Italy will have to pay 190 million euros plus interest to the oil and gas company Rockhopper Exploration for breaching its obligations related to the company's Ombrina Mare field in the Adriatic Sea.
The oil company - now mainly focused on Falkland Islands' Sea Lion project - started arbitration in March 2017 after Italy in 2016 imposed restrictions on offshore oil and gas operations in its waters within 12 miles of the coast of Italy, and after the country's Ministry of Economic Development of Italy informed Rockhopper Exploration that the production concession covering its Ombrina Mare field area would not be awarded, despite the Ombrina Mare project having completed all the required technical and environmental authorizations.
Ombrina Mare is an appraisal/development project situated in the shallow waters of the central Adriatic off the coast of Abruzzo, Italy.
"The arbitration panel unanimously held that Italy had breached its obligations under the Energy Charter Treaty entitling Rockhopper to compensation. The award is final and binding on the parties. Italy has 120 days to apply for an annulment of the award, which can only be annulled in limited circumstances. Under a legal agreement with the Falkland Island Government Rockhopper is prevented from making any form of distribution," Rockhopper said.
"All costs associated with the arbitration were funded on a non-recourse ("no win - no fee") basis from a specialist arbitration funder. After payments due to the arbitration funder, Rockhopper expects to retain approximately 80% of the award (assuming full recovery of the award). Further analysis is required to establish the tax treatment on any payments related to the award," Rockhopper said.
Samuel Moody, CEO said: "We are delighted to have won our case. A huge amount of work has been involved since we acquired Mediterranean Oil & Gas Plc in 2014 and commenced the Arbitration in 2017. I would like to pay tribute to our team for their dedication over such a long period. We will update the market in due course once we have been able to analyze fully the results of the arbitration and its full, very positive financial implications for Rockhopper. This positive milestone builds on our recent transaction with Navitas and while work still needs to be done on Sea Lion, we believe after collection of the award, it will make a material contribution towards our share of the development costs."