BusinessCantillon

Frustrated Irish exploration investors could tap €190m Italian precedent

Coalition dragging its heels with firms so shareholders may opt for legal route that delivered in Italy

The Government and, specifically, Minister for the Environment Eamon Ryan, should take note of an announcement on Wednesday by London-listed oil and gas minnow Rockhopper Exploration.

Rockhopper holds a licence to explore for oil off Italy’s eastern Adriatic coast in a bloc known as Ombrina Mare. It is off the coast of Abruzzo, one of the most beautiful regions in Italy. Spooked by local protests at the prospect of an oil platform off the coast, the Italian government in 2015 banned all drilling within 12 nautical miles of the coast.

Rockhopper acquired the licence for the bloc but, subsequently, the Italian authorities refused to issue it with permission to drill. Rockhopper took legal action and this week it won a €190 million arbitration payout, with an annual interest of 4 per cent backdated to 2016.

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The relevance for this State comes in the potential for similar legal actions from exploration companies that hold legally valid licences to search for oil and gas off the Irish coast but who are being frustrated by the Government’s failure to supply them with the necessary permissions to proceed. The stalling is viewed as a political move to frustrate those companies who got in under the wire to obtain licences before Ryan banned all exploration last year.

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Red tape

Providence Resources, soon to be renamed Barryroe, has been waiting for 16 months for State approval to drill an appraisal well for its Barryroe oil prospect off the southern coast. Meanwhile, Europa Oil & Gas can’t get an answer from State officials over paperwork needed for a licence extension to conduct further technical analyses for its Inishkea prospect off the west coast.

These companies will not wait around forever and could eventually look to force the State to let them proceed. Rockhopper farmed its case out to a specialist “no foal, no fee” company, which took on Italy’s government for a 20 per cent cut. Could investors in the Irish explorers start to think similarly?