Italian oil company Eni SpA has cancelled a development phase of a field in Iran, according to an announcement by Italy’s Prime Minister, as Rome moves to block new oil and gas investments in the country.

Italy has been one of Iran’s main trading partners in Europe, but Prime Minister Silvio Berlusconi’s close ties with Israel and diplomatic pressure over the nuclear dispute with Tehran have led to a sharp reduction in Italian investments in Iran, reports Reuters.

“Eni has a contract to respect unless it wants to pay a penalty, but it has already renounced the possibility it had to develop the third phase of an important field,” Berlusconi said at a news conference.

He gave no details about the field Eni, which is state-controlled, and declined to comment on his remarks, according to the news agency.

Eni produced 28,000bopd in Iran during 2008.