Summary
Eni and Heritage reached agreement under which ENI will obtain 50% interest in blocks 1 and 3A in Uganda for $1.35 billion. An additional payment of $150 million may be made for future contingencies. ENI will become the operator. The two blocks are located in the Lake Albert basin with discovered reserves of 700 million barrels. Twenty eight wells exist in the area. The transaction is part of ENI's strategy to grow the company in Africa. ENI currently works in Angola, Nigeria, Congo and Gabon.
Analysis
In the 1920s, the government of Italy created a refining company called Azienda Generali Italiania Petroli, otherwise known as AGIP. At the end of World War II an ambitious Enrico Mattei was placed in charge of of the wreckage of AGIP in northern Italy. He was an independent thinker and was determined to create a much grander enterprise. In 1953 he consolidated the 36 subsidiaries of the company into Ente Nazionale Idrocarburi (ENI). In a few years with new, user-friendly, modern ENI gasoline stations strung out along Italy's major highways, Enrico Mattei was the most powerful man in the country. His overarching objective was to make ENI an international upstream power giving the nation an independent source of crude oil. He believed that the 7 international majors (Jersey, Socal, Socony Vacuum, British Petroleum, Royal Dutch Shell, Gulf and Texas Company) constituted a cartel. He named them the "Sette Sorrelle", in English, The Seven Sisters. Actually there were eight of them if Compagnie Française des Petroles (Total) were counted.Mattei wanted to join the club but ENI was too small. The turbulence that upset the existing order in the Middle East beginning with the Suez Crisis in 1956 gave him his chance to grow exponentially. His first success was in Iran. By 1962, ENI was a world class oil company. But tragically in October of 1962, Mattei was killed in an airplane crash during a thunderstorm. ENI top management, guided by Mattei's philosophy pushed on. By 1976, the Seven Sisters were stripped of their assets in the Middle East and ENI was now truly an international giant. Today, running 1.8 million bbl/day of crude oil, operator for supergiant Kashagan oil field in the Caspian Sea and running ten offshore rigs around the world, ENI has attained the status that Mattei dreamed of.
