**4. The case study of an Italian oil district: features and data analysis**

Eni SpA is an integrated multinational energy company, founded in Italy in 1926 [56]. Its activities in the petroleum sector cover the entire production chain, from

**Figure 8.**

*Eni DIME organizational structure.*

upstream, high-value operations, including the search for reserves, to downstream implementation and operation of wells, processing and distribution, as well as secondary logistical activities at all levels of operation. The Eni group operates both in the oil and gas sectors and in onshore and offshore mining. Most of the mining activity is concentrated outside Italy, with the exception of a substantial focus in the Italian region of Basilicata. Eni's administrative structure for Italian production is divided into two major geographical areas: the North-Central District (DICS), with headquarters in Ravenna, Emilia-Romagna, and the Southern District (DIME), based in Viggiano, in the Val d'Agri and in Basilicata. The Val d'Agri field, discovered in 1981, consists of three concessions: Volturino, Caldarosa and Grumento Nova. The ASI Consortium, with a resolution dated July 17, 1992, sold a plot of 60,000 square metres to Eni: only since the mid-1990s, Eni decided to carry out a large-scale cultivation campaign, with the construction of an oil centre (COVA), where the first treatment of the raw extract, which passes through the ducts coming from most of the wells in production. This first treatment consists, more specifically, in the separation of oil from water, gas, sulfur and H2S (odorless hydrogen sulphide, therefore dangerous and deadly). In the following years, an oil pipeline was then built that transports crude oil converted into COVA at the Eni refinery in Taranto. Previously, transport was carried out using tanks, still used today for wells that are not connected to the collection network. **Figure 8** shows the organizational structure of the Dime.

In Basilicata there are about 400 companies operating in the oil sector: among these, in addition to the hub company, i.e. ENI, there are about 120 companies that make up the district system of Val d'Agri.

**121**

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study…*

However, it is important to highlight that, in the Basilicata region, there is also another drilling area, named Tempa Rossa, in which the Hub company is the French company Total. The business sale, as can be seen in **Graphic 1**, it does not depend

Therefore, companies do not always have an exclusive commitment relationship with a single company leader, even though most of them owe their turnover to work with Eni. With regard to the volume of oil extraction and the associated royalties, to date the daily extraction, it is about 80,000 barrels of oil per day [56]. Eni in Basilicata, in the last 10 years, paid about 2 billion€ for the production of the Val d'Agri. In the 2014–2016 3-year period, for example, Eni paid a total of 673.5 million€ to the state, the Basilicata Region, the province and the municipalities involved [56]. From a technical viewpoint, the crude oil processing in the final product includes a whole series of activities, ranging from extraction of oil until use, by the final consumer, of finished products. The value chain is composed of three main subprocesses, namely: **Upstream:** it includes activities for the discovery and extraction of crude oil. **Midstream:** it consists, principally, in the activity of refining, i.e. the process by which the crude is transformed into finished products (gasoline, diesel and fuel oil). **Downstream:** it includes the distribution and sale of final product to the consumer, both as the individual who does fill up his car and both industry needs,

2.**Punch:** the drilling of wells is the only way to verify the value of a field, i.e. the

3.**Extraction:** in the production phase, a number of wells enough to optimize the

4.**Treatment and storage:** once extracted, the crude oil is constituted by a mixture of gases and liquids, which must be separated and purified, before being placed in the oil and gas pipelines. Typically, these operations take place

5.**Transportation:** most of the oil must be transported to reach the refineries and the places of consumption. There are two ways to transport oil, often

6.**Refining crude oil**: it consists of a wide variety of hydrocarbons with different amounts of carbon atoms. The refining consists in the separation of the various

The oil district of Val d'Agri operates within the framework of activities ranging from drilling to the processing and storage of oil. The district is composed of the hub company, ENI, which holds the rights to exploit the subsoil and a series of companies that, with different roles, physically implement all the activities necessary for oil extraction. Counting smaller companies in the supply and production chain, the district includes 2400 employees, increasing from about 400 in 1998 [57], as can be seen in **Figures 9** and **10**, representing the companies involved in

In 2018 DIME employed a total of 316 people. Of these, 64% are actually

*DOI: http://dx.doi.org/10.5772/intechopen.86298*

for example, fuel oil to power its systems.

The production cycle consists of several stages:

type and quantity of the hydrocarbons contained.

in a collection site or in the same production platforms.

hydrocarbons based on the different boiling temperature.

complementary: oil pipelines and oil tankers.

direct supply and the district structure.

residents in Basilicata.

1.**Prospecting:** it is finding new deposits.

exploitation of the deposit are provided.

only from the activity of Dime.

**Graphic 1.** *Percentage of business sale figures that depends on the oil industry in Val d'Agri.*

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study… DOI: http://dx.doi.org/10.5772/intechopen.86298*

However, it is important to highlight that, in the Basilicata region, there is also another drilling area, named Tempa Rossa, in which the Hub company is the French company Total. The business sale, as can be seen in **Graphic 1**, it does not depend only from the activity of Dime.

