A History of Collaboration and a Future of enormous Opportunities
Italy’s Eni, one of the world’s leading energy companies, has long been a significant player in the global oil and gas industry. Known for its expertise in upstream exploration and production, Eni has built a reputation for operating in challenging environments and forming strategic partnerships in resource-rich nations. Among these nations is Iran, a country with one of the largest oil and gas reserves in the world. While Eni has a notable history of collaboration with Iran, the company’s opportunities in the Iranian market have been largely curtailed due to geopolitical tensions and international sanctions. This article explores Eni’s history with Iran, the economic potential of renewed collaboration, and the broader implications for both the company and the EU.
A History of Collaboration: Eni’s Past in Iran
Eni’s relationship with Iran dates back to the late 1950s, when the company began exploring opportunities in the country’s energy sector. Under the leadership of Enrico Mattei, Eni was one of the few Western companies willing to challenge the dominance of the “Seven Sisters” (the major oil companies controlling global oil supplies at the time). Eni signed its first agreement with Iran in 1957, marking the beginning of a long and, at times, turbulent partnership.
In the late 1990s and early 2000s, Eni played a pivotal role in the development of Iran’s energy resources. The company was involved in two major projects:
- South Pars Gas Field – Phases 4 and 5: In 2000, Eni signed a contract worth approximately $3.8 billion to develop phases 4 and 5 of the South Pars gas field, the world’s largest natural gas field. The project aimed to produce 20 million cubic meters of gas per day for domestic consumption and export.
- Darquin Oil Field: Eni also signed an agreement to develop the Darquin oil field, further cementing its presence in Iran’s upstream energy sector.
However, Eni’s operations in Iran came under increased scrutiny as international sanctions were imposed on the country due to its nuclear program. By 2010, Eni had significantly reduced its involvement in Iran, delivering its final projects and refraining from signing new contracts.
Iran’s Energy Potential and Eni’s Expertise
Iran’s energy sector remains one of the most attractive in the world. The country holds 157 billion barrels of proven crude oil reserves (the fourth-largest globally) and 33.9 trillion cubic meters of natural gas reserves (second only to Russia). For a company like Eni, which has extensive experience in upstream exploration and production, Iran represents a unique opportunity to expand its portfolio of high-quality assets.
Iran’s vast underdeveloped energy infrastructure also aligns with Eni’s capabilities. The company has a strong track record of working in complex environments and modernizing outdated energy systems. For instance, Eni has successfully operated in countries like Libya, Egypt, and Angola—regions with similar challenges to those faced by Iran.
Missed Opportunities: Economic and Strategic Losses
1. Revenue Potential
Had Eni continued its operations in Iran, the company could have reaped significant financial rewards. For example, the South Pars gas field alone offers long-term revenue potential worth billions of euros. Eni’s initial investment in South Pars phases 4 and 5 was highly profitable, and the company’s expertise could have easily positioned it to take on additional phases or other projects.
By being absent from Iran, Eni has also missed out on lucrative contracts for oil field development. For instance, Iran’s Azadegan oil field, one of the largest undeveloped oil fields in the world, has been a target for foreign investment. While China has stepped in to fill the void left by European companies, Eni’s absence represents a lost opportunity to secure new reserves and long-term production.
2. Natural Gas Exports to Europe
In light of the EU’s efforts to diversify its energy sources away from Russia, Iran could have played a critical role in supplying natural gas to Europe. Eni’s involvement in developing Iran’s gas infrastructure—through pipelines or LNG facilities—could have significantly contributed to European energy security.
For example, the Trans-Anatolian Natural Gas Pipeline (TANAP), which connects Azerbaijan to Europe, could have been expanded to include Iranian gas. Eni’s expertise in pipeline projects, such as its work on the Greenstream pipeline from Libya to Italy, would have made the company an ideal partner for such an initiative.
3. Renewable Energy Potential
In recent years, Eni has shifted its focus toward renewable energy and sustainability. Iran, with its high solar irradiance and vast open spaces, offers immense potential for renewable energy development. According to the International Renewable Energy Agency (IRENA), Iran has the capacity to install up to 30 GW of solar energy and 25 GW of wind energy by 2030. Eni’s absence from this market means the company is missing an opportunity to expand its renewable energy portfolio in one of the most promising regions.
Employment and Economic Multiplier Effects
Eni’s involvement in Iran would not only benefit the company but also create significant employment opportunities. Large-scale energy projects typically require thousands of skilled and unskilled workers for construction, operation, and maintenance. Beyond direct employment, there are multiplier effects in the form of increased demand for engineering services, industrial equipment, and logistics, much of which could be sourced from EU-based suppliers.
For example, during its South Pars project, Eni worked with European subcontractors to supply technology and expertise. A renewed partnership with Iran would likely create similar opportunities, boosting employment and economic growth in the EU.
The Geopolitical Context: EU vs. China and Russia
One of the most significant consequences of Eni’s absence from Iran is the growing influence of non-EU players like China and Russia in the region. Chinese companies, in particular, have aggressively pursued contracts in Iran, filling the void left by European companies. For instance, China’s CNPC took over TotalEnergies’ stake in South Pars Phase 11 after the French company withdrew due to U.S. sanctions. We have already covered the TotalEnergies case in a previous article, examining the opportunities and failures in the relationship between resource-rich Iran and energy giant TotalEnergies.
This shift in influence represents a strategic loss for both Eni and the EU. Iran’s energy sector is not just an economic asset but also a geopolitical one. By allowing competitors to dominate the market, the EU is losing leverage in a region that is critical to global energy security. One example of this is the landmark agreement between Russia and Iran in January 2025, in which the two countries agreed to export Russian natural gas to Iran, with the aim of making it the region’s natural gas hub. The EU’s participation in the country’s natural gas reserves is an investment in the future and in regional stability.
Eni’s history with Iran is a testament to the company’s ability to operate in challenging but resource-rich regions. From its pioneering agreements in the 1950s to its successful South Pars project in the 2000s, Eni has demonstrated the value of collaboration with Iran. However, geopolitical tensions and sanctions have led to a missed opportunity for both the company and the EU.
For Eni, the financial and strategic losses are substantial. Iran offers not only vast oil and gas reserves but also emerging opportunities in renewable energy. For the EU, the absence of companies like Eni from Iran’s energy sector represents a failure to secure long-term energy diversification and economic growth.
As global energy dynamics continue to shift, revisiting the EU’s approach to Iran could unlock significant benefits for European companies like Eni and strengthen the bloc’s position in the global energy market.
