Italy Oil and Gas Upstream Fiscal and Regulatory Guide

Italy governs upstream petroleum operations through a royalty and tax framework. In 2019, the country significantly increased surface fees and imposed a moratorium on offshore exploration. These steps are part of a major push towards progressing the energy transition and achieving ambitious decarbonisation targets in the country. The offshore moratorium was set for an initial 18 month period, although the economic shock caused by the COVID-19 pandemic may effect this. Additionally onshore exploration has been significantly impeded due to sustained environmental pressure and public hostility towards drilling. It is possible that in the longer term, regulation and taxation on the petroleum industry will increase further as the country continues its push towards the energy transition and environmental pressure remains.

“Italy Oil and Gas Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Italy’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Italy’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in Italy

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Italy

Reasons to buy

Understand the complex regulations and contractual requirements applicable to Italy’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

1. Table of Contents

1.1. List of Tables

1.2. List of Figures

2. Regime Overview

2.1. Regime Overview ─ Royalty and Tax Agreement

2.2. Timeline

3. State Take Assessment

4. Key Fiscal Terms

4.1. Royalties, Bonuses and Fees

4.1.1. Surface Fees

4.1.2. Royalty

4.2. Direct Taxation

4.2.1. Corporate Income Tax (IRES)

4.2.2. Deductions and Depreciation

4.2.3. Additional Income Tax 2008 – 2015 (Abrogated)

4.2.4. Regional Tax (IRAP)

4.2.5. Withholding Tax

4.3. Indirect Taxation

4.3.1. Value Added Tax

4.3.2. Customs Duties

5. Regulation and Licensing

5.1. Legal Framework

5.1.1. Governing Law

5.1.2. Contract Type

5.1.3. Title to Hydrocarbons

5.2. Institutional Framework

5.2.1. Ministry of Economic Development

5.2.2. Licensing Authority

5.2.3. Regulatory Agency

5.2.4. National Oil Company

5.3. Licensing Process

5.3.1. License Applications

5.3.2. Duration

5.3.3. Licensing Restrictions

5.3.4. Work Obligation

6. Appendix

6.1. References

6.2. Contact Us

6.3. Disclaimer

List of Tables

1.1. List of Tables

Table 1: Regime Overview

Table 2: Italy, Key Events Since Year 2000

Table 3: Italy, Surface Fees, 1997 Onwards

Table 4: Italy, Onshore Royalties (%), 1997 Onwards

Table 5: Italy, Offshore Royalties (%), 1997 Onwards

Table 6: Italy, Oil Royalty Exemption Thresholds, 1997 Onwards

Table 7: Italy, Gas Royalty Exemption Thresholds, 1997 Onwards

Table 8: Italy, Sicily Onshore Royalty Rates, 1997 Onwards

Table 9: Italy, Corporate Income Tax Rates (IRES), 1981 Onwards

Table 10: Italy, Tangible Asset Depreciation Rates (%), Fossil Fuels Sector, 1996 – Present

Table 11: Italy, Additional Corporate Tax Rates, 2008 – 2015

Table 12: Italy, National IRAP Tax Base Rate, 1997 – 2020

Table 13: Italy, Regional IRAP Rate (%), 2019 Onwards

Table 14: References

List of Figures

1.2. List of Figures

Figure 1: Regime Flow Chart

Figure 2: Italy, Indicative NPV10/boe, IRR and State Take Comparison, and Price and Cost Sensitivity Analysis

Figure 3: Italy, Legal Framework

Figure 4: Italy, Institutional Framework

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