Therefore, companies do not always have an exclusive commitment relationship with a single company leader, even though most of them owe their turnover to work with Eni. With regard to the volume of oil extraction and the associated royalties, to date the daily extraction, it is about 80,000 barrels of oil per day [56]. Eni in Basilicata, in the last 10 years, paid about 2 billion€ for the production of the Val d'Agri. In the 2014–2016 3-year period, for example, Eni paid a total of 673.5 million€ to the state, the Basilicata Region, the province and the municipalities involved [56].

From a technical viewpoint, the crude oil processing in the final product includes a whole series of activities, ranging from extraction of oil until use, by the final consumer, of finished products. The value chain is composed of three main subprocesses, namely:

**Upstream:** it includes activities for the discovery and extraction of crude oil. **Midstream:** it consists, principally, in the activity of refining, i.e. the process by which the crude is transformed into finished products (gasoline, diesel and fuel oil).

**Downstream:** it includes the distribution and sale of final product to the consumer, both as the individual who does fill up his car and both industry needs, for example, fuel oil to power its systems.

The production cycle consists of several stages:


The oil district of Val d'Agri operates within the framework of activities ranging from drilling to the processing and storage of oil. The district is composed of the hub company, ENI, which holds the rights to exploit the subsoil and a series of companies that, with different roles, physically implement all the activities necessary for oil extraction. Counting smaller companies in the supply and production chain, the district includes 2400 employees, increasing from about 400 in 1998 [57], as can be seen in **Figures 9** and **10**, representing the companies involved in direct supply and the district structure.

In 2018 DIME employed a total of 316 people. Of these, 64% are actually residents in Basilicata.

*Current Issues in Knowledge Management*

make up the district system of Val d'Agri.

*Percentage of business sale figures that depends on the oil industry in Val d'Agri.*

upstream, high-value operations, including the search for reserves, to downstream implementation and operation of wells, processing and distribution, as well as secondary logistical activities at all levels of operation. The Eni group operates both in the oil and gas sectors and in onshore and offshore mining. Most of the mining activity is concentrated outside Italy, with the exception of a substantial focus in the Italian region of Basilicata. Eni's administrative structure for Italian production is divided into two major geographical areas: the North-Central District (DICS), with headquarters in Ravenna, Emilia-Romagna, and the Southern District (DIME), based in Viggiano, in the Val d'Agri and in Basilicata. The Val d'Agri field, discovered in 1981, consists of three concessions: Volturino, Caldarosa and Grumento Nova. The ASI Consortium, with a resolution dated July 17, 1992, sold a plot of 60,000 square metres to Eni: only since the mid-1990s, Eni decided to carry out a large-scale cultivation campaign, with the construction of an oil centre (COVA), where the first treatment of the raw extract, which passes through the ducts coming from most of the wells in production. This first treatment consists, more specifically, in the separation of oil from water, gas, sulfur and H2S (odorless hydrogen sulphide, therefore dangerous and deadly). In the following years, an oil pipeline was then built that transports crude oil converted into COVA at the Eni refinery in Taranto. Previously, transport was carried out using tanks, still used today for wells that are not connected to the collection network. **Figure 8** shows the organizational structure of the Dime. In Basilicata there are about 400 companies operating in the oil sector: among these, in addition to the hub company, i.e. ENI, there are about 120 companies that

**120**

**Graphic 1.**

**Figure 8.**

*Eni DIME organizational structure.*

**Figure 9.** *The companies involved in direct supply.*

**Figure 10.** *Val d'Agri district structure.*

The study carried out, in addition to being based on the analysis of the literature, was deepened both with the collection of the data of the district companies, through the administration of questionnaires, specially created, and interviewing the managers within DIME and with the directors of other companies in the Basilicata oil district. The characteristics considered are the structure of the individual companies, its specializations, the types of formal relations with the leading company, their stability, the nature of information exchanges, the existence of any common programs or projects for knowledge transfer (R&D, incubators, etc.), the distinctive knowledge of the company and the existence of knowledge management systems and further issues. Another aspect of the study was to illustrate aspects of employment in the district, verifying the potential existence of any common social and cultural context among the various employees, as can be seen in **Table 1**.

