Italy to Block New Iran Deals

Italian oil company Eni SpA has cancelled a development phase of a field in Iran, Italy's prime minister said, as Rome moves to block new oil and gas investments there.

Italy has been one of Iran's main trading partners in Europe but Prime Minister Silvio Berlusconi's close ties with Israel, and diplomatic pressure over the nuclear dispute with Tehran, have led to a sharp reduction in Italian investments in Iran.

"Eni has a contract to respect unless it wants to pay a penalty but it has already renounced the possibility it had to develop the third phase of an important field," Berlusconi said at a news conference on an official visit.

Berlusconi gave no details about the field but Eni has fields at Darkhovein and the South Pars offshore site. Eni, which is state controlled, declined to comment on his remarks.

Italian Foreign Minister Franco Frattini told Italian television from Israel that Rome had gone so far as to suspend export credit guarantees for firms investing in Iran.

"We are absolutely firm about blocking new investments in the oil and gas sector," he said.

An analyst who spoke on condition of anonymity said he believed the field in question was Darkhovein. Eni had upgrading plans to bring on line 14,000 extra bpd.

The analyst called Eni's cancellation of the third phase "not a big deal" for the company.

"I calculate that in 2009 Eni produced just 15,000 bpd in Iran from a daily total of around 1.7 million barrels," he said. He added the move also removed potential political headaches for the oil major. Eni produced 28,000 barrels of oil per day in Iran in 2008.- Reuters