Hello to all, here is the promised ATL rise of ENI, as usual with revisions and additions from Sorairo. Enjoy!
‘The Six-Legged Dog Will Roar: the Rise of the ENI’ by Ernesto Gandolfini
Few know the definitive establishment of Italian Fascism was caused by a political incident over oil extraction – the Sinclair Scandal of 1924. In short, it was discovered that the government favoured an agreement with the American oil company Sinclair about extremely advantageous concessions in Italian soil, not only unfavourable to the Italian nation but violating the current laws too. Giacomo Matteotti was intended to denounce the scandal on the 12th June – he was assassinated two days before. Everyone knows how that story would eventually end.
When Fascism won in Italy, the regime saw fit to revise the entire Italian Energy policy, based essentially on total self-dependence of coal and oil. For this, in 1926 the AGIP (Azienda Generale Italiana Petroli) was founded, de jure a private company, de facto a state owned one, with the ability to control production and trade of oil in Italian soil. AGIP was established by the will of Giuseppe Volpi, the Minister of Economy at the time, supported by car producer FIAT and growing interests in Romania, another European country rich in oil. The fellow nation therefore came of early interest to the company.
AGIP didn’t have a brilliant start – despite being aided by a 1927 law where the government took exclusive right in conceding concessions and excavation permits in Italian soil, they had still to face competition by far older and stronger foreign oil companies. Then in 1929 what little was gained was lost in the Great Depression.
But in the early 30’s, AGIP, through the more capable though brief leadership of Alessandro Martelli being also a former Economic Minister, started to grow for real. In 1933, the government decreed that AGIP had monopoly in oil processing of the first small (and not very deep oil) sources found in Italy. But where the company would focus more, was attempting to develop better and synthetic oil through a joint venture with chemical company Montecatini: the ANIC. It wasn’t mere autarchic policy – the AGIP, and through it the government – started to look for suitable oil depots in Italian soil. Even attempts to extract oil in Albania failed miserably.
But in those years AGIP would also start to invest over seismic reflection geysers, becoming the first oil company in Europe to get such advanced devices. Those new instruments worked greatly. As suspected since long ago, the Padan Plain was rich of energetic resources: not oil however, but natural gas. Finally, towards the end of the 30’s renown explorer Ardito Desio found track of the first, extensive, and huge oil fields in Libya. What was once called the “Italian empty sandbox” suddenly became a treasure chest just waiting to be brought to light. There was an issue however: such oilfields were quite deep and AGIP didn’t have the technology to extract it properly at the time. However in 1939 “Operation Petrolibia” began through financial support from FIAT, still present enough in AGIP’s life to make a second joint-venture (later incorporated into ANIC) focused on synthetic oil. Despite the harshest phase of autarchy ending with the reforming of the Stresa Front alongside Britain and France lifting the embargo against Italy, between the war in Ethiopia, invasion of Albania, and the gear up for a greater conflict, the AGIP saw its funds cut, hence halting serious plans in Libya.
The government would up AGIP funding in the early 40’s, as Operation Petrolibia benefitted as part of a set of investments in the colony during the Jewish Escape to Lybia. Also helped by improving infrastructure and new equipment was bought in America, the oil company hired many Jewish engineers and chemists in order to boost its efforts on the operation, which would finally start to pay dividends by 1945. But AGIP was definitely in business in Libya. It would soon face issues in Romania, acquiring Prahova, the third largest Romanian oil company, therefore giving solid access to the rich oilfields of the country. The Italian presence irked the Germans, salivating over the Romanian oil as well, but also the Americans, where they had control over half of the local oil industry.
In AGIP (but above all during the early ENI age) there was awareness about the consortium of seven Anglo-American oil companies (the so called “Seven Sisters”): five Americans (the future named Esso, Texaco, Mobil, Chevron and Gulf Oil), one British (Anglo-Persian oil company, future British Petroleum) and a British-Dutch joint venture (Royal Dutch Shell). Dominating the oil market since then, such consortium would soon start to see with growing hostility the rise of a potential eighth player; however, with the progression of the war and the growing divergences between Americans and Europeans towards the Soviet Union, this corporate alliance would break as Churchill agreed a detente between British companies and AGIP, which would soon grow to become the pipeline of the entire Roman Alliance (and Israel as well).
With respect to the Prahova issue, the Germans failed in ousting AGIP from Romania, a nation that despite aligning with the Nazis didn’t want a total rupture with the Italians. Besides, the Romanians were more than satisfied to seize the assets of the American oil companies when ending up at war with the US; there wasn’t a necessity from their point of view to nationalize Prahova as well.