The data on the residence of employees within Val d'Agri and the larger area of Basilicata is important in the understanding knowledge transfer in the Huband- Spoke ID. The information indicates the existence of a common sociocultural

**123**

**Table 3.**

**Table 1.**

**Table 2.**

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study…*

ibility leads to the shift of knowledge, both tacit and explicit.

sphere, which is an essential fundament for transfer behaviour and activities. Once more, with a view to KT, data on the types of employment contracts, in **Table 2**, are important, because, for example, short-term contracts allow greater flexibility among employees, in terms of switching from one company to another. This flex-

The application of a type of contract, in respect to another, is closely linked to the nature of the productive activities of the individual companies and to the contractual relationships between the district companies. The time length of a contract derives from the contractual relationships, from the orders received, from the quantities and from the types and working times required by the main contracting company, the hub. Nevertheless, some of the smaller companies keep all staff in

Considering all companies active in the Val d'Agri, 35% of these are directly active or provide indirect services to the oilfield. Considering only the DIME and the companies in its direct production chain, employment has increased in recent years, but only a part of the new positions is "permanent". In data, over the past 3 years, the permanent employees in district societies have increased by 50%, and the permanent employees put together have increased by over 100%. Unfortunately, of the 2400 workers only less than half of these are resident in Basilicata (**Table 3**), and less than half have permanent positions. Through the study of the employment of human resources in the district, we were able to obtain a reasonably clear picture

**Employment type Personnel Of which resident in Basilicata**

DIME employees 316 203 Indirect employment (DIME production chain) 2046 1000 Total 2362 1203

**DIME indirect employment, by contract type Number** Permanent 1555 Term 394 Project-based 35 Other 62 Total 2046

**DIME indirect employment, by residence Number** Other Italian regions 1040 Resident in Basilicata 1000 • *Of which Val d'Agri* 668 • *Of which other part in the region* 332 Other EU nations 6 Total 2046

*DOI: http://dx.doi.org/10.5772/intechopen.86298*

the district in permanent positions.

*Eni DIME: direct and indirect employment.*

*Eni DIME: indirect employment by contract type.*

*DIME indirect employment, by residence.*

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study… DOI: http://dx.doi.org/10.5772/intechopen.86298*

sphere, which is an essential fundament for transfer behaviour and activities. Once more, with a view to KT, data on the types of employment contracts, in **Table 2**, are important, because, for example, short-term contracts allow greater flexibility among employees, in terms of switching from one company to another. This flexibility leads to the shift of knowledge, both tacit and explicit.

The application of a type of contract, in respect to another, is closely linked to the nature of the productive activities of the individual companies and to the contractual relationships between the district companies. The time length of a contract derives from the contractual relationships, from the orders received, from the quantities and from the types and working times required by the main contracting company, the hub. Nevertheless, some of the smaller companies keep all staff in the district in permanent positions.

Considering all companies active in the Val d'Agri, 35% of these are directly active or provide indirect services to the oilfield. Considering only the DIME and the companies in its direct production chain, employment has increased in recent years, but only a part of the new positions is "permanent". In data, over the past 3 years, the permanent employees in district societies have increased by 50%, and the permanent employees put together have increased by over 100%. Unfortunately, of the 2400 workers only less than half of these are resident in Basilicata (**Table 3**), and less than half have permanent positions. Through the study of the employment of human resources in the district, we were able to obtain a reasonably clear picture


#### **Table 1.**

*Current Issues in Knowledge Management*

*The companies involved in direct supply.*

The study carried out, in addition to being based on the analysis of the literature, was deepened both with the collection of the data of the district companies, through the administration of questionnaires, specially created, and interviewing the managers within DIME and with the directors of other companies in the Basilicata oil district. The characteristics considered are the structure of the individual companies, its specializations, the types of formal relations with the leading company, their stability, the nature of information exchanges, the existence of any common programs or projects for knowledge transfer (R&D, incubators, etc.), the distinctive knowledge of the company and the existence of knowledge management systems and further issues. Another aspect of the study was to illustrate aspects of employment in the district, verifying the potential existence of any common social and cultural context among the various employees, as can be seen in **Table 1**. The data on the residence of employees within Val d'Agri and the larger area of Basilicata is important in the understanding knowledge transfer in the Huband- Spoke ID. The information indicates the existence of a common sociocultural

**122**

**Figure 10.**

**Figure 9.**

*Val d'Agri district structure.*

*Eni DIME: direct and indirect employment.*


#### **Table 2.**

*Eni DIME: indirect employment by contract type.*


#### **Table 3.** *DIME indirect employment, by residence.*

**Figure 11.** *Knowledge transfer between district firms.*

of the role of knowledge transfer and sharing in the characteristics of the vertical relational system of this hub-and-spoke ID. The research is designed to elicit information on the mechanisms of knowledge transfer, whether tacit or explicit, including identification of how each company's degree of contractual power and position within the district might influence the relative mechanisms. Explicit knowledge transfer occurs primarily in the development of production processes along the companies of the district's value chain. In contrast, tacit knowledge transfer occurs primarily through the actions of individuals residing within the district. Human resources thus play an important role in knowledge transfer, through imitative behaviour, personal mobility mechanisms and social interaction (**Figure 11**).

Unfortunately, from the investigation carried, we have not received specific numerical data about the activities that individual firms play in order to promote the knowledge transfer. However, in line with the literature has emerged the key role that employees have in the transfer of district knowledge.
