Italy law changes to benefit Mediterranean Oil & Gas

Mediterranean Oil & Gas said it would push forward with plans for a concession in the Central Asiatic after the Italian government clarified rules on offshore drilling.

Italy introduced offshore drilling restrictions in 2010 following the Macondo disaster in the Gulf of Mexico.

Changes to these rules now mean restrictions on offshore exploration and production activities will apply to activities up to 12 miles offshore the Italian coastline.

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However, applications for production concessions that were under review at the time the rules came into force will no longer be covered.

Mediterranean said this meant it could seek the award of a concession covering the Ombrina Mare oil and gas field in the Central Adriatic.

"The relevant application, which includes the proposed field development plan, was submitted in December 2008, received technical approval in June 2009 and was completing the final stages of environmental approval when [the decree] came into force," the firm said.

The decree also includes a provision for an increase of 3% in royalty payable by offshore hydrocarbon producers to the Italian government.

Mediterranean said would hit profitability at its Guendalina field, and subsequently Ombrina Mare.

However, it added that the economics of both assets remained viable.

happy investors shrugged off the news of this new tax and pushed shares up 17%.