However, when Germany declared war on Italy, one of the first orders from Berlin towards Bucharest was to seize all Prahova properties – but the Romanians hesitated as they found themselves at war with a belligerant Bulgaria with the Danube all exposed to an invasion while their army was struggling in the Soviet Union. Besides whatever action taken at the time would have been in vain – after a few weeks, the Bulgarians flooded the Ploesti oil fields and Dobrujia. An AGIP team was hastily sent to repair the damage done by German raids, and start soon as possible restarted the local production.
The issue of the Romanian oilfields was an issue in the Kiev Conference. The Italian delegation asked that Romania should pay part of compensation to the Roman Alliance in oil, hence AGIP, through Prahova, which would control the clear majority of the Romanian oil fields. They also stated that the German would pay for the damages during their retreat. The Soviets weren’t happy about the proposal and above all not the Americans, which saw in the Italian proposal a reduction of their oil companies power in Romania. But it was also noticed, with Bulgaria and Turkey being allies of Italy, access to Romania would have been more difficult for the Americans. The British were instead more supportive, considering the Italian proposal fair and also preferring that Romanian oil be controlled by AGIP rather than American companies which may sell to the Soviets.
In the end, also in lieu of the general agreements over Romania (neutrality, and loss of Bessarabia and Dobrujia) it was agreed that AGIP through Prahova could retain what they had and control half of the remnant oil resources of Romania for the 10 years from the end of the war to be then returned to Romania. The American companies regain their rightful other half. When the time expired, ENI bought the granted share, the American government instead to win favours from the Romanians would press its own companies to sell back rights and properties to Bucharest. With those, Romania established its own state oil company. It was nothing major, but enough for the Romanians to be self-reliant and make some profits (like selling their surplus during the oil crisis across Europe during the Second Arabian War).
In 1945, AGIP was becoming, between new discoveries of gas in Italy, control of Prahova, and above all the slow but constant extraction of Libyan oil, a major player in the oil market. It therefore needed to adjust and reform its administration. However, the position of president of the AGIP – which saw various changes in the last ten years – was one which started to become very appealing in the Italian administration dragging the interests of the main gerarchs, salivating around Mussolini to propose their own candidate. Also there was FIAT, which tried to meddle as well, giving the support given to AGIP so far.
The 28th April of 1945, it was decided to suggest a compromise candidate – a certain Enrico Mattei, owner of a chemical company which obtained a fair success before and during the war as major supplier of the armed forces, not tied with the major gerarchs (above all Ciano and Balbo), loyal enough to Fascist cause (though OVRA kept watch on him due to his sympathies to the Christian Democrats). Mattei was supposed to last for only few months, but his activity would soon prove to be so energetic and effective, he would stand in that position for decades –becoming one of the most powerful men of Italy.
Mattei would manage to establish the foundation of a full network (extraction and distribution) of Italian natural gas in the Padan valley in less than two years, creating a team motivated and capable, and expanding the operations in Libya. It came through patient work, negotiation and diplomacy with several Libyan tribes in the interior (many still barely accepting of Italian rule), offering jobs, basic school preparation paid by AGIP, houses, all in exchange to let the company to drill across their lands. Balbo would even venture to say; “I wish I did in all my years in Libya what Mattei could do in an afternoon. Without him, maybe we would have ended up like Algeria.” The ties Mattei established with those tribes was so strong and effective to the modern day that ENI’s armed guard core is exclusively formed by South-Eastern Libyans – not counting the number of Libyan engineers and chemists and even administrators in the company.
But Mattei went even further ahead by establishing a new (and also innovative) national network of AGIP oil pumps, in major national roads as in the blooming motorway network as well. Between 1951 and 1952, he was able to present the reform of the company as an effective state agency and Mega-Corporation ready to compete with the Americans. After a brief competition, he presented a new brand which Mussolini approved immediately: a black dog with six legs, of Roman inspiration, releasing a fire breath, on a yellow background. Only one detail was changed from the original design. Instead to look ahead, the dog’s head would be turned behind. Mattei managed to convince the Duce that the logo shouldn’t show an aggressive face but rather a more reassuring one, hence the turned head. The state oil company could win the competition with the Americans by offering honest cooperation with oil producer states, unlike the “Seven Sisters”. Mattei would prove right, as proven by Italy’s string of stunning geopolitical successes in the late fifties, in the realm of the energy market especially.
The 10th February 1952, the AGIP was incorporated into the ENI (Ente Nazionale Idrocarburi). With Mattei at the head, the Italian state oil company would take this market (and the gas one, as well) by storm. He didn’t have to wait long to encounter the opportunity that wouldn’t just elevate ENI to the top of food-chain, but make Italy the definitive Third Power on the planet.