Cablegate: Italy's Commercial and Business Presence in Iran

VZCZCXRO7036
PP RUEHBC RUEHDE RUEHKUK
DE RUEHRO #2156/01 2131307
ZNR UUUUU ZZH
P 011307Z AUG 06
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC PRIORITY 5508
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUCNIRA/IRAN COLLECTIVE
RUEHFL/AMCONSUL FLORENCE 1609
RUEHMIL/AMCONSUL MILAN 7441
RUEHNP/AMCONSUL NAPLES 1703

UNCLAS SECTION 01 OF 03 ROME 002156

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EFIN IR IT
SUBJECT: ITALY'S COMMERCIAL AND BUSINESS PRESENCE IN IRAN

REF: A. ROME 2034
B. ROME 1876
C. JUNE 22 2006 SIPRNET REPORT
D. ROME 452

ROME 00002156 001.2 OF 003

Introduction
------------

1. (U) Total two-way trade between Italy and Iran reached
5.17 billion euros in 2005, making Italy Iran's second
biggest trade partner in the EU in eurodollar terms. Italian
companies also have an active presence in many sectors of the
Iranian economy. Paragraph 3 lists companies with
investments, specific on-going projects, or representative
offices in Iran. This list is derived from the Ministry of
Trade, which requires all Italian companies "doing business"
with Iran to register with the Ministry. We have also drawn
from company information found on the internet to provide a
description of a company's business activities. The
paragraph 3 list also includes Italian banks. For further
information on Italy's financial and banking relationship
with Iran, please see ref B.

2. (U) Italy has at least 433.2 million euros in foreign
direct investment in Iran as of December 31, 2004. However,
that figure, in our view, is vastly understated. The figure
does not take into account foreign direct investment through
a service contract mechanism, whereby a firm can invest in,
for example, the oil sector, but only by relinquishing the
title to the infrastructure the firm builds, and only for the
promise of a return through downstream oil flow proceeds.
For example, ENI, Italy's oil and gas parastatal, reports it
has invested 2.5 billion euros over a period of several
decades. As you can see, this figure of 2.5 billion euros is
not included in Italy's official foreign direct investment
figure (433.2 million euros).

3. (U) Italian Commercial Presence in Iran 2005.

Associazione Operatori Italiani in Iran: Association of
Italian workers in Iran; not a company

Alcatel Italia S.p.A.: Providers of telecommunication
equipment (broadband DSL)

Alitalia S.p.A.: Airline operators

Alstom Power Italia S.p.A.: Design and construction in
electrical engineering

Ansaldo Energia: Supply and start-up of gas turbines

ASI-Robicon: Installation and start-up of electrical pumps

Banca Intesa S.p.A.: Bank/financial activities; loan exposure
is 25 mm. euros (loan funded in euros)

Banca Nazionale Del Lavoro: Bank/financial activities; loan
exposure is 80 mm. euros (loan funded in U.S. dollars)

BFS/SIMIC: Metal barrel production

Danieli & C. Officine Meccaniche: Construction of steelwork
plants

De Nora: Electro-chemical technologies

Dietsmann Comerint: Technical training services, operation
and maintenance; won the contract from ENI Iran B.V. to train
future workers for the South Pars Phases 4 & 5 plant

Duferco: Structural steel trading

Edison International S.p.A.: Oil exploration and hydrocarbon
research

Ensemble: Representative office for various Italian agencies
and businesses; not a company

Eni Iran B.V.: Exploration and production of natural gas
fields; currently working on South Pars Phases 4&5 plant

Fata Engineering S.p.A.: Engineering and architectural
consulting

Fiat: Manufacturers of various models of Fiat automobiles

ROME 00002156 002.2 OF 003

Foster Wheeler: Petrochemicals, refineries, oil-gas
engineering

Mediobanca: Bank/financial activities; loan exposure is 850
mm. euros (loans funded in U.S. dollars)

Mediocredito Centrale: Bank/financial activities; loan
exposure is 850 mm. euros (loans funded in U.S. dollars)

Nalco Italiana S.p.A.: Producer of specialty chemicals and
services for water treatment and industrial process treatment

Nassetti S.p.A.: Ceramics/kiln manufacturers, provides raw
materials and equipment

Nuovo Pignone S.p.A. (GE): Provides oil and natural-gas
services, as well as equipment

Pedrini: Provides technology and equipment for marble and
granite; equipped Stone Factory 2 in Tehran

