Eni: Size of Dacion Claim Vs Venezuela Still Not Decided

ROME Jan 04, 2007 (Dow Jones Newswires)

Eni SpA (E), Italy's biggest oil and natural gas company by revenue, Thursday said it still hadn't decided on the figure it will claim as compensation after the seizure by Venezuela of its Dacion field last year.

"We still haven't decided on the amount," said a spokesman for Eni.

Italian newspaper MF reported Thursday, without citing sources, Eni could seek at least $1 billion if it includes lost profits in its claim against the field's takeover by Venezuela.

The Rome-based company lost the field, its main operation in the Latin American country, last April after refusing to agree to a contract renegotiation with state firm Petroleos de Venezuela SA, or PdVSA, forced the operators of 32 oil fields to accept minority stakes in new joint ventures dominated by the state firm.

The contract migration was part of a major overhaul of the Venezuelan oil sector towards more state control. The government argued that agreements with foreign companies signed in the 1990s to raise the country's production were contrary to the national interest.

In November, Eni said it made an application for arbitration with the World's Bank International Center for Settlement of Investment Dispute and defined the seizure "a violation of its rights."

Output at the onshore field averaged 60,000 barrels of oil a day, the Italian company said in November.

Eni is seeking at least EUR654 million from Venezuela as compensation for Dacion, according to the company's financial report for the first half of 2006. That figure corresponds to the book value of its assets.

Europe's fourth biggest oil company by market capitalization in November fingered the Dacion confiscation as one of the reasons its third-quarter production was unchanged on the year.

Copyright (c) 2007 Dow Jones & Company, Inc.