Italy's shrinking offshore oil and gas industry

Italy's shrinking offshore oil and gas industry

New restrictions on areas for exploration and production offshore of Italy has pushed activities away from the Tyrrhenian Sea and over to deeper waters west of Sardinia. The changes which affectively halve the area available for discovery have raised concerns that the country will fail to reduce its high demand on energy imports, as well as deter industry with its environmentalist red tape approach.
Italy has taken what some consider to be an overly cautious approach to offshore oil and gas exploration since the 2010 Macondo Deepwater Horizon oil spill disaster in the Gulf of Mexico, after which it was the only country to temporarily ban all oil and gas exploration and production (E&P) in its waters.

In its latest round of restrictions introduced in September, the country's Industry Ministry by decree imposed a 12-mile ban on E&P activities within Italy's coastlines and protected area, and also shut the Tyrrhenian Sea east of Sardinia and opened up a new area west of Sardinia. The changes effectively halve area where companies can explore for oil and gas.

All E&P activities, except those granted pre-2010, will now be focused in the new areas which are believed to have high potential but low environmental impact, and are typically in deepwater.

"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," industry minister Flavio Zanonato said at the time.

However, the legislation seems at odds with the country's need to reduce its cost of energy, and its pledge to increase its energy production and rely less on imports.

Currently, Italy relies heavily on imports - up to 90% - from countries such as Russia and Libya. It also pays some of the highest energy bills in the EU. Eurostat data showed businesses in Italy paid around 40% more for their power in the second half of last year than the EU average.

Many believe, including academic Prof. Giacomo Luciani from the Graduate Institute Geneva, that Italy has simply brought in the decree to "allow people who are keener on the environment to impose their line, which is a feature in many European countries."