Roma. An Italian government plan to restrict drilling offshore, influenced by the catastrophic BP oil spill in the Gulf of Mexico, hit shares in Ireland's Petroceltic International and other explorers active in the region on Thursday. The curbs come as the U.S. administration works on a new offshore drilling moratorium following the worst-ever oil spill in the U.S., with the International Energy Agency suggesting idled drilling rigs should head to other countries if the ban were extended.
Oil and gas explorer Petroceltic International said in a statement it was considering alternative drilling locations for its Elsa structure, which straddles the five-mile boundary from the Italian coast within which drilling would be banned. Shares in the company, which focuses on drilling in the Middle East, North Africa and Mediterranean region, shed 10.6 percent in Dublin and 13.2 percent in London.
AIM-listed Northern Petroleum, which has operations in Italy and elsewhere in Europe, closed down 8.3 percent, while Mediterranean Oil & Gas tumbled 12.3 percent. Mediterranean Oil's Ombrina Mare field is close to the Elsa field and like Elsa is also seven kilometers from the coast.
The Italian cabinet last week approved a decree amending current norms on environmental safeguards. Among the measures was a ban on drilling within five miles of the coast and within 12 miles of any protected marine area. The legislation is immediately effective. It also stipulates that any proposals for future drilling, including requests already made, must be scrutinized by an independent agency charged with assessing the impact on the environment.
A spokesman for Environment Minister Stefania Prestigiacomo said the BP oil spill was a factor in the new rules. Prestigiacomo had said on Wednesday the changes would 'protect the sea and Italy's natural jewels.'
Petroceltic said: 'We are keenly aware of the environmental concerns associated with drilling in the Abbruzo region and have been diligent in communicating to stakeholders our plans to mitigate environmental risks when drilling the Elsa 2 well.' Petroceltic had expected to start drilling Elsa in the fourth quarter of this year and the field has estimated recoverable oil reserves of 100 million barrels of oil.
Petroceltic has a 55 percent interest in the Elsa-2 well, while Orca Exploration Group holds a 15 percent interest, with the remaining 30 percent owned by Vega, a unit of Canada's Cygam Energy.
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