Italy is preparing to intensify its focus on domestic hydrocarbon development, as energy giant Shell announced its readiness to significantly increase investment in Italian oil and gas production — provided the government approves new drilling permits.
Shell currently invests approximately €500 million per year into its Italian operations, positioning the company as the largest foreign investor in the country’s upstream energy sector. According to company executives, the potential for growth is substantial, and additional capital could be deployed immediately if regulatory barriers are removed.
Potential to Double Production Output
Shell operates within Italy’s two largest on-shore hydrocarbon fields — Val d’Agri and Tempa Rossa, located in the Basilicata region of southern Italy. Representatives stated that production at Val d’Agri could double from the current level of around 40,000 barrels of oil equivalent per day to 80,000 if approval for new wells is granted.
Meanwhile, the Tempa Rossa field, operated by a separate partner company with Shell as a stakeholder, is currently producing around 30,000 barrels of oil equivalent per day, below its full operational capacity. Expansion plans there also depend on regulatory and technical authorization.
Strategic Importance for Italy’s Energy Security
In 2024, production from Shell and its partners in Basilicata accounted for approximately 85% of Italy’s total oil output and 36% of its natural gas production. This makes the region central to the nation’s energy independence strategy at a time when Europe continues to grapple with volatile international energy markets.
In addition to upstream extraction, Shell operates in Italy’s retail fuel sector, lubricants market, and the trading of both traditional and renewable energy. The company has also entered the Italian renewables market, selling clean electricity to industrial and corporate clients.
Why the Pressure on Permitting Now
Shell’s announcement is widely seen as a strategic signal to Italy’s government. Company leadership emphasized that the opportunity to expand production is immediate, yet progress remains dependent on the acceleration of regulatory approvals for drilling.
The push comes as global competition for oil and gas investment intensifies, and European countries are reassessing domestic energy strategies amid geopolitical instability and rising energy costs.
Challenges and Risks
The potential expansion faces several obstacles:
Environmental and Regulatory Pressure
Italy, like much of the European Union, is pursuing aggressive climate and decarbonization goals. New drilling activity is expected to draw criticism from environmental organizations, regional communities, and political groups concerned with ecological impact.
Energy Transition vs. Energy Security
The announcement fuels ongoing debate within Europe:
Should nations continue to exploit domestic fossil fuel resources to stabilize supply, or concentrate their efforts on renewable technologies and emissions reduction?
Market Uncertainty
Future profitability depends heavily on global oil and gas prices, which continue to fluctuate due to economic shifts, conflicts, and changes in consumer demand.
Implications for Italy and Europe
If the Italian government approves the proposed drilling permits:
- Italy could significantly reduce its dependence on imported hydrocarbons
- The country may enhance national energy stability and increase regional influence
- European energy markets could see increased supply from southern Europe
- Political and social debate over fossil fuels versus renewables will intensify
The decision will shape not only Italy’s energy direction but also broader EU-level discussions on how traditional energy resources can — or cannot — coexist with long-term climate goals.
