• This Day (Nigeria) aagm: Political Economy of Sustainable Democracy in Nigeria (2)

Telecommunications | Group 642 |
FINANCIAL INTERMED. | FINANCIAL INTERMEDIATION | Sec J |
Financial intermediation, except insurance and pension funding | Div 65 |
Insurance and pension funding, except compulsory social security | Div 66 |
Activities auxiliary to financial intermediation | Div 67 |
REAL ESTATE ACTIVITIES | Sec K, Div 70 |
RENTING OF MACHINERY AND EQUIPMENT WITHOUT OPERATOR AND OF PERSONAL AND HOUSEHOLD GOODS | Sec K, Div 71 |
COMPUT. & RELATED ACT. | COMPUTER AND RELATED ACTIVITIES | Sec K, Div 72 |
RESEARCH & DEVELOP. | RESEARCH AND DEVELOPMENT | Sec K, Div 73 |
OTHER BUSINESS ACT. | OTHER BUSINESS ACTIVITIES | Sec K, Div 74 |
Legal, account., market research, consultancy | Group 741 |
Legal activities | Class 7411 |
Account., bookkeeping and audit.; tax consult. | Class 7412 |
Market research and public opinion polling | Class 7413 |
Business and management consultancy activities | Class 7414 |
Management activities of holding companies | Class 7415 |
Architectural, engineering and other tech. act. | Group 742 |
Advertising | Group 744 |
Business activities n.e.c. | Group 743, 745, 746, 747, 748 |
EDUCATION | Sec M |
HEALTH AND SOCIAL WORK | Sec N |
SEWAGE AND REFUSE DISPOSAL | Sec O, Div 90 |
ACTIVITIES OF MEMBERSHIP ORGANIS. N.E.C. | Sec O, Div 91 |
REC., CULT., SPORTING ACTIV. | RECREATIONAL, CULT., SPORTING ACTIVITIES | Sec O, Div 92 |
Motion picture, radio, tel., other entertain. activ. | Group 921, 922, 923 |
News agency activities | Group 924 |
Library, archives, museums, other cultural act. | Group 925 |
Sporting and other recreational activities | Group 926, 927 |
OTHER SERVICE ACTIVITIES | Sec O, Div 93 |
Not allocated |
Level 3 (NACE Rev. 1.1) |
Heading | Requested level of detail |
Total activity | Sections C to K |
Mining and quarrying | Section C |
Manufacturing | Section D All subsections DA to DN All divisions 15 to 37 |
Aggregates: |
High-technology (HIT) Medium-high-technology (MHT) Medium-low-technology (MLT) Low-Technology (LOT) | 24.4, 30, 32, 33, 35.3 24 except 24.4, 29, 31, 34, 35.2, 35.4, 35.5 23, 25-28, 35.1 15-22, 36, 37 |
Electricity, gas and water supply | Section E All divisions (40 and 41) |
Construction | Section F (Division 45) All Groups (45.1 to 45.5) |
Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods | Section G All divisions (50 to 52) Groups 50.1+50.2+50.3, 50.4, 50.5, 51.1 to 51.7 Groups 52.1 to 52.7 |
Hotels and restaurants | Section H (Division 55) Groups 55.1 to 55.5 |
Transport, storage and communication | Section I All divisions Groups 60.1, 60.2, 60.3, 63.1+63.2, 63.3, 64.1, 64.2 |
Financial intermediation | Section J All divisions |
Real estate, renting and business activities | Section K Division 70 Division 71, groups 71.1+71.2, 71.3 and 71.4 Division 72, groups 72.1 to 72.6 Division 73 Division 74, the aggregates 74.1 to 74.4 and 74.5 to 74.8 |
LEGISLATIVE FINANCIAL STATEMENT
Policy area(s): Statistics, Internal Market, Trade, Competition Activit(y/ies): Structural Business Statistics, Balance of Payments Statistics |
TITLE OF ACTION: PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL (EC) NO ../.. ON COMMUNITY STATISTICS AND ACTIVITY OF FOREIGN AFFILIATES |
1. BUDGET LINE(S) + HEADING(S)
29 02 01 Statistical Information Policy
2. OVERALL FIGURES
2.1. Total allocation for action (Part B): 2.150 million for the period 2005-2007
2.2. Period of application:
Yearly data collection and compilation starting from the year after entry into force of the regulation.
2.3. Overall multiannual estimate of expenditure:
(a) Schedule of commitment appropriations/payment appropriations (financial intervention) (see point 6.1.1)
million ( to three decimal places)
2005 | 2006 | 2007 | Total |
Commitments | 0.450 | 0.850 | 0.850 | 2.150 |
Payments |
(b) Technical and administrative assistance and support expenditure is 0.
Subtotal a+b | 2005 | 2006 | 2007 | Total |
Commitments | 0.450 | 0.850 | 0.850 | 2.150 |
Payments |
(c) Overall financial impact of human resources and other administrative expenditure (see points 7.2 and 7.3)
TOTAL a+b+c | 2005 | 2006 | 2007 | Total |
Commitments | 0.450 | 0.850 | 0.850 | 2.150 |
Payments |
2.4. Compatibility with financial programming and financial perspective
Proposal is compatible with existing financial programming.
