Rockhopper begins international arbitration against Italy over Ombrina Mare project
Rockhopper Exploration says it has begun international arbitration proceedings against the Republic of Italy in relation to the Ombrina Mare project.
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This followed a decision in February 2016 by the Ministry of Economic Development not to award Rockhopper 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)," said Rockhopper in a statement.
The ECT was designed to provide a stable platform for energy sector investments. The Republic of Italy, as a member of the European Union, was a founding signatory to the ECT.
Rockhopper believed that, based on legal and expert opinions, it had strong prospects of recovering very significant monetary damages as a result of the Republic of Italy's alleged breaches of the ECT.
"Damages would be sought on the basis of lost profits," Rockhopper said.
Moreover, Rockhopper had secured non-recourse funding for the arbitration from a funder that specialises 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."
Chief executive Sam Moody said he was disappointed that arbitration was required to protect the company's 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."
Rockhopper is an oil and gas company with key interests in the North Falkland Basin and the Greater Mediterranean region.
At about 11:04 GMT, shares in AIM-listed Rockhopper were flat at 22p each.