Italy unlocks drilling in new Italian “Aiuti Quater” Decree22 December 2022

The Council of Ministers of the Italian government, in its session No. 4 of 10 November 2022, approved a Law Decree named “Aiuti quater” (the “Aiuti quater Decree”) which introduces urgent regarding electricity, natural gas and fuels, including amendments to Article 16 of Law Decree No. 17 of 1 March 2022. Following in the footsteps of Mario Draghi’s government and the work of former Ecological Transition Minister Roberto Cingolani (now Giorgia Meloni’s consultant for energy policies), the Aiuti quater Decree aims to continue decreasing Italy’s dependence on gas from Russia. Ultimately, the government’s goal is to gradually increase the amount of natural gas extracted from available domestic reservoirs.

On 18 November 2022, the Aiuti quater Decree was published in the Official Journal (Gazzetta Ufficiale) and entered into force on 19 November 2022. Like all law decrees, the Aiuti quater Decree will have to be converted into law by the Italian Parliament within 60 days of its publication in the Official Journal. During this parliamentary phase, corrective measures or new measures or amendments may be introduced.

The Aiuti quater Decree allocates approximately €9.1bn from tax surplus to finance measures against high energy prices.

Article 16 of Law Decree No. 17 of 1 March 2022

According to Paragraphs 1 and 2 of Article 16 of Law Decree No. 17 of 1 March 2022 (converted, with amendments, by Law No. 34 of 27 April 2022 and setting out “measures to deal with the emergency resulting from high prices of energy products by strengthening the security of supply of natural gas at fair prices”), the National Operator of Energy Services (“GSE”) and/or companies controlled by it (hereafter the “GSE Group”) shall initiate – pursuant to the directives of the Ministry for Ecological Transition (now the Ministry of the Environment and Energy Security (Ministero dell’Ambiente e della Sicurezza Energetica or “MASE”) – procedures for the long-term supply of domestically produced natural gas from the holders of concessions for gas production. Specifically, the GSE Group formally invites holders of natural gas cultivation concessions to express interest in joining the long-term supply of domestically produced natural gas by sharing their proposals for producing natural gas from existing concessions for the years 2022 to 2031, as well as a list of possible developments, increases or restoration of natural gas production for the same period in the concessions they hold. The concession holders must communicate their programmes to the GSE Group, the MASE and the Italian Regulatory Authority for Energy, Networks and Environment (“ARERA”), within 30 days of the GSE Group’s formal invitation to the expression of interest.

Regulatory interventions on drilling – amendments to Article 16 of Law Decree No. 17 of 1 March 2022

Article 4 of the Aiuti quater Decree introduces amendments to Article 16 of Law Decree No. 17 of 1 March 2022 in relation to the extraction of hydrocarbons in Italy, including the following:

1.  Article 4 of the Aiuti quater Decree has amended Article 16, Paragraph 2, of Law Decree No. 17 of 1 March 2022 (which limited the access to the long-term supply of domestically produced natural gas only to holders of gas production concessions whose facilities were located in specific areas considered compatible with the “Plan for the Sustainable Energy Transition of the Eligible Areas” (“PiTESAI”)) by extending the possibility of accessing the long-term supply of domestically produced natural gas also to the holders of “concessions for the production of hydrocarbons located in the stretch of sea between the 45^th parallel and the parallel passing through the mouth of the Goro branch of the Po river, at a distance from the coastline of more than 9 miles and having a gas mining potential for a certain reserve quantity exceeding 500 million cubic meters”¹. This area is located approximately 16 km from the coast off the Po Delta between the Municipalities of Rovigo and Goro. Additionally, in derogation from the provisions of Article 4 of Law No. 9 of 9 January 1991, which prohibits prospecting, exploration and cultivation in in the stretch of sea between the parallel passing through the mouth of the Tagliamento river and the parallel passing through the mouth of the Goro branch of the Po river, the Aiuti quater Decree allows for the exploitation of hydrocarbon production concessions located in that part of the Adriatic Sea for the duration of the whole useful life of the reservoir:

(i)   on condition that the holders of such concessions adhere to the procedures for the long-term supply of domestically produced natural gas initiated through formal invitation from the GSE Group and followed by an expression of interest from the concession holders, as explained above, and
(ii)  upon presentation of technical-scientific analyses and detailed programmes for monitoring and verifying the absence of significant subsidence of the coastline to be carried out under the supervision of the MASE.

2.  Article 4 of the Aiuti quater Decree introduces a new Paragraph 2-bis under Article 16 of Law Decree No. 17 of 1 March 2022, which, by derogating from the prohibition contained in Article 6, Paragraph 17 of Legislative Decree No. 152 of 2006, allows new hydrocarbon production concessions to be granted along all the Italian coastline in marine areas between 9 and 12 nautical miles from the coast and the outer perimeter of marine and coastal protected areas, though limited to sites with mineable gas reserves exceeding 500m cubic metres. Entities that acquire ownership of these concessions are also required to adhere to the long-term supply of domestically produced natural gas initiated by the GSE Group upon formal invitation by the GSE Group followed by an expression of interest of the interested concession holders.

3.  Article 4, Paragraph 2 (d) and (e), of the Aiuti quater Decree also includes amendments to Paragraphs 4 and 5 of Article 16 of Law Decree No. 17 of 1 March 2022 concerning the long-term supply of domestically produced natural gas. According to these amendments: