Italian Drilling Ban Could Impact MOG, Northern Assets

The offshore drilling ban within five miles of Italy's coastline may impact Mediterranean Oil & Gas' (MOG) Ombrina Mare project, MOG reported.

The Italian Minister of Environment Stefania Prestigiacomo on June 30 unveiled an outline legislative decree amending the Italian Environmental Code that would prohibit drilling in Italian offshore locations within five miles of the coastline.

The Ombrina Mare reservoir structure is located within the proposed five-mile exclusion zone. MOG is reviewing alternative potential well locations outside the exclusion zone in case the legislative decree applies to the current platform at Ombrina Mare.

Ombrina Mare lies offshore Italy in the central Adriatic Sea in 66 feet of water. In February, MOG confirmed that 2P oil reserves in the Oligo-Miocene carbonate reservoir of the Ombrina Mare field are twice the level of the previous certification, increasing the 2P reserve estimate from 20 to 40 million barrels of oil, according to SubseaIQ.

Northern Petroleum reported that the proposed drilling ban would not affect its reported reserves in Italy or the exploration prospectivity of the Southern Adriatic, and has limited or no effect upon most other areas including the West of Sicily Thurst Belt.

The company's three preliminary awards and two applications in the Ionian Sea would feel the greatest impact, with the new proposals ruling out most of the area of the two preliminary awards d59F.R-.NP and d64F.R-.NP. Other areas of this region where Northern has preliminary awards and applications would face little or no impact.

Previous discussions between the company and Italy's Ministry of Industry and Economic Development had concerned an agreement for a three-mile nautical limitation, which would have had little or no effect on Northern's operations. The Ministry of Environment did not consult with Northern on the five-mile initiative.

"It is not surprising that the Italian Government would have some reaction to events in the Gulf of Mexico and now we can move forward with their views having been expressed," said Derek Musgrove, managing director of Northern.

Petroceltic reported on July 1 that it would consider alternative well locations for its planned appraisal of the Elsa structure offshore Italy, which fall outside the five mile boundary. The Elsa field straddles the five-mile boundary. Elsa is located in the central Adriatic Sea in water depths between 100 feet to 165 feet.