2.5. Financial impact on revenue: [21]
Proposal has no financial implications (involves technical aspects regarding implementation of a measure)
3. BUDGET CHARACTERISTICS
Type of expenditure | New | EFTA contribution | Contributions form applicant countries | Heading in financial perspective |
Non-comp | Diff/ Non-diff | NO | YES | YES | No 3 Internal Policies |
4. LEGAL BASIS
- Council Regulation (EC) No. 322/97 on Community Statistics.
- Decision No. 2367/2002/EC of the European Parliament and of the Council of the 16 December 2002 on the Community Statistical Programme 2003 to 2007.
5. DESCRIPTION AND GROUNDS
5.1. Need for Community intervention [22]
5.1.1. Objectives pursued
This Council Regulation aims to make available harmonised statistical information on foreign-controlled affiliates in the reporting country (inward FATS). The feasibility of collecting harmonised statistical information on foreign affiliates controlled by the reporting country (outward FATS) will be tested in pilot studies. The information is needed for drawing up, monitoring and evaluating Community policies, in particular concerning the internal market as well as economic, trade, employment, research and development, competition and enterprise policies. Furthermore, international treaties such as that instituting the General Agreements on Trade in Services (GATS) require harmonised statistics in this area.
5.1.2. Measures taken in connection with ex ante evaluation
The feasibility of collecting the data, taking into account the benefits of the availability of the data in relation to the costs of collection and the burden of businesses was tested for the inward FATS part since reference year 1996 in yearly pilot studies on a voluntary basis.
The legal basis for the pilot studies was Annex 1 Section 10 of Council Regulation No 58/97 of 20 December 1996 concerning structural business statistics, also known as the SBS Regulation.[23] Up to now, 12 Member States participated and are participating in the project, providing data for several reference years (up to 2001). The scope of the pilot studies was extended over the years while introducing additional variables and increasing the level of country detail.
The pilot studies for inward FATS have proven that a breakdown of structural business statistics by ultimate controlling institutional unit of a foreign affiliate is possible. It has been shown convincingly that the data can be collected, that the statistics can be produced in a cost-effective way, and that the results are of great interest to users inside and outside the European Commission. It has been shown that it is possible accurately to compare the impact on foreign controlled affiliates not only with their nationally controlled counterparts, but also with the FATS of other countries.
Several publications presenting the results of the data collection so far have been produced. A publication and several Statistics in Focus on foreign-controlled enterprises have been published so far. Data are also available in Eurostat's reference database, New Cronos, Theme 4, SBS Domain, FATS Collection.
The main limitation is the lack of coverage of all Member States. To evaluate the implementation of the GATS and the functioning of the Internal Market it is essential to have data for all EU Member States.
The benefits of the availability of the data have been measured against the costs of collection and the burden on businesses for the pilot studies. The burden on businesses was difficult to quantify, because there are not data existing in the Member States quantifying it. But it can be appreciated that it is not very heavy, because existing data are generally used for processing the FATS data sets and the data collection is based on already existing data collections. Therefore, the additional costs of FATS to business outside normal national statistics activity is restricted to occasional contact for clarification of ownership and control, or to a few additional questions on that theme in ongoing surveys.
The costs to the Member States of data collection and processing are also not very high, because existing registers are used and most of the data used to calculate FATS are available as part of the regular surveys. The only additional data collection necessary is for the allocation of control. Therefore, the costs to the Member States are restricted mainly to administrative and computer services expenses.
The implementation of new statistics always involves set-up costs as well as costs for the research and development of the data process in the implementation phase. If FATS can be produced automatically as part of an inquiry results process, for example, the costs will be restricted to register and inquiry analysis time. For the pilot studies the Commission contributed financial support to help cover the costs of the Member States.
The benefits of FATS are also difficult to quantify in figures. However, in the past few years the Member States and Eurostat have registered a growth in the number of requests for FATS-type statistics on both the services and manufacturing sectors from international organisations such as the OECD and UNCTAD as well as from economists, banks, foreign embassies, academics and other statistical offices.
5.1.3. Measures taken following ex post evaluation
According to article 12 of the proposed regulation it is envisaged that a report on the implementation of this regulation will be submitted within five years of the entry into force of the regulation, to the European Parliament and the Council. In particular, the report shall also assess the benefits accruing to the Community, the Member States, the providers and users of statistical information of the statistics produced in relation to the costs.
5.2. Action envisaged and budget intervention arrangements
The proposed Regulation describes the legal framework within which Member States' National Statistical Offices or Central Banks will provide the FATS data. Both this regulation and future implementing regulations will be output measures, defining the statistical variables to be provided, but leaving Member States full flexibility in how to obtain the variables. In practice, many Member States will use existing data sources to obtain the results required.
The contribution from the Commission budget with respect to the work by the national statistical institutes or other national authorities responsible for Commission statistics represents only part of the total of the statistical work undertaken by the national authorities. In principle production and transmission of regular statistics, which form an integral part of the statistical programme, will be based on the subsidiarity principle, and the operational and administrative costs are borne by the national authorities. The regular data collection is based on existing administrative sources, but for pilot studies co-financing would be necessary to test the feasibility of the collection of the data requested by our main users but difficult to collect.
The Commission contribution will take the form of grants awarded on the basis of grant applications submitted by Member States in advance, which will include estimated cost statements. The pilot studies will be funded via the existing Community Statistical Programme 2003 to 2007. There will be no Community funding on the basis of the proposed Regulation after the year 2007. This funding only concerns co-financing of pilot studies. The population who should get budgetary help are the national authorities. According to Article 2 of Council Regulation (CE) No 322/97 on Community Statistics[24] national authorities shall mean national statistical institutes and other bodies responsible in each Member State for producing Community statistics. They should directly be given to the data processing institutes, namely statistical institutes and central banks.
