CAPITAL: Rome

MONETARY UNIT: Lira

REFINING CAPACITY: 2,340,600 b/cd

OIL PRODUCTION: 108,000 b/d

OIL RESERVES: 621 million bbl

GAS RESERVES: 8 tcf

The Italian government planned to open the nation`s gasoline market to competition in June 2000, a year ahead of schedule.

It also planned to end waiting periods for licensing self-service stations and provide faster permitting for regular stations.

The government explained there was too little competition in the retail gasoline market, resulting in nearly identical prices everywhere.

Industry Minister Pierluigi Bersani said the Italian gasoline market was the least efficient in Europe, and action was needed to increase market efficiency and reduce costs for consumers.

But gas station operators said they were not ready for full competition and feared larger stations would push smaller ones out of business and destroy thousands of jobs.

Meanwhile, the Autorita Garante della Concorrenza e del Mercato, Italy`s antitrust authority, was investigating possible gasoline price-fixing.

The agency targeted nine oil companies, including units of ENI SPA, TotalFina SA, Exxon Corp., and Royal Dutch/Shell, as well as the oil companies` association, Petrol Union.

Treasury Minister Giuliano Amato said some companies` costs were 30% below those of competitors, yet all had raised prices to the same level.

The antitrust agency also recommended Snam SPA, the gas pipeline subsidiary that earns two thirds of ENI`s revenues, be dismantled to meet European Union market-opening directives.

The agency said Snam`s gas transportation, storage, supply, and sales operations should be sold if Italy was to have a competitive gas market.

And it said Snam, which had a monopoly on gas imports, should sell some of its long-term supply contracts to other firms.

It recommended that a federal agency regulate access to the transportation network and to storage sites. But it said large customers should be allowed to continue negotiating their own supply contracts with Snam.

The EU directive required that the Italian gas market be deregulated in stages: 30% by 2000, 38% by 2003, and 43% by 2008.

Clean gasoline

Italy claimed to have the "cleanest" gasoline in Europe following an $8 billion investment program by refiners in 1990-97.

The refiners faced more investments to comply with tightening fuel specifications and the Kyoto climate change treaty.

By 2005, Italy, along with the rest of the European Union, was required to reduce sulfur in gasoline to 30 ppm and benzene levels in gasoline to 1 vol %. Carbon dioxide emissions were to be cut 6.5-7% in the same period.

Italian refiners were expected to increase their hydrocracking, desulfurization, and hydrogen production capacities to meet specifications for cleaner fuels.

By July 2000, all 25,000 Italian gasoline stations were to implement vapor recovery systems. Storage tanks were being revamped with double-containment floating roofs and emissions monitoring systems.

The government planned to increase hydrocarbon taxes to limit CO2 emissions. Under the Kyoto agreement, Italy committed to cut emissions of greenhouse gases by 6.5% from 1990 levels.

During 1999-2004, the tax on natural gas for industrial use would increase by 7%, residential use 2%, and electricity generation 4%.

The tax on low-sulfur fuel oil would jump 33% for industrial use and 52% for residential use. The tax on high-sulfur fuel oil for industrial use was to leap 61%.

The tax on unleaded gasoline would rise 7%, while the tax on vehicular natural gas would fall 23%. The tax on coal burned in power stations would jump 42%.

Of the $57 billion program to comply with Kyoto, half would be spent during 2000-12 to revamp the electric power sector, enabling most power plants to burn natural gas instead of fuel oil or coal.

Other activity

In other energy activity in Italy:

-Esso Italiana SPA planned to integrate its Augusta refinery with the neighboring Priolo refinery owned by Agip Petro SPA.

The $110 million project would create a refining complex with a combined crude capacity of about 240,000 b/d.

A 50-50 joint venture would operate the plant. When plants were fully integrated in 2001, the firms would sell the Priolo motor gasoline production facility to Erg Petro.

-Italy`s ENEL entered a contract with Petroleos de Venezuela SA`s Bitor SA unit to buy up to 3 million tonnes/year of Orimulsion, a fuel mixture of bitumen, water, and a surfactant.

The fuel was to be burned at ENEL`s 960-Mw Fiume Santo power plant at Sardinia. About 750,000 tonnes/year of Orimulsion was being used at ENEL`s Brindisi power complex, making Italy the largest international consumer of the boiler fuel.

- Enichem was increasing the aromatics output of its Priolo, Sicily, refinery by 22,000 b/d through addition of a reforming process.

- Enterprise Oil PLC said a sidetrack to the 1 Cerro Falcone on the Volturino concession in southern Italy flowed 5,435 b/d of oil through a 3/4-in. choke. The well was expected to produce 8,000 b/d when put on production. The original 1 Cerro Falcone well tested at 597 b/d in 1992.

ENI was operator with 45% and Enterprise had 55%. More drilling was planned.