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* Expects output to be boosted by Kashagan field start-up
* Sees 2013 oil and gas production growth at over 3 pct
* Starts internal audit on Saipem, says zero tolerance on bribery issues
* To pay full-year dividend of 1.08 euros
By Stephen Jewkes
MILAN, Feb 15 (Reuters) - Italian oil and gas major Eni delivered an upbeat production outlook on Friday after output rose in the final quarter of 2012, driving an increase in profits that comforted investors anxious about problems besetting its key projects.
Eni confirmed previous growth forecasts of more than 3 percent for 2013 and said production at its giant Kashagan field in Kazakhstan - a project that had been marred by cost overruns and delays - was expected to start before June, with around 200,000 barrels per day on tap by the end of the year.
It also said a recovery in Libyan production since a civil war and a stronger performance in Iraq and Russia had underpinned a 7 percent increase in production last year.
"It's an excellent E&P (exploration and production) result and with losses on refining much smaller and the downstream business improving they produced an EBIT number that beat our expectations," Mediobanca oil analyst Andrea Scauri said.
The problems at Kashagan, the biggest oilfield discovery in over four decades, had prompted some analysts to question Eni's ability to deliver large-scale projects on budget and on time.
The company's buoyant statement lifted its shares 3.4 percent by 1521 GMT, while a European oil and gas sector index was up 0.1 percent.
Adjusted operating profit rose 17 percent in the fourth quarter to 4.96 billion euros ($6.6 billion), Eni said.
The company also announced it would conduct its own audit after allegations of bribery at its Saipem subsidiary and chief executive Paolo Scaroni told analysts on a results conference call that Eni had a zero tolerance approach.
"We have started our own internal audit (on Saipem) so as to act in a transparent way... Nothing illegal is ever acceptable," said Scaroni, who is himself under investigation in the probe into allegations that Saipem paid bribes to secure a series of contracts in Algeria worth $11 billion.
The allegations prompted the resignation in December of Saipem's long-standing chief executive, Pietro Franco Tali and cost the heads of other Saipem and Eni executives.
It is the latest in a series of scandals in recent weeks - others have involved Italy's third-biggest bank Monte dei Paschi di Siena and state-controlled defence group Finmeccanica - which have sent shock waves through Italy's business and political circles just days ahead of crucial elections on Feb 24-25.
Scaroni, at the helm of Eni since 2005, said again that recent events at Saipem could lead to a rethink of its 43 percent stake in Europe's biggest oil services group.
Earlier this week Scaroni said that while Saipem had always been a strategic asset, the developments in Algeria had led Eni to rethink the relationship long-term.
"We periodically review (our corporate structure). It can change over time and what happened recently may contribute to this," he told analysts on Friday.
Eni, the biggest foreign energy operator in Africa, has extensive gas interests in Algeria which supplies Italy with about a third of its gas needs. It has successfully renegotiated costly long-term gas contracts with Algeria's energy group Sonatrach and is now in talks to the same end with Russian gas giant Gazprom.
Scaroni said that with European gas and power demand still weak and not expected to pick up this year, Eni's gas and power division would be below last year if contract renegotiations were stripped out.
The world's No. 7 oil and gas group by output is instead focusing on big upstream projects in Africa, Latin America and the former Soviet states to fuel growth in years to come.
Scaroni said the group's discovered resources in 2012 were about six times its yearly production, in large part thanks to bumper finds in Mozambique and the Barents Sea.
With around 75 trillion cubic metres of gas in place, Eni's Mozambique discovery has got rival oil companies falling over each other to get a piece of the action.
"We expect a final investment decision on Mozambique in 2014. We're very happy with our 70 percent stake (in the Mamba field) but if we got an offer of a strategic alliance we would consider it," Scaroni told analysts.
Large-size projects bode well for Eni's production portfolio. In 2012, it had a reserve replacement ratio of 147 percent, one of the highest among European oil majors.
The performance marks it out at a time when oil companies are finding it increasingly costly to seek out and commercialise new discoveries.
The world's second-biggest oil company Royal Dutch Shell recently said its reserve replacement ratio was just 44 percent in 2001, adding it expected the ratio to average 84 percent over the next three years.