6.500
%
Neutral
31
mm boe
62
%
Italy is a frustrating jurisdiction, its positive infrastructure, stable pricing, and growing demand are offset by continued rises in tax take and a shambolic licencing and permitting regime. The Regulator's approach to rule of law in the wake of Rockhopper's arbitration award makes oil and gas operations a concern. Nevertheless, the new progressive government appears to be focusing on Italy's needs, including those of energy. Consequently, we have reduced Italy's Risk Premia to 6.50% but maintained the outlook (Neutral).
April 21, 2024
Europe - Mediterranean
mm bbl
bcf
Southern Europe, a peninsula extending into the central Mediterranean Sea, northeast of Tunisia.
Concession
Italy operates a relatively simple Concession fiscal regime, with royalty and corporate income tax payable, that is made complicated by the lack of a uniform licencing approach across regions and segments (onshore and offshore). Licence terms, therefore, are deemed to be bespoke, within a wide framework.
Italy’s National Resilience and Recovery Plan ("NRRP") combines over €200bn in investment to accelerate the digital and green transition coupled with wide-ranging reforms addressing the Italian economy’s longstanding drags on growth — namely its slow legal system, tax administration and bloated bureaucracy — while rebalancing policies to address gender, youth, and regional disparities. This combination of investment and reform, with some easing of fiscal constraints from Brussels, may reposition Italy, the eurozone’s second largest industrial base, as an engine for growth. The election of Meloni provide hope that the malaise that has beset the energy sector might be reversed. However, there will need to be significant progress made before the fortunes can be said to have changed.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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