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Second Italian Gasfield Wins Environment Approval

March 31, 2008

The environmental approval for a second gasfield in northern Italy being developed by Australia’s Po Valley Limited has been granted.

The decision by the Lombardia Region authorities to approve Po Valley Energy’s (ASX “PVE”) Castello gasfield near Milan follows environment approval for the Company’s Sillaro field near Bologna approved on 21 January 2008.

Both fields will host Po Valley’s maiden production which, subject to remaining approval processes, is expected by the Company towards the end of 2008.

The funding required to bring the Sillaro and Castello fields into production, including a second production well in the Sillaro field, is in place with the recently completed A$34m (€20m) reservoir financing facility with the Bank of Scotland.

Po Valley said today that the surface plant construction and grid connection infrastructure works continued to advance for both projects.

“Construction of the key surface plant equipment for both fields is more than 30% complete and the equipment mounted skids are on schedule and will be assembled and tested at the facility of the manufacturer, Semat, in June” CEO, Michael Masterman said today.

“The pipeline operator, SNAM Rete Gas (SRG), has advised that it is similarly advanced in its preparations to install pipeline grid connections to both Sillaro and Castello”, Mr. Masterman said.

“Gas production, based on our current civil works and installation plans, can be achieved about 4 months from regulatory approval for site access, subject always to weather conditions. “Following the now successful grant of the previously delayed environmental approvals, there are a number of remaining steps to achieve site access. These include:

• Formal granting of these Production Concessions by the Italian Ministry • Subsequent approvals by the Ministry office in Bologna of the formal Development Plans

“While we hope to receive final concession grant for Sillaro by May 2008, our plans allow up to a further 3 months for the Ministry office in Bologna to approve the development plan and associated site access documentation. This should permit gas production by December 2008.

Production at Castello is targetted to commence about 2 months later. The Italian election on 13—14 April may cause these target dates to extend by a further 2 months.”

Mr. Masterman said the Company’s current countdown to commissioning and first production sought to allow for any unavoidable time risks resulting from the newness of the approvals process.

“We are one of the first companies set to be granted new gas production concessions in Italy since the deregulation of the Po River Valley region and introduction of the new approval process under the 2004 “Marzano” energy law.

“We remain concerned about the slow pace of regulatory approvals over the past two years and this has delayed commencement of our gas production by up to one year.

“We are working closely with the Ministry to ensure that the new administrative procedures involved in granting approvals minimise slippage and are well understood on both sides,” Mr. Masterman said.

In preparation for maiden gas production, the Company has commenced its gas marketing program. In January, the Company briefed 13 prospective customers in Milan and 10 have requested follow up meetings. The Company plans to finalise contractual arrangements in June 2008.

“Being over 85% import-dependent, the Italian market is short of domestic supply, and with continual disputes between Russia and gas transit countries, energy security remains a national issue” said Mr. Masterman.

Mr. Michael Masterman further commented: “Overall, the Company continues to move steadily towards its maiden gas production. We have a growing pipeline of strategic assets being developed in Europe’s highest price gas market. While the path to maiden production has extended beyond our initial estimates due to slowness of the regulatory environment, the Company continues to expand the depth of its exploration portfolio while progressing its fields into production with all practicable speed”.


Michael Masterman Po Valley Energy 0417 851 303
Kevin Skinner Field Public Relations (08) 8234 9555 or 0414 822 631

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