Licence Awards Ireland

Island Oil and Gas PLC
21 August 2006



21 August 2006



           ISLAND OIL AND GAS AWARDED FRONTIER EXPLORATION LICENCES
             IN THE SLYNE TROUGH AND DONEGAL BASIN, OFFSHORE IRELAND

Island Oil & Gas plc ('Island' or the 'Company') today announces that, following
an application to the Petroleum Affairs Division of the Department of
Communications, Marine and Natural Resources in the recent Slyne-Erris-Donegal
Bid Round which closed on the 15 March 2006, the Company has been granted two
new licences. The Frontier Exploration Licences ('FEL') granted are:

•An FEL covering blocks 27/18 & 27/23 and part-blocks 27/17(E) & 27/
22(E) in the Southern Slyne Trough approximately 110 km. south of the Corrib gas
field. Island, the designated operator, and Lundin Petroleum AB will each hold a
50% interest in the newly named Inishmore Licence. A 3D seismic survey will be
acquired during the initial three year phase of the Licence.

•An FEL covering part-blocks 13/4(S), 13/5(S), 13/9(E), 13/13(N), 13/
14(N) & 14/1(N) in the Donegal Basin approximately 60 km. east of the Dooish
hydrocarbon discovery in the Rockall Basin. Island, the designated operator, and
Lundin Petroleum AB will each hold a 40% interest and Endeavour Energy UK
Limited a 20% interest in the newly named Inishowen Licence. A new 2D seismic
survey will be acquired during the initial three year phase of the Licence.

 Commenting on the Awards Paul Griffiths, Chief Executive of Island, stated:

'The award of these new licences significantly expands our portfolio of
exploration and near-development assets along the Atlantic Margin where we now
operate four licences covering an area of approximately 3,000 sq. km. This is
strategically a key area for the future discovery of the large quantities of
indigenous gas necessary to reduce Ireland's long term dependence on gas
imported from the United Kingdom. Island has demonstrated through the successful
execution of its 2006 drilling programme, which has already delivered two gas
wells, its ability to potentially play a lead role in the exploration for gas
along the Atlantic Margin where we are in the process of developing a number of
Triassic gas prospects.'

Enquiries:


Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]

 Further information on Island can be found on the Company's website at http://
                            www.islandoilandgas.com



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