Total to Develop 1.6 Billion Euro Tempa Rossa Project in Italy

Total SA, Europe’s third-largest oil company, will begin developing a 1.6 billion euro ($1.9 billion) onshore field in Italy as a probe into contracts that led to the arrest of local executives drags on for more than three years.

Total expects output from the Tempa Rossa field to begin in early 2016 and reach 50,000 barrels of oil a day and 230,000 cubic meters of natural gas, it said in a statement.

“The field has significant potential and will make a strategic contribution to regional economic development,” raising Italy’s output by almost 40 percent, Yves-Louis Darricarrere, exploration and production chief, said today.

Lionel Levha, head of the Italian unit, was arrested by police as part of the investigation in 2008 and the company’s offices searched, Total said at the time. An Italian judge also suspended Total’s exploration concession for a year.

“The legal procedure is still ongoing,” Victoria Chanial, a Total spokeswoman, said today, with four officials charged.

The company, based outside Paris, is operator of the field with 75 percent, while Royal Dutch Shell Plc has 25 percent. The original partners in the project, including Eni SpA and Exxon Mobil Corp., had expected production to begin as early as 2010.

The Italian government of Mario Monti is seeking to attract as much as $18 billion in investment, partly by easing a ban on offshore oil and gas exploration imposed after the 2010 Gulf of Mexico spill. Monti has said companies such as Shell, Edison SpA and Eni can resume shallow-water projects within 12 kilometers (7 miles) of the coast that they were forced to abandon in 2010.

Regain Confidence

The decree, which needs parliamentary approval, is part of his efforts to regain investor confidence as Europe’s economic crisis threatens to cut off market funding. Italy relies on imports to meet 90 percent of its oil and natural gas demand.

Tempa Rossa, 4,000 meters underground in the Basilicata region, will have eight wells, with oil sent to the Taranto refinery via the Val d’Agri-Taranto pipeline. It will help Total sustain output growth in coming years, Darricarrere said.

Total is expected to report adjusted second-quarter net profit of 2.845 billion euros on July 27, according to the average of 10 analyst estimates compiled by Bloomberg.

The explorer isn’t expecting production growth in 2012 after the closing of the Elgin and Franklin fields following a leak this year, as well as stoppages in Nigeria and Yemen.

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