Welcome to the Eni 2020 Strategy Update and First Half Results Conference Call and Q&A session led by Mr. Claudio Descalzi, Eni’s CEO and top management. During this call, you will be in listen-only mode. I will now turn it over to your host to start the conference call. Thank you.

Good morning and welcome to Eni Strategy Update and First Half Results. In February, we communicated the strategic roadmap towards 2050 that will take our company through the energy transition. In line with this strategy in June, we announced the new organization, creating two new integrated business groups. Natural Resources will develop the upstream oil and gas portfolio sustainably, promoting energy efficiency and carbon capture. The business group will be integrated along the gas value chain, from exploration to development to wholesale via pipeline or LNG, leveraging our technical and commercial competencies. In addition, this business will lead CCUS, forestry sustainability, and environmental remediation, key activities for the sustainable delivery of decarbonized products. The second business group, Energy Evolution, is dedicated to supporting the evolution of the company’s power generation, product transformation, and marketing from fossil to bio, blue, and green. Thanks to the business group’s coordination, the company will be able to develop these activities in an integrated way, both geographically and in terms of business lines, maximizing results in terms of product development, customer service, and profitability. Alongside corporate functions, the business group will be supported by new technology, R&D, and digital functions. Our organization will deliver a more balanced portfolio, reducing the exposure to volatility of hydrocarbon prices, to become a leader in the decarbonization process. Turning to our long-term strategy, this remains unchanged. Our transformation is irreversible. The recent events related to the COVID-19 pandemic emphasize the need to accelerate along this path to deliver a more sustainable Eni. This drove the capital allocation for the 4-year plan and will deliver a significant reduction in our carbon footprint where our target implies that Eni will be Scope 1, 2, and 3, net emission neutral in Europe by 2050. Let’s now turn to the actions we have taken on CapEx and cost for 2020 and 2021. We reacted to the pandemic immediately. In just one month, we declared our first set of actions and have conducted a deep analysis to further cut our costs. In the meantime, we also reviewed our scenario, assuming $40 per barrel Brent this year, growing to $60 per barrel Brent in 2023. The result is that today we are announcing our target, both for CapEx reduction and cost optimization. Overall, in 2020 and 2021, we aim at an average CapEx cut of over 30% and €2.8 billion of overall cost optimization, of which 25% to 30% are structural. Together, this represents almost €8 billion of reductions compared to the original plan. In our group’s CapEx plan, rigorous capital discipline is key. With the expectation of Brent at $40 per barrel in 2020, we will keep the CapEx at just over €5 billion. In line with our gradually rising expectation for Brent, our CapEx will flexibly increase from 2021 to reach around €8 billion in 2022, comparable to our original pre-COVID plan. The mix inside the CapEx plan will change, accelerating the energy transition. The new plan versus the original one envisages in upstream an almost €6 billion reduction. By contrast, in the green businesses, CapEx will grow by €0.8 billion, mainly dedicated to biorefining, renewables, and expansion in the retail segment. Overall, in the plan, green CapEx will account for 17% of the total versus 12% in the original plan, reaching 26% in 2023 versus 20% in the original plan. The weight of green investment will become increasingly more important as we move through our other balancing of our portfolio. In upstream production in 2020, it is confirmed at around 1.71 million to 1.76 million barrels of oil equivalent per day after the OpEx cut. The 2019-2023 average growth rates will be in the range of 2%, driven in 2023 by startups and ramp-ups for around 400,000 barrels per day and production optimization for over 200,000 per day. If this scenario proves to be stronger than expected in 2021, we will have the flexibility to reactivate some production optimization actions. Growth in the medium to long-term is a function of the upstream CapEx profile. In terms of project development, the new 2020-2023 CapEx plan includes a number of revisions, impacting especially the first two years as we postpone a number of FIDs. Exploration will target 2 billion barrels of new discoveries in the period at a leading cost of $1.6 per barrel. In exploration, no activity has been canceled, but we have rephased 50% of the investment plan for 2020. 