LGO Energy said it was disappointed that its subsidiary Compaaía Petrolífera de Sedano’s request for an extension of the La Lora concession has not been approved by the Spanish Cabinet of Ministers.
The concession will terminate at midnight on 31 January.
LGO said: “This decision appears to have been made on purely legal, and not technical or commercial, grounds and despite the advice that LGO received from its Spanish lawyers on the fundamental strength of the legal case.
“The Spanish Ministry of Industry, Energy and Tourism (has already indicated that it will offer the Ayoluengo Field to CPS for a new concession as soon as possible.”
LGO said the ministry had yet to issue the text of the Royal Decree so full details were not yet available, however, in anticipation of this possible outcome CPS was already in the final stages of a process to temporarily suspend all field operations and to complete the envisaged sale of all oil stocks from the Ayoluengo field by the end of the concession.
It said employment contracts for the vast majority of CPS’s 17 staff members would also be suspended, initially for a period of up to one year.
LGO executive chairman Neil Ritson said: “Naturally we are disappointed with the decision and it will inevitably cause some hardship to our employees and their communities in the Burgos area, where Ayoluengo has been a significant source of employment for the last 50 years.
“We will be working with the Spanish authorities to seek a new concession as soon as possible.”
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