Good afternoon, ladies and gentlemen, and welcome to the Eni's 2021 First Quarter Results Conference Call hosted by Mr. Francesco Gattei, Chief Financial Officer. For the duration of the call you will be on listen-only mode however at the end of the call you will have the opportunity to ask questions by pressing star and one on your touchtone telephone. I am now handing you over to your hosts to begin today's conference. Thank you. Good afternoon, welcome to Eni first quarter 2021 results. 2021 is still a year of transition, the first quarter has demonstrated a different pace of recovery for our businesses. The quarter was positive for oil, with an 11% growth of Brent price in euro versus first quarter 2020. We have recorded a partial rebound of demand now at around 95 million barrel per day, and a more materially disciplined supply, mainly thanks to the OPEC+ cut, a natural decline of tight oil production. Likewise, chemicals rebounded strongly, benefiting from industry-wide disruptions due to the winter weather in the U.S. and higher demand in Asia. On the other hand, other factors are still facing a weak environment. Downstream was impacted by negative refining margins and the lower volumes due to the lockdowns, mainly across Europe. Finally, notwithstanding the increase of gas prices, the spread between PSV and TTF showed very low differential due to the new supply sources in Italy and increased demand in Europe and Far East. Notwithstanding these mixed conditions, we are steadily making progress in our recovery. Eni EBIT adjusted at EUR 1.3 billion, was flat versus first quarter 2020, and it was 2.7 x higher than the previous quarter. Net profit adjusted at EUR 0.27 billion was also 5x higher than the first quarter 2020. In detail, in upstream, our production of 1.7 million barrels per day is in line with our yearly guidance. Production was 5% lower than last year, with a steady gas profile and 9% lower in oil production due to the OPEC cut and lower investment in production optimization because of the pandemic. In exploration, within our infrastructure -led strategy, we discovered 120 million barrels of oil equivalent, mainly in Norway and in Angola, creating synergies with existing gas and facilities. The Cuica discovery in Angola is closer to our existing FPSO in Block 15/06 and will be connected to the production within six months. Global Gas and LNG EBIT was slightly negative due to the low spread between European hubs and due to the reduced optimization opportunity with respect to last year. We expect the coming months remain challenging for this business. With regards to Energy Evolution, we are rapidly progressing to expand the value of our retail and renewable businesses. We entered the Spanish market this quarter, acquiring both retail and renewable assets, as well completing the acquisition of a 20% stake in Dogger Bank, our first wind offshore project in U.K. The merger of the retail and renewable businesses is progressing, and further on in the presentation, I will outline our plans. In refining, a negative margin of -$0.6 per barrel in the quarter and weaker retail sales in Europe, -10% year-on-year impacted our results. Lockdown and the limited air traffic demand weighted on the consumption of the most valuable products. In biorefinery, where weak demand has also put pressures on margin, we have now started up a new Biomass Treatment Unit in Gela that will enable us to receive up to 100% waste and residue feedstock, in line with our palm oil-free target by 2023. We made a material move in this promising sector with the acquisition of FRI-EL, a leader in the Italian biogas production. Versalis, our chemical company, delivered its best results since 2018. Coming on to financials, with a CFFO of EUR 1.96 billion and CapEx of EUR 1.4 billion, we were able to generate a robust cash flow. Even take into account a portfolio net acquisition of EUR 400 million, we kept leverage flat at 31%. Now let's move on to Natural Resources. Upstream EBIT in the first quarter was EUR 1.4 billion, an increase of around EUR 300 million compared to the first quarter 2020, thanks to the improved market conditions, and notwithstanding the lower level of production, around 90,000 barrels per day year-on-year. In line with our yearly guidance, production in 2021 is confirmed at 1.7 million barrels per day, considering an OPEC cut of 35,000 barrels per day. In the second quarter, we expect production to be at around 1.6 million barrels due to the maintenance that we originally planned in 2020, and we postponed in 2021 due to COVID. We plan, therefore, a progressive rebound in the following quarters. In 2021, with CapEx kept below EUR 4.5 billion, we will be able to fully capture the benefit of a higher scenario. Regarding GGP, on 21st February 2021, the first LNG cargo was successfully loaded from Damietta plant. To date, a total of nine cargos have been loaded, and we expect to maintain stable production during the rest of the year for a total of around 40 cargos across 2021, contributing to sustain our gas equity production in Egypt. In terms of GGP EBIT, first quarter was slightly negative, down by around EUR 260 million compared to the previous year. The result was mainly driven by the very low spread between the European hubs, - 84% year-on-year. That led to limited trading opportunity, especially in Italy, impacting for around one-third of the overall losses. The additional negative impact is mostly linked to the lack of positive one-off optimization that occurred in the first quarter 2020. If the current scenario is confirmed for the rest of the year, we expect the GGP 2021 EBIT to be almost at breakeven, whilst delivering a positive free cash flow of around EUR 200 million, also thanks to the contribution of the deal that led to Damietta startup. Before moving to Energy Evolution, I want to focus briefly on the startup of Merakes field in Indonesia that we have announced early this week. Merakes is a concrete step in our strategy focused on increasing gas production, leveraging our infrastructure- led exploration, and fast time to market. Indeed, excluding the six months of temporary suspension due to COVID between March to September 2020, Merakes has been developed in less than two years from the FID as a tie-in to the existing Jangkrik FPU. The field is estimated to hold about 2 trillion cu ft of gas in place and will contribute with an equity production of about 30,000 barrels per day in 2021 and of 50,000 barrels per day in 2022. Merakes gas will be partially sold to the domestic market and will also support the extension of the life of the Bontang LNG facility. Moving on to Energy Evolution. Eni Gas e Luc e and renewables is growing rapidly. EBITDA in the first quarter 2021 was EUR 220 million, 17% higher than last year, thanks to the strong performance of EGL, which benefited from a growing customer and service basis. The combined entity retail and renewables will reach an EBITDA of 2021 of EUR 600 million, growing almost 70% on a yearly basis. Downstream