The view from the terrace behind the town hall in Corleto Perticara is as grand as any in Tuscany, taking in the majestic Sauro River valley and a line of towering hills that shepherd the river out to sea. However, where a visitor might dream of building an idyllic second home, Corleto Perticara Mayor Rosaria Vicino is picturing the line of well-head pumpjacks that will soon pepper the undulating slopes beyond the Sauro.
In May, Italian Prime Minister Mario Monti’s non-party government in Rome gave the go-ahead for the development of the so-called Tempa Rossa field, whose 200 million barrels of heavy, sulphurous petroleum lie within Vicino’s comune. The French company Total SA has a 75 percent stake in Tempa Rossa. Royal Dutch Shell has the remaining 25 percent interest in a field whose production capacity is expected to reach 50,000 barrels a day (b/d).
“Oil is central to our development plans,” Vicino said fervently. “It is the element around which all our hopes revolve.”
Onshore oil and gas production is similarly central to the Italian government’s ambitious plan to lop 14 billion euros (US$17.7 billion) off the nation’s annual 62 billion euros bill for energy imports by 2020. The target is set in a proposed national energy plan that would be the first to be adopted in Italy for more than 20 years.
A draft, put out for consultation last month, sees some of the savings coming from increases in “green” (renewable) sources and “white” (efficiency) economies. Yet it also envisages a doubling of domestic oil and gas production. The Italian government estimates the increase in output could provide Italy with 7 percent of its total energy requirements and create 25,000 new jobs.
Crude oil production in Italy peaked in 2005 at 115,000 b/d and has since slumped below 100,000 b/d. The decline is not due to a lack of reserves — Italy’s proven onshore deposits are the biggest in Europe — but because of a drastic fall in exploration and development, which the government is keen to reverse.
It aims to boost crude oil production by almost 150 percent, and bringing the Tempa Rossa field on stream will take it about one-third of the way to that goal. Even considering the beauty of the countryside around Corleto Perticara, Tempa Rossa is unlikely to stir much local opposition.
Mention of royalties brings an ear-to-ear smile to the face of Vicino, who readily agrees that the 30 or 40 years of income will transform the fortunes of little Corleto Perticara and its 2,700 inhabitants. The cash should be ample recompense for the pumpjacks and a large, smelly oil processing center that Total plans to build beyond the hills, out of sight of the town.
The scenic, but remote, region of Basilicata in which Corleto Perticara is situated is often called Italy’s Texas. It holds about three-quarters of the country’s total reserves.
Yet not everyone is as enthusiastic about pumping them out as Vicino. Many in Basilicata resent the fact that the royalties from oil production go largely to the local authorities directly affected and make little impact on a region that, despite its black gold, is still Italy’s fifth poorest.
Basilicata’s communications are dire. Unemployment is high and rising. In January, Monti’s government slipped a clause into a bill ostensibly about liberalization that allows future oil royalties to be used for regional infrastructure projects. A senior government official acknowledged it was designed specifically to assuage criticism in Basilicata. So far, it has not worked.
In August, the regional assembly declared a moratorium on all further exploration and production in Basilicata. The next day, Basilicata Governor Vito De Filippo of the center-left Democratic Party declared that the petroleum concessions that had already been granted were “at the limits of sustainability.”
His opinion matters because, as the law in Italy stands, approval from his government is essential for future projects to go ahead.
It has not helped that Tempa Rossa is mired in a scandal that is set to unfold as the field is developed. On Sept. 26, four former executives of Total’s Italian subsidiary went on trial in the regional capital of Potenza accused of rigging the tender for the oil treatment center so that the contract went to a consortium headed by a local builder. The builder was in turn accused of paying a 200,000 euro bribe to a Democratic Party deputy in the national parliament.
Total’s former employees are also charged with using a local official to get landowners in the area to take lower-than-market offers for land needed to develop the oil field. All the accused deny wrongdoing.