Work by Eurostat to develop and document the Community methodology and to process, analyse and disseminate data will be covered in full. Additional costs are expected to be marginal.
Data will be provided annually. Eurostat will maintain a database for the data, and will publish FATS annually.
5.3. Methods of implementation
Management of the grants procedure and all data handling will be carried out by permanent Commission staff, with no externalisation.
6. FINANCIAL IMPACT
6.1. Total financial impact on Part B - (over the entire programming period)
(The method of calculating the total amounts set out in the table below must be explained by the breakdown in Table 6.2. )
6.1.1. Financial intervention
Commitments (in million to three decimal places)
Breakdown | 2005 | 2006 | 2007 | Total |
Grants to national authorities for pilot studies | 0.450 | 0.850 | 0.850 | 2.150 |
TOTAL | 0.450 | 0.850 | 0.850 | 2.150 |
7. IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE
7.1. Impact on human resources
Types of post | Staff to be assigned to management of the action using existing resources | Total | Description of tasks deriving from the action |
Number of permanent posts | Number of temporary posts |
Officials or temporary staff | A B C | 2 3 | 1 | 2 4 | A-grades for implementation of the Regulation and methodological work, B-grades for data treatment and the maintenance of the informatics system. |
Other human resources |
Total | 5 | 6 |
7.2. Overall financial impact of human resources
Type of human resources | Amount () | Method of calculation * |
Officials Temporary staff | 648.000 | 6x108.000 |
Other human resources (specify budget line) |
Total | 648.000 |
Existing human resources will be reallocated for the management and the needs of the programme, no other resources are necessary.
7.3. Other administrative expenditure deriving from the action
No or only marginal increase in other administrative expenditure is foreseen. Expenditure on working groups and missions etc. are expected to continue at the current level.
8. FOLLOW-UP AND EVALUATION
8.1. Follow-up arrangements
The implementation of this Regulation will be treated in a comitology procedure. As specified in article 9 of this Regulation, Commission Regulations will be developed in relation to
- the adjustment to economic and technical developments in the collection and statistical processing of data, as well as the processing and transmission of results,
- the adjustment of the definitions, if necessary, according to economic and methodological developments,
- for adaptation of the level of detail listed in Annexes I, II and III of the proposed Regulation,
- for the definition of the proper common quality standards and the contents of the quality reports,
- to setting out the appropriate format and procedure for the transmission of results by Member States
- and to the implementation of the results of the pilot studies.
8.2. Arrangements and schedule for the planned evaluation
Each Member State will take all measures necessary to ensure the quality of the data transmitted according to common quality standards. Member States will supply the Commission with a report on the quality of the data transmitted. The common quality standards as well as the content of the quality reports will be specified by the Commission by comitology. The Commission shall assess the quality of the data transmitted on the basis of the quality reports transmitted by Member States, and shall define the periodicity of such exercise.
The Commission will, within five years of the entry into force of this Regulation, submit a report to the European Parliament and the Council on the implementation of this Regulation. In particular, this report will assess the quality of the statistics produced, assess the benefits accruing to the Community, the Member States, the providers and users of statistical information of the statistics produced in relation to the costs, assess the progress of the pilot studies and their implementation and identify areas for potential improvement and amendments considered necessary in light of the results obtained and the costs involved.
9. ANTI-FRAUD MEASURES
A revised system of internal management and control was put in place following the Commission's Reform initiative on financial management. This system included a reinforced internal audit capacity.
Annual monitoring of progress with implementation of the Commission's Internal Control Standards is designed to give assurance on the existence and functioning of procedures for prevention and detection of fraud and irregularities.
New rules and procedures have been adopted for the principal budgetary process: calls for tenders, grants, commitments, contracts and payments. The manual of procedures are made available to all those intervening in financial acts with a view to clarify responsibilities, simplify workflows and indicate key control points. Training on their use is provided. The manuals are subject to regular review and updating.
IMPACT ASSESSMENT FORMTHE IMPACT OF THE PROPOSAL ON BUSINESS WITH SPECIAL REFERENCE TO SMALL AND MEDIUM-SIZED ENTERPRISES( SMEs)
Title of proposal
Proposal for a regulation of the European Parliament and the Council on Community Statistics on the Structure and Activity of Foreign Affiliates.
DOCUMENT REFERENCE NUMBER
The proposal
1. Taking account of the principle of subsidiarity, why is Community legislation necessary in this area and what are its main aims?
Community legislation on statistics on the structure and activity of foreign affiliates is needed to set common statistical standards for data, with a high degree of comparability between data colleted in different Member States. Such comparability is requested by all users, not only at Community level, but also within Member States.
The aim of the proposed regulation is to establish common rules for the production of Community statistics on the structure and activity of foreign affiliates. The regulation defines a set of relevant statistical data, together with the most important definitions needed to ensure the comparability of the statistics. This is essential, for the calculation of EU aggregates, which are in great demand by users.
THE IMPACT ON BUSINESS
2. Who will be affected by the proposal?
- which sectors of business
NACE section C to K
- which sizes of business (what is the concentration of small and medium-sized firms)
As foreign control is exerted in general in big enterprises, the impact on small and medium-sized firms will be relatively small.
