Italy’s Eni to Develop Iranian Oil Field

Eni, Europe’s fourth-largest oil company, signed a contract to spend $550 million to develop an Iranian oil field in the latest test of U.S. opposition to companies doing business with the No. 2 oil producer.

The value of the contract will be recouped from the sale of oil during a six-year period, the Rome-based company said this weekend. Eni will develop the oil field and have a 60% stake in a venture with a subsidiary of the National Iranian Oil Co.

“This operation is part of the international growth strategy that Eni is following with determination in order to strengthen its activities in the most promising areas of the world,” said Eni Chief Executive Vittorio Mincato.

The contract signed by Eni, among several European companies that have reacted coolly to the U.S. stance on Iran, will pose a test for the Bush administration. A 1996 U.S. law calls for sanctions against foreign companies investing in Iran or Libya. The Clinton administration waived sanctions several times, and Congress is moving to renew the law.

Royal Dutch/Shell Group and TotalFinaElf already have agreed to develop Iranian energy resources, and Eni has worked in Iran since 1954. The company is investing $2 billion in the South Pars gas field and is involved in production at the Dorood and Balal oil fields.

The White House didn’t immediately return a call seeking comment on the Eni contract.

Eni will invest the $550 million over the course of the 65-month project. After an initial period of drilling and construction, Eni expects to pump 160,000 barrels of oil a day from the Darquain field. The total value of the venture is $1 billion, the company said.