Sace's focus on the Middle East has not been undone overnight by a knee-jerk reaction to fallout from the World Trade Centre attack ? or so it claims. So far the Italian export credit agency's view of the region remains unchanged, and with no political announcement from the government as yet (other than prime minister Berlusconi's widely broadcast comments on Islam), Sace is taking a wait-and-see strategy and will continue to back its exporters in the region.

The agency's exposure to the Middle East is sizeable. Last year Sace guaranteed more than Eu1.8 billion ($1.7 million) of new project and export business in the region. Most of that business was in Iran following Sace's decision to upgrade its Iranian risk from category five to category six. In 2001 the agency's project and structured finance division, headed up by David Mizoule, provided comprehensive cover for four petrochemical projects in Iran ? Linde 1 ($119 million), Linde 2 ($52 million), Tecnimont 1 ($144 million) and Tecnimont 2 ($144 million). These Iranian deals follow on the back of last year's Mobarakeh steel deal. The only other projects to receive cover this year were for Estonia's Galvex steel project and Argentina's Profertil petrochemical project.

Further Iranian ventures are in the pipeline. In March a consortium led by Sondel, the Italian subsidiary of Montedison, signed an agreement to build the first independent power project in Iran. The project involves the construction of a 900MW gas-fired power plant at Rezvanshahr on the Caspian coast in the north of the country. Financing for the Eu600 million plant, the first of four such IPPs planned in the country, is expected to include Eu400 million of debt. According to Sondel, Germany's Hermes and Sace have agreed to provide cover for the project.

In recent years Sace has also backed projects in Oman, the United Arab Emirates and Qatar. Following on from its involvement in the Oman LNG project ? which is due to be refinanced shortly ? the agency is expected to provide cover for the Oman India Fertilizer Company.

At the beginning of October a final offtake agreement for the $800 million Oman India Fertiliser Company project is expected to be signed. However signing depends on France's Coface and Sace providing a $325 million financing package for the deal.

But by far the most high profile of Sace's projects in 2000 was the Blue Stream project ? a 760km gas pipeline stretching from Russia under the Black Sea to Turkey. The project, sponsored by the Russian integrated oil and gas giant Gazprom and Italy's Eni, has certainly raised Sace's profile and tightened Italy's links to Russia.

Blue Stream is the largest project to successfully close in the Russia since the currency crisis of 1998. It is also the largest deal for a Russia sponsor to be backed by a group of export credit agencies. Sace joined a group which included the Japanese and British export credit agencies.

The Blue Stream deal was also the first time a receivables-backed tranche had been supported by a group of agencies. It was also the first time Sace's reinsurance policy with the ECGD has been used. The agency already has agreements with several agencies including OND, EKN, Hermes, ECGD, Cesce, NCM and OEKB. And this year Sace signed further agreements with Coface, SEC and EKF.

Following on from Blue Stream Italy's connection with Gazprom has paved the way for another Russian deal. At the beginning of September, Sibur, the Russian chemical firm controlled by Gazprom, signed a contract with Italy's Technimont, part of the Montedison group, to construct an Eu89 million polyethylene plant. Italy's SanPaolo will provide financing which will then be guaranteed by Sace.