Island Awarded Exploration License Offshore Netherlands

Island Oil & Gas plc announces that the Minister of Economic Affairs of the Netherlands has awarded the Q13b Exploration Licence to Island Netherlands B.V. ("INBV"), a wholly owned subsidiary of Island, and Aceiro Energy B.V. Island, the designated operator, will hold a 100% working interest in the Licence. The Licence is effective from 19 March 2008 and is valid for five years

Island intends to file a request with the Minister of Economic Affairs in the Netherlands for splitting the Licence into a shallow (oil) and deep (gas) part defined by the top of the Trias stratigraphic marker. Island will operate the shallow part with a 100% equity interest and Cirrus Energy Nederland B.V. will operate, on behalf of its partner Petro-Canada Netherlands B.V., the deep part in which Island will have no equity interest.

The Q13b Exploration Licence covers an area of 369 sq. km. and contains the northern part of the Zaan Field, a Lower Cretaceous field with up to 12.4 million barrels of gross oil in place based on material balance calculations generated by the Operator NAM following testing of the Q13-4 discovery well. Q13-4 flowed at an initial rate of 2,641 bopd from three separate oil-bearing intervals.

The Q13-5 well on the Licence also encountered oil shows in the Lower Cretaceous. An area covering 3.7 sq. km., approximately the area of the Zaan Field, lies untested updip from the Q13-5 well and will be the subject of further evaluation by Island.

The Q13b Exploration Licence further contains the NW-extension of the Wassenaar-Zee field, where in 1980 the Wassenaar-Zee 01 well tested some 400 bopd, and several untested structures.

The Licence work programme includes the drilling, subject to technical and commercial justification, and testing of an appraisal well in the Zaan Field in the second year of the Licence and a further test well in the third year of the Licence

The Zaan Field and the Q13-5 Appraisal Prospect are located within the West Netherlands Basin, a prolific oil and gas province in which, to date, over 1.3 billion barrels of oil-, and 3 tcf of gas-, in place have been encountered. Both structures, if successfully appraised, are anticipated to be developed as satellite tie-backs to Island's Amstel field development project.

Commenting on the Licence Award, Paul Griffiths, Chief Executive of Island stated, "Island is delighted with the award of this licence as it adds potential additional recoverable oil resources to the Amstel development hub via the projected tie-back of the Zaan Field.

"Our low entry cost, which reflects our approved operator status, and our established position in the Amstel development project, creates a significant development upside from any additional reserves increases, at a time of buoyant oil prices."