EXPLORER PETROCELTIC’S share price dropped over 12 per cent yesterday after the company announced that an Italian government proposal could have an impact on its interests in the Adriatic.

Italy’s environment minister Stafania Prestigiacomo is proposing to ban drilling for oil or gas within five miles of the country’s coast and within 12 miles of the perimeter of protected marine parks.

Petroceltic said that should this proposal become law, it would include the location where the Irish company intends drilling its Elsa 2 well in its Elsa licence area in the Adriatic, and to permit applications pending with the Italian government.

Investors reacted by selling its shares, which were down 12.5 per cent at 10.5 cent at 4.30pm yesterday. Around 20,000 units had changed hands by that time.

The Adriatic accounts for 15 per cent of the company’s overall net asset value and Elsa makes up the bulk of this. The field was discovered in 1992 and could contain in the region of 100 million barrels of oil.

Mr Prestigiacomo’s proposal is not yet law, and it is not clear if he will succeed in getting it on to Italy’s statute books.

If it were to become law, it would not prevent the company from drilling in the Elsa field. The company said it is considering alternative well locations outside the proposed five-mile boundary.

Petroceltic chief executive Brian O’Cathain said the firm is keenly aware of the environmental concerns associated with drilling in the region and has taken care to communicate its plans to mitigate these to all interested parties.

“We are committed to maintaining this partnership approach in the months ahead,” he added.

Petroceltic has oil and gas interests in North Africa, the Middle East and the Mediterranean.