September 16, 2011 / 1:13 PM / in 6 years

Eni, Gazprom press ahead with Libya oilfield deal

MOSCOW/MILAN (Reuters) - Italy’s Eni will press on with an agreement to sell half its stake in Libyan oilfield Elephant to Russian energy giant Gazprom, as Moscow seeks to regain its footing in strife-torn Libya.

An official of Eni infront of their logo during a news conference in Milan March 1, 2006. REUTERS/Daniele La Monaca

Eni, the biggest foreign oil producer in Libya, has a 33.3 percent stake in the Elephant field, 800 kilometres (500 miles) from Tripoli.

In February, Eni said, pending approval by Libyan authorities, Gazprom would take 50 percent of its Elephant stake, which it valued at $170 million. In a statement on Friday, Eni said it was laying the ground for “the future handover” to Gazprom, but did not give a timeframe.

A source at Gazprom told Reuters earlier on Friday the two parties were expected to sign an agreement giving Gazprom the right to acquire half Eni’s stake in Elephant.

“The companies will sign an option agreement on Elephant. The option will not expire soon as there is war in Libya, and it won’t end soon,” the source said.

Some analysts are concerned Eni could lose assets or opportunities in the long run if Rome’s hesitant support for the rebel government early in the conflict triggers a backlash.

The future of Russia’s energy interests in Libya is also uncertain. The rebels, who are close to winning a seven-month war against Muammar Gaddafi, have already said firms from Russia and China could fall out of favour for the lack of support for the uprising.

Italy was once Libya’s closest Western ally, and Italian Prime Minister Silvio Berlusconi has said Italy made the right decision by first courting and then abandoning Gaddafi, adding that turning on his old friend left him feeling “very bad”.

Eni’s agreement to sell half its stake in Elephant is part of a strategic partnership signed between Eni and Gazprom in 2006.

Gazprom was expected to transfer its share in the project to its oil arm, Gazprom Neft.

The February agreement was suspended in April amid the upsurge of violence in Libya where Russia, which has billions of dollars worth of arms, energy and construction deals.

Also on Friday, Gazprom and its partners in the South Stream pipeline signed an agreement parcelling out stakes in its offshore section.

Gazprom will own 50 percent, while 20 percent will go to Eni and 15 percent each to France’s EDF and Germany’s Wintershall.

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