The project

The project concerns the development of two large onshore oil discoveries located in the Southern Appenine mountains of the Val d'Agri area, some 30 km south of Potenza (Basilicata region). The oil fields extend over two concessions (Grumento Nova and Volturino), in which ENI and Enterprise Oil hold shares.

The first commercial production from the Val d'Agri area started in April 1996. Present production is transported by the new Monte Alpi-Taranto pipeline to the AGIP Petroli refinery at Taranto, and associated gas production is directed to the national transmission network.

EIB decision to finance

In March 2000, EIB's Board of Directors approved a EUR 200 million loan to ENI for the development of the two on-shore oil fields in Val d'Agri. The principal consideration for financing was the project's location in the Mezzogiorno, an Objective 1 region, and therefore eligible under the Bank's prime lending objective of promoting the development of less-advanced regions. The project also contributes to the European Union's policy objective of promoting the use of indigenous energy resources.

The Bank's loan, which was entirely disbursed, represented a substantial further development of projects previously financed by EIB in 1994, 1996 and 1998, for ENI and Enterprise Oil Val d'Agri development.

Project implementation

EIAs for the development of the concessions, the construction of the oil centre and the pipeline and an Environmental Management Plan (EMP) have been prepared by ENI. EIAs and EMP were made available for public consultation and submitted to review by the Regional authorities and the Ministry of Environment in accordance with national and EU legislation.

The location of the drilling sites was subject to a careful selection process, the outcome of which was approved by the Region. In particular the original drilling plan has been further optimised so that all new wells will be located outside the environmentally sensitive areas of Serra di Cavallo and Monte Volturino, which are proposed "Natura 2000" sites.

The EMP provides for assistance from qualified archeologists in executing the works, safeguarding the region's cultural heritage during pipeline-trenching. This supervision resulted in numerous archaeological finds. Other EMP measures comprise reforestation projects and emergency and contingency plans.

After extensive public consultation (about 2.5 years), a tripartite agreement was signed between the Region, the Italian Government and the promoter in order to define all environmental protection measures to be followed during the project's implementation and operation, as well as environmental compensation measures.

Following agreement with the Basilicata Region, the Italian Ministry of Environment issued in 1999 a positive environmental assessment which allowed the development of the fields and the enlargement of the oil treatment center. The assessment covered all specific environmental impact aspects of the projects, including also possible impacts on water resources and areas proposed for a National Park establishment.

Environmental compensation and regional development

ENI and Enterprise Oil have entered into a series of agreements with the Basilicata regional authorities with the aim of providing environmental compensation, complementary to the overall EMP; establishing an integrated environmental monitoring network; and supporting the region's general economic development.

The environmental complementary mitigation measures include, for example, an integrated environmental monitoring network, covering air emission control, remote seismic sensing and bio monitoring. The network is currently in progress. ENI has implemented an air monitoring station, as well as several seismic recording stations. Recorded data on air quality, daily production and royalties accrued to the region are dispatched to online terminals visible at the ENI oil center and the main Region office.

Direct financial support of EUR 165 million to the region's general economic development over the next 15 years was also agreed. Furthermore, an agreement between the Italian Government and the Basilicata region was signed, foreseeing oil and gas production royalties and commitments regarding investments in infrastructures to be directed to the Region. The combined benefits of the planned direct contributions and royalties to the region would amount to about USD 1.5 per barrel produced during the lifetime of the project.

EIB monitoring of the project

In line with its normal procedures, the Bank is monitoring the project's implementation and compliance with the EMP. An on-site monitoring review that was carried out in May 2002 confirmed that the project continues to meet the criteria on which EIB took its decision to finance the investment.

The project's emergency and contingency plans have been reviewed by EIB. When some oil spills, albeit limited, occurred in the region in Spring 2002, the competent authorities, as well as EIB, were promptly informed. ENI activated its oil spill response plan, implementing all legally required measures to contain the spills and restore the polluted area to its initial conditions. Monitoring of water and soil was carried out in the presence of engineers and officials of the Region, with whom ENI is developing a coordinated regional emergency plan. Depending on the assessment of the potential residual impact caused by the spill, the need for mitigating measures will be assessed and a final reinstatement plan agreed.

Dialogue with NGOs

The Bank is engaged in a dialogue with NGOs who have shown a particular interest in the Val d'Agri project. EIB staff participated in a roundtable that was organized by "Campagna per la riforma della Banca Mondiale" in Rome on 10 April 2002 to discuss, among other subjects, this project. NGOs and EIB are presently engaged in correspondence on aspects of the project of particular concern, including the outcome of the above-mentioned on-site monitoring visit.

Further details

Online terminals have been installed at the gate of the oil center and at the Region's main office dispatching continuous information on the project. In addition, further detailed information on the project is provided at least every six months via ENI press releases.

Moreover, in view of continued public interest, EIB has recommended to the promoter to publish, on its website, EIA documentation related to the project.

Update 08 December 2008

The project has been implemented in phases. It started production in 1996, and full scale production has been ongoing since 2005 after completion of the 104,000 bopd oil treatment centre in September 2004.  The drilling programme is still ongoing however as a number of the initially planned wells have been delayed due to a lengthy approval process. Total investment cost is estimated at EUR 1.54 billion.  

The oil produced from the Val d'Agri oil fields is collected by underground flow lines and processed at the Val d'Agri oil centre in the industrial valley and transported by pipeline to the Taranto refinery. Current oil production is around 93,000 bopd representing about 75% of Italy's indigenous oil production and 4% of EU indigenous oil production.

Cumulative oil production as at end September 2008 is estimated at 220 million barrels of oil and 5.0 billions of associated gas. Recorded data on air quality, daily production and royalties in the region are dispatched to online terminals visible at the oil centre and the main Basilicata Region office (see: Implementation agreements between the promoter and the region for environmental compensation and support to regional development are being progressed.