Po Valley wins approval for Italian gas plant build as EU embargo looms

Po Valley Energy (ASX:PVE) has received nearly all approvals needed to begin producing gas from its acreage at the Podere Maiar gas field located onshore central North Italy. 

The Emilia Romagna Regional Counsel has approved a final production agreement compliant with the environmental regulator, Ecological Transition Ministry (MiTE). 

The agreement ultimately allows the company to construct a gas plant on-site, as well as a 1km pipeline to connect to the National Gas Grid. While the approval for this build is complete, contractor negotiations with local firms remain ongoing. 

The company is confident in its ability to quickly progress works—first gas from Podere Maiar is expected in the first half of the 2023 calendar year, at the same time gas prices in Italy (and across Europe) remain strong.

Plant set to produce 5.3 million square cubic feet a day 

The approval comes on the back of the company's submission of an EIA in late March this year. 

The company expects production to rest at a maximum rate of 150,000 cubic metres per day, or 5.3 million square cubic feet. 

The play targets the Porto Garibaldi Formation; Po Valley holds a 63% interest in the Selva Gas Field. 

The happy elephant in the room: an EU embargo 

The announcement of a partial EU embargo on Russian energy products this week is set to startle the European economy, and Italy's government has not been a stranger to dialogue surrounding European energy security—in other words, a lessening of dependence on Russian products.

While Italy this week imported more oil from Russia ahead of the embargo kick-in date, the bigger issue has been gas, via Russian giant Gazprom.

Italy has been approved for payments to Russian players for gas in rubles, so it is likely Russian energy will continue to play a part in Italy.

It is conceivable however Po Valley stands set to benefit from a heightened regulatory encouragement of domestic manufacture and supply.

The Podere Maiar gas field is considered an economic 'area of interest' by the Italian government. 

Pre-production, Po Valley is trading at a discount to the energy index (XEJ)