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UPDATE 4-In boost for Renzi, Italy drilling referendum fails to draw quorum

Sun, 17th Apr 2016 21:56

(Recasts after referendum fails to draw quorum)

By Crispian Balmer

ROME, April 17 (Reuters) - A referendum aimed at curbingItaly's offshore oil and gas industry was sunk on Sunday when itfailed to secure the necessary quorum, with a sizeable majorityof voters shunning the ballot, initial data showed.

The result was a relief for Prime Minister Matteo Renzi, whohad called on people to abstain, saying the vote was unnecessaryand would have hurt the economy. It was also good news forenergy firm Eni which potentially had the most to lose.

Turnout was estimated at just over 30 percent according topreliminary data supplied by the Interior Ministry, well underthe 50 percent plus one vote needed to make the ballot valid.

The referendum had asked Italians whether the governmentshould stop renewing offshore drilling licenses within 12 miles(20 km) of the coast.

New drilling concessions are no longer being handed out, butRenzi said existing sites should have the option to remainoperational until they are fully depleted, warning that 11,000jobs would have been put at risk had the referendum passed.

The ballot was proposed by nine regional assemblies, most ofthem run by Renzi's own centre-left Democratic Party, whichobject to drilling platforms because of worries about theenvironment, as well as the impact on tourism.

"Italy has spoken. The result is clear, above ourexpectations," Renzi said in a combative televised address inwhich he criticised those who had pushed for the ballot, sayingit had cost more than 300 million euros ($340 million) to stage.

Italy imports around 90 percent of its energy needs andsuccessive governments have looked to boost domestic productionto reduce dependence on foreign suppliers such as Russia'sGazprom.

There are 69 exploration concessions in Italian waters, mostof them gas, the industry ministry says. Of these, 44 fallwithin the 12-mile range, most of them run by Italy's Eni.

If the referendum had succeeded, these 44 fields would havebeen shut when their concessions expired, even if they werestill operational.

Environmental watchdog Legambiente and other green groupssay domestic oil and gas production is minimal and that acontinued focus on fossil fuels takes Italy further away fromits renewable energy and carbon targets.

Gas production from offshore fields inside the 12-mile areacurrently accounts for around 3 percent of Italian consumptionwhile oil output in the area makes up just 1 percent.

While the short-term impact of a "Yes" vote would have beenminimal it would have had long-term implications, because by2027 the offshore fields could account for more than 20 percentof Italy's oil and gas production, said Alessandro Pozzi, ananalyst at Mediobanca.

The referendum came at an awkward time for Renzi. Aninfluence-peddling case centred on the country's main landlockedoil-producing area triggered the resignation of the industryminister two weeks ago.

Opponents sought to use the scandal to bring voters out totest the government ahead of June local elections, in whichRenzi's party risks losing control of several cities.

While the prime minister played down Sunday's referendum, hehas said he will resign if he loses another referendum slatedfor October on constitutional reform. ($1 = 0.8852 euros)

(Additional reporting by Steve Jewkes and Francesca Landini inMilan; Editing by Andrew Bolton and Jonathan Oatis)

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