Italy plans to double its oil, gas production by 2020

Italy intends to double its domestic production of oil and gas by 2020 and boost renewable energy power generation as it moves to cut consumers’ energy costs and boost flagging economic growth.

A new energy strategy, presented to the cabinet on Tuesday, said it aims to have 14 percent of its energy needs met by domestic production by 2020 from the current 7 percent.

The move is part of a packet of measures Rome says will help reduce imports to 67 percent of the country’s energy needs from 84 percent at present, while also slashing 14 billion euros ($18.23 billion) per year off its 62 billion euro energy import bill.

“The measures proposed in the energy strategy … aim to make sure that energy no longer represents for our country a structural factor for competitive disadvantage and weighs on family budgets,” it said.

Italy has some of the highest gas and power prices in Europe and is seeking ways to cut energy costs to allow its businesses to compete.

Aluminium group Alcoa has decided to shut its aluminium smelter in Sardinia, blaming high power prices for undermining its competitiveness.

High energy costs have even prompted some companies to consider relocating abroad.

According to the government’s new energy strategy, which will be discussed before being approved in around two months, about 36-38 percent of electricity will be generated from renewables in 2020, from 23 percent in 2010 – on a par with natural gas.

GAS POWERED

With nuclear power outlawed, Italy currently uses gas to fuel more than half of its power plants.

The country’s 90 percent reliance on imported natural gas, much of it brought in under expensive take-or-pay contracts, means end-user prices remain high.

On Tuesday Industry Minister Corrado Passera said the government was ready to support oil and gas group Eni renegotiate its costly long-term gas contracts with countries like Russia, Algeria and Norway.

He said new contracts should be indexed to spot gas prices.

Rome’s new energy strategy, which confirmed plans to transform Italy into a gas hub for Europe, expects private energy investments to 2020 to the tune of around 180 billion euros, in part supported by government incentives.

Drilling for oil and gas in “sensitive” areas both offshore and onshore will not be allowed and neither will the development of shale gas, the strategy said.

To help cut red tape, the government intends to introduce a single permit for oil and gas developers and will introduce a deadline for final opinions to projects from local authorities.

A labyrinthine bureaucracy of contradictory rules that often vary from one region to the next has frustrated a series of energy projects in Italy.

Earlier this year UK gas producer BG Group threatened to shelve plans to build a liquefied natural gas (LNG) plant in the southern region of Puglia after failing for 11 years to obtain all the necessary permits.

Reuters