Morocco Licence

Island Oil and Gas PLC
12 December 2006

12 December 2006

           ISLAND OIL & GAS PLC AWARDED EXCLUSIVE LICENCE IN MOROCCO

Island Oil & Gas plc, (LSE:IOG) ('Island' or the 'Company'), today announces
that it has signed a reconnaissance contract for the granting of an Exclusive
Reconnaissance Licence (the 'Licence') in the Zag Basin onshore Morocco, by the
Office National des Hydrocarbures et des Mines ('ONHYM'). The granting of the
Licence represents the further internationalisation of Island's project
portfolio with the Company focusing upon areas where its experience and
technical competency can be utilised to best advantage.

The Licence, which is valid for a period of 12 months until December 2007,
covers an area of 21,807 sq. kms. The work programme that has been committed to
comprises geological field studies; a geochemical study; the processing and
interpretation of gravity and magnetic data; and the interpretation of satellite
data. The joint venture partners in the Licence are San Leon (Morocco) Limited
(50%), the designated operator; GB Oil and Gas Ventures Limited (30%) and Island
Oil & Gas plc (20%). Island's costs are fully carried by GB Oil and Gas Ventures
Limited for the duration of the 12 month Licence.

The Zag Basin is an under-explored Palaeozoic North African sedimentary basin
within which no seismic data have been acquired to date. Wells drilled in the
1960's encountered gas shows in Palaeozoic sandstones, with surface oil shows
also observed. An active petroleum system is believed to be present in this
basin based on the early drilling history and the proven presence of a source
rock equivalent to that responsible for the major Palaeozoic oil and gas fields
of neighbour countries.

Morocco has an attractive fiscal regime relative to other North African oil and
gas producing countries - State Participation upon production of up to 25%; 10%
royalty on oil production (first 300,000 tons of production exempt) and 5%
royalty on gas production (first 300 million cubic meters exempt); and 35%
corporation tax (only after 10 years of production holiday).


Commenting on the award of the new licence, Paul Griffiths, Chief Executive of
Island stated:

'The award of the Moroccan licence covering an area approximately one third the
size of Ireland in one of the least explored prospective Palaozoic basins in
North Africa marks a further step in our plans to broaden our international
acreage position, particularly in onshore areas where drilling and development
costs are potentially lower relative to the offshore environment. Our
participation was achieved on the basis that we bring a proven operating
capability to the joint venture partnership in the event that we move towards a
successor licence. We believe that Morocco is under-explored relative to other
North African countries and we look forward to building a strong working
relationship with ONHYM in order to develop other opportunities for Island'.


Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting
Tel: [phone]


Notes to Editors:

Island was founded in 2003 and listed on AIM in December 2004.  The Company has
interests in eleven Irish offshore licences, (six as operator) and the Q13
Production Licence offshore Netherlands.   The Company is involved in an active
exploration and appraisal programme with two successful gas discoveries in
2006.  The Company has secured the Petrolia rig for its planned 2007 drilling
programme.

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




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