- are there particular geographical areas of the Community where these businesses are found
No.
3. What will business have to do to comply with the proposal?
In general, data for inward FATS can be collected from existing administrative sources, e.g. Structural Business Statistics, or statistical business registers in the Member States. Therefore the additional burden for businesses should be small.
For outward FATS, resident owners should supply information on the activity of their affiliates located in extra-EU countries. Additional variables should be supplied with respect to FDI surveys, although FATS only consider controlled affiliates while FDI considers affiliates with more than 10% of equity capital.
4. What economic effects is the proposal likely to have?
- on employment
None.
- on investment and the creation of new businesses
The statistics which will become available via this Regulation will assist enterprises in finding attractive destinations for setting-up foreign affiliates. This Regulation may therefore help businesses in investment decisions.
- on the competitiveness of businesses
The statistics which will become available via this Regulation will assist enterprises who wish to benchmark their operations against the industry average. This Regulation may therefore help to promote the competitiveness of businesses.
5. Does the proposal contain measures to take account of the specific situation of small and medium-sized firms (reduced or different requirements etc)?
Pilot studies have shown that foreign-controlled affiliates are rather big enterprises. Thus, small and medium-sized firms are less concerned by the data collection.
CONSULTATION
6. List the organisations which have been consulted about the proposal and outline their main views.
The National Statistical Offices, the National Central Banks and other competent national authorities responsible for data collections have been consulted on many occasions during the preparation of this text. A draft of a legal act was first presented to a FATS Task Force in September 2002 and was then presented and discussed at the meetings of the FATS Joint Working Group in January 2003, where both groups of data providers, National Statistical Institutes and Central Banks, were present. Based on the discussions in this working group meeting, a revised version was drafted and sent for written consultation to the FATS contacts in March 2003. The draft proposal was amended on the basis of written consultation and a revised version was presented to the BSDG and the CMFB in June 2003. There was general support in both groups for the regulation. The draft Regulation was discussed at the meeting of the SPC on 17 September 2003. Several delegations supported the proposal. The main areas of concern for some delegations were especially outward FATS, exchange of individual data and the level of detail requested. A series of consultations with Member States were conducted; specifically, discussions in the SBS Steering Group in November 2003 and in the CMFB in January 2004 and three written consultations of the members of the FATS Joint Working Group in November 2003, January and March 2004 and one written consultation. These resulted in revisions of the act, and finally the agreed text of the present proposal. In particular, the article on exchange of individual data has been deleted, outward FATS are now planned as pilot studies and the level of detail of inward FATS has been reduced. The draft Regulation was presented to the SPC for opinion in May 2004. The members of the SPC generally supported the proposal.
[1] General Agreement on Trade in Services
[2] Statistical Classification of economic activities in the European Community
[3] Committee for Monetary, Financial and Balance of Payments statistics
[4] Business Statistics Directors Group
[5] OJ C , , p. .
[6] OJ C [...], [...], p. [...].
[7] OJ C , , p. .
[8] OJ L , , p. .
[9] OJ L 14, 17.1.1997, p.1 . Regulation as last amended by Regulation (EC) No 1670/2003 (OJ L 244 , 29.09.2003, p. 74)
[10] OJ L 76, 30.3.1993, p.1.
[11] OJ L 310, 30.11.1996, p.1.
[12] OJ L 52, 22.2.1997, p. 1.
[13] OJ L 184, 17.7.1999, p. 23. Regulation amended by Regulation (EC) No 1882/2003 of the European Parliament and of the Council (OJ L 284, 31.10.2003, p. 1).
[14] OJ L 76, 30.3.1993, p. 1.
[15] OJ L 181, 28.6.1989, p. 47.
[16] OJ L 59, 6.3.1991, p. 19. Decision amended by Decision 96/174/EC (OJ L 51, 1.3.1996, p. 48 ).
[17] OJ L 344, 18.12.1998. Regulation amended by Commission Regulation (EC) No 1670/2003, OJ L 244, 29.9.2003, p. 74.
(*) Variables 22 11 0 and 22 12 0 shall be reported every second year. If the total amount of turnover or the number of persons employed in a division of NACE Rev. 1.1 Sections C to E represent, in a Member State, less than 1% of the Community total, the information necessary for the compilation of statistics relating to characteristics 22 11 0 and 22 12 0 need not to be collected for the purposes of this Regulation. If necessary for Community policy requirements, the Commission may, in accordance with the procedures laid down in Article 10(2) of this Regulation, request ad-hoc collection of this data.
(**) For NACE Rev. 1.1 division 65 turnover will be replaced by production value.
[18] OJ L 344, 18.12.1998.
[19] "Provisional code that does not affect the definitive denomination of the country to be attributed after the conclusion of the negotiations currently taking place in the United Nations"
[20] Council Regulation (EEC) No. 3037 of 9 October 1990 on the statistical classification of economic activities in the European Community, and Commission Regulation (EC) No 29/2002 of 19 December 2001 amending Council Regulation (EEC) No 3037 on the statistical classification of economic activities in the European Community.
[21] For further information, see separate explanatory note.
[22] For further information, see separate explanatory note.
[23] Council Regulation (EC, EURATOM) No. 58/97 of 20 December 1996 concerning structural business statistics (OJ No. L 14, 17.1.97)
[24] OJ L 52, 22.02.1997.
