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Sergio Polito is senior vice president of procurement for the Italian oil and gas company Eni S.p.A. and chairman of the Manufacturers and Suppliers of Equipment and Services section of Assomineraria, the Italian Petroleum and Mining Industry Association. Assomineraria represents the interests of E&P companies and service companies operating within Italy, with regard to both regulatory environment and public image.
Question: What is the role of Assomineraria with regard to the different players involved in the oil and gas industry?
Answer: The purpose of Assomineraria is to promote innovative development by companies working in the exploration and production of oil and natural gas, industrial minerals and geothermal fluid. It also represents the companies supplying equipment and services to the petroleum and mining industry, helping them achieve both low cost and high efficiency, and supporting their action toward a better social and environmental context.
Assomineraria makes every effort to create favorable conditions to operate in our country and operates according to the following guidelines:
- Encouraging suitable conditions for the development of the oil and mining industries from the legislative, fiscal and economic points of view
- Coordinating and supporting the operational effectiveness of oil and mining companies with respect to local and national institutions responsible for regulations, permits and fiscal as well as economic frameworks
- Interpreting and promoting the needs and the interests of the oil and mining industry with the institutions, associations and agencies that operate in the same sectors and in sectors directly or indirectly linked to it
- Improving the level of competitiveness of the companies we represent by diffusing and promoting top national and international standards on the environment, health, safety and quality
- Promoting and publicizing a positive image of the Italian oil and mining industries
- Supporting the activity of upstream services companies that have developed the advanced technologies and acquired the precious know-how that have made them worldwide leaders in exploration and production.
Q: How do you see Italy’s oil and gas production trending in the next one to three years?
A: Oil production should rise to more than 150,000 bpd around 2010, with the startup of production at the second oil field in Basilicata.
Regarding gas, in recent years the slowdown in authorization procedures has led to a substantial and accelerating fall in production due to the exhaustion of reservoirs both on land and at sea. Currently, gas production in Italy is able to meet around 10% of the national demand, despite estimates at the end of 2007 of recoverable reserves of 146 billion cubic meters (5.16 Tcf), plus additional potential reserves of between 120 and 220 billion cubic meters (4.2-7.8 Tcf). More recently, the investment activities of oil companies in gas development and the increase in their number mean that we can expect a reversal in this trend, conditional on elimination of the restrictions on new exploration.
Q: What important projects do Italian companies have upcoming?
A: In the medium term, the biggest upcoming project is the Tempa Rossa oil project, for which Total is the operator in a joint venture with Shell and Exxon. When up and running, the forecast is for 50,000 bpd.
Exploration activities in 2007 recorded 11 wells. We have seen a recovery in the last three years; in 2006 there were nine discoveries, a record since 1999.
Overall, companies in the sector have planned 2008 exploration and production investments for €880 million, compared with €560 million in 2007. In the last three years, the appeal of the gas market has resulted in a reversal of the trend and led to an increase in the number of “new entry” companies in Italy.
Q: How do you see Italian oil and gas companies’ current and future roles outside Italy? How has Assomineraria been supporting such endeavors?
A: Italian oil and gas companies have traditionally been active in many parts of the world and their position in the international market is constantly growing, and not only in countries in the Mediterranean Basin.
The mission of Assomineraria is, however, limited to supporting Italian and foreign operators in their activities in Italy, activities that have been made more difficult by a particularly complicated administrative environment that results in a significant drawing out of time-to-market for projects.
Q: What are the main technical challenges to increasing domestic production in Italy?
A: Production in Italy is conditioned by the particularly delicate environment in which we operate. Italy has a high population density and the world’s highest concentration of works of art, spread across a multitude of medieval and Renaissance towns and villages. Onshore production, especially oil, is consequently often conducted in contexts where the highest levels of protection must be guaranteed.
But offshore activities, too, must take account of the very high prestige of coastal areas, with a high value in terms of tourism and extensive recreational sailing activities.
Last but not least, subsidence control, especially in offshore Adriatic reservoirs, has for more than 50 years been one of a number of challenging areas in which Italian operators have become highly specialized.
Q: What technologies are Italian companies developing to improve production, and how will these impact output?
A: E&P projects in Italy, with their particular environmental difficulties, have been an excellent training ground for Italian oil companies, which have consequently obtained important operatorships abroad. These projects have also helped Italian contractors, which are now leading in technically challenging projects worldwide.
High pressures, high temperatures and major field depths have contributed to forming the greater capabilities of the Italian industry, and people in the industry appreciate this around the world.
Q: How else has recent Italian government policy affected domestic E&P activity?
A: A number of obstacles have been emerging locally on environmental matters, especially for onshore projects, which are under the full responsibility of regional administration. The government could encourage an increase in E&P by taking back the helm of the energy policy.
In the last year, the government has given out strong signals of an interest in re-launching such activities by increasing the involvement of regional authorities that, ideally, would move from being stakeholders to becoming shareholders. In this regard, Assomineraria has presented a series of proposals that would facilitate the re-launch of E&P activities and increase gas production by about 50% in the next five to six years.
The country, which spends more than €50 billion a year for oil and gas imports, would benefit significantly from an increase, even marginal, in national production.
Q: How does Assomineraria, or Italian companies, interact with the European Union-based organization Eurogif in research and development?
A: Assomineraria is a very active member of Eurogif, and supplies its chairman, Marco Cercato. The association follows Eurogif’s R&D activities closely, above all the biggest projects. However, the relatively small size of most Italian companies makes it difficult to participate in European R&D programs promoted by Eurogif and its networks.
Q: What does the Kashagan project mean for the Italian oil and gas sector?
A: Italian companies have been operating in Kazakhstan since the Soviet era. In recent years, the particular environmental challenges of projects in the country have attracted a number of companies that are especially distinctive in Italy.
Having to operate with scarce resources and in a difficult environmental context, Italian companies were obliged to make special efforts to develop particularly sophisticated technologies and know-how to cover all stages of production.
The excellent technological standards achieved in Italy have been an advantage for the international development of several Italian companies that have contributed to the realization of extremely complex projects in some of the most difficult areas of the world.
Among them, the oil fields in Kazakhstan-with their extreme climatic and environmentally sensitive situations, and the presence of ice-are an example of the decisive contribution made by technological development in the upstream sector to overcome the various difficulties, and underline the important advantages for future generations regarding the availability of oil resources in such locations. 
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Sergio Polito has had a long and diverse career with Eni S.p.A. since he earned a degree in mechanical and marine engineering at the Polytechnic of Naples in 1973. He began working for Eni subsidiary Saipem S.p.A. as a structural engineer, and has worked in a variety of other positions in the company, including: shipbuilding superintendent; fleet department manager; offshore engineering manager; head of assets management; chief operating officer; and senior vice president for procurement, assets, R&D and business development. In September 2006 he moved to Eni, where he serves as senior vice president for procurement. Mr. Polito is a counselor in the Italian National Association of Industrial Plant Engineering (ANIMP), president of the Association of Industry Directors (ALDAI), and a member of the American Bureau of Shipping. He also serves as chairman of the Manufacturers and Suppliers of Equipment and Services section of Assomineraria.
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