So for that reason the postponement cover more of this.

So it’s not a question of gas and nor it was a question of postponing all the big capital allocation for the big project, and that is on gas. And so, that is the main reason..

Yeah, sorry, just finally, if I come back to the February presentation, you suggested that by 2030, the upstream business might be sort of 60% weighted towards gas, I think that’s the number you quoted.

Is that still roughly the...?.

Yeah, yeah, that is confirmed completely. So we confirm our targets and this postponement in any case, is not a cancellation of the project. So it’s a postponement to bypass it to be able to bridge these 2 – these couple of years.

So then, for example, as we presented in our presentation, I will show in our presentation, the Indonesian project, that is gas will restart in 2021. So that is an example of postponement. And then, the other project in terms of FID is postponed over 1 or couple of years. So we’ll deliver their production in – after the plan, but clearly, before 2030.

And we have to consider that most of our discoveries are gas, so as gas-producing field. So that target is absolutely confirmed..

Thank you, Claudio..

Your next question is from Alessandro Pozzi of Mediobanca. Please go ahead, sir..

Yeah, good morning all. Thank you for taking my questions. I have one on the CapEx. You announced actually an increase in CapEx in – for green projects. I was wondering, if you can give us a bit more color on which projects you are thinking of accelerating? Also, remaining on this theme, clearly, lots of talks about hydrogen.

I believe you’re involved in bigger and more hydrogen projects in Italy, with carbon capture in as well. I mean, I was wondering, how do you think – how competitive do you think the hydrogen is going to be versus green hydrogen? Thank you..

So thank you. So the first question was related to the green investment. Clearly, what we said during the presentation, we allocated and we gave the main categories that is bio-refineries, renewables and then increase on customers and clients. Clearly, that is – there is a reason.

First of all, because that is one of the main pillars of our strategy, but we had also the demonstration in the last 4 months with COVID, with this big discontinuities, where the bio-refineries helped a lot to recover, also the marketing was not – it was depressed because of lockdown, have allowed to recover the returns of the R&M.

We had a very interesting internal return of these refineries that is about 15%. That will, we believe, where we can increase especially with the feedstock that will be more closer to the refinery in the future and different kind of feedstock, as you know, by 2023.

We will not use anymore palm oil, but different kind of feedstocks and our technology allow us to a really huge number of possible feedstocks that will reduce the logistics cost. So this really is a key point. So, clearly, the bio-refineries that are getting good results, especially in the North Europe market, will be one of the capital allocation.

Renewable, we confirm – and for renewables, we want to link, as we said before, and we accelerate on that. We will be clear – more clear in our strategy, but we want to link our Eni gas e luce, so our retail Gas & Power to the renewables to be able to deliver and sell green products and the number of customers.

Clearly, we’re already a competitive advantage respect to the other oil and gas company because we have more than 9 million clients. We want to reach about 11 million clients in the next plan, and then, growing to more than 20 million.

And that will be a key point in the new strategy to improve the efficiency and to stay far from the fluctuation of the hydrocarbons. So that is what we can say now, then we will give more details in our strategy in 2021. Sorry, you talk about hydrogen. So I was so focused on the first question there, I forgot hydrogen.

You know that we are one of the – the most important producer of hydrogen and consumer, because all our refinery, all our industrial system use hydrogen. And we are working on hydrogen, especially on the blue one, because we have this big opportunity to have a CCS that is very, we can say cheap, because we have everything in place. And it’s huge.

And that will allow us to have a blue hydrogen at very low cost. At the moment, I really think that the blue hydrogen is cheaper than the green one. Maybe that will not be more through in 10 years.

But at the moment, having us all the facilities, all the CCS and the know-how of produced hydrogen, and we have also our internal market and the future [estar] [ph] market. I think that is something where we are putting our effort internal development.

We are starting, and we’re going to test also hydrogen in terms of feedstock for turbine and for power plant that is part of the future. And that clearly is in the cycle of decarbonization of our gas and getting a clean energy..

All right. Thank you..

The next question is from Jon Rigby of UBS. Please go ahead..

