U.K. oil and gas company Mediterranean Oil & Gas PLC (MOG.LN) Friday said it is investigating how it can develop the Ombrina Mare oil discovery after an Italian decree banned oil exploration and production within five miles of the country's coastline.

Ombrina Mare, which has proven and probable reserves of 40 million barrels of oil, is within the five-mile boundary.

Mediterranean said it is unclear whether the decree will prohibit further development of the field. It added it is scrutinizing certain exemptions to the decree which may allow Ombrina Mare to be developed.

The company said it will consider challenging the new law if an environmental assessment being carried out at Ombrina Mare is disrupted.

Italian Minister of Environment Stafania Prestigiacomo proposed in July that drilling be prohibited within five miles of Italy 's shore and within 12 miles of protected areas of coast or sea.

The proposal followed BP PLC's (BP.LN) spill in the Gulf of Mexico .

Mediterranean said it is evaluating whether it can develop Ombrina Mare in another way. In July, analysts suggested the company could drill into the field from outside the exclusion zone but noted that would push up the costs of development.

A second company, Dublin-listed Petroceltic International PLC (EG5.DB), said in July it too would be affected by the proposed ban, now law.

Its Elsa field is located within the five-mile limit.
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