Saipem S.p.A. (ENI): Engineering; currently constructing and
installing two below-sea pipelines on behalf of ENI/Agip as
part of the South Pars Gas and Oil Project

SELI: Tunnel construction; operating in various phases of the
South Pars Gas and Oil Project

Snamprogetti S.p.A. (ENI): Provides engineering and design
for petrochemical plants; several projects in the works

Soilmec S.p.A.: Provides drilling and foundation equipment;
recently outfitted the Mahshahr APC Piling Project, the
biggest PVC (Polyvinyl Chloride) plant in the world

Sondel (Gruppo Falck): Electricity; currently constructing
and administering a central electricity plant in Pareh Sar

Tecnimont S.p.A. (Edison): Petrochemicals; currently
constructing a giant Low Density Polyethylene (LDPE)
production unit

Technip Italy: Petrochemicals; currently equipping the
Isfahan Refinery

Unicredit: Bank/financial activities; loan exposure is 20 mm.
euros (loans funded in euros)

The Energy Sector
-----------------

4. (U) ENI, which is 30 percent government-owned, has been
active in Iran since the 1950s, and claims to have invested
approximately $2.5 billion under service contracts with the
Iranian National Oil Company (NIOC). ENI is currently
participating in the development of phases 4 and 5 of the
South Pars Oil field. ENI's construction and engineering
subsidiaries, Snamprogetti and Saipem, are also providing
services to South Pars phases 4 and 5. Other ENI investments
in Iran are reported ref D.

5. (U) Other Italian firms involved with the South Pars
Project are: Dietsmann Comerint, which won a contract to
train future workers for phases 4 and 5 of the plant and
SELI, involved in tunnel construction for various phases of
the South Pars Project. Outside the energy sector, SELI has
been awarded contracts for the construction of several
water/irrigation tunnels in Iran.

6. (U) Additional Italian companies active in the Iranian
energy sector are: Soilmec S.p.A., which recently outfitted
the Mahshahr APC Piling Project with drilling and foundation
equipment; Sondel (Gruppo Falck), currently constructing and
administering a central electricity plant in Pareh; Edison
International S.p.A., involved with various projects in oil
exploration and hydrocarbon research; Tecnimont, a subsidiary
of Edison, currently constructing a Low Density Polyethylane
(LDPE) production unit in Sanandaj; and Technip Italy,
currently providing engineering services and equipment to the
Isfahan Refinery.

7. (U) Italian companies with branches in Iran, but no
reported current projects, are: De Nora, providers of
chemical and petrochemical technologies; Ansaldo Energia and
ASI-Robicon, both of which supply and start up electrical
pumps; Foster Wheeler, involved in petrochemicals,
refineries, and oil-gas engineering; Noyvallesina Engineering

ROME 00002156 003.2 OF 003

S.p.A., which provides petrochemical, textile, mechanical and
chemical engineering services; and Nuovo Pignone S.p.A.,
which supplies oil and natural-gas services and equipment.

Telecommunications
------------------

8. (U) Alcatel Italia S.p.A. is currently fulfilling an
agreement made with private Iranian operator ADA (Asre Danesh
Afzar) to outfit 100,000 DSL lines in Iran by 2007/2008. We
know of no other Italian and Iranian partnership in the
telecommunications sector, except for Finmeccanica's proposed
sale of Tetra telephone technology to two municipal police
departments (ref A).

Transportation, Industry, and Manufacturing
-------------------------------------------

9. (U) Fiat opened phase 1 of its dual-fuel automobile model
production for the Iranian market in the second half of 2005;
100,000 vehicles are scheduled to be produced in the initial
phase, with an additional 150,000 in the second. Alitalia,
Italy's state-controlled airline, has a branch in Tehran.
Alstom Power Italia S.p.A. is an electrical engineering firm.
Pedrini, providers of technology and equipment for marble
and granite, recently equipped Stone Factory 2 in Tehran.
Nalco Italiana S.p.A. is a producer of specialty chemicals
and services for water- and industrial-process treatment.
Nassetti S.p.A. is a provider of raw materials and equipment
for ceramics and kiln manufacturing. Fata Engineering S.p.A.
provides architectural and engineering consulting from their
office in Tehran. Duferco's Iran branch is involved in
structural steel trading. Danieli & C. Officine Meccaniche
deals with the construction of steelwork plants. BFC/SIMIC
is a metal barrel producer. All have branches in Tehran.
SPOGLI

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