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ADX gets green light to kick off Italian gas hunt

ADX Energy could soon launch an offshore gas hunt in Italy after the country’s authorities offered the producer approval to conduct exploration off the coast of Sicily. The Government suspended exploration in the area back in 2019 in order to evaluate the viability of sustainable hydrocarbon prospecting, exploration and development in the area.

After the review the relevant authorities are now ready for the company to kick off exploration under the proviso that only the area’s gas is commercially developed.

ADX previously delivered a comprehensive report to the Italian authorities outlining the prospectivity of natural gas within a specific licenced area.

The company has already mapped out a suite of prospects in the area using previously acquired 2D seismic data. Management considers a handful of the areas compelling and says the group could offer a best technical prospective resource of 369 billion standard cubic feet of gas, or “BSCF”.

The company says the higher-ranked targets boast distinct seismically related direct hydrocarbon indicators, or “DHI’s” which may point to gas in the zone’s underlying reservoirs.

ADX says the licenced area’s blend of relatively shallow drill targets, strong historical production and existence of DHI supported prospects drives down exploration risk and incentivised it to chase up the exploration offer.

The company believes its key Sicilian gas targets sit at depths of between 700 to 1300m.

While the protracted suspension of exploration activities for our d363C.R–.AX license has been disappointing given the oil prospectivity in the license, the government’s decision to focus on natural gas production has come as a welcome development for ADX.

The company believes exploiting the zone’s gas could deliver a robust pipeline of future resources and given the current demand for the resource, the move could prove a lucrative play.

Europe’s market for natural gas market has seen a massive 15-fold price increase over the past year or so and with the price of the commodity hovering around US$560 per barrel of oil equivalent ADX sees the Italian authorities offer as one worth taking up.

The surging price of gas has been linked to post pandemic travel, domestic production constraints and the ongoing fissures of the Ukraine-Russia conflict.

Russia previously satiated about 30 per cent of Europe’s gas demand.

Italy is Europe’s second largest gas consumer after Germany and goes through about 72 billion cubic feet of the energy source each year. Unlike many nations on the continent the country has no nuclear power plants in operation leading to a heavy reliance on natural gas.

The reliance means if ADX is able to get its Sicilian gas hunt off the ground it could be primed to supply an energy hungry market.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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