Thank you, Claudio. Can I just ask on the dividend and the way you’re looking at the floor? I think – is the mechanism you’ve come up with, I mean, it’s unusual, but it has been talked about in terms of trying to move to an element of fixed and variable remuneration.

But I’m interested in how you will think about calculating the improvement in the underlying business that generates a raise in the floor? And that’s always seem to be the challenge for oil companies, is trying to understand what their sort of through-cycle economic generation, value generation and the resiliency of that? So I’m just interested in that.

And also, whether there’s any – you talk about the floor, whether there’s any risk to that floor, if you’re making a decision in July? And then as is often the want of the oil market is you get some intense volatility in the second half of the year or the first couple of months of the following year when – before you make a decision about your final dividend? The second question is sort of linked, I guess, is you obviously running at a lower CapEx figure at the moment, but with an expectation that you raise CapEx back to 8, and you’ve talked about some flexibility in that CapEx.

So can you just revisit what considerations you have in terms of the annual CapEx figure that you use, given the there’s sort of an implication that 8 is your sort of through cycle spending, but what is it that’s making you decide on 6.5 or lower than 8? Especially, when you’re relatively constructive about an oil price and macro improvement over the coming years and so your any dollars spent now on CapEx are obviously going to remunerate at a better value in 2 to 3 years, when they come on stream? Thanks..

Okay. So your question about the floor and how the floor could be up or down based on the strategic improvement in our performance.

So the floor – the up of this floor is we say, strictly related to the second part of your question, so about the flexibility, because definitely, the floor has been fixed based on the current level of production, the current level of investment. And both are based on the scenario as we assume the price will be in the near future.

But definitely, we are retaining some flexibility, and how to use such a flexibility will depend on the scenario we can see in the next 1, 2 years. So for example, if the oil price will be higher than $48 that is our scenario assumption in 2021, definitely, we are retaining some flexibility to push up our CapEx and push our production.

So more or less – so it’s difficult to give you now an exact figure. But the flexibility we believe we can have in order to react immediately to a better scenario would be in the range of in terms of production, 50,000 boe per day progressively, from 2021 and 2023, investing something in the range of €400 million, €500 million in the next 2 years.

So if the price will be higher, definitely, we will do it and the cash flow contribution will be definitely positive. And this would be one of the key element to evaluate how to progress the floor in our dividend. And definitely, such an evaluation would be taken, as we said, every year, and the first evaluation is in July 2021.

So such an assessment would be performed. We will see the scenario. We will use our flexibility in terms of investment. If positive, we will definitely take into account the additional cash flow, the industrial additional cash flow, not the scenario one.

So in case of a higher scenario, the dividend will be taking advantage on both sides, on the scenario and performance, and we will release the annual amount of the dividend. As far as the down, you said, but what about an oil price below $45.

So certainly, such a remuneration policy, the one that we are announcing today is based on the scenario we are assuming or higher scenario than that. In case of a Brent price lower than $45, certainly, I don’t have a clear answer right now. But definitely, we should evaluate or that is the downturn – for how long, we expect such a downturn could last.

But definitely, we will use the same flexibility I mentioned for an increase in the dividend floor. Definitely, we can use the same flexibility in order to resist, if it’s the case, and to keep the floor at the same level, maybe giving up some additional investment to grow as we are anyway, envisaging in 2022 and 2023..

I want to add something as a comment on what you said that this is an unconventional approach when we look at the dividend, because, normally, it’s very simple and its year-by-year or quarter-by-quarter.

Here, we – our effort this time is so volatile and not clear environment, was to give or is to give the maximum vision and clear – and clear vision and transparency, and all the different value of our structure for the dividend to our investors. We gave a lot of details. It seems, isn’t complicated, but it’s not complicated.

I think it’s very transparent, because we talked for – we gave for 4 years. We give a floor, so how you can calculate that. And then, we give all the different environment on the flexible or on the other component that is a variable component and the buyback.

So our – we aim really to be transparent and be clear in a situation that is very volatile, because if we create no clear situation inside and we have no clear situation in terms of perspective outside, it’s not easy for our investor. Now you know exactly step by step.

