The first signs of a recovery in the oil price have been seen and opportunities are opening up in the Mediterranean for Europe to significantly reduce its reliance on energy imports, delegates at the 12th Offshore Mediterranean Conference (OMC 2015) heard this morning.
The event, being held in Ravenna, Italy, was told the oil and gas industry was facing "peculiar times," but that, in the mid-term, the situation, including oil prices, would be expected to improve.
Image: OMC 2015 opened today (26 March).
Guiseppe Tannoia, executive VP central and Southern Europe, Eni, told today's (26 March) standing room only plenary session of the event: "in a short period of time, after a along period of stabile high oil prices, the fundamentals of our business have completely changed. Demand declined, oil prices dropped. US production maintained a steady increase and we have had a level of geopolitical uncertainty in the Eastern Mediterranean, North Africa and the Middle East."
However, he said: "I think this downward trend has bottomed out and we see the first signs of recovery."
He said the low price of energy is helping economic growth, which was in turn is increasing energy demand. Mid-term, he explained, combined with oil company's reduced investment, this could help boost oil prices.
"If the drop in investment continues, the industry will not be able to counter the decline in existing fields," he said. "We will have a situation in the mid-term where we will see an increase in demand, due to the economic growth, with a decrease in supply, due to the cute in investment and declining production from existing fields. It is reasonable to assume, therefore, the oil price will increase, in the medium term, even without OPEC's intervention."
However, Europe still needed to be cognisant of its security of supply, he said. Europe is a net importer of energy, he said, importing 50% of its oil and gas. North Africa had similar issues. But, while oil, as a tradable commodity, which could be bought and was relatively easily available on the markets, gas is very different, relying on long term contracts and pipeline infrastructure.
Europe, however, could easily increase its gas production, he said. "Europe has the potential to increase gas production, and some countries significantly, including Italy. Italy has the greatest potential in continental Europe to develop its resources," he says. "What is important is that Italian reserves are gas reserves. This opportunity is coupled with gas being a much cleaner fuel, making it a transition fuel to a greener economy."
In addition, there were efforts to unlock the giant reserves in the Levant, in the eastern Mediterranean, totaling some 40 Tcf, he said. Also, Croatia recently offered 29 exploration blocks, seismic acquisition campaigns have been carried out offshore Greece and Albania and there has been a bid round in Albania in the Adriatic.
"These are all potential new resources for Europe which could allow for a new North South energy corridor," concluded Tannoia.
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