A Review of the Nigerian Energy Industry

Italy halves area where offshore drilling is permitted

wti-crude-oil04 September 2013, Milan – Italy has almost halved the offshore areas where companies can explore for oil and gas, at a time when it is trying to reduce the country’s dependence on energy imports.

The measures, which could reduce the government’s royalties income, are designed to placate environmental campaign groups and hasten development of new deep-water opportunities.

Industry minister Flavio Zanonato signed a decree on Wednesday cutting the offshore acreage open to exploration and production to 139,000 square kilometres from 255,000 square kilometres previously.

“We are supporting the development of strategic national resources by concentrating hydrocarbon research and development in a few marine areas that have the highest potential and the least potential environmental impact,” Zanonato said.

Italy imports about 90 percent of its gas and most of its oil. Under a national energy policy introduced by the previous government of Mario Monti, it is seeking to double domestic energy production by 2020.

“It’s true the new areas are deepwater and more promising, but they’re also more challenging for companies cost wise,” said Davide Tabarelli, head of independent energy research company Nomisma Energia.

“Italy is always giving way to environmental groups on energy projects. It all means less energy and, of course, less royalties for the government,” Tabarelli added, referring to a number of infrastructure projects that have been delayed or shelved.

A statement from the industry ministry said that new E&P activity would be shifted a long way from Italy’s coasts into areas where nearby countries already carried out such work.

E&P activity is now off-limits within 12 miles of all Italy’s coastlines and protected areas, the ministry said, though new acreage has been opened up near Spanish and French operations around the Balearic Islands.

– Reuters

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