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C O N F I D E N T I A L SECTION 01 OF 02 ROME 000035 
 
NOFORN 
SIPDIS 
 
STATE FOR ECONOMIC, ENERGY, AGRICULTURE U/S HORMATS 
STATE FOR INTERNATIONAL ENERGY AFFAIRS COORDINATOR GOLDWYN 
STATE FOR EEB DAS HENGEL 
STATE FOR NEA/IR RAJEEV WADHWANI 
STATE FOR INR/EAP 
STATE FOR INR/NEA 
STATE PASS TO DEPARTMENT OF TREASURY U/S STUART LEVEY 
 
E.O. 12958: DECL: 01/12/2020 
TAGS: ECON ENRG EPET ETTC IR IT PREL
SUBJECT: GETTING ENI TO HALT ITS EXPANSION IN IRAN 
 
REF: A. A) 09 ROME 1342 
     ¶B. B) ROME 00001 
     ¶C. C) 09 SECSTATE 121808 
 
ROME 00000035  001.2 OF 002 
 
 
Classified By: Classified By: CDA Elizabeth Dibble 
for reasons 1.4 (b) and (d) 
 
¶1. (C/NF) SUMMARY:  While Eni claims to cooperate with us on 
Iran, the Italian energy parastatal company continues to 
expand its operations in there. One-third owned by the 
Italian government, Eni is the largest foreign energy company 
in Iran. With significant assets in the United States, Eni is 
very concerned about the potential impact of U.S. sanctions, 
and is lobbying hard in Washington to avoid being sanctioned. 
The Ambassador recently raised this issue with Under 
Secretary Gianni Letta (Prime Minister Berlusconi's right 
hand man), noting that it was in Italy's interest for Eni to 
halt its expansion in Iran. The visit of Eni CEO Paolo 
Scaroni to Washington in January 15 provides an excellent 
opportunity for the USG to reinforce the message that Eni 
needs to cease all new activities in Iran, or face the 
possibility of sanctions. End Summary. 
 
 
ENI WORRIED ABOUT SANCTIONS; CEO HEADING TO WASHINGTON 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶2. (C/NF) Eni's management knows that the firm's activities 
-- including drilling new wells in Iran -- make it a possible 
target for U.S. sanctions. With significant assets in the 
United States, the company is concerned, and is lobbying hard 
in Washington and elsewhere to avoid sanctions. During a 
mid-December meeting with the Ambassador, Eni CEO Paolo 
Scaroni said he planned to go Washington to meet with State 
Department and Department of Treasury senior officials to 
explain Eni's Iran activities. Scaroni also asked for advice 
on dealing with key members of the Congress. We understand 
Scaroni is scheduled to meet on January 15 with Treasury U/S 
Stuart Levey and that meetings with senior State Department 
officials, including U/S for Economic, Energy and 
Agricultural Affairs Robert Hormats, are being sought. 
 
ENI's LINE: NEW IS NOT NEW 
- - - - - - - - - - - - - 
 
¶3. (C/NF) During his Washington meetings Scaroni will likely 
continue to portray Eni as cooperating with USG and 
international efforts on Iran. Based on what we've heard from 
Eni officials, we anticipate Scaroni will make the following 
points: Eni long-ago decided not to undertake any "new" 
activities in Iran, including not signing of any new deals or 
new contracts by Eni subsidiaries (Saipem and Polimeri 
Europa). Eni's interest in continuing operating in Iran is 
only to fulfill outstanding contracts and to recover the 
investments it has made already. Eni has been "transparent" 
with the USG about its Iran operations. 
 
¶4. (C/NF) The centerpiece of Eni's somewhat disingenuous 
position is its claim that any activity carried out under 
"old" contracts by definition does not constitute "new" 
activity. According to this interpretation of what 
constitutes "new" versus "old," Eni believes it is free to 
continue to drill new wells and develop Iranian energy 
infrastructure in existing fields of operation while still 
claiming that it is not doing anything "new" in Iran. During 
 
ROME 00000035  002.2 OF 002 
 
 
a mid-November meeting with EcMin Post pressed Eni 
representatives for further details about activities falling 
under "old" contracts, and the Eni officials clarified that 
Eni plans to continue to expand production of the Darquain 
field (ref A). Pressed further, Eni officials admitted that 
such expansion activity will lead to a significant increase 
in oil production from this field (Note: Eni's 2008 Fact Book 
states that its objective is to increase Darquain production 
from its current 100,000 barrels of oil per day to  160,000 
barrels per day). Eni officials further added that Eni will 
continue to negotiate with Iran for the possibility of 
additional expansion of Darquain production in order to 
recover $1.4 billion that Eni claims as extra costs. Embassy 
officers have pointed out to Eni the contradiction of 
claiming not to undertake new activities while planning new 
activities to expand Iran's oil production. Eni officials 
fall back, however, on their insistence that planned 
expansion of the Darquain field falls within Eni's existing 
"old" contracts, and thus the company does not consider these 
"new" activities. 
 
COMMENT: WHAT SCARONI NEEDS TO HEAR 
- - - - - - - - - - - - - - - - - - 
 
¶5. (C/NF) It is critical at this point that CEO Scaroni hear 
in no uncertain terms that the USG does not accept his 
company's "new is not new" claims. Scaroni should be told 
that Eni's continued expansion of its activities in Iran sets 
it apart from the other major European energy companies, and 
for that reason has become one of the Congress' biggest 
targets for sanctions. Washington should press Scaroni to 
halt any further expansion in Iran. Washington could also 
note that Eni's position as the largest foreign operator in 
Iran make its cooperation especially important. Its one-third 
ownership by the Italian government makes the company's 
current lack of cooperation especially unseemly. On December 
30, 2009 PM Berlusconi's principal advisor, U/S Gianni Letta, 
told Ambassador Thorne that he would personally contact 
Scaroni and try to get Eni to halt its activities in Iran 
(ref B). The DCM reinforced this message January 12 with the 
MFA's Secretary General Massolo, noting that Eni's continuing 
activities in Iran (and its much more narrow interpretation 
of what constitutes "new" activity) could have an adverse 
impact on Italian credibility when it comes to Iran. Massolo, 
who is also scheduled to travel to Washington this week and 
will see Scaroni there, said he would convey this to Eni. 
DIBBLE