Italy's ENI to pull out of Iran

ENI SpA's chief executive said Thursday that the Italian energy company will pull out of Iran after current contracts to develop two gas fields there run out, as international pressure grows to isolate the country over its disputed nuclear program, AP reported.

Paolo Scaroni also said the company plans to raise around euro1.5 billion from selling off shares in three gas pipelines in order to settle a European Union antitrust dispute.

He told reporters that the company won't prolong contracts it signed in 2001 to develop two Iranian gas fields. Iran has the world's second largest gas resources after Russia and has resisted global pressure - including U.S. sanctions - over its program to enrich uranium. Iran says its program is peaceful but the U.S. says it suspects Iran is trying to build nuclear weapons.

"We will continue to abstain in the future," Scaroni told reporters.

Italy has long enjoyed strong commercial ties with Iran. But President Silvio Berlusconi this week called for tighter sanctions against Iran and said Italian companies have cut business ties with Iran by a third since 2007. The Italian government owns about 30 percent of ENI.

German industrial conglomerate Siemens AG said last week that it will stop doing business in Iran by the middle of 2010. European banks such as Deutsche Bank, Commerzbank, UBS AG and Credit Suisse Group have also pulled out of Iran.

The U.S., Britain and France are pressing for more United Nations sanctions against Iran to get it to drop its nuclear ambitions. Iran's hardline government is also worrying Western powers with Wednesday satellite launch, part of a space program that could build long-range missiles.

ENI also said Thursday that it would sell shares in three pipelines to settle an antitrust dispute with European Union regulators - a deal allowing it avoid big fines for alleged monopoly abuse.

Scaroni said ENI would raise euro1.5 billion from selling the pipelines to Italy's state investment arm Cassa Depositi e Prestiti.

The pipelines - known as TAG, TENP and Transitgas - transport Russian and Dutch gas across Germany, Austria and Switzerland into Italy, some 30 percent of the gas used by Italians.

The European Commission said the offer would eliminate competition problems because ENI would no longer have a conflict of interest in controlling both the transport and sale of gas.

The deal will become legally binding after EU officials consult ENI's rivals and customers. The EU will then formally drop its case.

ENI is Italy's biggest oil and gas company. It sells gas directly to customers and also transports gas into Italy for its own supplies and for rivals.

Regulators said ENI stopped rivals from using the pipelines from 2000 to 2005, weakening them and harming customer choice in Italy. ENI also deliberately underinvested in the pipelines to limit the amount of gas on the Italian market in order to keep prices high, they said.

This hurt Italy's security of supply, making the country more dependent on ENI for the gas that heats homes and fuels power plants - and its choice of Russia as a major supplier.

The EU executive is worried about Europe's growing dependence on Russian gas and has called for a wider choice of energy supplies and transport routes to reduce uncertainty over supplies.

However, Berlusconi openly favors Russia and is one of the few EU leaders to have a warm relationship Russian president Vladimir Putin. Italy relies heavily on imported gas and ENI works closely with Russian state gas monopoly OAO Gazprom.

/Trend News/