Petrel shares soar as Iraqi oil field deal closer

SHARES in Petrel Resources soared as much as 25% yesterday after the company said it was on the verge of finalising an agreement to develop oil fields in Iraq.

Petrel executives have been called to an “urgent” meeting with officials from the Iraqi oil ministry to complete the “technical and commercial aspects” of the dealing, which will allow and commercial aspects of the dealing to develop to three fields in the western deserts of the country. Petrel submitted tenders last year for three fields - Khurmala Dome, Hamrin and Subba & Luhais - each capable of producing 120,000 barrels of oil per day.

News of the meeting sent shares in Petrel up by 18p to 87p yesterday valuing the company at £40 million. The shares have jumped by nearly 500% since May 2003 when regime of Saddam Hussein was toppled.

Petrel managing director David Horgan said the tenders are cash contracts, but it was hoping the Iraq interim government may eventually shares some of the financial costs of the projects.

He added: “funding is not a problem. A major international group has offered full financing in return for a crude oil off-take agreement. We will elect for a full risk-sharing arrangement, including undertaking exploration risk, as soon as such initiatives are legally and practically possible.”

Although the fields being chased by Petrel are small - Iraq has 112 billion barrels of proven reserves, around 10% of the world’s total - it would be huge boost to Petrel. Mr Horgan said he was confident of the company getting the green light from the Iraq.

He said Petrel has good relations with the oil ministry and did not have any dealing with any military forces.

“We have no business links, directly or indirectly, with any military contacts.

“Petrel employs, where possible, local staff. We hire the best people available. This locals first policy has insulated Petrel from difficulties experienced by many foreign companies,” added Mr Horgan.