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ENI in Libya pipeline deal
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July 27, 1999: 10:23 a.m. ET
Italian energy producer to help develop 1.8B barrels of reserves
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LONDON (CNNfn) - Italian energy producer ENI said Tuesday it has reached a deal with Libya's National Oil Corp. to jointly develop gas, condensate and oil reserves estimated at around 1.8 billion barrels.
ENI, which has been in Libya since 1959 and currently produces 80,000 barrels a day from the Bu-Attifel oil field, predicted the deal could generate investments of $5.5 billion -- factoring in a 370-mile export undersea pipeline to transport gas from the Libyan coast to the Italian island of Sicily.
First production is expected to begin in late 2003.
ENI plans to execute the deal through its regional affiliate, Agip North Africa B.V., which will develop the energy reserves in one offshore block and one onshore block.
The project is expected to boost Agip's equity production by as much as 200,000 barrels a day, in line with the company's goal to strengthen its position in the Mediterranean basin.
Another ENI affiliate, Agip Gas, B.V., will operate the project. A contractor for the project will be chosen shortly, the company said.
The onshore Wafa infrastructure, situated 340 miles southwest of the Libyan capital of Tripoli, will be connected to a gas processing center at Melitah via gas and liquid pipelines, ENI said in a statement
The offshore block, located 68 miles north of Tripoli, will be developed in 180 meters of water using a fixed drilling and production platform and submarine clusters, the company said. Sealines will convey gas and condensates onshore to the Melitah plant.
Beyond Africa and Italy, which comprise the bulwark of its operations, ENI has ventures in China, Croatia, Iran, Iraq and Kazakhstan.
The company's latest endeavor comes as the United States prepares to loosen sanctions against Libya after the country relented to a long-standing demand to extradite two suspects in the bombing of a commercial flight over Lockerbie, Scotland, in 1988.
In a controversial move, ENI unveiled an agreement with the Russian oil company Gazprom in February to lay a 250-mile pipeline from Russia to Turkey's Black Sea. At 2,100 meters and $3 billion, the line will be the world's deepest underwater conveyor of natural gas and one of its costliest.
ENI shares were up 1.93 percent at 0.6600 euro in Milan Tuesday afternoon. The Italian government owns 36 percent of the company.
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