Petrel wins Iraqi oil contract

IRISH oil and gas exploration company Petrel Resources has won its first contract to drill for oil in Iraq.

The Dublin-based company said yesterday the Iraqi Ministry for Oil had awarded it a $197 million (€158m) three-year contract to extract oil and gas from the Subba and Luhais oil fields near the Saudi Arabia and Kuwaiti boarders. Until now, Petrel has only been testing the fields and has not extracted any oil for export.

Managing director David Horgan said: “This is a great moment for us. It is what we have been working towards for the past six years.”

Shares soared after the announcement, tripling in value to 100.5 pence each.

Mr Horgan said that while the contract, which envisages daily production of 200,000 barrels of oil and 100 million cubic feet of gas, is to drill for oil proved to exist at shallow levels, the company hopes to extend the contract to include drilling at depth in the future.

The shallow levels alone are estimated to have at least one billion barrels of reserves and possibly three billion, he said. Work will begin almost immediately. The oil and gas will be transported to Basra and exported to the Far East.

He said the contract was a pleasing achievement because many in the industry expected it to go to one of the large multinational.

Petrel moved into Iraq during the fall of Saddam Hussein and has built up a valuable relationship with the Iraqi oil ministry.

Saudi Arabia is the world’s number one oil producer, extracting 9 million barrels a day, about 10% of world production. Mr Horgan estimates that Iraq, which currently produces about 1.4 million barrels a day, could match that.

The country has the largest unexplored reserves in the world, he said. Russia is the number two producer, but its supplies are at their peak and are expected to diminish going forward.