CELEX number 2: 505PC0088
Author: European Commission
Form: Proposal for a regulation
Treaty: European Community
Date of document: 20050315
Date of despatch: 20050315
End of validity date: 99999999
Legal basis: 12002E285
12002E251
Subsequent related instruments: Relation 52005AB0016
Subject matter: Information and verification
Additional information: COD 2005/0016
All dates: of document: 15/03/2005
of transmission: 15/03/2005; Forwarded to the Council
end of validity: 99/99/9999
Document creation: 2005/03/17
Update analytical fields: 2005/06/17
Update textual fields: 2005/04/25
Document CELEXE0020050509e13f0025f
ENI SpA Strategy Presentation & Conference Call - Final
16,540 words

1 March 2005

FD (FAIR DISCLOSURE) WIRE

FNDW

English

© Voxant Inc. All rights reserved.
UNIDENTIFIED COMPANY REPRESENTATIVE: Hi. Good afternoon, ladies and gentlemen, and welcome to Eni's Strategy Presentation. And welcome also to the ones that are following this presentation from the phone by conference call.
Before introducing the speakers, I would like to remind you that this presentation contains forward-looking statements regarding future events and future results of Eni. And those results are based on current expectations, estimates, forecasts and projections about the industry in which Eni operates. Therefore Eni results may differ materially and adversely from those expressed or implied in any forward-looking statement.
Having said that let me briefly introduce Eni's top management, starting from the CEO, Mr. Vittorio Mincato, who will comment on the 2005-2008 strategic guidelines. Then Stefano Cao and Luciano Sgubini will comment on the E&P and Gas and Power activity and Mario Taraborrelli - I may say a new entry. He was appointed the Chief Operating Officer of the Refining and Marketing Division at Eni last May - will comment on its business line. And finally, as usual, Marco Mangiagalli, Eni's CFO, will comment on the 2004 results.
I hand you over to Mr. Mincato to comment on the 2005-2008 strategic guidance.
VITTORIO MINCATO, CEO, ENI: Thank you [indiscernible]. Good afternoon, ladies and gentlemen. Since we last met here in London 1 year ago, the scenario has changed substantially. Today, the oil and the gas industry is marked by increasing complex market dynamics and new challenges. In particular, high commodity prices, due to structural reasons such as the strong demand from China and India and the slight disruption in Iraq, Nigeria and Russia. Significant increase in the gas demand worldwide. Challenges such as production growth and hydrocarbon reserve replacement. Expansion in frontier areas in order to access reserves and to sustain long term profitable production increase. That offsetting the depletion of the mature areas. Rising costs, and finally capital discipline in pursuing future growth.
In this context, we believe that Eni's position is healthy and competitive, by leveraging on a strong production increase and solid reserves replacement, a robust and still developing position from key areas to achieve the profitable long term production growth. A strong presence in the gas sector, operational efficiency and strong cash flow generation, attractive returns to shareholders.
In 2004, the abovementioned points of strength allowed Eni to achieve impressive results in terms of both financial and shareholder return.
As to growth in core business, upstream production increased by 4%. Before PSA impact, the growth rate is 6.4%. And organic reserves replacement ratio was 105.
In regards to Power, full year gas volumes sold increased by 8% and powergen installed capacity doubled. And finally, the good performance achieved in the downstream oil sector, in terms of higher quantity processed in our own refineries, and increased retail sales abroad
These industrial results are well reflected in our 2004 financials. Eni totaled E7.3b reported net income. Excluding special items, we recorded E6.7b all time record net profit and E12.4b all time record cash flow from operations.
Furthermore, yesterday the Board decided to propose to the next AGM a dividend of E0.90 per share for 2004. In 2004, Eni's total shareholders' return was 28.5%.
Once again, these results show Eni's capability to deliver on industrial targets and, as I commented some months ago, to keep sustaining our shareholders high returns.
On the basis of these solid results, our 2005-'08 strategic guidelines are characterized by continuity with the past plan. In particular, in the upstream sector, to increase production by replacing reserves and focusing on operating efficiencies.
In the gas sector, to maintain the profitable growth by leveraging on our well-established presence in the domestic market and on international expansion in the LNG business and in the European gas sector.
In Refining & Marketing, to improve refinery performance and to grow in key European regions in marketing. To pursue efficiency by improving unit costs in all business areas by 2008.
And finally, shareholders return - dividend and buyback - through a strict financial discipline in developing the core business. The future growth and the profitability in the core businesses will also be sustained by higher business integration in each business segment, and by technological innovation.
Turning your attention to the core business, I would like to start with the results achieved in the upstream business. In 2004, average hydrocarbon production was above 1.6m barrels per day. A result fully in line with our plan. This is a good result and it compares well with our peers, if the following factors are taken into account. The high oil price experienced in 2004. Very important factor, but Eni's growth is achieved thanks to the producing fields and the delivery on project start ups.
And finally, the disposal of some assets. In the fourth quarter of 2004, project start up, most of which operated by Eni, boosted the average hydrocarbon production to over 1.7m boe per day, up more than 7% from the corresponding period in 2003, if the PSA impact is excluded.
