Eni wants to revive its chemicals, retail and refining businesses to offset volatility in oil prices and regain favour with investors after its shares underperformed those of industry rivals in the past three years, the sources said.

The state-controlled major is looking at the Italian assets of bioplastics multinational Mossi Ghisolfi, which has been put under creditor protection, two banking sources said.

"Non-binding bids are due in the next few days and Eni is there," one of the sources said, adding that the deal was worth "hundreds of millions of euros".

There has been media speculation about Eni being interested in Mossi Ghisolfi, but this is the first time it has emerged the group would submit bid interest in the assets.

Eni did not comment.

The potential acquisition, although small for Eni, flags an ongoing strategy shift for CEO Claudio Descalzi, who has spent four years creating a lean exploration business, racking up big discoveries in places like Mozambique and Egypt.

While keeping a firm focus on exploration, the 62-year-old reservoir engineer now wants to rejig the business model to bolster and create greener midstream and downstream businesses like marketing and refining as a hedge against oil price swings.

An acquisition of Mossi Ghisolfi's Italian unit, which uses agricultural waste to make plastics, would fit such a profile.

The move comes at a time when the boom in renewable energy and the prospect of a world powered by electric vehicles is creating a challenge for the oil industry.

BALANCED PORTFOLIOEni has been sounding out investors on why its shares have underperformed and feedback suggested more downstream protection is needed, said two fund managers contacted by the group.

Its heavy presence in high-risk areas such as Libya and Nigeria was another reason for concern, they said.

"It makes sense to build a more balanced portfolio less exposed to oil price swings ... It will help boost multiples and support the stock," said Mediobanca oil analyst Alessandro Pozzi.

Since oil prices plunged from above $100 a barrel in 2014 to below $30 in 2016, Eni shares have fallen more than 20 percent while France’s Total has risen 7 percent and Royal Dutch Shell 9 percent. [http://reut.rs/2AuObMh]

Total and Shell have fared better because they have greater exposure to downstream businesses such as refining and petrochemicals, where demand is lifted by economic growth fuelled by lower crude prices.

Exxon Mobil Corp said last week it was revamping its refining and chemical operations to boost profits.

Eni, whose exploration and production (E&P) arm generated more than 80 percent of operating income over 2015 and 2016, has been the industry's best discoverer in recent years. But its downstream business has struggled.

A year or so ago, it toyed with the idea of selling its chemicals and retail operations but pulled both deals, opting instead to streamline operations and make them more profitable. That strategy has led it to consider acquisitions, sources said.

CEO Descalzi has said the group could float its retail arm with an initial public offering (IPO) within two to three years.

A banker familiar with the matter said Eni wanted to strengthen its retail business, adding this could involve acquisitions.

Eni is seeking to reduce its carbon emissions, making new investments in solar plants and converting refineries to biofuels. Last month, it signed a deal with carmaker Fiat Chrysler to work on new carbon-low fuels for cars.

It also plans to expand its liquefied natural gas (LNG) business.

"It used to be all about E&P. Now at its roadshows Eni dedicates almost half the time to downstream," the banker said.

(Additional reporting by Danilo Masoni; Editing by Edmund Blair)

By Stephen Jewkes