Italy’s oil and gas exploration moratorium gives Cabot chance to assess future strategy
Oil and gas company Cabot Energy has confirmed that the Italian government signed a decree which enacts the suspension of work on oil and gas exploration permits or applications for new exploration permits in Italy whilst a review is undertaken, giving Cabot an opportunity to evaluate its future strategy on its onshore and offshore licenses.
As reported earlier in February, the decision also affects ADX Energy, an oil and gas company based in Australia, which has assets offshore Sicily.
Cabot said on Thursday that the period given for the review is up to 18 months and that the suspension will be lifted as soon as consensus is reached on the terms under which the different areas will proceed with oil and gas exploration. In the event that no consensus is reached within 24 months, the suspension will be lifted.
During the suspension period, the Ministries of Economic Development and Environment will review all areas in the Italian onshore and offshore territories as part of the Plan for Sustainable Energy Transition of Suitable Areas (PTESAI) Bill, to determine which are suitable for sustainable hydrocarbon prospecting, exploration and development activities.
Following the assessment of areas, a decision will be taken whether to allow further exploration activity or to reduce or withdraw licenses in that area. Should agreement not be reached between the government and the regions on all onshore licenses within 24 months, the suspension will be lifted and rulings will only be issued for offshore areas.
Opportunity to evaluate future strategy
Cabot Energy confirmed that its exploration licenses went through a rigorous environmental review and is hopeful for a positive outcome. However, the moratorium provides the opportunity for the company to evaluate its future strategy in both its onshore Po Valley Cascina Alberto exploration permit with its partner, Shell Italia, and in its 100 percent owned and operated offshore permits in the Southern Adriatic and Sicily Channel. Cabot Energy 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.
According to Cabot, the legislation makes allowance for compensation for companies that are impacted. Should it become necessary, Cabot Energy could seek compensation for all exploration costs up to the withdrawal date.
Scott Aitken, Chief Executive Officer, commented: “This new legislation is not a ban on exploration. It allows the Italian government to reappraise the exploration licenses it has granted. Cabot Energy will ensure the company is prepared to rapidly progress our licenses as soon as the review is completed, whenever that occurs within the next 18 months.”