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THE WALL STREET JOURNAL: Eni reports 48% rise in third-quarter profit: Eni is the lead operator of the mammoth Kashagan oil field in the northern Caspian Sea, the largest new oil discovery in the industry over the past 30 years. Other members of the consortium include Exxon Mobil Corp., Royal Dutch Shell PLC...": Thursday 10 November 2005

Italian energy firm plans
a pipeline across Turkey
for Central Asian output
By GABRIEL KAHN
Staff Reporter of THE WALL STREET JOURNAL
November 10, 2005

ROME -- Italian oil and natural-gas giant Eni SpA posted a 48% rise in third-quarter profit and announced plans to build a pipeline across Turkey linking the Black Sea with the Mediterranean, a project that would create an important new export route for large amounts of oil expected to flow from Central Asia in the next few years.

The pipeline, with a projected capacity to transport more than one million barrels a day, would extend from the Black Sea port of Samsun 560 kilometers to the port of Ceyhan on the Mediterranean, avoiding the overcrowded Bosporus shipping lane. The pipeline, which would be built together with Turkish firm Calik Enerji AS, would be operational in two to three years, said Eni. A person familiar with the project estimated the total cost at more than $1 billion.

For Eni, the pipeline stands to resolve in part one of the major headaches the oil firm was facing.

Eni is the lead operator of the mammoth Kashagan oil field in the northern Caspian Sea, the largest new oil discovery in the industry over the past 30 years. Other members of the consortium include Exxon Mobil Corp., Royal Dutch Shell PLC, Total SA, ConocoPhillips, Inpex of Japan and Kazakhstan state oil company KazMunaiGaz.

While oil is supposed to begin flowing from that project by 2008, it is still unclear how the tremendous output, which will eventually reach two million barrels a day, will be transported from the remote location to markets in the West.

While the proposed pipeline across Turkey would bridge only part of that distance, it could be connected via shipping routes across the Black Sea with a pipeline built by the Caspian Pipeline Consortium, called the CPC pipeline, in which Eni also holds a small stake

To be sure, the announcement doesn't guarantee the project will get built. A host of energy conduits in the Caspian area have been delayed or stymied for political or economic reasons. The Eni pipeline still requires the formal approval of the Turkish government. Paolo Scaroni, Eni's chief executive, said he was confident that would happen in the next few months.

Eni announced the pipeline together with its third-quarter results. It reported a quarterly profit of 2.45 billion ($2.89 billion) amid high oil prices and higher volumes of oil and gas sold. It reported an 11% jump in output to 1.72 million barrels of oil equivalent a day, up from 1.55 million barrels in the third quarter of 2004.

--Kenneth Maxwell in Milan contributed to this article.

Write to Gabriel Kahn at gabriel.kahn@wsj.com

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