Word: enis
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...boss of Italy's state-run oil monopoly (ENI), Enrico Mattei is a bitter foe of private enterprise. In 1957 he bulled through a punitive Italian oil law which put such restrictions on private oil companies that Gulf, the last U.S. firm wildcatting on the peninsula, got out (TIME, Feb. 4, 1957). Five months ago he got a concession in Iran in return for a promise to turn over 75% of oil profits, thus overturning the fifty-fifty pattern now in effect in the Middle East...
...Aragona, president of Gulf's subsidiary, Gulf Italia, and tidied up the facts. "Although constantly being attacked," he said, "private enterprise is the most powerful instrument for social and economic development wherever it is given a competitive chance." Since first striking Sicilian oil in 1954 at Ragusa (where ENI had tried and failed), he pointed out that Gulf has drilled 34 holes, and that 31 of them are now producing 22,000 bbl. a day-only half of eventual capacity. In contrast, ENI's subsidiary, AGIP Mineraria, has moved into Gela, 30 miles away, in hopes of matching...
...biggest moneymaker of all is Sicily's booming young oil industry. Instead of throttling foreign oil exploration by setting up a state-run monopoly such as Italy's ENI (TIME, Sept. 2), Sicily encouraged Gulf Oil Corp. with a deal that one U.S. oilman calls "the best terms of any oil company operating anywhere in the world." Instead of the standard fifty-fifty split, Gulf gets 80% of all profits, has pumped $50 million into Sicilian oil development. The payoff: wells that will produce 1,650.000 tons of oil next year, some 15% of Italy's total...
Though Iran still claims that "the principle of sharing profits fifty-fifty between partners has been respected." it will get its extra 25% by bringing the state-run National Iranian Oil Co. (NIOC) in as an equal partner with Italy's ENI. From any profits, the Iranian government will skim a 50% royalty off the top; then the remaining 50% will be divided equally between ENI and NIOC. In addition, ENI will ante up NIOC's initial contribution to the joint company on a "loan" basis, pump another $22,250,000 into the venture over the next twelve...
...most Western oilmen ENI's largess was a power play to crash Italy into the big leagues of Middle East oil. Probably no major Western company will be as free-handed in future contracts with oil-rich Iran. Even so, the ENI deal is a significant break in the fifty-fifty pattern. The government will press for NIOC participation in future oil deals...