The European Investment Bank (EIB), the European Union's long-term financing institution, is advancing a EUR 200 million loan to Enterprise Oil Italiana SpA for the development of two oil fields in Southern Italy.

The financing will support the development of two large onshore oil discoveries located in the Southern Apennine mountains of the Val d'Agri area, some 30 km south of Potenza. Separately, a new 150 km pipeline will be constructed to Taranto. Project implementation takes fully into account the particular characteristics of this environmentally sensitive area.

The project involves a significant increase in production with the treatment capacity of the oil centre increasing in stages from the present 7,000 barrels of oil per day (bopd) to over 100 000 bopd, as more wells are put on stream. This level of production will double Italy's present domestic output level and meet some 6% of present domestic oil demand.

Completion of construction is envisaged by 2002. Further drilling is planned to continue until 2004. Project implementation will require approximately 2000 man-years. Operation of the overall Val d'Agri oil fields development will employ about 70 people at the oil centre and involve an additional 75 man-years for engineering and field support activities.

This project represents further substantial support from the Bank to the development of oil projects in Italy's Mezzogiorno.

The EIB was founded in 1958 under the Treaty of Rome. Its remit is to finance investment contributing to attainment of the European Union's objectives: fostering development in less favoured areas, supporting growth and employment, bolstering the competitiveness of the industrial sector, promoting small and medium-sized enterprises. EIB loans are directed towards economically viable projects in the fields of infrastructure, transport, energy, telecommunications, environmental protection, urban renewal, industry, services, health and education. In 1998, Italy confirmed its position as one of the EIB's major customers, alongside Germany and the United Kingdom, attracting aggregate lending of EUR 4.387 billion. As a general rule, EIB loans do not exceed 50% of a project's investment cost.

(1) 1 euro = 0.666300 GBP, 1 936.27 ITL.