Petrelstock plunges on Iraq default

IRISH oil and gas explorer Petrel Resources stock fell the most in four-and-a-half years in London trading yesterday after saying it hasn’t been paid for $54 million (€39m) of work in Iraq.

The company hasn’t been paid for work at the Subba and Luhais fields, Petrel said adding “it is the potential which keeps Petrel in Iraq”.

The stock has fallen 27% this year, giving the company a market value of £25m (€29m). Petrel is seeking oil rights on its Subba and Luhais Iraqi joint venture project after the Iraqi government failed to honour an agreed payment schedule.

Since signing the $197m contract in 2005 and getting a $20m advance into a joint venture account from the Iraqi authorities, Petrel has completed half the project.

The work has been approved by the authorities and Petrel has billed $54m against the project Letter of Credit, but it has not received the money due. Protracted discussions have been ongoing for 16 months and although payment agreements were reached in March no additional payments have been made.

Petrel chairman John Teeling said: “It is difficult to convey to shareholders to understand the current position in Iraq. The turmoil and chaos of the past six years has impacted on almost all administrative structures.”

Petrel put the Subba and Luhais project on care and maintenance in October 2008 and temporarily disbanded the world-class technical team on site.