Eni SpA (ENI), the biggest foreign investor in Libya under Muammar Qaddafi, expects a new government to honor the Italian oil company’s contracts as rebel fighters declared the end to a regime that ruled for 42 years.
“Our contracts are protected by international law,” Chairman Giuseppe Recchi said in an interview in Rimini, Italy. An end to conflict will be “very positive” and allow output to resume, he said after rebel fighters stormed Tripoli.
Eni has committed to invest $25 billion over the next 10 years in Libya, where it has had a presence since 1959, a decade before the military coup that brought Qaddafi to power.
The company, based in Rome, rose 6.3 percent to 13.27 euros by the 5:30 p.m. close of Milan trading after rebels reached the Libyan capital, raising the prospect of an end to a war that all but halted Eni’s production in the country. Libya made up about 13 percent of Eni’s revenue before the conflict began.
Recchi wasn’t able to say when plants may reopen and won’t send workers to resume output until the situation stabilizes.
“This is good news for Eni but to be reassured we’ll need to know what plans the rebels have and whether they can quickly pacify and manage the country,” said Massimiliano Romano, head of research at brokerage Concentric Italy in Milan. “Between that and getting production going again, I think it will take some time before companies are making money in Libya again.”
Before the fighting, Italian companies had been increasing investments in Libya as Prime Minister Silvio Berlusconi signed a “friendship” treaty with Qaddafi in 2009. The deal included a pledge of $5 billion for Libyan infrastructure, led by Italian companies, as compensation for Italy’s 30-year occupation of the country that ended with Mussolini’s defeat in World War II.
Italy may compensate companies that suffered losses because of the Libyan conflict, Industry Minister Paolo Romani said today. Measures to help “hundreds” of companies may be included as amendments to an austerity plan being reviewed by parliament, he told reporters, without giving more details.
“The new government will maintain the good relationship that Italy has always had with Libya,” Romani said.