EBIT in the quarter was slightly negative. In R&M, weak demand, in particular for jet fuel, due to the widespread lockdown measures, put pressure on oil and biorefining margins. We expect a gradual recovery over the course of the year with the easing of COVID measures. Versalis posted a positive result for the first time since the second quarter of 2018, driven by polyethylene and styrenics demand and a good margin environment. We expect this positive environment gradually reduced in the coming quarter, but the results of the chemical segment is forecasted to remain positive. For the full year, the lower than expected refining scenario will be almost compensated through a remediation action plan as well as the positive chemical trend. The overall EBIT adjusted pro forma for downstream, R&M in the chemical, will be in the range of EUR 400 million. Turning now to cash. In the first quarter of 2021, the adjusted cash flow from operation before working capital was at EUR 1.96 billion, exceeding our overall CapEx of EUR 1.4 billion. Looking at 2021, we expect a cash flow from operation before working capital at replacement cost higher than EUR 9 billion at the current price of around $60 per barrel, assuming a refining margin just above zero. This cash flow generation will more than cover our 2021 CapEx of almost EUR 6 billion. Before turning to the Q&A session, I would like to spend a few minutes on our plan for the retail and renewable businesses. Today, the board of Eni has approved the launch of a strategic project to evaluate the best industrial and financial plan for the new entity resulting from this integration. This operation is part of Eni's wider commitment to delivering value through the energy transition, and represent a material step in reducing the Scope 3 emissions of our domestic clients. A journey that we started a few years ago. On renewables, in 2015, when we created Energy Solutions, the business unit that has progressively expanded its span of technology and geographies, and it is now managing more than 1 GW of capacity installed or under construction in more than 10 countries. During this period, we have built different joint ventures to create growth opportunity in U.S. with Falck Renewables, in Norway with HitecVision, and in Italy with CDP. In 2021, we have also joined the world's largest offshore wind project in Dogger Bank in U.K. This joint venture, together with other standalone initiatives, will be the organic source of our growth. In the meantime, we have expanded our retail offer. In 2017, Eni Gas e Luce, the historical unit of gas and power dedicated to the final market, was established as a dedicated company for the sale of innovative energy services to the final customers. EGL expanded its international footprint, setting up a new company in Greece in 2018 and entering the Spanish market this year. Furthermore, EGL has enhanced its offer with additional services, including energy management, electric mobility, and buildings energy upgrading, providing products and services to almost 10 million clients. Looking to the future, we expect retail G&P customer to grow to 15 million within a decade, with an increasing supply of renewable power and biomethane. Renewable capacity will reach more than 1 GW by the end of 2021, including projects under construction, reaching 5 GW of installed capacity by 2025 and 15 GW by 2030. Through this new entity, we are creating a unique proposition, both for our customers and our investors. In an increasing competitive market, renewables will benefit from a captive customer base, representing a stabilizing factor for revenues, giving more optionality in the use of the market opportunities and contracts. At the same time, retail will be able to sell green energy produced by proprietary plants. We believe that this will be a key marketing differentiation factor, enhancing our commercial attractiveness. Finally, additional services, including distributed solar and energy management, will complete our distinctive approach. Overall, EBITDA of the new entity is expected to almost double from EUR 600 million in 2021 to around EUR 1 billion by the end of the plan. Operating cash flow generation will double as well, thanks to our resilient and free cash flow positive retail businesses, accompanied by the renewables business growing cash contributions. Eni has formed an internal team, supported by strategic and financial advisors, to lead the project that will evaluate multiple options to extrapolate the maximum value from this new entity. Options under considerations include a stock exchange listing through initial public offering or the sale or exchange of a minority stake in the new entity during the course of 2022, subject to market conditions. The market valuation will unlock value, capturing the better enterprise value EBITDA multiples that today the market recognize to renewable retail companies. Together with Eni top management, we are ready to answer to your questions. Thank you. Thank you, sir. The first question is from Michele Della Vigna of Goldman Sachs. Please go ahead. Francesco, thank you very much for the presentation. I have two questions, if I may. The first one is on Eni Gas e Luce. I was wondering, do you see this as your global vehicle for power, which includes all of the renewable work that you're doing in your upstream heartlands in the Caspian, in Africa, in Southeast Asia, or more as a European-focused company? Secondly, your ongoing exploration success continues to provide you with a large funnel of short cycle development opportunities at a time when the macro recovery is finally coming through. Do you see an opportunity to accelerate the development of these projects? What do you see as the most interesting investment decisions coming? Thank you. Thank you, Michele. About EGL, I will leave it to Alessandro Puliti, the answer about the exploration, the FID. In terms of EGL, what I can tell you is that this is a vehicle that for us is a vehicle to decarbonize our domestic clients. That is the main scope of this vehicle. This vehicle is substantially a new entity. There is no such kind of players in the market. The market is now specialized or is building and generating capacity, or on the other side, is selling power to the clients. We are creating this new machine that put together these two extremes. In the middle, there is value, because in the middle there is energy management, there is a capability to absorb the fluctuation of renewables, gaining value from that. There is clearly value in the two sides of this proposition because, as we said, there is stabilizing the renewable sales to attractive client. There is a green marketing proposal that is attractive for the domestic customers. In terms of the boundaries of this vehicle, this vehicle will be clearly mainly an OECD player, because clearly in this area, there is the full chain covered, but there is no exclusive, let's say, OECD. For example, we have opportunities in certain countries that we believe are quite promising. For