Italy Oil and Gas Upstream Market - Growth, Trends, and Forecasts (2020-2025)

The Italy oil and gas upstream market is expected to grow at a CAGR of over 2% during the forecast period 2020-2025.

Italy is a net importer of oil and gas, importing 92% of its oil and gas from countries like Russia and Libya while producing 8% of oil and gas in the country. At the same time, the energy demand of the country is constantly increasing, which is likely to drive Italy oil and gas upstream market during the forecast period. However, the Italian government is emphasizing on shifting towards renewable energy resources by 2030. Italy, in the past years, banned offshore upstream activities within 12 miles near the coast due to the deep-water Horizon incident in the Gulf of Mexico in 2010. Such moves by the government are expected to hinder the growth of the market in the coming years.

• The onshore segment held a significant market share and is likely to dominate the Italy oil and gas upstream market.
• The country's renewable energy market is likely to take more than 10-15 years to produce 30% of energy, till then oil and gas demand is likely to increase which creates several opportunities for Italy's oil and gas upstream market in the future.
• Increasing deployment of renewable energy sources is likley to create restrain in the Italy oil and gas upstream market durng the forecast period.

Key Market Trends

Onshore Activities to Drive the Market

• After a ban on oil and gas activities within 12 miles from the coast, many companies find it more suitable to go for onshore exploration and drilling. Italy also has a massive amount of proven oil and gas in-land reserves.
• Italy has the third largest proven reserves in Europe after Norway and United Kingdom and largest onshore reserves in Europe. After a ban on oil and gas activities within 12 miles from the coast, many companies find it more suitable to go for onshore exploration and drilling. Italy also has a massive amount of proven oil and gas in-land reserves.
• In 2018, more than 75% of the energy consumption of Italy came from oil and natural gas. Natural gas was the major source of energy followed by oil; a total of 51,041 ktoe oil was used, while the country used a total of 59,515 ktoe of natural gas.
• Tempa Rossa Field, located in southern Apennines of Italy, has proven reserves of 200 million barrels. Total SA, Royal Dutch Shell, and Mitsui E&P are partners of the Tempa Rossa oil field. Tempa Rossa is the second largest onshore field of Italy. The first production from the field took place in 2016, and more wells are to be drilled in the field in the future.
• Due to the government ban in the offshore region and massive reserves in onshore, the onshore activities are expected to dominate the market in the future.

Increasing Installations of Renewable Energy is Likely to Restrain the Market

• Italy is planning to phase out electricity from coal production by 2025 and increase its renewable energy to 30% by 2030. In 2018 the renewable energy sources contributed up to 10% of the total energy consumption of Italy. The government has already banned all the exploration activities under 12 miles radius in the Mediterranean Sea. Due to this ban, companies now had to continue their exploration for oil and gas in the deep-water zone.
• In February 2019, Italy government put an eighteen months moratorium on some of the offshore oil and gas exploration permits, as well as a sharp increase in fees payable on upstream concessions. This will restrain the oil and gas upstream market in Italy.
• In 2019, EDP Renewable signed a contract with the Italian government to build three wind power projects with a total installed capacity of 109 megawatts (MW). EDP also signed a twenty-year contract of selling electricity produced from the three projects. The installation is expected to be complete by 2021.
• In Sicily, Steag has planned to construct six solar photovoltaic power projects with a total installation capacity of 440 megawatts (MW). The construction of the plants are expected to start by the end of 2020 and is likley to compete by 2021.
• Hence, owing to the above points, increasing installatons of renewable energy are likely to restrain the Italy oil and gas upstream market.

Competitive Landscape

The Italy oil and gas upstream market is partially consolidated. Some of the major companies operating in the market include Eni SpA, Edison SpA, Royal Dutch Shell Plc, Total SA, and Saipem SpA.

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