Mediterranean Oil and Gas may contest Italy drilling ban

Shares in Mediterranean Oil & Gas plunged 15% after the Italian government banned offshore exploration and production within five miles of its coast.

The explorer's Ombrina Mare field in the Adriatic lies within the exclusion zone but the company said it still hopes to make a case for exemption from the rules which come into force later this month.

The shares fell 31.2p to 20½p.

The company said it will ask Italian authorities for clarification of the ruling, which prohibits oil exploration and production within five miles of the coast and comes into force on August 26.

MOG shares have lost over a quarter of their market value since the day before details of the proposed ban became known on July 1 as Ombrina Mare is less than five miles offshore.

Italy's environment ministry brought in the ban in June in reaction to the oil spill disaster in the Gulf of Mexico but the move was criticised by energy analysts who said it showed a poor understanding of the country's oil sector.

MOG will begin the next step of the development of Ombrina Mare, off the east coast, and the company will consider possible action to challenge the ruling should it affect its work.

The company warned that obtaining a production concession for the oil field, a key step in enabling the development to go forward, would take longer than it previously thought.