Last checked at 
* Assets in carve out still being discussed-source
* IPO most likely way, possibly in 2016 - source
* Eni seeking to sell assets to bolster cash flow (Adds source comments, background)
By Pamela Barbaglia, Stephen Jewkes and Giancarlo Navach
LONDON/MILAN, Feb 5 (Reuters) - Italian oil and gas groupEni is working with Goldman Sachs on thepossible spinoff of its power and gas unit, two sources withknowledge of the matter said on Thursday.
"The group is reviewing its options for the division andGoldman Sachs is working with them," one of the sources said.
The assets that will be included in the carve-out are stillunder discussion, though an initial public offering (IPO) lookedthe only way to do it, a second source said.
"I can't see a piecemeal sale, it would be too complicated.It'll be an IPO," the source said, adding it was unlikely tohappen this year but "possibly (in) early 2016".
Eni declined to comment, while Goldman Sachs could notimmediately be reached for comment.
Claudio Descalzi, who took over as CEO of Italy's biggestcompany in May last year, has said he wants to focus on thebread-and-butter business of finding oil and gas. He is due topresent his first business plan in London on March 13.
Analysts have said that, with oil prices sharply downbecause of weak global demand, Eni will have to sell assets tosupport cash flow and dividend.
State-controlled Eni still needs to raise 6 billion euros ($6.89 billion) under an 11 billion euro asset sale programmelasting until 2017 but lower crude prices mean finding buyers atthe right price has become difficult.
In December it had to put on hold the sale of part of its 43percent stake in oil services group Saipem due tomarket volatility.
"Eni needs to unload assets. With Saipem out of the picture,they need to find something else, maybe their big oil and gasclient portfolio," the first source said.
Eni's power and gas unit has been a drain on resources forsome time, posting an adjusted operating loss of 662 millioneuros in 2013. The group is targeting an operating breakeven forthe unit in 2014.
Oil majors including BP and Total haveannounced cuts in capital expenditure of around 10-15 percentthis year and sold assets worth dozens of billions of dollars tohang on to their dividends.
($1 = 0.8711 euros) (Reporting by Pamela Barbaglia, Stephen Jewkes and GiancarloNavach; Editing by Catherine Evans)