In July when you talk about what happened to the floor, are you – how we can calculate the increase of the floor in relation to our strategy plan and the implementation of our strategy. We will be very transparent, because we will communicate, when? July.

And how we are going to explain you, how? We have – say, we have 6 months where we can take a risk. But as Massimo said, we have the flexibility to react, especially very rapidly, as we say, as we did in the last 3, 4 months during a very difficult situation, so we can compensate.

That is clearly a more risk compared to the big effort to be clear and give you a really solid platform to understand what is going to happen to our company in the next years in terms of strategy, action, CapEx, OpEx and capital allocation. That is one of the most important points..

Yeah. I think there’s been a difficulty for investors to square up progressive dividends with the volatility that we’ve seen in oil markets. So I mean, this is one of the solutions to that.

Can I just ask a follow-up? I mean as you increase your investment into non-upstream, I think clearly, an increasing component of what pays the dividend will be your midstream, downstream, your renewables businesses, et cetera. And dividends are a signaling device.

So what will you look at there sort of ongoing ROE, free cash flow generation? What – I mean, it’s – that’s obviously going to be an important element to the decision on your dividend floor, I would guess..

The more important element would be the cash flow. So this will be the basis to evaluate any potential increase.

Certainly, each project, and the one that Claudio mentioned, so bio-refinery clients, renewables will be evaluated on a stand-alone basis, but as far as the remuneration policy, certainly, the cash profile generated in the – in coming years would be the most important one..

Okay. Thank you. And good luck in the new role, Massimo, by the way..

Thank you very much..

The next question is from Irene Himona of Société Générale. Please go ahead..

Thank you. Good morning. I have a couple of questions on the second quarter specifically. Upstream loss was actually deeper than anticipated.

I wonder if you can just talk around the key drivers in that, splitting it between volume price, obviously, the cost I presume, were down? Then secondly, in the opposite direction, in Q2, the downstream results of €73 million profit, very, very strong.

Maybe, you did mention it, but what is the full year guidance, not forget and borrow for the 3 downstream businesses, please, refining, marketing, and chemicals for EBIT? And then finally, any guidance for full year, working capital impacts at your scenario? Thank you..

Luca, you can answer through the first question and upstream losses and main point. And then further downstream, Pino can answer and then Massimo answer for the forecast and the rest..

Okay, regarding the losses for the upstream in the second quarter 2020, we have to account the losses for the OPEC+ cut, that in terms of production are affecting us around 40,000 barrels of oil equivalent per day.

And then, we had also the full effect in the second quarter of the losses due to the COVID situation that are around 130,000 barrels of oil equivalent per day when compared to Q1 of this year. So those are the 2 main elements regarding the losses..

Okay. So Irene, just to give you some color – some additional color on the performance – the best performance we had on the Refining & Marketing, Gas & Power. So – and the effect – the headwind we had, mainly because of the COVID-19. So in – starting from R&M, the refinery had substantially performed in line with the first semester 2019.

Notwithstanding, I would say, a worse scenario in terms of margin, compensating also more or less an €90 million, €100 million of COVID – negative COVID effect because of definitely the utilization of our plants that in April and May and June has been reduced even down to 60%, more or less, especially, because of the oversupply in gasoline.

While the market has been affected as well, but we some way, we succeeded in keeping the margin a bit lower than it was with the loss that has been in the range of €40 million versus the first semester 2019. Talking about the retail, Gas & Power.

So the better performance has been due to the fact that, first of all, we succeeded in increasing our client base. We added up something in the range of 150,000 clients in the first semester. And at the same time, we have been capable to increase the amount of services sold to our customers.

Also, thanks to the subsidies that now are available mainly in Italy, for investment in energy saving. That is something that is becoming more and more an additional business in our retail. So retail would be more and more, as we said, during our strategy.

More and more, I would say, complemented with services that will be aside the sale of just commodities. And the retail gas e luce recorded an increase, notwithstanding, more or less at €30 million, €35 million of loss, because of the COVID. So without such a loss, you see the better results that would have been even more important.