The results achieved in 2004 confirmed the sustainability of the growth trend and represents a solid base for the future growth. Our new development program will lead to a production of 2m boe per day in 2008, with an annual average growth rate higher than 5% in the period. 1 of the highest in the sector. The production increase will be fueled by production build up in producing fields and the new project start ups in '05/'08. The average organic production growth today is between 4.5 and 5%. On top of that, we will lever on dynamic asset management by continuing the disposal of marginal assets and by analyzing possible focused asset acquisitions or swaps aimed at strengthening our position in core areas.
With the Brent price being over $40 at the end of 2004, our organic reserve replacement was 105%. Considering oil prices, the replacement rate is equal to 91%, due to the impact of the portfolio rationalization. If we consider an oil price of $30, as recorded at the end of 2002 and 2003, the organic replacement rate for 2004 shows the healthy level of 132%, perfectly in line with our 3 year average trend.
For the same period, we are strongly committed to maintain a reserve replacement ratio about 100%.
Last but not least, I would like to confirm that as for the reserves matter, Eni's booking criteria are in line with SEC guidelines.
In the coming years, we will enhance the value and the quality of our portfolio, thanks to a high operational efficiency, continuing asset management, the development of large scale projects and exploration activities. In particular, with reference to efficiency. On the 1 hand, we target to maintain our leading position in operating costs, continue reduction in discovery costs, focus on refining and development costs. And on the other hand, we will continue to focus on cash generation. Eni's cash flow per barrel is 1 of the highest among its peers.
As far as the upstream portfolio is concerned, we are developing world scale projects such as in Libya and Kazakhstan, leveraging on our distinctive execution skill, and strengthening exploration activities through high selectivity and focused on materiality and synergy.
The high quality of our portfolio will sustain the strong production trends set for the 2005-'08 period and beyond. And will represent a strategic mainstay for creating long term growth through new initiatives aimed at developing gas projects in producing regions, such as North Africa and West Africa. And tapping upside potential in existing rich areas in Kazakhstan. Accessing high potential areas for exploration such as Saudi Arabia. Development of new fields. Seizing new business opportunities in non-conventional oil. Leveraging on technological know-how.
The upstream future growth will be pursued by leveraging on operatorship, development in legacy countries, technological innovation and higher integration in upstream to downstream gas projects. This is a key driver of our growth strategy. In fact, the upstream Eni -- in the upstream, Eni can leverage on its highly valuable equity gas reserves, as well as the abovementioned material assets and exploration strength in high potential core areas.
On the other hand, if we look at downstream gas, Eni can rely on marketing know-how, direct access to attractive markets and extensive and well balanced infrastructures.
Through the development of integrated gas projects, Eni will capture the full value of the gas chain, monetizing its equity gases, and accessing growing markets. By combining upstream and the gas and power sales in 2004, Eni's overall gas sales totaled 102b cubic meters, 54 bcm in Italy and more than 48 bcm internationally. By 2008, Eni will reach around 120 bcm of overall gas sales, with a 4% increase per year.
The 2008 gas volume sales will show a remarkable change in sales mix. In just 7 years, our sales portfolio will be internationally driven, with gas sales abroad accounting for almost 60% of overall sales, compared to 28% in 2001.
In addition, it is worth mentioning that more than 30% of the 2008 volumes will be Eni equity gas. We believe that Eni is well positioned in the international gas sector and it could further enhance its presence through the ongoing expansion in the attractive European markets, and the development in the LNG sector.
The 2004 industrial results in the Gas & Power division confirm our growth trend and our strength in the Gas business. In particular, the overall gas sold totaled almost 85 bcm, compared to 67 bcm in 2001. This growth was driven by the significant increase in gas sales abroad that last year reached more than 30 bcm, up 19% if compared to 2003.
In Italy, sales increased by 2.5%, thanks to the rise of demand on the Italian market and the growing sales consumption, mainly related to Enipower's increased installed capacity.
Eni is complying with the ceilings both for the inlets into the National Grid, and the final customer. And is acting proactively in the Italian gas market opening.
On the supply front, Eni is tangibly increasing the supply flexibility by investing in international infrastructure that will bring new gas to the Italian market. Last October, we completed the Greenstream pipeline, which will supply 8 bcm of gas from Libya by 2006. Moreover, and this is very important for the gas operators in Italy and industrial consumers in Italy, for the Italian authorities and for the European Community and for Russia and Algeria sales, I said, moreover, Eni will increase the transportation capacity of the existing networks from Russia and Algeria for an overall additional capacity of 6.5 bcm in 2008. This will improve the overall flexibility of the Italian gas system.
In addition, in the near future, Eni will increasingly profit from commercial activity and will progressively reduce its presence in gas regulated business, according to regulations and the market trend. In March 2004, we sold 9% of the share capital of Snam Rete Gas and a further reduction will allow us to go down to at least 20% by July 1, 2007. Our strategic target remains unchanged - to allocate new capital from low return regulated businesses to high return opportunities in core business.
Another important element of our proactive strategy in the Italian gas sector is the expansion of power generation. Today, we are perfectly on track to reach our target of around 6 gigawatts of installed capacity, with sales consumption between 6 to 7 bcm of gas by 2007. In 2004, the plants in Ferrerea Erbognone and Ravenna started commercial operations with inaugural installed capacity of 2.8 gigawatts, doubling the level reached in 2003. Additional 2.9 gigawatts are now under construction in Mantova, Brindisi and Ferrara.
