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The Po Valley region in northern Italy has historically been a prolific hydrocarbon province. Over 23tcf of gas have been produced from the province since it was brought into the production. Current production levels in the province are some 50bcf per annum which is similar to the levels of the Australian Northwest Shelf. Total gas consumption in Italy during 2007 was 2.9 trillion cubic feet per annum - three times the Australian market. Imports account for over 80% of supply and Italy has recently been severely affected by disruptions to the supply of natural gas from Russia following the Ukraine dispute late in 2005. Gas prices have doubled since the IPO of the Company in December 2004.
Continued rapid gas consumption demand combined with import capacity constraint and Russian gas supply disruptions have significantly tightened market conditions. Europe is becoming a more integrated market and the declining North Sea gas production and rising UK imports and UK gas prices is having a strong ripple effect on the Italian end European markets.
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