Petroceltic, the Irish oil and gas explorer, hopes to capitalise on a decision by Italy's new technocrat government to take on powerful Sicilian business interests and other lobby groups and reopen offshore exploration.
Italy's new government estimates that €5bn would be invested if the ban on offshore exploration is lifted in what is a core part of its "pro-growth" strategy.
Former Prime Minister Silvio Berlusconi controversially shut down all offshore exploration in 2010 causing Petroceltic to freeze promising developments in the Abruzzo region, east of Rome. External consultants to Petroceltic estimate that there were recoverable resources of between 35 million and 180 million barrels of oil in one of Petroceltic's finds, called Elsa, alone. The explorer has six other licences scattered around this find.
Brian O'Cathain, chief executive of Petroceltic, said his company planned to invest between $35m (€27.8m) and $40m (€31.8m) in developing Elsa. Petroceltic, before the ban, said it had raised $26m (€20.6m) and "most" of this funding was still ready-to-go.
"The new legislation will take a month or two to be passed, so we are very hopeful," Mr O'Cathain predicted. "[Exploration] has serious potential in Italy," he said, "It doesn't require any incentives for investment to increase."
Under the proposed reopening of Italian offshore drilling a new 3 per cent royalty tax is planned by the state. "This will create new funding for regulation to ensure people operate in a prudent way," Mr O'Cathain said. "We're very supportive of this as it will help address public concerns."
Italy has never had a significant oil or gas related environmental problem yet Mr Berlusconi stopped all drilling ostensibly because of BP's disaster in the Gulf of Mexico. The Financial Times, however, has reported the real reason he did this was as a "pretext to appease powerful Sicilian interests opposed to developments seen as jeopardising the island's tourism industry."
Sunday Indo Business