As to expansion across Europe, in 2004, Eni progressed well by reaching around 34 bcm of gas sales outside Italy, an increase of 21% versus 2003. In 2008, we target 48b cubic meters of sales, increasing the volume we previously set for 2007 by 4 bcm and with a 9% average growth rate. In year 2005, 8b.
The expansion in the French gas market, with a target of 2.5b cm of gas sales in 2008, is a brand new step of Eni's development across the European liberalized gas market.
Our transportation system has been strengthened by the Blue Stream pipeline, the completion of the Greenstream pipeline, as well as the start up of Damietta plant in Egypt.
In the coming years, Eni will enhance its international presence in the gas industry, thanks to the expansion in LNG activity, which is experiencing a period of strong demand growth on a worldwide basis. This is, for Eni, a good opportunity to develop a profitable expansion in the international gas market, leveraged on its gas service portfolio, around 45% of Eni's total proved reserves, which is well diversified and across the market. This challenging strategy will be pursued either through the existing LNG terminals, the ongoing projects such as Brass LNG and the new opportunities now under consideration.
In the Refining & Marketing sector, the strategic guidelines outlined in past years are confirmed as follows. In the Refining segment, we are balancing our refinery capacity versus our retained sales by reducing the FOB capacity. In addition, we are increasing the complexity of our refineries by investing in hydrocracking units. This will allow us to run a wider range of crude oils, selecting the more profitable ones according to market trends, and to achieve a higher flexibility in terms of refinery yields.
Finally, we are leveraging on a higher integration. We will increase the value and volumes of Eni equity oil. As a result of these actions, our overall refinery throughput will be 38m pounds per year by 2008 and the complexity index will reach a level of 63%.
In Marketing, first, upgrading and enhancing the distribution network thus reaching an average of throughput per site of 2.8m liters by 2008, both in Italy and abroad.
Second, expanding and concentrating our distribution activity in selected European regions. These results will allow us to achieve total day sales exceeding 19b liters by 2008.
As far as efficiency is concerned, we are progressing very well. In fact, we have exceeded our '99-'03 target set at E2b, by 15%. Including the 2004 results of around E500m, we totaled an overall cost cutting of E2.8b. For the coming years, we confirm the E3.4b target for the 2000-06 period, with an upside potential. We are now increasingly focusing our unit costs and investment efficiencies, aimed at improving capital efficiency and operational effectiveness in all divisions.
Capital expenditure in industrial projects is based on a strict capital discipline as well as high dividend and the share buyback programs are the levels to which we allocate our cash flow. According to our 2005-'08 plan, the cash flows generated by operating activities will support the investments aimed at long term growth in core business activities, covering the payments of the dividends. Thus assuring a competitive dividend yield, and preserving at the time a solid balance sheet.
As for share buyback we will manage this as a flexible tool for additional return to shareholders, always taking in consideration our gearing trend.
First priority in cash allocation is the capital expenditure in industrial projects. To sustain the growth trend of the core business in the next 4 years, Eni's investment plan will require around E27b, of which E95b is allocated to core activities. In particular 64% to E&P, 16% to G&P and 10% to downstream oil.
I would like to add, though, that the capital spending plan has been defined considering the deconsolidation of Snam Rete Gas in 2007, in line with the regulatory framework, and new initiatives in the E&P and Gas & Power sectors.
The dividend is the second priority in our cash allocation. Last year, we paid a dividend of E0.75 per share, with a yield that was a top level in the oil sector. In 2000-04 period the total shareholders return, considering capital gains and dividends, showed an average increase of 16% per annum. At the next AGM, the Board will propose E0.90 per share for 2004, up 20% from last year. This means a payout ratio of 47%, the highest among our peers. Furthermore, the Board approved a semi-annual dividend distribution starting from 2005, which implies a cash payment in the region of October 2005. This year, realized dividend yield will be once again competitive, compared to the oil gas sector.
As far as share buyback is concerned, the program was launched in September 2000, and up to the end of 2004 we bought 5.9% of the share capital. With an overall cash out of more than E3.2b, out of the E5.4b provided by the AGM.
Last year, we wanted to keep a high flexibility in our program, according to the gearing level, thus resulting in a low material amount of shares that were purchased. In January 2005, we resumed our share buyback program.
To conclude my presentation, I would like to briefly summarize Eni's main strategic objectives for 2008. Firstly, growing in the core business, thus reaching an annual average increase of more than 5% in E&P production, 9% average growth in gas sales in the European market.
Secondly, focusing on unit cost and capital investment efficiency.
And finally, a CapEx profile of around E27b, supporting short and long term organic growth with a strict capital discipline. The dividend of E0.90 will be sustainable also with the Snam Rete Gas deconsolidation. And, according to our planned scenario, the cash neutrality covering CapEx and dividend yield at $20 per barrel.
Finally, taking into consideration the different risk profiles of our business portfolio, as per the consolidation of Snam Rete Gas, the debt to equity ceiling is confirmed at 0.4. This is consistent with the current ratings and represents a further commitment to a disciplined allocation of your cash.
Thank you for your attention.
STEFANO CAO, COO ENI EXPLORATION AND PRODUCTION DIVISION, ENI: Ladies and gentlemen, good afternoon. I am pleased to update you on the upstream business. Throughout the presentation, the following subjects will be dealt with.
Highlights - I will start with a brief updating on some of the results obtained in 2004. I will continue with an analysis on production and its main features. Then reserves, evaluation criteria and main results. A review of capital investments, in addition to expenditures level. Some aspects of our investment criteria. A look at exploration and production development, with an updating of the Exploration activities and main development projects. Human Resources and technology with an overview of new process and new technology applications. Finally performance, an analysis of our technical and economic performance.
