Island Oil & Gas plc announces that the Ministre de l'Energie, des Mines, de l'Eau et de l'Environment of Morocco has formally approved the 'Tarfaya Onshore' Petroleum Agreement (the 'Permit') awarded to Island's wholly owned subsidiary Island International Exploration Morocco ("IIEM") by the Office National des Hydrocarbures et des Mines ("ONHYM") in November 2007.
The Permit is effective from 14 January 2008 and is valid for up to eight years. The work programme that has been committed to during the initial two years and six months phase of the Permit comprises seismic reprocessing and acquisition and geochemical modeling. A drill or drop decision will be made at the end of the initial phase of the Permit. It is currently anticipated that seismic will be acquired in 2009.
The joint venture partners in the Tarfaya Permit are IIEM (40%), the designated operator, Longreach Oil and Gas Ventures Limited (30%) and San Leon (Morocco) Limited (30%).
Morocco has an attractive fiscal regime relative to other North African oil and gas producing countries -- State Participation upon production of up to 25%; a 10% royalty on oil production (the first 300,000 tons of production are exempt) and a 5% royalty on gas production (the first 300 million cubic meters are exempt); and 35% corporation tax which is only payable after a 10 year holiday on production.
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