Italian Parliament Approves Modifications to Offshore Drilling Ban

Both houses of Italy's Parliament on Aug. 3 passed a decree modifying the offshore exploration and production moratorium that has been in place since 2010.

The Italian government moved to allow certain offshore oil and gas projects to move forward when it Legislative Decree 83/2012 on June 26. The new legislation took effect immediately, but required further ratification by the Italian parliament within 60 days.

Legislative Decree 83/2012 modifies the offshore restrictions introduced in August 2010 by Legislative Decree 128/2010 (DL128), which generally banned all such activities within 12 nautical miles of the coast, or 5 nautical miles for liquid hydrocarbons.

The restrictions will no longer apply to:

  • Applications for production concessions that were under review at the time DL128 came into force;
  • Any titles, including exploration licenses, that had been issued prior to DL128 taking effect;
  • Any proceedings connected with or subsequent to such titles.

The new decree includes a provision for a 3 percent increase in the royalty rates, with proceeds allocated to the state budgets of the Ministry of the Environment and the Ministry of Economic Development. The increase would boost the royalty rate to 7 percent for oil and 10 percent for gas.

The royalty rate increase will support the monitoring and enforcement of marine environmental protection and the supervision of environmental safety for offshore exploration and production activities.

Calgary-based exploration company CYGAM Energy, which has exploration projects offshore Italy, was "delighted" the decree had been passed. CYGAM has two exploration projects offshore Italy, including a 30 percent interest in the Elsa discovery in the Adriatic Sea and the Aretusa prospect in the Mediterranean Sea.

"We will now commence discussions with the relevant authorities to progress these projects to the benefit of all stakeholders and in the most environmentally responsible manner," said Giuseppe Rigo, interim president and chief executive officer of CYGAM, in a statement.

Dr. Bill Higgs, chief executive of UK-based Mediterranean Oil & Gas (MOG), said in a statement the modification was "very positive news".

MOG will now be able to seek a production concession for its Ombrina Mare field based on the application submitted in December 2008. The company's existing production concession AC19.PI in the northern Adriatic Sea also is excluded from the restrictions of DLGS 128/2010.

"Once the full details of the decree are published, we look forward to being able to continue with the development of the Ombrina Mare field, a project that is of considerable strategic importance to the company and that will be a very positive contributor to the Italian economy," Higgs said.


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