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. Last Updated: 07/27/2016

Gazprom's Italy Deal Facing Investigation

ROME -- An Italian parliamentary commission will open an investigation into an agreement between Italian oil company Eni and Gazprom that would permit the Russian energy company to supply gas directly to customers in Italy.

Central Energy Italien Gas Holding was formed this month to own and distribute the gas. Italian businessman Bruno Mentasti Granelli became a 33 percent partner in the company, with state-controlled Gazprom holding the rest.

"We will conduct a fact-finding investigation into the energy world," said Bruno Tabacci, chairman of the industry committee in the Chamber of Deputies in Rome.

"Among others, we will call Italian Gazprom representatives and Bruno Mentasti" to testify. The comments, reported Monday by newspaper Corriere della Sera, were confirmed by his spokesman, who declined to be named.

Italy's anti-monopoly authority wants to loosen Eni's dominance of the country's natural gas market, Europe's third biggest, especially through Eni's control of import pipelines. The state-controlled company, Italy's former gas monopoly, has been forced by the authority to auction extra import capacity that it is adding through links to Russia and Algeria.

Mentasti, who is a former chief executive of mineral water company San Pellegrino, and others would have to appear in front of the commission at dates to be determined, Tabacci's spokesman said.

Enrico Letta and Pierluigi Bersani, both former industry ministers and members of the opposition coalition in parliament, last week called for an investigation into the Eni-Gazprom accord because of what they called a conflict of interest with Prime Minister Silvio Berlusconi.

Mentasti is an ex-partner of Berlusconi's in a pay television service.

Mentasti denied speculation that he was a front for Berlusconi in Central Energy. "I categorically exclude any economic interest, direct or indirect, of Berlusconi in this business," Mentasti told financial newspaper Il Sole/24 Ore last week.

Rome-based Eni in May signed an agreement ceding as many as 2 billion cubic meters of gas pipeline capacity per year to Gazprom. Eni will let Gazprom ship the fuel through the Trans-Austria Gasleitung Pipeline, known as TAG.

Eni is waiting for approval from the Italian anti-monopoly body before the contract takes effect next year. An Eni spokeswoman, who declined to be named, could not offer immediate comment. Central Energy Italien spokesman Igor Reichlin had no comment.

As part of the accord, Eni extended its purchase agreement with Gazprom by 10 years through 2027. A major point of contention is that Eni conducted no auction for the capacity it is ceding to Gazprom's venture, according to Corriere.

Utilities like Enel, Edison and Endesa Italia have converted part of their power plant capacity to burn gas.

Such companies are dependent on Eni for imports and need to purchase space on Eni's pipelines if they want to buy directly from producer nations like Russia and Algeria.

Italian gas demand climbed 5 percent in the first eight months from a year earlier as power generators use more of the fuel.

Demand for gas is also soaring on a global scale. Europe's demand for gas will double to 1 trillion cubic meters a year by 2030, according to a recent study by Boston Consulting Group.