The Perth-based junior told the market yesterday that the Italian Ministry had confirmed its application for the licence area, which is just 50km offshore from its main operating base in northern Italy where first gas production is targeted from mid 2008.

Po Valley chief executive Michael Masterman said the application marked the company’s first step in potentially expanding its onshore exploration focus on proven but undeveloped fields to larger gas target opportunities in the northern Adriatic Sea.

“The Ministry’s confirmation of our application is a welcome milestone and while early days yet, could soon add to what is becoming an increasingly solid base for Po Valley of exploration, development and production gas assets able to feed into Italy’s heavily import-dependent gas market,” he said.

Like Po Valley’s onshore developments, the Adriatic license application area covers three gas targets successfully drilled, but undeveloped, by Italian oil company Eni in the 1990s.

Under the application, Po Valley has agreed to further analyse these target structures by purchasing and re-evaluating an existing 3D seismic dataset.

Recoverable reserves for the prospects are expected to be around 54 billion cubic feet of gas.

One other applicant is competing for the same license area, Masterman said.

“The application is expected to be reviewed at the next Hydrocarbon Commission meeting, where it is anticipated that a preliminary award will be made to the successful applicant,” he said.

In addition to this new licence application, the company has three production applications, three awarded exploration licenses, six exploration licenses with preliminary award and one application pending award in the Po Valley region of the country.