ADX Energy (ASX: ADX) has been granted a permit to search the Sicily Channel for gas after Italy’s Ministry gave its subsidiary Audax Energy the green light to explore the area following an industry standard review.
According to technical studies conducted by the company last year, five prospects in the area covered by the permit have a best technical prospective resource estimate of 369 billion cubic feet.
The Ministry has informed ADX that its technical, financial and organisational capacity verification procedure is now complete and has delivered a positive outcome that will result in the granting of the “Nilde” gas exploration permit between Sicily and Tunisia. The permit grant follows the annulment of a decree limiting oil exploitation in the area, which may lead to the development of the Nilde oil field.
Management says an oil redevelopment project at Nilde will target the production of 34.1 million barrels of 2C contingent resource from three wells at an estimated initial production rate of 22,000 barrels per day.
The recognition of the importance of hydrocarbons to maintain energy security is a recurring theme in a number of jurisdictions. It is a credit to our team that the granting of the gas rights has been made possible as a result of ADX financial, technical and organisational capability.
ADX Energy executive chairman Ian Tchacos
The company says the Italian licensing authorities had previously offered ADX the opportunity to ratify the Nilde permit subject to several conditions, including that only the gas potential within the permit may be commercially exploited.
Management subsequently submitted a report highlighting the excellent shallow gas prospectivity of the permit, which is located in shallow water depths, in addition to follow-on details outlining its financial, technical and organisational capability.
Audax provided all necessary documents to allow the Italian authorities to review the feasibility of gas exploration and the financial and technical capability of ADX.
In February, the Regional Administrative Court of Rome annulled a plan that limited the extent of hydrocarbon prospecting, exploration and production in areas of the Mediterranean Sea, including over the proposed Nilde operations.
Management says if the annulment is not contested, it could lead to the return of 2018 legislation that will allow oil and gas within the permit area to be exploited.
In 2018, it was estimated that the range of contingent resources was 19.2 to 65.6 million barrels of remaining oil and the prospective resources range was 40 to 201 million barrels of oil.
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