Italian Offshore Oil and Gas Referendum Fails

Matteo Renzi
Italian Prime Minister, Matteo Renzi.

By MarEx 2016-04-17 17:48:50

A referendum aimed at curbing Italy's offshore oil and gas industry was sunk on Sunday when it failed to secure the necessary quorum, with a majority of voters shunning the ballot, initial official data showed.

The result was a relief for Prime Minister Matteo Renzi, who had called on people to abstain, saying the ballot was unnecessary and would end up hurting the economy.

Turnout after the day-long ballot was seen hovering around the 30-percent level, according to preliminary data published by the Interior Ministry, well under the 50 percent plus one vote needed to make it valid.

The referendum asked Italians whether the government should stop renewing offshore drilling licenses within 12 miles (20 kilometers) of the coast. New drilling concessions are no longer being handed out, but Renzi said existing sites should have the option to remain operational until they are fully depleted.

Italy imports around 90 percent of its energy needs and successive governments have looked to boost domestic production to reduce dependence on foreign suppliers such as Russia's Gazprom.

There are 69 exploration concessions in Italian waters, most of them gas, the industry ministry says. Of these, 44 fall within the 12-mile range, most of them run by Italy's Eni.

If the referendum was successful, these 44 fields would have been shut when their concessions expire, even if they were still workable.

"This not a political referendum, but concerns 11,000 workers, their future and Italy's energy supply chain," Renzi told reporters on Friday.

Environmental watchdog Legambiente and other green groups say domestic oil and gas production is minimal and that a continued focus on fossil fuels takes Italy further away from its renewable energy and carbon targets.

Gas production from offshore fields inside the 12-mile area currently accounts for around three percent of Italian consumption while oil output in the area makes up just one percent.

The ballot was proposed by a number of regional assemblies, most of them run by Renzi's own center-left Democratic Party, which object to drilling platforms because of worries about the environment, as well as the impact on tourism.

A failure to reach the 50 percent threshold is a victory for Renzi a few weeks before Italians return to vote in major local elections. It has been an awkward time for Renzi. An influence-peddling case centered on the country's main landlocked oil producing area triggered the resignation of the industry minister two weeks ago. Opponents were seeking to use the scandal to bring voters out to test the government ahead of June local elections, in which Renzi's party risks losing control of several cities.

While the prime minister has played down the drilling referendum, he has said he will resign if he loses another referendum slated for October on constitutional reform.