example, we think in Kazakhstan, countries of Eni original historical positioning. In this country, we could just be exposed to the generation side. In the future, we don't know. In the future, we will see what's going on. The generation side will remain attractive. Where there is a market that is, let's say, more mature, advanced, there is an opportunity to sell directly to the final customer. Otherwise, we will sell to the grid. Also in Australia, where we have activity already existing. What will not be included is that kind of generation capacity that is, let's say, embedded that is strictly connected to our upstream plants. In that case, this capacity is just a facility of an upstream activity. I leave the second answer to Alessandro. Okay. Good afternoon. Regarding ability to transform recent exploration success in accelerated development program to capture the oil pricing upside, I would say that this is exactly the strategy was set because our exploration is mainly devoted to the so-called infrastructure-led exploration. Means targeting prospects nearby existing infrastructure and facilities to accelerate time to market and bring new production to the market. Also, we have a strong input in what is called the near field exploration, so directly close to fields already in production. I would like just to give you an example on this. Recently, in the Western Desert of Egypt, Arcadia Discovery led in few months really, so the region of three, four months, from zero to an addition of 50,000 barrels of oil to our Agiba Petroleum Company in the Western Desert of Egypt. This was immediately put into production right after four successful exploration wells. Thank you. The next question is from Mehdi Ennebati of Bank of America. Please go ahead. Hi. Good afternoon, and thanks for taking my questions. Two questions, please. The first one regarding the upstream. If we apply the sensitivity to the oil that you provided us a few months ago, your first quarter upstream EBIT would have been much higher than what you posted. Can you please tell us why there was such a difference between what you posted and the figure based on your sensitivity? Was there any one-off or anything like that, which negatively impact on your upstream EBIT? The second question, please, on Versalis. You posted a positive EBIT for the first time since 2018, as you said. This is good. If I look at the utilization rates of your chemical plants, it remained at around 70%. Does it mean that you are able to take advantage of the strong macroeconomic environment, but the local demand doesn't allow you to increase the production? Or should we expect a higher utilization rate in the coming quarters for the division as you forecast the margin to remain good? Okay. I will answer to the first, then I will leave it to Adriano Alfani, the answer about the chemical performance. Actually, once you apply the sensitivity, there are two elements, first of all, of principle to be taken into account, then I will describe also the specific case. The two elements that you have to take into account that on a quarterly basis, I think that there are various moving parts, so it is capturing a shift quarter by quarter. It is, let's say, relatively not precise. Another factor that you have to take into account is that in the sensitivity, clearly, we said that this kind of sensitivity are designed with a movement of price that are relatively small, so in the sense of $5, $7. What's going on is that if you have a EUR 17 change, if you compare, for example, the last quarter 2020 with the first quarter 2021, first of all, you have 50% of that is gas. In that gas, there is, just to give you an idea, a 20% that is spot, so it's collecting the dynamic of that quarter. There is another 30% that is oil linked. Once it is oil linked, it doesn't mean that it's oil linked of that quarter. Majority speaking, is a nine-month average of the previous nine months. That will be, let's say, a sort of lag time change in the price of that 30%. Then there is a 50% of gas that is related to fixed price or formula price that are completely, let's say, not referred, not linked to variation of scenario or very marginally linked to that. That is the first element that you have to take into account. A linear approach of sensitivity in a quarter, it is in such a size of changes, it is not correct. There is also some PSA impact that could also impact, have effect. Specifically, for the quarter 2020 and early quarter 2021, there were two factors. At the end of the year, generally, you have also one-off. For example, at the end of last year, we had an insurance benefit, we have a settlement in West Africa, there were some changes that impacted positively that quarter at the EBIT level. There was also change of mix. The change of mix, for example, was, just to give you a figure, it's a larger figure, was a large increase in the gas of Zohr, that has a fixed formula, and there was, for example, a lower contribution in Indonesia for Jangkrik that is more related to the spot market of the JKM, and there were also changes, for example, in Karachaganak or Nigeria. Even if you have some absolute gas trend or absolute volume trend that seems similar, there are a lot of moving parts. Another element then justify that once you have this larger variation, it is more appropriate to apply a certain degree of discount. It is not large, this discount, but it is, let's say, reflecting all the factors that I mentioned now. I leave it to Adriano for the answer about chemicals. Sure. Thanks, Francesco. Can you hear me well? Perfectly. Okay. Thank you. Yeah. As you described, the situation in Q1 was extremely positive because we have seen a global recovery in demand, mainly in Asia and North America, but also in Europe, a strong recovery and a rebound that was significantly faster and bigger than what we expected at the beginning. This was also complemented with additional problem on the supply side. Why I say additional, because already at the end of 2020, with the hurricane season in the U.S., we start to see some limitation import of products from North America, and so some shortage in Europe. This shortage has been increased in Q1 due to a very bad weather in Texas. We just know that probably Texas didn't see for the last, I don't know how many years. Also some unplanned event in Asia and in Europe. As you said, our asset realization was in the range of 70%-72%. Why we could not run more? Mainly for two reasons. One reason relate to internal effects because we have some unplanned event, very minor unplanned event that limit us a little bit in term of producing more. Also because in some stream of business, we also buy product in the market. Like benzene, like acrylonitrile, and few other chemicals that being very short in the market, we also face some challenge. In order to secure. This is the reason why in Q1, we run as much as possible, but asset utilization was in the range of 72%, which was anyway very much in line with the Q4 2020. In the second quarter, our asset