Tag Archives: Offshore

Italian Offshore Back on Track but Progress Has Been Limited

ImageAlmost a year after Rome reversed a ban on offshore drilling, Italy’s energy sector is showing signs of life with new efforts and interest on the part of foreign firms.

This month has seen progress reported by   Petroceltic, Northern Petroleum and Mediterranean Oil and Gas regarding offshore efforts in Italian waters. However, despite such advancements, progress has been limited in improving the country’s overall energy standing – a situation made worse by a toxic political and economic environment and local opposition.

The Mario Monti government announced an end to a ban on drilling within five nautical miles of Italian shores that had been put into place following the Deepwater Horizon oil spill in the Gulf of Mexico in 2010.

The purpose of the government’s reversal on offshore drilling last year was two-fold. First, an increase in domestic production would help ease the country’s current, heavy dependence on foreign producers. Italy brings in about 90 percent of its oil and gas needs from outside the country and has seen alternative energy options evaporate over the last three years, making those imports all the more important. While renewable development has suffered amid a wave of government cuts and a loss of investor confidence brought on by the country’s economic crisis, Italy’s push to reintroduce nuclear power disappeared almost as soon as news of Japan’s Fukushima disaster reached Rome.

Second, the financial benefits of a boost in domestic production could help jumpstart Italy’s ailing economy, offering little in the way of investment options to outside investors. When the Monti government announced the plan to ditch the offshore ban, the country’s Economic Development Minister Corrado Passera predicted that expected increases in output allowed by the revision could bring in as much as 15 billion euros, while reducing the country’s energy bill by about 6 billion euros, according to Bloomberg.

Nearly a year on from the ban reversal, Italy’s energy options have offered little relief due to a precarious economic and political environment as well as instability in Algeria and Libya, two of the country’s largest providers of oil and gas.

Complicating the offshore situation still further has been the actions of local environmental and political advocacy groups. Even before the 2010 ban had been into place, groups in Sicily and along the Adriatic coast had pushed for drilling bans in the name of environmental and tourism protection. Although the ban has been reversed on a national level, local groups have still challenged exploration efforts in individual cases leading to production delays.

Offshore may have returned to Italy, but it is still far from clear whether it can provide the diversification and revenues

Image: Rigzone.com

Originally Posted: Newsbase Euroil Monitor

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Enthusiasm for Eastern Med Gas Still Strong Despite Pitfalls

In the short time since news first broke that the Eastern Mediterranean held enough offshore natural gas to keep the region’s energy need met for decades, the area has become a hot bed of tension thanks to conflicting claims and revenue sharing agreements. Recently, local actors Israel and Cyprus has signaled efforts to move production plans forward, but despite advancements, accessing the region’s potential remains fraught with political and security pitfalls.

Set in waters between Israel, Lebanon, Syria and Cyprus, the Levant Basin holds an estimated 120 trillion cubic feet in accessible natural gas to those who can access it.

However, its deep set placement and differing geological challenges have set limitations on just who can take a realistic chance on reaching the reserves from their respective waters. Combined with unclear maritime borders between some regional neighbors and deep political and diplomatic divisions, the limitations have created an often-tense environment for relevant regional actors. Further, foreign firms hoping to take part in exploration efforts that might demand a local partnership have found themselves at odds with both competing countries and collaborators in other parts of the world.

According to a Bloomberg Businessweek report, Fadel Gheit, an analyst at Oppenheimer & Co. told them that, “the world’s largest energy companies like Royal Dutch Shell Plc (RDSA), Chevron Corp., and Exxon Mobil Corp. will be deterred from investing in Israel because of interests they have in the rest of the Middle East.”

While they hold no official claim to the waters in the Levant Basin, Turkey has recently stepped up exploration efforts of their own, stating that they hold authority over waters to the north of Cyprus. Further, Greece has stepped into the discussion with offers to act as a transport hub for natural gas bound for the European market.

On the national level, uncertainty about how best to move forward could also spell further delays, including how best to split earnings across the many political factions in Lebanon and how to address growing environmental concerns in Israel. The latter concern has strengthened the argument for partnering with Cyrus to host Israel’s LNG facilities.

None of these concerns appear to have immediate solutions, though few seem to be dampening enthusiasm for the Eastern Mediterranean’s true natural gas potential.

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Repsol’s Year Just Keeps Getting Worse

Despite winning approval from Spain’s government to pursue offshore exploration efforts near the Canary Islands, Repsol appear to have few allies in the company’s efforts to kick-start domestic production.

Since receiving the support of the government of Maraino Rajoy on March 16 to restart offshore efforts 70 km off the coast of the islands of Lanzarote and Fuerteventura, Repsol have faced a steady stream of legal challenges and protest movements from across Spain. Spain’s Socialist opposition party has joined residents of the islands to oppose the project on the grounds that it could threaten the archipelago’s most important source of revenue – tourism.

Originally initiated in 2001, the Repsol effort – a consortium with Australia’s Woodside Petroleum Ltd. and RWE AG of Germany – has been stalled as a result of an earlier court ruling. Now equipped with the encouragement of Rajoy and Spain’s new Minster of Industry, José Manuel Soria López, the effort will move forward, but not without its challengers.