2021, we’ll see the drilling of parts of the wells we postponed this year. Turning to the mid-downstream, we confirm the development of our decarbonized businesses, further accelerated by the increase in green CapEx mentioned before, mainly dedicated to bio-refining, renewables, and retail expansion. At the next 2021 strategy, we will give further details on the specific upgraded targets within these green businesses. Turning now to our shareholders’ remuneration policy. In light of the unprecedented market context, characterized by elevated volatility and the depressed level of prices expected in the next two years and only after the radical revision of all our group’s cost and CapEx, as just explained, Eni has decided to revise its shareholder remuneration policy, to give clear visibility on the future dividend and buyback program. The new remuneration policy is valid for a Brent price of $45 per barrel or more. The policy includes an annual dividend that has a floor value of €0.36 in annual Brent scenario of at least $45 per barrel and an additional variable component that depends on the value of Brent above $45. The buyback program is set at €400 million for annual Brent scenarios between $61 and $65 or €800 million for annual Brent scenarios above $65. In more detail, the dividend floor value of €0.36 will grow as the company realizes its strategic plan, and this will be evaluated each year. The variable component of the dividend is determined by the value of our Brent forecast each year. This is calculated as a growing percentage between 30% to 45% of the incremental free cash flow generated by scenarios between $45 and $60. The fixed free cash flow sensitivity incorporated in the remuneration policy is €900 million for every $5 change in Brent. Notwithstanding our Brent scenario at $40 this year, our dividend proposal for 2020 is €0.36 per share; one-third or €0.12 will be paid at the interim in September 2020, with the remaining two-thirds or €0.24 will be paid in May 2021. After 2020, if the Brent scenario assumption is below $45, we will evaluate the floor dividend considering the expected duration and depth of the downturn. From 2021, the floor dividend will be paid 50% in the interim payment in September and 50% in the final payment the following May, while the variable component will be paid entirely with the interim payment. The variable component will be paid for the due amount applied in the policy, if they envisage yearly Brent prices in July each year is above $45 regardless of the progressive growth now assumed in our scenario. To be even more clear, in the case next year of Brent being $60 per barrel, we will pay the entire variable component of €0.34 per share. Applying the current Brent scenario adopted by Eni and assuming no change in the floor dividend, the new remuneration policy will deliver cash dividends of €0.55, €0.47, €0.56, and €0.70 respectively, in the year 2020 to 2023. Turning now to our first half results. In the context of unprecedented discontinuities in the hydrocarbon scenario due to COVID-19, Eni has performed well. Our action has focused on two principles: firstly, we acted strongly to protect the health of our people and 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 barrels 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 barrels per day, down 5% year-on-year. The reduction was mainly driven by COVID-19 impact and OPEC+ cuts. Portfolio, price effects, and other positive elements were offset by lower gas demand, in particular, in Egypt and the effect of contractual triggers 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 products. The Gas & Power result was driven by the wholesale business and portfolio optimization, which counterbalanced 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 wind generation in Italy. Installed capacity at the end of the first semester was about 250 megawatts. Versalis experienced lower demand and assumed 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 barrels of oil equivalent per day after the OPEC cuts that account for around 40,000 barrels 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 barrels of resources at less than $2 per barrel this year. Moving to mid-downstream. The overall results have been very strong, improving by almost 70% compared to last year, more than doubling, excluding scenario and COVID impacts. 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 from the power business. This strong performance was only partially offset by the lower contribution of the LNG business. In retail, Eni gas e luce delivered a result of over €180 million, up 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 two-thirds higher than last year, despite the challenging scenario both in terms 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 helped counterbalance the demand reduction related to the lockdown measures. Finally, the Versalis result was impacted by lower demand in the plastic sector, particularly in the automotive sector, by lower plant availability. Versalis’s first half result was negative at €130 million. Overall, we expect for 2020 an EBIT contribution of around €800 million from these three businesses together, one-third 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 the non-commodity business will reach 20% of EBIT. This will be offset by a weaker result from the 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 results 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 operations before working capital was at €3.3 billion, exceeding our CapEx. Excluding scenario and COVID, our cash flow would have improved year-on-year by €0.8 billion. Looking at 2020, with the new scenario assumptions, we expect a cash flow from operations 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 four 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 questions.