utilization will be impacted by a few planned events that we have already announced. I'm talking about planned event like the turnaround in Brindisi, of the big cracking in Brindisi, some activity that we also announced this week in Mantova. We are going to have limited capacity driven by turnaround season. Perfect. Thank you very much, both of you. You're welcome. The next question is from Jon Rigby of UBS. Please go ahead. Thank you. Hi, everybody. If I just have a quick question on the transaction or the proposed transaction. The first is the transaction in of itself all that you plan to do, or is there some second wave that will emphasize the value extraction? What I mean is, clearly this will raise cash for Eni Corporate. Is there a plan for what you would do with the cash from any transaction that you're proposing to do, enhance a buyback or something, just to actually physically demonstrate and highlight the differential in valuations? The second question is, we sort of wrestle with this issue of the paradox of trying to maintain the advantage, or competitive advantage that integrated oil companies have in entering some of these markets with the skills that they have, against the sort of integrated discount on operational side. Is there a way, a structure, a management and legal arrangement that you can set up that maintains the sort of independence of this new entity, but is also able to ensure that you share the skill set that exists in the Eni group? Thanks. Okay. Jon, clearly, about the first question, you touched on an important point. I would like just to recap what are the three main rationale about this transaction and this merge and the potential IPO disposal the next year. I think that the first element, it is an industrial rationale. The industrial rationale is what I mentioned. This integrated value chain that will stabilize value, that will add the value at the end, and that will create value in the middle. I think this is something that could be done only by an integrated player. The second element is that to create a vehicle that is working in this new area of growth, in these new businesses, with the right and proper metrics. Once I speak about metric, I'm speaking about the multiple of value, but also speaking about the cost of capital. I'm speaking about the dividend policy of this vehicle, and I'm speaking about the leverage level. We will, let's say, create a runner for this growth area of businesses. In the current world, if you enter and play this game, you buy immediately with certain multiple, and once this new opportunity enters your portfolio, they will be immediately discounted as you are an integrated oil and gas company. We want to have the right currency to play this game. The third element instead is what you mentioned, the fact that this opportunity is an opportunity to free cash, to stabilize and improve the distribution policy of Eni, and reinforce substantially both the capability to growth of the new entity. Accelerating CapEx, thanks to the benefit of this new equity, let's say inflows, but also on the leverage that you will be able to attract, and substantially relieving Eni from the cash impact to invest in these new businesses. I think that it is too early now to design a use of the proceed. What I can tell you, what is visible, is that there is a win-win opportunity both for the new entity and for the mother company. This is coming to the second question. Clearly, we wanted to keep the control of this entity because we believe that we want to highlight the value, and I mentioned this one before, but we want also to prove that this is just one of the leg of our decarbonization plan. Eni will be an energy company, fully decarbonized in all segments, in all sectors, in processes and products. In this way, we are creating the tool to decarbonize our domestic clients. Clearly, we are decarbonizing our upstream with a net zero target in 2030. The downstream, you know that we have the target 2040, and overall, we have a Scope 3 target. We have then to touch the additional element of our emission flows. There will be other clients, the mobility clients, that have to be decarbonized, and there will be also the clients that we don't touch directly, so the clients that are just user of our oil and gas production. I think that we want to keep this link. This is the reason we are thinking to a minority stake disposal, because I think that this is an early phase of this journey. It is a process that will touch overall the company. We believe that this kind of discount will be progressively reduced because of the overall effort that you will see in all segments. Right. Got it. Thank you. That's very clear. The next question is from Alessandro Pozzi of Mediobanca. Please go ahead. Hi. I have a few questions. The first one on the tax rate. I think there are a couple of surprises there. At the group level, 75% is probably higher than what I had expected. If you can maybe give us some additional color there. At the same time, I think the upstream was quite low, despite the increase in volumes from North Africa and Egypt. Maybe can you tell us how we should model the tax rate in the upstream and at the group level, going forward in 2021? Maybe an update on the renewable pipeline. If you can give us maybe some color on the next two projects coming on stream. Obviously, you signed a new JV, with CDP and GreenIT. I was wondering what type of opportunities do you see, also the type of permitting that in Italy is quite slow to get permits for new projects. You have quite an ambitious target of 1 GW of new capacity. Yeah, I leave it there. Okay. Thank you. I will answer to the tax, and then I will leave it to Alessandro Della Zoppa, the answer about renewables. About the tax rate, it is right. It was at 70%, 73%. That is a bit higher than our original estimate. I think that the overall, let's say, group tax rate, have to be read, take into account that we have a very negative performance in this quarter of R&M and the GGP. The segments that are substantially with very low tax rate. We have to take also into account that we didn't recognize certain deferred tax asset in Italy due to the potential, let's say, future recoverability. There is one factor that substantially impacted this effect. Without this one-off element, we would have been to the same level of the guidance, so a 60% tax rate, up around $60. About E&P, the E&P tax rate is 50%. That is quite low. It is quite low because in a world of $60, you will have benefit from many countries, and not only, let's say, the higher tax rate typical countries that are Libya, Egypt, Middle East, et c. You benefit also, for example, from other regions, OECD countries, et c., Italy. The overall E&P is benefiting off this mix of different contributors. In terms of the expectation of the tax rate in the full year, actually, I can confirm that we return to the overall 60%, 65%, because this one-off element that you have seen in this quarter is expected substantially to be minimized and resolved