National Iranian Oil Company (NIOC) Signed with Eni and Naftiran Intertrade Company (NICO) the Agreement for the Development of

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June 30, 2001

The $1 billion agreement was signed today in Teheran in the presence of Mr Bijan Zanganeh, the Iranian Oil Minister and Mr Vittorio Mincato, Eni Chief Executive Officer and Mr. Razavi Hedayatzadeh, Managing Director and Chairman of NICO. Eni is present in Iran in the South Pars gas field and in the Dorood and Balal oil fields.

Eni, NICO and NIOC signed today in Teheran the agreement for the development of the onshore Darquain oil field, in the important oil region of Awhaz. The agreement was signed in the presence of Mr Bijan Zanganeh, the Iranian Oil Minister and Mr Vittorio Mincato, Eni Chief Executive Officer.

This agreement, as pointed out by the Iranian authorities and the Italian Oil Company, represents a further and significant strengthening of the co-operation ties between Italy and Iran, a Country with an extraordinary mining potential.

The total value of the contract is about $1 billion that will be reimbursed and paid back through the revenues generated by the oil produced by the field over a period of about 6 years. Eni will be the operator of the development phase, NIOC of the production one.

The contract's formula is of a buy-back nature, according to which the Contractor finance and thoroughly implement the project on the basis of an agreed development plan and recovers investments and returns only through the field production.

Eni is the Operator of development with a 60% stake while NICO, a subsidiary company of NIOC, has the remaining 40%.

The agreement concludes the negotiations following the tender launched by NIOC in 1998 for the field development, to which Eni participated competing with the major international oil companies.

"We are satisfied with the positive outcome of negotiations and we are honoured by the Iranian Government's trust in us and we are very pleased with the hospitality friendship and co-operation of the Iranian people especially the cordial and warm reception of the oil employees in the field and in the Headquartes." Mr Mincato, Chief Executive Officer of Eni, said. "As a matter of fact, this is the first onshore oil field project awarded to a foreign company and rewards Eni's vast experience, technology and competencies."

"Iran is one of the first countries in the world in terms of hydrocarbon reserves and production and it is a key area in the future scenario for global supply of energy" Mr Mincato also added. "This operation is part of the international growth strategy that Eni is following with determination in order to strengthen its activities in the most promising areas of the world."

The field will be developed in two phases. The first one envisages the drilling of eight producing wells, the construction of plants for oil treatment, re-injection of associated gas and shipping of a daily production of 50,000 barrels. The second phase will see daily production up to 160,000 barrels a day together with the expansion of gas injection facilities. The project will last 65 months and it will entail a total investment of about $550 million, of which $180 million will be in the first phase.

Eni has undertaken to provide the necessary know-how, technologies and human resources while improving the Iranian industrial capability to take part in the project. A special emphasis has been placed on the obligations to operate in full compliance with the laws of the Islamic Republic of Iran, especially for what concerns the environmental protection.

Eni has been present in the country since 1954 and kept its offices in Tehran open throughout 46 yers and entered into buy back projects since March 1999 for Dorood and Balal fields as non-operating partner.
In July 2000, Eni entered as operator into the buy back agreement for the development of phases 4 & 5 South Pars giant gas field with total investment for about $2 billion in partnership with Petropars.


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