Reuters: Italy’s energy major Eni will continue to receive Iranian crude for at least another three years as Tehran still owes the company about $1 billion from decade-old deals, ENI’s chief executive said on Monday.
By Daniel Fineren
LONDON, Nov 23 (Reuters) – Italy’s energy major Eni will continue to receive Iranian crude for at least another three years as Tehran still owes the company about $1 billion from decade-old deals, ENI’s chief executive said on Monday.
International sanctions against Iran have complicated financing of any deals involving buying Iranian crude or selling products to the Islamic Republic but Paolo Scaroni said ENI did not need to organise financing because the company receives the Iranian crude directly.
“We still have more than $1 billion that the Iranians still owe us,” Scaroni said while announcing the firm was moving its global trading headquarters to London.
“We signed two contracts in 2000 and 2001 to develop two fields in Iran…The way that they have to pay us is to give us crude…It will take three years to get our money back.”
Saras, an Italian oil refiner, said this month that transactions with Iran have become more challenging as banks are reluctant to get involved.
Other European oil companies have made similar remarks privately and many traders say the volumes of Iranian exports to Europe might shrink next year under pressure from the international community.
Iran is a major oil exporter and its production is equal to about 4.2 percent of daily world demand. The amount of Iranian crude sold to countries that are members of the International Energy Agency declined by 22 percent in August.
The financing hurdle follows a host of sanctions on Iran over its nuclear work passed this year by the United Nations, European Union and the United States. Tehran denies the West’s charge that it is seeking to build nuclear weapons.
ENI’s new trading and shipping headquarters in London will become responsible for all oil, products, natural gas, power, CO2 and related derivatives trading with other offices in Rome, Houston, Brussels, Amsterdam and Singapore.
Scaroni said ENI aimed to expand its global trading staff to 400 people by the end of 2011 or beginning of 2012 from 350 now.
“We are launching London as a centre of our trading and shipping activity worldwide,” he said, adding he saw the north European gas markets as one of the major growth areas.
He added he saw a lot of hiring opportunities following decisions by major trading houses such as Vitol to move some of their traders to Geneva and a decision by BP to streamline its trading operations.
Speaking of ENI’s trading strategies, Marco Alvera, the managing director of trading and shipping, said ENI would not take big risks but would neither it try to hedge them all.
“In the spectrum of the Vitols, the banks and BPs on the one hand that take delivery of the volatility and Chevrons and Exxons who try to hedge against volatility – I would say we are in the middle but still closer to the industrials on oil and gas,” he said. (Writing by Dmitry Zhdannikov, editing by Sue Thomas)