progressively. I think that the guidance, again, on a quarterly basis, has a value, but cannot be taken in absolute terms, so have to be a bit corrected. In a yearly basis, it is confirmed. Alessandro, if you are able, if you can, please answer to the question of renewables growth. Yes. In renewables, as we said, we expect to exceed 1 GW of capacity at the end of this year, installed or under construction. Coming to your question specifically on the pipeline, we are also working to reinforce our pipeline towards the target of 4 GW in 2024. We are doing this along a number of lines of development. I would mention a few. One is our JV in the U.S., together with Falck Renewables. The JV is now fully operational and is taking advantage of an improving framework generated by the new administration. In Southern Europe, we are working on a number of targets, especially in co-developments, as the one that we announced just one month ago with the Spanish company, X-ELIO, by which we will acquire three photovoltaic plants in the south of Spain. We are targeting particularly those countries because these are the countries where we expect to be able to explore the most synergies with our retail business that also entered Spain, for example, in the last month. Last, but I would say, also very important is what we are doing in Italy. Our joint venture with Cassa Depositi e Prestiti is also now fully operational, and it's working in order to reinforce our pipeline of greenfield projects, including through the enhancement of real estate assets that we own, or CDP owns, or the public administration owns, and are now unutilized. This is, we think, a field of development that is very interesting from an economic point of view, and also very much in line with the development of this sector in our country. Okay. Do you expect a bit more favorable environment in Italy from the new government? Do you think permitting will be accelerating the process? Certainly, we see the conditions now for the environment to improve, especially in the authorization processes that are, let me say, the weak point, the weak element that has slowed down the development of renewables in the last few years. There are certainly a number of good announcements in this respect by the government. Okay. Maybe if I can squeeze a final one. It's probably not a clear-cut finding the right comparable for the renewable and the retail business together. What sort of valuation do you have? What sort of multiples we should think about for that business? Alessandro, I think that clearly it is too early because we are selling this concept, that is clearly a new concept. Just to give you some elements coming from the market. An E&P major is now valued 4x-5x the EBITDA. A retailer is valued between 7x-8x the EBITDA, and the renewable player is valued clearly based on the growth assumption, et c., between 10 x- 15 x the EBITDA. There are also a section above that. The structure or the light of this vehicle outside has already immediately a value proposition. The combination of these two entities clearly could move the potential mixed vehicle in the range of a double-digit multiple. Absolutely. Thank you very much. The next question is from Irene Himona of Societe Generale. Please go ahead, ma'am. Thank you very much. Good afternoon. Two questions, please. First, a question on Mexico, if I may. They have just passed this new hydrocarbon law, rolling back the energy liberalization of recent years. You have quite a presence there, obviously. I wonder how we should think about the risks to Eni, in particular, to the full development of Area 1, or indeed in terms of potentially higher tax and royalty levels for Mexico. My second question is on the Global Gas and LNG business. It seems you're delivering great profits in quarters when you have some contractual renegotiation. If we remove that, we're left with essentially a trading business. How should we think of this business? Clearly we cannot model or predict contractual settlements. How should we think of it going forwards, please? Thank you, Irene. I leave the answer on Mexico to Alessandro Puliti and on the LNG business to Cristian Signoretto. Thank you. Okay. Regarding Mexico and our project and new laws. Our project is progressing. As you know, we are in the early production phase nowadays, and we are constantly producing above 20,000 barrels of oil per day. In the next year, it is foreseen the installation of the FPSO, and then we will re-ramp up to its maximum production. We are not envisaging impact on our project due to the new law, because as far as we understand, it won't affect this project, but won't affect other, let's say, oil trading business, but not development, this kind of development. For the time being, we don't have any doubt on our project delivery in Mexico. I will leave the floor to Cristian for the LNG. Good afternoon. Let me elaborate maybe the answer on two pillars. On the gas business, which is mostly clearly geared into Europe and Italy, as you pointed out, this is clearly affected by the renegotiation that we have with our long-term supplier, as it used to be in the past. As you can imagine, this quarter was affected by the negative impact of the spread between the Italian market and the European market, which in turn, clearly affects our long-term supply agreements. Clearly, this has triggered a renegotiation that will bear its fruit in the future. When it comes to the LNG instead, as you know, we are planning to grow substantially our portfolio in sync with our upstream activities. In the first quarter, we sold 1.5 million ton of LNG. In that quarter, we don't see any contribution to the Damietta startup. In the future quarters, you will see that clearly also contributing. In the future, also, thanks to other, let's say, equity projects, this will be increased even further. As you can imagine now that that activity is linked to the midstream part of the value chain. The movement of the flat price of the LNG and of the gas is capturing to the upstream. Here, we are taking care of the, let's say, trading margin, as you call it, which comes from the differential between the price at which we buy the LNG and the price at which we sell it into the global market. Okay, thank you. The next question is from Oswald Clint of Bernstein. Please go ahead. Oh, thank you. Francesco, I wonder if you could help think about the cash flows from some of your other startups. You spoke about Merakes, but in terms of Algeria and Angola and Sharjah recently, the ramping up there. It's a little bit opaque, I guess, on pricing and taxes. Just some indication or color around maybe the cash flow per barrel that those projects are really delivering, please. That would be helpful. Could you talk around any feedstock pricing pressures as it relates to your biorefineries? Obviously, Gela has the locally sourced biomass, but what about the palm oil as it relates to Venice? Has there been pressure there in the first quarter, and how do you think it plays out through the rest of the