Italian oil and natural-gas giant Eni SpA said Thursday it plans to sell stakes in three major pipelines as part of a potential settlement with European Union regulators over alleged anticompetitive behavior by the company's gas-pipeline business.
If EU regulators approve the plan, Brussels will drop charges against Eni alleging the company abused its dominant market position by refusing to sell rivals access to its pipelines. In Brussels, regulators said they will put Eni's proposal to a "market test," seeking opinions on the plan from Eni's competitors.
In an interview, Eni Chief Executive Paolo Scaroni valued the combined pipeline stakes at about 1.5 billion euros ($2.1 billion). Mr. Scaroni said he expects the plan to gain approval from Brussels in two months, adding that market tests are usually a "formality."
If Brussels rules against Eni, the company will face a fine of as much as 10% of its total annual revenue, which was 108 billion euros in 2008.
Eni's planned divestments mark a victory for EU regulators in their long-running battle to pry control of Europe's natural-gas market away from Europe's energy giants. For years, Brussels has tried to convince governments to force their national champions to separate their production business from their transit and sales businesses, arguing that such a separation would open up national markets to competition and lower energy prices.
The European Commission's efforts, however, have met with considerable resistance from the Italian government, which holds a 30% controlling stake in Eni and considers one of the pipelines key to Italy's energy security.
In a statement, the commission, the EU's regulatory arm, said Eni's proposal "has the potential to remove the concern that is at the heart of the Commission's investigation, namely the conflict of interest resulting from the vertical integration of the company."
If Brussels approves the plan, Eni plans to sell its 89% stake in the large TAG pipeline -- which carries gas from Russia to Italy -- to Italy's state-owned lender Cassa Depositi e Prestiti, Mr. Scaroni said. Such a sale should assuage the government's concerns over energy security by keeping the vital pipeline in Italian hands, he added.
Mr. Scaroni said buyers have not been found for Eni's 49% stake in the TENP pipeline, which carries gas from the Netherlands through Germany to the Swiss border, or for Eni's 46% stake in Transitgas pipeline, which transports gas through Switzerland to Italy.
Eni's plans to sell the three pipeline stakes could weaken the company's hand in negotiating natural-gas contracts with dominant suppliers such as Norway and Russia. Eni has long argued that its ability to pump natural gas from distant fields and deliver them to Italian homes gave the company an edge over rivals in securing gas contracts.
The planned sale would sever major arteries from a sprawling pipeline network that has allowed Eni to become one of Europe's biggest suppliers of natural gas. Unlike many of its larger rivals, Eni's control over gas deliveries allowed the company to avoid paying fees to third parties to transport the gas it purchases in Russia and Algeria, boosting Eni's margins.
Eni has locked in contracts granting it rights to transport gas in the TAG pipeline if the sale to Cassa Depositi e Prestiti is approved by Brussels, Mr. Scaroni said, without elaborating.
The move could also embolden a recent campaign by Knight Vinke, a New York-based activist investment fund that holds 1% of Eni, to convince Mr. Scaroni to separate Eni's gas-utility business from the rest of the company. Knight Vinke has argued that keeping Eni's upstream and downstream operations yoked together no longer makes financial sense. Mr. Scaroni said the decision to sell the stakes "goes in the direction" of Knight Vinke's demands.
If Eni sells the stakes, the company will probably use the money from the sale to pay down its debt, Mr. Scaroni said.