Rockhopper looking to get Ombrina Mare money back from Italy
UK-based oil and gas company Rockhopper Exploration has started international arbitration proceedings against Italy in relation to the offshore Ombrina Mare project.
The Ombrina Mare is an appraisal/development project located off the Abruzzo, a region in Italy, in the shallow waters of the Central Adriatic.
Following the decision in February 2016 by the Ministry of Economic Development not to award the company a production concession covering the Ombrina Mare field, the company, with its legal advisers, has considered its options with regard to obtaining damages and compensation from the Republic of Italy for breaching the Energy Charter Treaty (ECT), Rockhopper said on Thursday.
The decision not to award the concession to Rockhopper followed the re-introduction of the ban on exploration and production activity within 12 nautical miles of the coast of Italy in January 2016. Ombrina Mare is located within the 12 mile limit.
The oil company explained that the ECT entered into legal force in April 1998 and is designed to provide a stable platform for energy sector investments. Italy, as a member of the European Union, was a founding signatory to the ECT, the company said.
Based on legal and expert opinions, Rockhopper stated it has been advised that it has strong prospects of recovering very significant monetary damages as a result of the country’s breaches of the ECT. Damages would be sought on the basis of lost profits.
In addition, the company has secured non-recourse funding for the arbitration from a funder that specializes in financing commercial litigation and arbitration claims. In the event of success, with an award above a nominal threshold, Rockhopper retains a very material proportion of any award.
Sam Moody, CEO of Rockhopper, commented: “Whilst we had hoped to avoid arbitration, we are extremely disappointed that it has proved to be necessary in order to protect our investment in the Ombrina Mare project. While it may take some time to produce a result, and there is no certainty of success, Rockhopper is taking all necessary steps to protect its shareholders’ interests at no extra cost to the company.”