Production. I'd like to start with some operating data. Average production in the fourth quarter of 2004 reached the record level of 1,704m boe per day, an increase of 4.1% year-on-year. Before the impact of PSA effect, the increase is 7.6%. Full-year production recorded a 4% rise versus 2003, from 1,562m boe per day to 1,624m boe per day. Needless to say that these volumes are net of Flare Gas as required by SEC rules.
The impact of higher oil prices on PSA and buyback contracts accounts for 38,000 boe per day, calculated on a basis of the reduction of approximately 4,000 boe per day for $1 price up towards the variation.
Production increase occurred in all geographical areas, except for the mature areas - Italy, North Sea U.K. sector. This in particular has been affected also by upward divestment.
The slide shows the production contribution to our growth in 2004 versus 2003. PSA effect and divestment for minus 51,000 boe per day includes a reduction of 38 -- minus 38,000 boe per day due to higher oil price, from $28.8 per barrel to $38.2 Brent, as well as the disposal of assets for 13,000 boe per day. Producing fields, plus 73,000 boe per day, includes the contribution of fields already producing in 2003, but with growing and declining production.
New production, 40,000 boe per day. This is from fields whose productions went up in 2004. The main wells are Elephant in Libya, Bayu Undan in Australia, Okpoho in Nigeria, Kizomba A in Angola, Wafa in Libya, Rod and Satellites in Algeria, and South Pars phase 4 and 5 in Iran.
Subsequent slide shows the main start-ups and the newly sanctioned projects. In particular, we point out new production in North Africa, in Angola, in the Middle East and in Australia. Among the newly sanctioned projects - Kashagan; Mondo in Block 15, Angola; and K2 in Gulf of Mexico. As to Kashagan, another main project, I'll make specific comments later on.
Let's now move to Production. The slide shows past and future growth. Strong production growth is confirmed in our 4 year plan where production is expected to reach 2m boe/day in 2008, with a leverage annual increase of more than 5% for the 2004/2008 period. For 2005, we estimate a production level above 1.7m boe/day.
The expected productions are based on a Brent price scenario of $30 a barrel in 2005, $28 in 2006, $26 in 2007 and $25 in 2008, while the 2m boe/day is inclusive of the portfolio management, which is comprehensive of further rationalization and possible acquisition. Overall, a net contribution between 40 and 50,000 boe/day.
Next slide shows the comparison between the 2 4-years period - 2000-2004, and 2004-2008. In 2004, about 33% of the total production is new when compared to 2000. It is made up of new start-ups and corporate acquisition. In 2008, 21% is new production if compared to 2004. Contribution comes from the following main fields - Bahr-Essalam, Libya; Kizomba B, Angola; Bonga, Nigeria; Kristin, Norway; Benguela, Belize, Lobito, Tomboco and Mondo in Angola; Block 208 in Algeria; Corocoro in Venezuela; Gendalo, Indonesia; Taurt in Egypt; then Kashagan. Unlike 2004, new production in 2008 is 100% organic.
Production by region. The slide displays production in terms of geographical distribution in 2008. The percentage of Gas 38%, and Liquids production 62% are also displayed. The 2004-2008 compound average growth rate is composed for a 4.6% growth in Liquids and 7.9% in Gas.
The intent of the following slide is to show some characteristic featuring our portfolio. As you can see, a larger amount of Production is coming from a reduced number of producing countries. In 2008, we'll produce over 100,000 boe/day in 9 countries, compared to 5 countries in 2004. On the right-hand side you can see a steady growth of our Operated Production, both gross and equity.
Now Reserves. The slide shows the main feature of our Reserves book in structure, a centralized system of Reserves evaluation based on internal guidelines, reviewed by DeGolyer & MacNaughton, attesting to their compliance with SEC rules. 30% of the Proved Reserves have been reviewed in 2004 by an independent party for a total of 63% reviewed in the 2003/2004 period. All new projects on the Strategic Plan had been reviewed obviously including Kashagan.
Last but not least, allow me to confirm that Reserves are booked only up to the lease expiry using year-end pricing and excluding Flare Gas.
Proved Reserves. Proved Reserves and the Replacement Reserve ratio evolution are shown on this slide. For 2004, we have also calculated them by assuming a year-end price, Brent, of $30 per barrel, it being the price recorded at the 2002 and 2003 year-end. In our opinion, this represents an accurate reference to allow a comparative industrial analysis, but filtering the price effect. Without price effect there is a continuous growth in Proved Reserves, and a strong level of Reserves Replacement, both organic and all sources. In fact, a $30 per barrel year-end, Brent, the organic replacement has always been above 118% over the last 3 years.
At the end of 2004 the split into Oil and Gas was 56% of Liquids and about 44% in Gas. The 2004 Reserves Life Index is 12.1 - year. Proved Developed Reserves reached 60% in 2004 compared to 58% in the previous years.
Let's move to capital investment. In our 4 Year Plan, estimated investment amounts to a yearly average of about E4.4b a year, of which E0.6b are new opportunities. New opportunities refer to projects whose implementation is contingent on the occurrence of certain conditions. In our Plan, investments related to new opportunities have been included net of risk factor. I will provide more information later on in the presentation.