Eni’s Scaroni meets Iran minister for future oil work

Bloomberg

Paulo Scaroni, chief executive of Italy’s biggest oil company Eni SpA (ENI), said he had a “fairly long and warm meeting” with Iran’s petroleum minister to discuss possible future energy projects and money owed to Eni.

Speaking to reporters outside the Vienna hotel room of the minister, Bijan Zanganeh, Scaroni said any oil and gas projects would wait until sanctions ended. Their discussion included possible modifications to so-called buyback contracts as well as monies owed relating to the Darquain and South Pars fields, where the Rome-based company previously operated, he said.

“We’ve been discussing potential new activities of Eni in Iran, of course all this is subject to lifting of the sanctions,” Scaroni said. They discussed “the contractual framework of Iran, the famous buyback.”

Iran, which has dropped to sixth-largest producer within OPEC, from second place, hopes to rekindle investment in its energy industry once world powers lift sanctions tied to nuclear research. Zanganeh said yesterday he would meet international companies in Vienna today, and in London in March, without saying which ones.

Zanganeh was in Vienna after attending yesterday’s meeting of the Organization of Petroleum Exporting Countries, at which the group reaffirmed its production target.

Gerhard Roiss, the chief executive officer of Vienna-based OMV AG, the biggest central European energy company, also met with the Iranian minister at his hotel today, after Scaroni. Roiss declined to comment upon entering, and leaving, the minister’s hotel suite.

Buyback Modifications

Scaroni said Eni wouldn’t work under Iran’s current buyback model and suggested modifications to the structure that he said he believes the minister was willing to adopt.

Before European Union sanctions restricted activities last year, the Islamic republic had offered buyback contracts under which a foreign company would be paid for its work in oil and gas over a limited period of time. The terms of the contract are meant to comply with Iran’s constitution, which forbids foreign ownership of energy reserves.

South Pars is the Iranian name for a giant gas field that straddles the country’s maritime border with Qatar. Scaroni attended an inauguration ceremony for the development of the Darquain field in July 2005 along with Zanganeh, who was petroleum minister at the time, according to Eni.