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

Oh, hi, good morning. Thank you. Yeah, just two 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 three 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 three 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 different variables clearly gave us the opportunity to create a new dividend policy. Clearly, the forecast for the next two years and the Brent prices that is for the next two years and the COVID impact and the uncertainty on 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 improved our strategy looking at the long term and creating 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 costs, G&G, so we had the opportunity to have an overall revision of all our cost base. And only after that, considering this scenario, context, and pandemic, we structured this new dividend policy. For the – Massimo, maybe you can answer the timing for the floor dividend?

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 the 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 of our dividend, related mainly to the strategic progress in our 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. 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 weighting 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 sustenance which is coming from the OPEC activity, which is sustaining the Brent. And this is actually giving us confidence in 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. You see also that from the cut in the LNG exporting from the U.S. because, I mean, the price in this environment is such that 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 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 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. 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 covers 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 projects, 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 two years. 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 one or a 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-producing fields. 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 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 as well. I mean, I was wondering, how do you think – how competitive do you think hydrogen is going to be versus green hydrogen? Thank you.

Thank you. The first question was about green investment. As we mentioned in our presentation, we have designated significant resources primarily for bio-refineries and renewables, while also focusing on expanding our customer base. This is a crucial aspect of our strategy, and recent events over the past four months due to COVID have highlighted the importance of bio-refineries in our recovery. Although marketing was impacted by the lockdowns, we managed to recover returns from refining and marketing. We observed an internal return from these refineries of about 15%, and we see potential for growth, especially with feedstock that will be more accessible to the refineries in the future. By 2023, we will no longer use palm oil but will explore various feedstocks. Our technology supports a wide variety of feedstocks that can help lower logistics costs. The bio-refineries in North Europe are performing well, and this will be a focal point for our capital investments. Regarding renewables, we reaffirm our commitment and plan to enhance our connection with Eni Gas e Luce to offer green products to our extensive customer base. We currently serve over 9 million clients and aim to reach 11 million in our next plan, with a long-term goal of exceeding 20 million. This strategy is key for improving efficiency and mitigating volatility in hydrocarbon markets. We will provide more details on our approach in 2021. Now, concerning hydrogen, I got sidetracked by the first question. We are significant producers and consumers of hydrogen, as all of our refineries and industrial processes utilize it. We are particularly focused on blue hydrogen due to the advantageous opportunities provided by carbon capture and storage, which makes it cost-effective given our existing infrastructure. At present, blue hydrogen is more economical than green hydrogen, although this may change in the future. With all the necessary facilities and expertise in hydrogen production, we are also looking into testing hydrogen as a feedstock for turbines and power plants, which is essential for our decarbonization efforts and for providing 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 seemed 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 billion, 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 that there’s sort of an implication that €8 billion is your sort of through-cycle spending, but what is it that’s making you decide on €6.5 billion 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 increase 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. 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 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 – it’s difficult to give you an exact figure now. But the flexibility we believe we can have in order to react immediately to a better scenario would be in the range of production, 50,000 boe per day progressively, from 2021 to 2023, investing something in the range of €400 million, €500 million in the next two years. So if the price will be higher, definitely, we will do it and the cash flow contribution will be definitely positive. This would be one of the key elements to evaluate how to progress the floor in our dividend. Definitely, such an evaluation would be taken, as we said, every year, and the first evaluation is in July 2021. 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 also take 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 a 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 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. 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. This is an unconventional approach when we look at the dividend, because, normally, it’s very simple, and it’s year-by-year or quarter-by-quarter. Here, 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 complicated, but it’s not complicated. I think it’s very transparent, because we talked about – we gave for four years. We provide a floor, so how you can calculate that. And then, we give all the different environments on the flexible or on the other component that is a variable component and the buyback. 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 investors. 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, how? We have – say, we have six 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 three, four 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, etc. 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 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 three 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 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 of 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 two main elements regarding the losses.

Okay. So Irene, just to give you some additional color – the best performance we had in Refining & Marketing, Gas & Power. So – and the effect – the headwind we had was mainly because of the COVID-19. Starting from R&M, the refinery had substantially performed in line with the first semester of 2019. Notwithstanding, I would say, a worse scenario in terms of margin, compensating also more or less €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 somewhat 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 of 2019. Talking about 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, complemented with services that will be aside from the sale of just commodities. 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 in a very volatile environment. Just to name a few, the gas price vis-à-vis last year is down 50% and also the oil has been downwards and then upwards. So we have experienced 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. So we were 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 from possible losses.

Okay. So in terms of full year guidance, I’m making reference to 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 to still be losing money, even with a slower pace versus the first semester with a total loss on a yearly basis of €200 million. So as far as the Gas & Power, certainly the Eni gas e luce 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. At the same time, we expect that the refinery, mainly the bio-refinery, the positive effect 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. Previously, I said that we were envisaging a capital absorption in the range of a few hundred 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. The tax rate, the last question, this year is 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. But the same exceptionality would be on the cash tax rate that has been guided in the past in the range of 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. 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, 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 certainly gives us a very good opportunity to lower cost for capturing each tonne of CO2 compared to the other techniques that can be applied. 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 or South America, but especially Africa, where we have all our operations, we are present. 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; it’s not like in the upstream. It’s a portion of primary forestry that we protect. So it’s a question of training people to define standards, to give a certification, to get in connection with the UN authorities, to implement all the processes of the REDD+ program because it’s not just forestry conservation money. It’s also different other aspects, biodiversities, and job creation. So it’s a question of different components. 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 agreements in the different countries. Our aim is to have by 2030 about 20 million tonnes that will be captured by forestry. 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 funds. So we are working to package our projects 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 possible, this improvement and 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 terms of cash flow variation. 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.

Mr. Descalzi, that was the last question. If you’d like to make some closing remarks, please go ahead.

Yes, thank you. So, first of all, I want to thank you, everybody who was listening to us, but I want to thank my colleagues, 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 worked on different kinds of issues and topics because it was on the revision of CapEx, OpEx and reorganize different kinds of teams worldwide. Then we worked on the organization, then we worked on the capital allocation, revision of the dividend policy that took about more than two months. I think that this exercise was very useful to test our robustness for the future in terms of team and motivation. Especially, we had the courage and the vision to start a new kind of phase in terms of approaching the dividend policy. 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. 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.