Maybe Cristian could give some color on the GLP in the first semester, and he can elaborate on the guidance?.

Sure. So as we have said before, the first semester has been very volatile environment. So just to name a few, the gas price vis-à-vis last year is 50% downwards and also the oil has been downwards and then upwards. So we have experienced an increased volatility.

And so we were able, notwithstanding the negative impact of the COVID pandemic on the demand, to re-optimize the asset base, the portfolio base, especially in the Gas & Power business, and we anticipated all the, let’s say, value extraction from the flexibility in the first semester, given exactly this volatility.

And so we’re able to capture this, let’s say, trading margins, so to speak, mainly in Europe. To the contrary, let’s say, the LNG environment has been pretty complex.

And so we were able to broadly, let’s say, be in line vis-à-vis last year in terms of results, also leveraging, notwithstanding the scenario leveraging on integration with our upstream production base in order to optimize the operations and to safeguard ourselves for – from possible losses..

Okay. So in terms of full year guidance, I’m making reference to the Slide #11. So the €800 million are mainly based on the contribution from Gas & Power, €650 million and €350 million from Refining & Marketing.

While we expect the chemical business still losing money, even with a slower pace versus the first semester with a total lost on yearly basis of €200 million.

So as far as the Gas & Power, certainly the Eni gas e luche will keep on growing on the same part, likely, even faster, if COVID will allow us to take advantage fully from the client base growth.

And at the same time, we expect that the refinery, mainly the bio-refinery, the positive effect that we recorded in the first half will continue even in the second part of the year. And then you mentioned working capital.

So in terms of working capital in the full year, I can anticipate a number slightly worse than the one that I guided in the previous period. So previously, I said that we were envisaging a capital absorption in the range of a few hundred million in terms of working capital.

Likely, this number would be now assuming a bit higher, I would say, in the range of €600 million and €700 million, because of the probability to have lower pace in payment at year-end because of the crisis, mainly from our partners in upstream, including the national oil companies.

While the performance in terms of payment in our retail and the other businesses is performing even better than what we assumed at the very beginning of the crisis, so in March. And the tax rate, the last question, this year is a very, I would say, it’s too volatile to measure the tax rate.

So I’m afraid to say that the tax rate in 2020 would be quite unreadable. And – but the same exceptionality would be on the cash tax rate that has been guided in the past in the range 30%, now we’re envisaging something in the range of 20%, because of such an extraordinary period. No reason to imagine that on a more steady environment.

So more or less $60 per barrel flat, the tax rate, the adjusted tax rate will be 60%, as has been guided in the past and the cash tax rate will be back in the range of 30%..

Okay. Thank you..

The next question is from Lucas Herrmann of Exane. Please go ahead..

Yeah, good afternoon, gentlemen. I mean, thank you very much for breaking out the growth in decarbonized products and giving us some timeframe around delivery in terms of absolute volume.

I wonder whether you could give us any comments on how you see cash flow from those businesses at an operating level developing over the same period, however? So try and put some financial numbers, the cash flow level, not at free cash level, around the progress that you see in decarbonized products overall? And secondly, I wanted to ask you something on natural carbon solutions.

And just as an important part of your policy of offset, it’s an important part of other’s policy, and I just wonder whether you could give us any indication of how the costs are moving as much as anything, the capturing acreage with which – in which plant whatever related to effectively decarbonize in a natural way, if you all start to gravitate towards the same broad policy? Thanks very much..

So on the first question on the cash flow from our green activities, I think that will be more specific during the strategy in 2021. This is an updated strategy. Clearly, we – when we run our exercise, we run an exercise for all the industrial development, but we’ll be more specific later on at the beginning of the next year.

For the cost of the forestry, I think Massimo or – or sorry, Alessandro Puliti can say something on the natural, natural and forestry?.

Okay. So the natural capture of CO2 to forestry preservation activity, in terms of cost, it is an activity that is certainly give us a very good opportunity lower cost for capture each tonnes of CO2 compared to the other techniques that can be applied. And we are in a region below the $10 per million tonne of CO2 capture rate..

