Oil and gas: new commissioners to speed up the start of extraction
Excise duty decree includes measures to lift the freeze on hydrocarbon licences. Meloni: “More domestic production – we’ll see this through to the end”
Italia is taking another step towards invoking the flexibility clause of the EU Pact, which allows for an additional deficit of up to 36 billion over the three-year period for investment in energy (14 billion) and defence (22). But in the meantime, it is also aiming for domestic ‘structural solutions’ to ‘increase national oil and gas production’, with a measure to speed up permits and concessions for hydrocarbon exploration and extraction, as announced by Prime Minister Giorgia Meloni in a video.
Streamlining authorisation processes
All this took place at yesterday’s Cabinet meeting, which approved a further week of 17-cent-per-litre reductions in diesel excise duty, whilst postponing the transition to the ‘targeted support’ measures announced by the Prime Minister. This is one of the reasons why, yesterday, Giorgia Meloni chose to shine a spotlight on the legislation to unblock extraction, drawn up by the Ministry for the Environment led by Gilberto Pichetto Fratin. The key lies in the appointment of government commissioners who, as the Prime Minister explains, ‘will help the regions to issue permits and licences for the research, exploration and extraction of hydrocarbons on our territory much more quickly’. ‘We will see this through to the end,’ promises the Prime Minister, after a predictable prediction of the controversy to come – which had already begun yesterday evening with comments from AVS leader Nicola Fratoianni, who claimed that ‘the oil and gas lobbies are taking over Palazzo Chigi’. Meloni’s interpretation is, of course, the opposite, based on the idea that ‘increasing domestic production means reducing dependence on foreign sources, ensuring lower costs for households and businesses, safeguarding the nation’s energy security, and generating royalties as well as economic and employment benefits for local areas’.
EU flexibility gets the green light
Yesterday’s Cabinet meeting also provided an opportunity for the Minister for the Economy, Giancarlo Giorgetti, to give a (brief) update on the letter – which was then immediately sent to the European Commission – to initiate the process of invoking the safeguard clause on energy and defence.
The move stems from the resolution passed by Parliament on 5 August, when Giorgetti had outlined to both Houses Italy’s intention to seek approval for an additional deficit of 0.6 per cent of GDP for energy investments and 0.9 per cent to bolster security and defence. The letter initiates discussions with Brussels on how these margins will be utilised. However, it does not complete the process, which must still go through a parliamentary vote on the deviation and the precise definition of how the funds raised through borrowing will be allocated. For this reason, the text does not go into detail, but sets out the objectives of supporting the development of renewables, increasing security of supply and reducing the country’s dependence on imported fossil fuels, whose price volatility affects the Italian economy and public finances.
The issue of accounts
Decisions will begin to take shape in a few weeks’ time, following the key date of 22 September, when Istat will publish the latest figures on GDP and the deficit. On that day, the verdict will be delivered on Italia’s exit from the EU’s excessive deficit procedure, in line with widespread hopes within the Government, although Giorgetti is showing a superstitious caution on this point.
Leaving the preventive arm of the Pact would in fact allow the clause to be triggered without re-entering the procedure, even whilst bringing the deficit back above 3 per cent of GDP. The constraints on the ordinary budget would remain anchored to the primary expenditure ceiling, net of a possible transfer to the extra-deficit of some energy and defence expenditure already provided for in the national trend forecasts. To work out the figures for this mechanism – similar to the one used last year to reallocate 5.1 billion, thus freed up in the national accounts, to the revised National Recovery and Resilience Plan (PNRR) – we will have to wait for the list of investments eligible under the clause.
