LGO Energy said today that the Spanish Government had rejected the London-listed firm’s request to have the La Lora concession extended by two years.
LGO Energy, which fully-owns and operates the asset through its subsidiary CPS, said it had suspended operations and the contracts of the 17 employees at the site in northern Spain.
But the company is confident that Madrid will eventually offer the field to CPS for a new concession.
Lawyers advised the firm that the government’s decision was made on purely legal, and not technical or commercial, grounds.
LGO now anticipates making a new application for a 30-year concession on the same overall technical basis as the extension and believes that its extensive experience at the field and its technical and commercial knowledge place CPS in a competitive position to regain the production rights in a situation with far better investment prospects with a new concession, the company said in a statement.
LGO executive chairman said: “Naturally we are disappointed with the decision and it will inevitably cause some hardship to our employees and their communities in the Burgos area, where Ayoluengo has been a significant source of employment for the last 50 years. We will be working with the Spanish authorities to seek a new concession as soon as possible.”