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TEHRAN (Reuters) - Italian energy group Eni signed a 1 billion oil contract with Iran on Saturday that will be the first test of extra-territorial U.S. sanctions under the presidency of George W. Bush. (Read photo caption below).
Eni Chief Executive Officer Vittorio Mincato signed the deal to develop the Dharkovin oilfield in southwest Iran with Iranian Oil Minister Bijan Zanganeh in Tehran and said Eni would invest 550 million in the project over 5-1/2 years.
On Friday, the United States said it was worried about reports the deal was about to be signed.
All eyes are now on Washington which is set to renew the 1996 Iran-Libya sanctions act that threatens to punish non-U.S. companies who invest more than 20 million in Iran.
Eni's deal with Iran caps three year of talks.
``The process for achieving this outcome has been long and complex because the importance of the issues dealt with was such that the negotiations required much more time than they normally do,'' Mincato said at the news conference, without elaborating.
In the first phase of the project -- which will include the drilling of eight wells and the construction of plants for oil treatment -- will require Eni to invest an initial 180 million.
Eni, in a statement, said it foresees daily production of 50,000 barrels per day during the first phase.
In the second phase it expected to see production rise to 160,000 barrels, together with the expansion of gas injection facilities.
``The oilfield has an estimated capacity of 3.6 billion barrels...and in 30 years time we expect 1.3 billion barrels to have been drawn,'' said Razavi Hedayatzadeh, Managing Director of Naftiran Intertrade Company (NICO), a subsidiary of the National Iranian Oil Company (NIOC).
Eni, named the project's operator at the development stage, will hold a 60 percent stake while NIOC will hold the remaining 40 percent and be the operator at the production stage.
Eni is already present in Iran with other European energy companies in both oil and gas joint projects and is in the running for another.
Eni, Shell and TotalFinaElf -- Iran's biggest investors -- are all interested in the multi-billion onshore Bangestan development.
Industry sources say the trio could yet find themselves running the project as a consortium.
PHOTO CAPTION:
Iran's deputy Oil Minister, Seyed Mehdi Mirmoezzi (R), trades copies of an oil deal signed with Italy's Eni deputy Chief Executive Stephano Cao (L) in Tehran June 30, 2001. Between them stands Pietro Cavanna. Europe is renewing its defiance of Washington's threat to punish investors in Iran's lucrative oil patch, with Eni the first to test the Bush administration's resolve. REUTERS/Str.
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