MILAN, March 14 (Reuters) -

Italian energy group Eni increased the payout for investors, but sounded a cautious note on its gas and LNG business and its cash flow generation, prompting a lukewarm reaction from investors on Thursday.

Presenting its updated strategy to 2027, the state-controlled group said it would distribute between 30% and 35% of its cash flow from operations (CFFO) to shareholders, up from a previous 25-30% of CFFO in last year plan.

For this year's results, the group will raise dividends by over 6% to 1 euro per share and buy back shares worth 1.1 billion euros.

Other big oil groups including Shell, Chevron and TotalEnergies have also increased their dividend in the fourth-quarter results, while BP increased the rate of its buybacks.

However, the group revised down its expectations for commodity prices and became more cautious on its gas and LNG business (GGP), which last year surprised on the upside.

Eni said earnings before interest and taxes (EBIT) for the gas and LNG division (GGP) for this year is now seen at 0.8 billion euros, substantially lower than what analysts had pencilled in.

"On first glance, Eni's updated corporate plans look weaker than expected, given weaker 2024 CFFO and GGP guidance," Royal Bank of Canada's analyst Biraj Borkhataria said in a report, adding the increase in the payout ratio was largely expected.

Eni said it expected to generate cash flow from operations before working capital of around 13.5 billion euros in 2024 and 62 billion euros over the plan, down from over 69 billion euros expected in the previous strategy.

"Similar to last year, we see the annual update driving a reset lower in consensus expectations, although this could lead to a buying opportunity similar to last year if Eni can deliver above its targets," the analyst added.

ENERGY TRANSITION UNITS

Shares in Eni were down 1.8% at 1435 GMT, underperforming a flattish Milan blue-chip index.

The previous acquisition and cancellation of shares by Eni via buybacks is expected to take Italy's total stake above 33%, creating wiggle room for the Treasury

to trim its holding

.

Shares in Eni were down 1.8% at 1435 GMT, underperforming a flattish Milan blue-chip index.

Eni plans to press on with the development of its energy transition businesses, creating independent units able to attract investments under its so-called satellite strategy.

It also estimated it would raise 8 billion euros in net proceeds from asset portfolio management to 2027.

After signing a deal with Energy Infrastructure Partners under which the Swiss investment fund bought a minority stake in Eni's low-carbon unit Plenitude, the group now plans a similar development for its biofuel unit Enilive.

Plenitude, which has a value of around 10 billion euros including debt, is due to be listed in the future.

Carbon capture and storage business and bio-plastic business would follow.

"The Carbon capture business has already the critical mass to become a separate business," Eni Chief Executive Claudio Descalzi told analysts.

($1 = 0.9150 euros)

(Reporting by Francesca Landini, editing by Gavin Jones and Keith Weir)