* 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 group Eni is working with Goldman Sachs on the possible spinoff of its power and gas unit, two sources with knowledge of the matter said on Thursday.
"The group is reviewing its options for the division and Goldman Sachs is working with them," one of the sources said.
The assets that will be included in the carve-out are still under discussion, though an initial public offering (IPO) looked the 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 to happen this year but "possibly (in) early 2016".
Eni declined to comment, while Goldman Sachs could not immediately be reached for comment.
Claudio Descalzi, who took over as CEO of Italy's biggest company in May last year, has said he wants to focus on the bread-and-butter business of finding oil and gas. He is due to present his first business plan in London on March 13.
Analysts have said that, with oil prices sharply down because of weak global demand, Eni will have to sell assets to support cash flow and dividend.
State-controlled Eni still needs to raise 6 billion euros ($6.89 billion) under an 11 billion euro asset sale programme lasting until 2017 but lower crude prices mean finding buyers at the right price has become difficult.
In December it had to put on hold the sale of part of its 43 percent stake in oil services group Saipem due to market volatility.
"Eni needs to unload assets. With Saipem out of the picture, they need to find something else, maybe their big oil and gas client portfolio," the first source said.
Eni's power and gas unit has been a drain on resources for some time, posting an adjusted operating loss of 662 million euros in 2013. The group is targeting an operating breakeven for the unit in 2014.
Oil majors including BP and Total have announced cuts in capital expenditure of around 10-15 percent this year and sold assets worth dozens of billions of dollars to hang on to their dividends.
$1 = 0.8711 euros Reporting by Pamela Barbaglia, Stephen Jewkes and Giancarlo Navach; Editing by Catherine Evans