year? Thank you. Thank you, Oswald. I leave this second question to Pino Ricci and Umberto Carrara, and then I will return to you about the project that you described in terms of contribution. Clearly, we are not providing details at a project level. What I can tell you, I will describe later. Pino, please. Okay. Umberto speaking. About the pricing of the feedstock in our biorefinery, yes, the first quarter we had quite a pressure from the palm oil, which was the main component of our feedstock for the biorefinery. We do expect a significant variation in the course of the year because we have put in operation our BTU that will allow us to change significantly the slate of the feedstock for the biorefinery. About the cash flow, clearly, each project has its own cash also because it is characterized by completely different products. The project in the Eni Sharjah is a project of gas with condensate, so wet gas. It is quite attractive in terms of cash flow. The one of Algeria that you are referring to, the Berkine, is made of two different streams. One is a gas production and the other one is an oil production that we started a year earlier. What I can tell you is that substantially in terms of cash generation, we are perfectly in line with our expectations. I think that you have seen from the cash assumption in terms of cash flow from operations that we are presenting in a $60 world. Actually, we are capturing the full benefit of the scenario. You have to consider that, and this is on a yearly basis, we will be able to capture both the oil, but also the gas that is growing, as we mentioned before, because of the time lag, in particular in the oil-linked contracts, clearly not in the fixed domestic sales. Just to give you a measure, we presented our plan in February with a $50 assumption of oil, with a cash flow from operation that was close to EUR 8 billion, just below EUR 8 billion. Adding up these $10 changes assumption of a $60 Brent, we will gain practically EUR 1.5 billion in term of oil of a Brent effect. You have also to take into account of SERM that we are presenting with an assumption in that sensitivity in close to zero. We are losing an additional EUR 300 million. You could add something on chemicals, but at the end of the day, if you make the sum, you reach a value closer to EUR 9 billion, in excess of EUR 9 billion. That is exactly the reference that we are presenting to you. Actually, in our forecast, we are also gaining a bit more thanks to the performance, to the mix. I would say that everything is actually in line with our prediction, and the contribution of these new fields are taking into account in the overall mix, contributing with positive value because they are essentially onshore brownfield, the case of Sharjah, and the case of Berkine, there is clearly a lot of facilities, and there is clearly a benefit from that point of view. That's really helpful. Thank you, Francesco. The next question is from Massimo Bonisoli of Equita. Please go ahead. Thank you, and good afternoon. I have a question on the announced transaction. You mentioned among the options an exchange of a minority stake. Could you give us some color on this option? Would you eventually swap your stake for another minority in a renewable company? It may also include other Eni asset. Are you looking for synergies with another renewable retail company? The second question is back on the call of the fourth quarter. It was announced there that you will eventually have a transaction in the upstream, like the one with Vår Energi for a joint venture in upstream assets. Are you targeting larger portfolio of assets for the JV, which include multiple countries in the same region? Just to understand the perimeter of a deal in the upstream. Okay. About the first transaction, the retail renewable, clearly, we have listed three different opportunities. The IPO, the disposal to a strategic player, or eventually combination. The third element cannot be a combination for an upstream player. We want to create a retail renewable champion. We have to assume and to work within that playground. I think that this is the logic of this operation on this potential option, because at the end of the day, we listed all the potential option in this early phase of our study. About the Vår-like initiative, if you remember, once we presented the strategy, we said that we would like to have this kind of combination because we want to create vehicles that are able financially to be standalone. This is different from the retail renewable. In this case, the target is to have a big consolidated vehicle as Vår, able to collect cash, etc., and to distribute dividend, and to reduce the CapEx exposure, in particular in certain countries or regions that are more, let's say, capital intensive. From the point of view, we are actually working very hard on that. There are more areas of interest, more geographies of interest, and potentially different operation. Not all have the same, let's say, degree of maturity. Clearly we are thinking to combination where we could have a few country together, not too many country, because once you build this kind of vehicle, you have to think on operational synergies. You have to think of financial attractiveness, and also you have to think on governance. You cannot be just to say, to put together in a big soup all the ingredient that you like. You have to select the right one. Very clear, Francesco. If I may squeeze in another very quick question, just for our models, considering the change in the assumption of oil for cash flow generation, what would be your new net working capital impact for 2021? On working capital, the assumption is substantially to have around EUR 500 million of absorb of working capital. We continue to have this kind of assumption. Very clear. Thank you very much. The next question is from Giacomo Romeo of Jefferies. Please go ahead. Good morning. The first question is on renewable capacity growth you discussed. A lot of the focus of the JVs you mentioned seems to be tilted towards solar, and your scale at the moment in wind is, you could say somewhat suboptimal. Can you talk a little bit about the potential bidding opportunities to add capacity in this technology, and where do you see offshore wind capacity going in the context of your 5 GW and 15 GW targets? The second question is, you mentioned that EGL Power and Renewables is just one of your decarbonization legs. Your biofuel business is also quite unique in the context of the integrated sector, I think. Do you think that the value of this business is fully recognized at the moment? Have you considered a similar path to the one you announced today for Eni Gas e Luce, for this business as well? Okay, Giacomo. On this second question, I leave to Alessandro again about the wind offshore plan. Clearly, we started with this domestic decarbonized model because we think this is more mature. There is a larger client basis, there is an opportunity to grow faster in renewable capacity, there is, let's say, this opportunity