And Massimo, in terms of accessing land and forestry, how is that? Is that changing at all? How do you see things there? I know it’s a slightly abstract question, but....

So maybe Sandro then can complete. So what we – the work over the last couple of years, more than a couple of years, our main target was the countries or we can say, Africa we can say or South America, but especially Africa, where we have all our operations, we are present. We have a presence in these countries.

So it’s not a problem of access to – I mean, access because, it’s not our land, it’s not a concession, it’s nothing that of this kind, is not like in the upstream. It’s a portion of primary forestry that we protect.

So it’s a question to training people to define standards, to give a certification, to get in connection with the UN authorities, to implement all the process of the red plus, because it’s not just forestry conservation money, also – it’s also different other aspects, biodiversities and job creation. So it’s a question of different component.

So we don’t have any problem to have access, because it’s a different kind of process. There is a forest. We have an agreement with the government and we implement a process to train people, to pay people, to give back parts of the credit in terms of money to develop the area. And that is the approach and it’s working very well.

Clearly, we work with developers. We already set up different agreement in the different countries. And this is something that we are developing. And our aim is to have by 2030 about 20 million of – 20 million tonne that will be captured by forestry. And that is in progress and is working quite well..

Thank you..

The next question is from Massimo Bonisoli of Equita. Please go ahead..

Good morning. Two questions for me. One on the dividend again. Sorry, if I’m still confused about the new policy.

Since there are many moving parts in the scenario not only related to Brent, but also gas prices, refining and chemical margins, production levels, euro-dollar exchange rate, do you include these moving parts in the additional variable dividend and additional free cash flow generation? If yes, would you provide a sensitivity to each KPI, just to let us track those variables? And the second question is on green CapEx.

How much of the CapEx related to the energy transition projects may be funded through the scheme of the European green deal? Did you already consider the access to that budget?.

Okay. Starting from the second question, the answer is yes. Definitely, we are working on the innovation fund, the recovery fund in order to get access to such a fund. So we are working to package our project and to follow-up the procedure.

This is definitely a very good occasion that could be taken as an advantage in order to speed up, if possibly, this improvement and this transformation. As far as the dividend policy, to simplify, yes, the variable component is linked to the Brent only. So we are assuming that the Brent will be the more important proxy in term of cash flow variation.

So the number we will look at, in order to assess the amount to be distributed as a variable component is the only Brent price. So all the rest would be some way included and matched by the company. And you made another – okay, so if there is something lost, so please let me know..

No, no. It’ sounds okay. Thank you, Massimo..

In the amount, sorry. And the amount, you mentioned the amount of the flexibility. So we gave €900 million, each $5 Brent, and this is fixed. So it’s not depending on the sensitivity we can assess each year, but the number has been set and then the number, the €900 million will remain in place all along such a remuneration policy..

Okay, thank you very much..

[Operator Instructions] Mr. Descalzi, that was the last question.

If you’d like to make some closing remarks, sir?.

Yes, thank you.

So, first of all, I want to thank you, everybody who was listening to us, but I want to thank my colleague, because in the – it’s the first time that I say – I say that during this half presentation, first half presentation, that was a very tough period, and we work on different kind of issue and topics, because it was on the revision of CapEx, OpEx and reorganize different kind of teams worldwide.

Then we work on the organization, then we work on the capital allocation, revision of the dividend policy that took about more than 2 months. I think that this exercise was very useful to test our robustness for the future in terms of team and motivation.

And especially, we had the really – we had the courage and the vision to start a new kind of phase in terms of approaching the dividend policy. And, clearly, as I said, our aim is to be transparent and give a clear reading of what we are doing because, outside, it is so confused and volatile that we want to be linear.

So maybe you can think that this dividend or this policy is complicated. It’s really simple, and in the case, much simpler than the word outside. And that was our aim, and I hope that we succeeded. Thank you very much..

Okay. Just a few words to say that this is my last conference call as CFO, as an Eni CFO. So thank you very much, everybody, for the good interaction we had all along this time. Thank you..

No, you’re going to continue. Okay. Thank you..