Asset Swap Agreement with OMV

Island Oil and Gas PLC
28 August 2007


28 August 2007


            ISLAND OIL & GAS CONCLUDES AGREEMENTS IN CONNECTION WITH

                                 OMV ASSET SWAP


Island Oil & Gas plc ('Island') (LSE:IOG) today announces that, further to its
announcement on 17 April 2007 regarding the Company's asset swap agreement ('the
Agreement') with OMV, the leading oil and gas group in Central Europe, the
relevant governmental and partner approvals have been received for the Agreement
to be concluded.

The assignment of the 50% interest in the Durresi Block, offshore Albania from
OMV to Island has been approved by the competent authorities in Albania and the
assignment of the 50% interest in Frontier Exploration Licence 3/05 ('FEL 3/05')
offshore the west of Ireland in the Rockall Basin, which includes the Killala
Prospect, from Island to OMV has been approved by the Minister for
Communications, Marine and Natural Resources of Ireland, subject to receipt of a
Deed of Assignment.

The Agreement is between Island Rockall JV Limited, a wholly-owned subsidiary of
Island, and OMV (Albanien) Adriatic Sea Exploration GMBH ('OMV'), a wholly-owned
subsidiary of OMV Exploration & Production GmbH. Under the terms of the
Agreement, Island will retain a 50% interest in FEL 3/05. In addition, Island
will take over operatorship of the Durresi Block.

Island plans to acquire a 3D seismic survey in 2008 in FEL 3/05 in order to
prepare the large Killala prospect for a drilling decision. OMV has a strong
track record on the Atlantic Margin, with significant exploration success in
both Irish and UK waters.

Enquiries:

Lisa J Newman MCIPR MIRS
Newman Consulting

Tel: [phone]


Paul Griffiths
Chief Executive
Island Oil & Gas plc

Tel: [phone]


Notes to Editors:

Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG).  The
Company has interests in eleven Irish offshore licences, as well as licences in
the Netherlands, Morocco and Albania.

FEL 3/05 covers an area of approximately 715 square kilometres and is located in
the Northeast Rockall Basin on the Atlantic Margin approximately 70 kilometres
off the west coast of Ireland and approximately 35 kilometres north of the
Corrib gas field.    The Licence area contains one very significant exploration
prospect covering an area of up to 80 square kilometres (the 'Killala
Prospect'), together with a number of other prospects and leads.

The Durresi Block in Albania covers an area of 4,200 sq. km. along the Adriatic
coastline of Western Albania. Discoveries made in similar play types in Southern
Italy (the Aquila Field and the Falco and Rovesti discovery wells) indicate the
high potential of the southern Adriatic Sea for both oil and gas. Its location
puts it in an ideal position to meet the region's fast growing energy demand and
to successfully develop even modest size discoveries.

The Durresi Block contains the A4-1X gas/condensate discovery drilled by Agip in
1993 at a time of lower oil price. The Chevron/Agip group quoted potential gross
resources of 35 mm barrels of condensate and 151 bcf of gas. Several undrilled
oil and gas prospects exist on the Durresi Block with potential mean gross
recoverable oil and gas of 35 million barrels and 410 to 540 bcf respectively
(OMV's unrisked estimates).


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






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