Eni has awarded a US$1.5 billion (€1 billion) contract to its subsidiary Saipem for the supply, installation and operation of a floating production storage and offloading (FPSO) vessel.

The 20-year contract, which is split into two phases, involves conversion of an oil tanker into an FPSO vessel.

The vessel will have a 12,000 bopd production capacity and 700,000 barrels storage capacity.

For the initial eight years of the contract, FPSO will be used for the exploitation of the Aquila field, which is situated north-east of Brindisi off the Italian coast in the Adriatic Sea.

Production work will begin in the last quarter of 2011, according to Saipem.