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Mediterranean Oil & Gas says Ombrina Mare may be exempt from Italian drilling ban may

Mediterranean Oil & Gas (LON:MOG) told investors that its Ombrina Mare project may be exempt from the Italian offshore drilling ban which comes into effect on 26 August 2010. Earlier this week, a Legislative Decree amending the Italian Environmental Code was published in the Official Journal of the Italian Republic.

After heightened public concerns in the wake of the BP (LON:BP) / Transocean oil spill in the Gulf of Mexico, the Italian government is prohibiting hydrocarbon drilling within 5 miles of the Italian shoreline - Ombrina Mare is located within a prohibition area. MOG had flagged the government plans to issue such a decree on July 2.

“There are exemptions to the Decree which the company believes may be applicable”, MOG said in today's statement.

“It remains unclear whether the Decree operates to prohibit further development of the Ombrina Mare field.  The company, in conjunction with legal counsel, is therefore investigating the legal position.”

MOG said it will request clarification from the Italian authorities regarding the interpretation of the Decree in relation to the Ombrina Mare project, and pending receipt of formal clarification, intends to continue the current environmental assessment procedure.

Furthermore, the company will also consider possible action to challenge the Decree, should the environmental assessment process be adversely affected.

“[We] remain committed to defending the significant investments which have already been undertaken at the Ombrina Mare field,” MOG chief executive Sergio Morandi commented.

"MOG will continue to work actively with environmental and local authorities, as well as the Italian Government, with the aim of obtaining clarification on the decree and its interpretation, as well as identifying solutions enabling development of the Ombrina Mare field.”

However, Morandi cautioned that, given the publication of the decree, the company expects delays in the issuance of a production concession. The company said it is assessing the likely delays, and it is focused on bringing Ombrina Mare to production at the earliest opportunity.

Additionally, MOG noted that will also evaluate the technical and economic feasibility of alternative solutions to develop Ombrina Mare.