Oil bonanza beckons in Italian olive groves

WHEN unemployed factory worker Nicola Paoliello loiters on the ramshackle main square of the southern Italian town of Viggiano, he sees in the sun-drenched valley below an incongruously modern compound that could make the rest of Italy envy this forgotten area's luck.

Below the grazing and olive groves of the Val d'Agri in the southern Basilicata region lies Europe's largest inland crude oil reservoir, according to forecasts by companies such as the UK's Enterprise Oil.

Mr Paoliello has great hopes for the regenerative potential of the oilfields in an area where unemployment is a crippling 35 per cent.

After almost 10 years of wrangling, Basilicata's government and ENI, Italy's largest oil company, have finally agreed on how to distribute and develop the oil riches.

Basilicata, where ENI, Enterprise and other oil companies plan to invest billions of dollars, could also dent the influence of Middle Eastern suppliers, which account for about one third of the European Union's oil consumption.

"When it is in production, it will be cheaper than what we've got in the North Sea and Norway," said Pierre Jungels, Enterprise's chief executive.

Thanks to the region's reserves, in seven years Italy could quintuple its existing oil production of 109,000 barrels per day - even though it would still have to import more than half of the oil it consumes.

Local geologists first discovered the presence of oil in Basilicata (squeezed between the heel and the toe of Italy's boot) more than 60 years ago when dictator Benito Mussolini still used the isolated area to exile dissidents, such as the writer Carlo Levi.

The oil became accessible only in recent years, thanks to new horizontal drilling technologies that allow curved wells to bypass difficult patches of hard rock. Now, following their accord with the Basilicata government, ENI in partnership with Enterprise will be the first to begin industrial development of the reserves, building a new processing centre and a pipeline to the port of Taranto.

"The oil companies could begin building the pipeline this year," said Filippo Bubbico, head of Basilicata's negotiating team and the region's environment commissioner.

The Val d'Agri agreement concerns only ENI-operated concessions. It will be used as a blueprint for development accords to lift heavy oil in fields alongside Val d'Agri for Enterprise, ENI, Mobil, and Belgium's Fina. Another British oil company, Lasmo, is selling its stake in the project to concentrate on business elsewhere.

Enterprise estimates Basilicata's entire oil reserves to be as much as 20 billion barrels, with approximately 10 per cent that could be extracted. ENI would not discuss how much oil the whole region may hold. It prefers the most conservative figure of 480 million barrels in proven and likely reserves at its concession in Val d'Agri alone, and says a roughly similar amount lies in the nearby Tempa Rossa concession.

In any case, "we are talking about a giant size," said Gianfranco Amici, head of ENI's Val d'Agri project.

ENI is the world's seventh-largest oil company by reserves, with more than 5 billion barrels of proven reserves. It has already invested L1,200bn (pounds 700m) in the region and plans to spend L2,000bn more.

The ENI and Enterprise concessions in Val d'Agri produce high-quality light oil comparable to Brent crude, worth more than $12 a barrel. Oil at the Tempa Rossa concessions of Fina, Mobil and other companies is of a heavier kind, trading some $6 cheaper per barrel, he said.

The Val d'Agri development remains profitable, even though crude oil prices fell by a quarter this year, according to Mr Marshall who rates both ENI and Enterprise shares as "buy".

"The wells may be more expensive to drill there than in the North Sea, but overall the costs are lower because the oil is onshore and getting it to consumers is cheaper."

Basilicata expects to receive about L70bn a year in royalties as production in Viggiano begins, said Mr Bubbico. It will spend most of its share of the money on creating jobs and infrastructure in Val d'Agri, the region's most isolated and underdeveloped area.

The new oil centre in Vald'Agri will employ only 50 new staff, but it will create 3,000 temporary construction jobs.

A 150-megawatt power station will run on the oil and gas produced locally, and the cheaper power is expected to lure businesses into Val d'Agri's nascent industrial park.

News
Emma Watson has become the latest target of the 4Chan nude hacking scandal
peopleThreats follows actress' speech on feminism and equality at the UN
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
Life and Style
tech
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
life
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
News
i100
Life and Style
life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits