In the wake of the Italian Senate suspending oil and gas exploration activities for 18 months, oil companies are evaluating the effect of this suspension.
To remind, the Italian Senate passed a Bill earlier this month to suspend oil and gas exploration activities in permits that were approved or are in the process of being approved.
The suspension is for a period of up to 18 months to enable the government to evaluate the suitability of exploration areas for sustainable hydrocarbon exploration and production activities.
The Ministries of Economic Development and Environment will review all areas in the Italian onshore and offshore territories to determine which are suitable for sustainable hydrocarbon prospecting, exploration and development activities.
All areas will be assessed based on environment, social and economic suitability. Offshore areas will be considered on the basis of the potential effects on the ecosystem, as well as impacts on sea routes, fishing and potential interference with the coastal communities. Areas considered suitable will resume activities. If the plan is not enacted within two years, activities will resume.
As previously reported, ADX, an oil company operating the Nilde field offshore Sicily described the move as a setback, but on the bright side, it said the government’s plan may result in a more efficient framework for achieving environmental approvals for operations in pre-approved areas.
It has also applied for a reduction of the permit containing the Nilde oil field, the Norma and Naila discoveries.
Coro Energy could seek compensation
The changes to the “Sustainable Energy Bill” include an increase in surface fees as well as a temporary suspension in the permitting of activities for exploration licenses such as the drilling of exploration wells.
Coro Energy, a company with oil and gas acreage in Italy, said that with the exception of the increase in surface fees, the changes are not material to Coro’s Italian portfolio which consists of five production concessions. The production concessions are all located onshore.
As for the company’s exploration licenses, Coro holds the D.R74.AP license that holds the offshore Laura discovery located in the Gulf of Taranto, Southern Italy.
The discovery, located in the Adriatic Sea some four kilometers from shore, was initially discovered by Eni in 1980 by the Laura-1 well. The concession was kept by Eni from 1984 to 2005 when it was relinquished without implementing a development plan.
The company’s other offshore license, D503-BR-CS, contains the Dalla offshore gas prospect. It is located off the coast of the Marche region and the license has an area of 138.09 square kilometers.
Coro Energy added that the new law makes allowance for compensation for companies that are impacted. Should it become necessary, Coro Energy could seek compensation for all exploration costs up to the withdrawal date.
Global Petroleum to focus on Namibia
In a separate announcement, Global Petroleum said on Friday that it continued to regard its Adriatic application areas as potentially valuable assets and prospective for both oil and gas regardless of the moratorium.
Unrelated to the moratorium, the company used the opportunity to comment on its court proceeds stemming from environmental groups’ appeals against environmental decrees related to Global’s application for four permits offshore Italy.
“All the judgments so far published regarding the appeals in relation to the company’s Southern Adriatic applications have gone in Global’s favor. Of the remaining appeals, a further two were heard in January – judgments are awaited – and are due to be heard in March,” the company said.
The company added that the normal legal process would continue and that the remaining cases were expected to be resolved in the company’s favor.
Also, the conclusion of the proceedings is likely to overlap with the exploration moratorium so the practical impact on Global’s operations would be less than 18 months.
Global CEO, Peter Hill, said: “We still believe that the permits we have applied for contain good prospectivity and we remain of the view that in time our Italian assets could provide material upside for our shareholders.
“Global intends to focus on the company’s Namibian acreage where we are particularly excited about the prospects within our new Namibia Block 2011A, designated PEL 0094, located in the Walvis basin.”
Cabot to evaluate its future strategy
Cabot said last week that the moratorium provided the opportunity for the company to evaluate its future strategy in both its onshore Po Valley Cascina Alberto exploration permit and in its 100 percent owned and operated offshore permits in the Southern Adriatic and Sicily Channel. Cabot has five permits and seven applications in process in total in Italy.
In the Italian southern Adriatic, the company has a 100 percent interest in two permits, F.R39.NP and F.R40.NP and in five contiguous permit applications. There are three existing oil discoveries within the permits area, Giove, Medusa and Rovesti. There are also a number of leads and prospects, the most exciting of which is the Cygnus prospect.
The company has two permits, C.R146.NP and C.R149.NP, located offshore in the Sicily channel that contain the Vesta exploration prospect along with other smaller exploration leads.
Like Coro Energy, Cabot also stated that, if necessary, it would seek compensation for all exploration costs up to the withdrawal date.