Italy Shuts The Door On New Oil Exploration

Italy will no longer grant concessions for oil and condensate exploration and production, a draft of a new government decree shows.

The decree, seen by Reuters, specifies that the oil exploration and production ban will only apply to new concessions—not existing ones that have already secured government approval.

The ban is part of Italy’s green ambitions, which include abandoning coal-fired electricity by the end of 2025 in favor of gas-fired power plants.

To that end, Italy approved four new gas-fired power plants in the past few years, capable of producing 3,400 MW of power, with upgrades to existing power plants expected to add another 700 MW by 2026 as the country attempts to move entirely away from Russian-supplied natural gas.

Oil exploration and production in Italy is regulated primarily through state legislation, with operators holding no title to exploration and production areas.

The Italian government is due a 10% royalty for onshore oil production and 7% for offshore.

While taking a step back from oil and gas exploration and production, Italy’s Central Bank, is pushing for developed economies with higher per-capital emissions to help developing economies transition away from fossil fuels in hopes of accelerating the clean energy rollout.

The call to assist, made by bank governor Fabio Panetta at the G7 – IEA Ensuring an Orderly Energy Transition conference in Rome, would help to reduce the overall cost of the energy transition globally, Panetta said.

But last week, Italy’s power utility Enel scrapped its plans to participate in the energy transition of Vietnam, deciding to exit the country’s wind and solar markets, which have been categorized by a rather complicated grid connection mechanism that has prompted even a transition-eager Italy is unwilling to tackle.

Source: Oilprice.com