Since mid-March, protest movements have grown both in the Canary Islands and on the Spanish Peninsula aimed at reversing the decision. These efforts come

despite claims by Soria that the project could help ease the country’s energy needs to the tune of 10 percent of Spain’s oil overall demand with an estimated 140,000 bpd.

Soria’s support for the exploration effort and reference of the impact a successful discovery could have on the country’s energy needs comes as the new minister struggles to deal with a daunting financial deficit. Facing a 24 billion euro energy deficit, accrued over the last few years thanks to poor subsidy planning and domestic energy prices that did not reflect new pressures, Soria has been charged with reducing this amount through any means necessary, insisting that the weight of it must be shared throughout the country.

Further complicating the issue is the proximity of the project to the maritime border with Morocco, whose government has also launched exploration efforts in the area. As the border is not officially set, the two countries could see conflicting claims to possible discoveries.

Similar fears led to the delay of another Repsol project off the coast of Cuba earlier this year, requiring lengthy inspections and environmental reviews by U.S. political leaders amid fears that a potential spill could harm local coastlines.

For now, Repsol appear intent on moving forward despite the opposition, thanks mostly to the support of Rajoy’s Partido Popular and will work towards the next step by completing a necessary environmental impact study.

Image: PressTV


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Local Protests Target Med Offshore Drilling

A recently quiet opposition movement against drilling oil and natural gas exploration off Spain’s Andalusian coastline has come alive in 2012 as local communities have begun calling on the new national government to reverse local offshore licenses.  With protests coming from across the political spectrum, including members of the local Green Party as well as the conservative Partido Popular, the projects have been targeted for their potential impact on the region’s tourism and fishing industries. Already weighed down by a near dormant national economy and a real estate market that has all but collapsed since 2008, the Andalusian coastline has become especially sensitive to any perceived threats to the remaining tourism market, which stands as the region’s largest economic factor for jobs and development.

The most recent project to come under fire includes an area of 130,000 hectares off Almuñecar, Salobreña and Motril (Granada) and Nerja and Torrox (Malaga), led by Canadian firm, CNWL. The project is the result of a 2006 appeal for exploration rights by CNWL but was delayed until last year after local opposition slowed the approval process. Local political and environmental groups have begun calling on the new government of Mariano Rajoy’s Partido Popular to reverse the project approval, including calls from members of his own party. The protests follow a similar pushback against exploration efforts on the part of Repsol off the nearby coast, in front of the tourist havens of Mijas and Fuengirola.

CNWL responded to local press queries, stating that they had no firm date to begin exploration efforts, though they were aiming for June of this year and would be pursuing natural gas finds, not oil, according to La Opinion of Malaga.

Although the protests have only occurred at a local level, the opposition to offshore efforts in Andalusia reflects a larger Mediterranean aversion to such efforts. In the months following the Deepwater Horizon spill in the Gulf of Mexico, political and environmental groups rallied behind new legislation and public protests, successfully slowing or halting offshore efforts in Italian and Spanish waters, as well as Libyan waters amid worries related to BP’s safety record. The efforts received a boost of support from European Commissioner for Energy Günter Ottinger, who proposed the idea of a moratorium on offshore efforts in European waters.

Image: Today’s Zaman

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EU Offshore Rules Face Tough Road Ahead

A year and a half after the Deepwater Horizon spill in the Gulf of Mexico led to calls for stricter offshore regulations in European waters, proponents continue to push for greater oversight and a more restrictive drilling environment. However, despite proclamations of support and proposals from the EU, advocates face stiff opposition from political and industry leaders across the Mediterranean.

Beginning late last summer, environmental and political groups across the Mediterranean began calling for local bans on offshore drilling efforts and new rules associated with safety and compensation following the Deepwater spill. Driven by fears about how a similar event could impact the Mediterranean, groups successfully lobbied for localized moratoriums on drilling in Italian waters and further reviews of existing projects, including BP’s efforts in Libya. Led by EU Energy Commissioner Gunther Oettinger, proponents of a stricter approach to offshore efforts pushed for a complete revision of EU regulations on the topic and the introduction of new industry observers. The campaign resulted in the passage of a draft resolution by the European Parliament in October that included would increase the area subject to protection 16-fold, from 22km from shore to 370km as well as increasing the amount companies would pay for clean-up efforts. The new offshore rules would impact 90 percent of oil and over 60 percent of gas produced in the EU and Norway, according to Bloomberg, though it did stop short of calling for an outright moratorium.

Although the resolution easily passed the EU parliament, setting it up for the approval of all member state governments and application within a year or two, the resolution faces stern opposition from political and industry figures.

The leadership of France’s Total blasted the introduction of new rules to the region, advocating that UK rules on offshore activities take precedent over any novel approaches from the EU.

“In the UK the standards are the best in the world…. We have to be very careful to take the best but not to introduce bureaucracy into the process,” said Total’s senior vice president for Northern Europe Patrice de Vivies, according to Reuters.

Further afield, the new regulations could run afoul of new and revived drilling campaigns in the eastern and southern Mediterranean, including projects initiated by Cyprus, Israel, Greece and Libya. While ostensibly out of European waters, efforts in Libya would be impacted by overlapping issues, making the introduction of much-needed oil and gas efforts difficult to achieve.

Image: Rff.org



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