ENI SPA subsidiary Agip North Africa BV has signed a contract to supply 4 billion cu m/year of Libyan natural gas to Edison Gas, the natural gas arm of Italian energy firm Edison SPA.
The firms signed a 24-year take-or-pay contract that takes effect in July 2002. Under terms of the agreement, Edison will buy 50% of the natural gas produced for the Italian market by Agip North Africa and Libya's National Oil Co. (NOC) from offshore and onshore concessions in Libya.
"The price of gas stipulated by take-or-pay contracts reflects international market conditions and foresees the possibility of price indexation," said ENI. The gas will be transported to Italy through a planned 600-km subsea export pipeline from Libya to Sicily. This line will be constructed and managed by a 75-25 joint venture of Agip North Africa and NOC.
Edison will use part of the gas in its power generation stations and sell the remainder to its private customers.
"This contract is ENI's first concrete step to make available to other operators 8 billion cu m of gas produced in Libya, as determined by ENI's board of directors on Jan. 20," said ENI CEO Vittorio Mincato.
This demonopolization plan is being driven by Italy's new gas deregulation bill, which in turn was prompted by pending EU gas deregulation (see Watching Government, this page).
An industry source said, "This [bill] has already had the effect of making ENI share its take-or-pay contract [for Libyan gas] with Edison in order to decrease its market share."
The Italian gas bill also creates a safety net for ENI against the sudden entrance of other big operators by inserting a reciprocity clause dictating that foreign operators won't be able to enter the Italian market unless their home country guarantees the same fair access to Italian companies.
ENI is expected to market its excess capacity abroad. So far, however, the company has refused to corroborate rumors that it plans to merge with Spanish or French interests (Repsol-YPF SA or TotalFina SA), but it has not denied them, either. The Repsol-YPF merger story resurfaced in press reports again last week, although at OGJ presstime it remained unsubstantiated.
ENI Chairman Gian Maria Gros-Pietro said ENI is working at an interconnection project between gas pipe- lines in the Mediterranean "from Portugal to Algeria, from Libya to Turkey and the Middle East," which he described as forming "a sort of ring that will unite most of the Mediterranean countries.
"That is why we want reciprocity in other European countries," he said.
