Under the deal, the pipeline contractor will allow Po Valley to connect to its Sillaro gas field east of Bologna into the Italian gas grid over a short 300m connection, ahead of planned initial supply deliveries next year.

Po Valley said the grid distance is much closer than anticipated, reducing construction times and capital costs for commercialising Sillaro’s first outputs.

Estimated cost of the Sillaro connection line is $230,000.

Following construction, Po Valley intends entering a transportation contract with SNAM similar to that provided for under SNAM’s regulatory framework.

“Agreement on pipeline connection points is an important step forward for Po Valley,” chief executive Michael Masterman said.

“Being able to connect to a national pipeline grid less than 500m away is a major competitive advantage of holding natural gas fields in northern Italy, giving entry to one of the most lucrative markets in the world.”

The Australian gas explorer last month announced a $5.85 million capital raising to fund its expansion in Italy.