to create the joint and integrated model. I think that this is the first step that we have designed. I agree with you that the other element that is quite interesting is the biorefining and the mobility client. The mobility client is the other side of the domestic client. The domestic client is exiting, taking a car, and moving around. He's surely have the same mindset to receive a set of decarbonized product. You know that we have the second, let's say, in term of capacity, we are the second operator, the second player for biorefining capacity. We have the Ecofining that is a unique technology that give us a lot of flexibility. We prefer to grow further and to, let's say, reinforce this model, before thinking to something more. Clearly, in this current configuration, all the technologies, this new business, and many other in the overall evaluation of Eni are relatively discounted. We have to think about that. Alessandro, if you want to integrate about the wind. Yes. I can confirm that, looking forward, we are going to rebalance our pipeline portfolio between solar and wind. In the past, we focused particularly on photovoltaic project, but we are now shifting this. We have, looking to geographies, wind offshore, wind project under construction currently in Italy, in Kazakhstan. We have a wind project in Iowa, in the U.S. So, what we are targeting is to come to 2024 with a split of renewable power generation between wind and solar. I would say 60% solar and 40% wind, which will also include, as you mentioned, offshore wind after our entry into Dogger Bank. We are also looking to those kinds of projects. Thank you. The next question is from Lucas Herrmann of Exane. Please go ahead. Thanks very much. Francesco, thanks for the opportunity and the commentary around trying to attract value is obviously very encouraging. We're thinking much more about how to play with your portfolio. Just going back to another aspect of that. Part of the strategy is clearly to realize value through divesting some of your upstream positions. I wondered how that market was looking for you at the present time. I'd assume more robust, but any commentary around potential divestments, JVs, etc., would be helpful. Secondly, if I could just go back to LNG, a couple of questions really. First, Merakes. How much of the production in Merakes I believe all of it goes through Bontang, but how much of it is actually contracted to other buyers at the present time? How much do you end up being able to play with? Staying with LNG, on Damietta, two questions, unfortunately. One is, can you just explain the structure? I presume that Damietta is a tolling facility itself, and you toll gas and take the offtake. Secondly, to what extent will that support Zohr's production at 3.2 Bcf a day through the course of this year? That's it, Francesco. Thanks very much. Okay. About disposal, the other question about LNG are given to Cristian. The disposal, clearly, we are working. You know that we presented a plan of disposal for the four-year plan in the range of EUR 2 billion, so practically EUR 500 million per year. Actually this year, we are expecting to have a net effect between disposal and acquisition of, let's say, - EUR 500 million, because we are selling for EUR 500 million and potentially having, let's say, a potential acquisition in the range of EUR 1 billion in different sector. I'm not just referring specifically to upstream. We are clearly working on different dossier in the upstream side. There are at least four or five assets that are under tender. In certain case, quite advanced. I think this process is maturing. There are assets that are coming from the dual exploration approach, assets that are related to, let's say, mature countries where we consider no more core in our portfolio, and other opportunity that we could monetize and valorize through this, eventually, to a partial disposal of a smaller stake. The process is coming in. It takes time because negotiation require a lot of detail, and therefore you will see some effects in the coming months. About LNG. On the Merakes, I can tell you that a quota of that production is going to go to the domestic market as per, let's say, the government requirement. The rest of it will be feeding the Bontang LNG facility, and it will be already put onto the market, let's say, in the next weeks and months. We are discussing with the authorities and also with the potential offtakers, clearly including Eni itself, to enter into long-term agreements, starting from, I would say, 2022, for securing the offtake of the LNG from the Merakes production. When it comes to Damietta, clearly, you're right. Damietta, you can consider it as a tolling facility, whereby Eni owns 50% of the equity and does, let's say, provide the tolling arrangement. When it comes to the link between the production of Damietta and Zohr, maybe I leave the floor to Alessandro, which can give more color on that. Okay. Regarding Zohr and Damietta, clearly, there is no direct commercial link, but there is clearly a production link between the two facilities. I give you just an example. Q1 2020, Zohr production averaged 2 Bcf per day. In Q1 2021, Zohr production has averaged 3 Bcf per day. Clearly, Zohr is producing almost 50% of the gas produced in Egypt, and it acts as a swing producer in the country. The opening of this export opportunity has contributed substantially to reach the nearby maximum capacity of Zohr production, benefiting certainly the upstream side together with the midstream side. Where do you forecast Zohr will be in the fourth quarter of this year? The fourth, we- on average. The fourth quarter, on average, would be certainly above 3 Bcf per day, while the average of the year, where we include clearly less consumption during the summer, will be around 2.7 Bcf per day. That's great. Thank you very much. The next question is from Bertrand Hodee of Kepler Cheuvreux. Please go ahead. Yes. Hi, Francesco. Two question, if I may, related to gas prices. On Zohr first. My understanding is that on your Zohr gas price realization, there was a formula, linked to oil price with a floor at $4.2 and a cap at $6 per Mcf when oil price were above $60 oil. My question is: Is there a lag effect on Zohr, meaning that could we see, if oil price stay above $60 in the next quarter, an uplift in your natural gas price realization? That is my first question. The second question is on the TTF, PSV spread. You clearly mentioned that you have suffered this quarter from this narrowing spread. The reason behind that is, and you may share your view on that, is for these new volumes from Shah Deniz. In a way, is that a structural narrowing, and hence your action to renegotiate some gas contract? Okay, I leave it to Alessandro and to Cristian about this answer of Zohr and the spread. Sure. Regarding gas pricing, Zohr formula, yes, I confirm there is a lag time effect. We will see the full benefit of the $60 per barrel toward the end of the year and beginning next year. I leave it to Cristian to complete the