BMI View: Italy's oil and gas sector will continue suffering from the gradual depletion of its hydrocarbon reserves as well as the rapid downsizing of the country's ailing refining sector. While an active exploration scene and a gradually improving regulatory environment are positive signs, we believe these improvements will take some years to garner more substantial industry changes.
|e/f = BMI estimate/forecast. Source: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||112.8||122.0||121.8||120.0||117.2||124.5||151.5|
|Refined products production & ethanol, 000b/d||1,506.0||1,355.4||1,423.2||1,309.3||1,256.9||1,256.9||1,258.2|
|Refined products consumption & ethanol, 000b/d||1,360.1||1,326.4||1,308.0||1,304.0||1,315.3||1,328.5||1,344.2|
|Dry natural gas production, bcm||7.7||7.5||7.3||7.1||6.9||6.7||6.5|
|Dry natural gas consumption, bcm||70.1||63.8||65.0||67.0||67.7||68.6||69.2|
The main developments in Italy's oil and gas sector:
In August 2015, Italy's Foreign Minister Paolo Gentiloni stated that Iran is likely to modify contract terms with the state-owned oil company Eni as the country emerges from a tough regime of Western sanctions. Earlier in August, Eni noted that it would consider investing in Iran after sanctions are removed and if Tehran provides favourable contract terms similar to international standards.
In August 2015, Sound Oil agreed on a gas sales deal for its Casa Tonetto (including Narvesa gas field) production concession with Shell Energy Italia.
The Algerian government is aiming to relaunch the Galsi gas pipeline project which will supply Italy with gas from Algeria, stated Algeria's PM Abdelmalek Sellal during the third Italo-Algerian Summit on May 28 2015. Algiers also proposed that Rome develop a strategic partnership with Algeria to enhance Italian and European energy security.
In May 2015, the Italian government gave a final authorisation for the Trans-Adriatic Pipeline construction, despite local opposition in Italy's Apulia region, which is highly dependent on tourism.
In April 2015, Sound Oil received environmental approval from the government of Italy's Veneto region to start production from its Nervesa gas field in northern Italy. The Italian Ministry of Economic Development awarded the Nervesa production concession shortly afterwards.
In March 2015, Royal Dutch Shell's wholly owned subsidiary Shell Italia E&P farmed-in an 80% interest and operatorship of the Cascina Alberto permit onshore north west Italy from AIM-listed Northern Petroleum. Shell will pay USD850,000 in cash on completion of the transaction. Shell will continue with the North Petroleum exploratio n programme, which includes the acquisition of any new seismic data until the seismic costs reach USD4mn and exploration of the well until costs reach USD50mn.
According to reports in February 2015, Italy's Eni registered a 16% fall in net profit to USD4.2bn in 2014, although production increased marginally. The company's Q414 profit was down 64% year-on-year to USD523mn. The firm performed well despite a more than 50% fall in crude oil prices from June to January. 'The performance was driven by the increased contribution from upstream production and the accelerated restructuring of our mid and downstream businesses,' CEO Claudio Descalzi.
In early January 2015, Canada-based Avanti Energy signed a purchase and sale agreement with Dove Energy to acquire Italy-based CMI SpA. The acquisition is valued at about USD5.78mn, which includes USD1.53mn in cash and USD4.25mn in common shares of Avanti.