In a statement yesterday, the Perth-based junior said its new partner, Star Energy, was the UK’s second largest onshore oil producer and a major operator and developer of underground gas storage facilities.

Po Valley chief executive Michael Masterman said the storage of gas in underground depleted reservoirs was a rapidly expanding business in Italy and Europe, reflecting increasing dependence on imported gas which is usually delivered on a ‘flat volume’ basis.

“Large storage capacity is required to meet Italy’s seasonal swings in gas consumption and spikes in usages,” Masterman said.

“Po Valley’s potential development of storage as a new cornerstone business is a natural complement to our emerging gas production capacity from early 2008.”

Masterman said the JV would combine Po Valley’s experience in gas field development in northern Italy with Star Energy’s specialist skills and operations in storing gas in the UK at Humbly Grove and 4 6 other projects in the UK using depleted oil and gas reservoirs.

“The partnership is highly strategic as Star Energy is the largest independent storage operator and developer in the United Kingdom and has recently expanded into the Netherlands,” Mr Masterman said.

Under the joint venture, Po Valley and Star will bid for up to five gas storage licences recently put out to tender by the Italian Ministry.

Bids close in September 2007, with results expected by the first quarter 2008.