answer. Yeah, on the spread. Clearly, I'd say you're right in the sense that the new flow of gas from the TAP pipeline has brought to the market roughly 6 Bcm going to 8 Bcm per annum of extra capacity. This has clearly triggered, let's say, a reshuffle, let's say, of the supply source to the country. I would say the first quarter has been also affected by clearly a very strong TTF price linked to the LNG tightening of the market, which actually brought away LNG from Europe towards Asia. In turn, TTF was, let's say, brought up by this dynamic, while PSV actually was not really linked to that dynamic. I would share your idea that going forward, maybe not at the level of the first quarter, but in general, the spread between PSV and TTF might have a new equilibrium, which is not, let's say, the EUR 20 per thousand cubic meters that we have seen in the last two years, but it is probably more in the range of the EUR 10, EUR 12. Having said that, this, as you said, triggered, in fact, our renegotiation with our suppliers that we started already and will bear fruits in the coming months. Thank you very much. Extremely helpful. The next question is from James Hubbard of Deutsche Bank. Please go ahead, sir. Hi. Thank you. Good afternoon. Two questions. The first is, you mentioned real estate in the context of renewables. I guess you're talking about brownfield industrial sites, but correct me if I'm wrong. If you are, though, you seem quite excited about it. In my mind, I'm just seeing some old brown field industrial sites, and I don't see how much acreage that could be and why. Could you give some color as to why that's an exciting aspect from the perspective of presumably installing solar panels? The next question was, could you just clarify, I thought I heard you say on the call that full year refining and marketing chemicals, you're looking at EUR 400 million EBIT. Did I hear that correctly? Thank you. Yes. This second question, then the first one, I return to Alessandro. Now, about the EBIT, clearly, this is a revised guidance that includes a progressive improvement in the refining margin. Potentially an average in the range of practically 1.8-1.9. That is half of the margin that we assume in the original budgeting. We substantially have this effect to have an EBIT in the range of EUR 300 million. On top of that, there is the benefit of the chemical businesses that is adding an additional EUR 100 million. Versus the previous guide, this means that there is a reduction of these two segments together in the range of less than EUR 200 million of EBIT. About the real estate, and particularly the use of industrial plant, I leave this to Alessandro to provide you more color. Yes. We will refer to both industrial sites, but also to areas that are simply unused, and they are under the control of the different entities in the public administration. We think that this is a all in all, a very significant and sizable potential that we would like to unlock. Also with the help of the institutional profile of capital for Cassa Depositi e Prestiti in Italy, that we listed. We are working in this new joint venture that has been incorporated a couple of months ago. It is both industrial sites and unused areas. Okay. I guess the advantage in Italy is much faster permitting. Is that correct? Yes, is on permitting. We count very much on the promised simplification that the government announced recently, together with the availability of the areas itself. In Italy, this is an issue. Once you exclude agricultural areas, you're left with the significant constraints that is hindering the growth of renewables in the last few years. Okay. Thank you very much. The last question is from Lydia Rainforth of Barclays. Please go ahead, madam. Great. Good afternoon. I have two questions, if I could. Gattei, on the biogas market that you mentioned earlier and the acquisition that you did, what is the scale of the market that you're seeing there, and will that sit in the Energy Evolution part of the business? Then secondly, apologies, I think I missed this earlier on, but in terms of July and the review on prices and the launch of the share buyback scheme, is that just automatic in terms of the idea that there will be a buyback and that you will start in the third quarter? Thanks. Okay. About the biogas, I leave the answer to Pino and Umberto, then I will conclude with the buyback. Thank you. Okay. Pino speaking. About the biogas, our recent acquisition of the company, FRI-EL, put us in condition to have a very high pipeline of conversion of plants that produce gas from biomass to biomethane, compressed and liquefied. In particular, to increase a lot our capability to enlarge this business, acquiring also the know-how and the organization that is already in the field of this. Our plan is to provide, at the end of the plan, only biogas to the service stations that sell gas, compressed and liquefied. Considering that only the pipeline already planned that should be transformed from gas to methane in a couple of years, we will reach more or less 50 million cu m per year of biomethane. This is a very large quantity to start. Yes. About the distribution policy, the buyback, clearly, you know that we designed this approach, this variable distribution, subject to oil price, and this oil price reference will be fixed in July. What I can say now is that clearly, Eni is in very good shape. I think that the quarter this year, even the difference in the consensus, in the assumptions that were made by the application of sensitivity, proved one thing, that we are back in generating cash, material free cash, and that was just an early phase. It is a quarter that still miss of certain components, the marketing component, the gas and power component. There are still rooms of improvement that will emerge during the years. Also E&P will fully capture in the gas component the price variation. For this reason, we presented that $60 reference that proves that up to that level, there is a significant amount of free cash. Today, the price is $ 67, so it's even higher. The year to date is $ 62, and our buyback scheme start or is, let's say, triggered by an assumption of $ 56. We are in a good shape. The market is positive. There are very good sign. There are, let's say, good premises. Clearly, we will check this in July. In July, we will have six month of a market. The market, I would say, is rebounding. All the trend, in particular in Western countries, proves that there is an increase phase of removal of the lockdown. There is only India now that is materially impacted, and there are a lot of positive sign that, let's say, give us a very positive confidence for the future. I think this is my last and positive sentence for this call. I don't think there is any other question. No, sir. I confirm there are no questions at this time. Okay. I thank you all, and we will remain in touch for any further clarification that could be required. Thank you very much. Thank you. Bye. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.