Eni postpones Gazprom deal in Libya

reuters.com ^ | April 6, 2011

[Tailgunner Joe]

ROME, April 6 (Reuters) - Eni's agreement to sell part of its Elephant oilfield in Libya to Russia's Gazprom has been postponed, CEO Paolo Scaroni said on Wednesday, as the Italian oil and gas group moves to protect its position in the country.

Eni's agreement to sell half of its 33.3 percent stake in Elephant, part of the strategic partnership signed between Eni and Gazprom in 2006, was subject to approval by the relevant Libyan authorities. The deal was valued at $170 million.

Some analysts have said opposition to air strikes to support Libyan rebels against strongman Muammar Gaddafi could put Russia in a weak bargaining position on energy contracts if the rebels win.

Before the air campaign began, Shokri Ghanem, head of Libyan national energy group NOC, said Eni's contracts were safe. Since then he has said Libya is considering offering oil block contracts directly to China, India and other nations it sees as friends.

Scaroni said the significant loss of output from Libya would weigh on the group's production for the full year.

"Today instead of producing 280,000 barrels (of oil equivalent) per day we are producing 50,000-60,000. That's an output loss which will weigh on production for the whole year," Scaroni said on the sidelines of a parliamentary hearing.

Eni started operations in Libya in 1959, producing more than 250,000 barrels of oil equivalent per day in 2010. Production of oil is now halted in light of the conflict and sanctions.

Scaroni said he did not fear French competition in Libya since Italy was the only country connected to Libya "by a pipeline". ....

Concern has been rising that state-controlled Eni's position in Libya could be undermined by Italy's hesitant backing for the rebel movement, paving the way for a greater say for French group Total.

[Tailgunner Joe]

Politically incorrect title: "France vetoes Italy's plan to help Russia and Libya form cartel monopolizing European energy supplies."