Enel SpA, Italy’s largest utility, is pushing ahead with domestic natural gas exploration as local output is seen meeting 20% of demand at a price as much as 40% below imports.

The Rome-based company expects permits for its onshore exploration in the Emilia Romagna region in the north to be issued in the first half of next year, Marco Arcelli, head of Enel’s upstream gas division, said in an interview at the European Autumn Gas Conference in London. Enel also will work on accelerating the issuance of permits for its offshore exploration area, he said.

Gas output in Italy can meet 20% of demand in 20 years, reducing the need for imports, Arcelli said. Italy meets 90% of its needs through imports, mainly from North Africa and Russia. Enel, which also produces in Algeria, signed a contract to buy supplies of liquefied fuel from the U.S. as the shale boom boosts production and reduces prices.

“Everybody speaks about the U.S., the shale revolution, how that’s making the U.S. more competitive, and in Italy we have a wealth of gas that could be produced, not at the same price level, but significantly cheaper than imports,” Arcelli said. “Our estimates are probably 30 percent to 40 percent cheaper, and people are not knocking on our door to say do more, do more and do it quicker.”

EU countries are seeking to diversify their gas supplies as a dispute between Russia and Ukraine threatens to interrupt flows, as in similar conflicts in 2006 and 2009. Italy is the EU’s third-biggest gas consumer and depends on Russia for 29% of its fuel, according to data from Brussels-based lobby group Eurogas. Russian flows to Italy fell to a four-year low last month as Moscow-based OAO Gazprom limited exports and supplies from other sources rose.

Local tremblors

The issuance of Enel’s exploration permits in Emilia Romagna were delayed after earthquakes struck the area, while a moratorium on gas exploration anywhere within 19 km (12 miles) of the coast was imposed, Arcelli said. The tremors weren’t related to gas exploration, he said, citing a study, and Enel’s offshore fields are beyond the 19-km (12-mile) range.

Italian gas prices for next-day delivery slid 6.6% this year, while Dutch fuel, a benchmark for mainland Europe, declined 19%, according to broker data compiled by Bloomberg. That comes after Europe’s mildest winter in seven years cut demand and left inventories full.

Storage sites in the EU’s 28 nations held 78.6 Bcm (2.8 Tcf) of fuel as of Oct. 29, the highest for this time of the year since at least 2009, and Italy’s were 98% full, according to data from lobby group Gas Infrastructure Europe in Brussels.

“Short-term, we are still living in an oversupplied market and the reason is really demand,” Arcelli said. “Short term there needs to be a readjustment and so decreasing volumes now are welcome because they help to rebalance the market,” he said, commenting on the reduction in Russian supplies.