Source: Petrel Resources
The directors of Petrel Resources settled all outstanding issues on the Subba and Luhais oil field development in Southern Iraq.
Petrel has handed over primary responsibility for the final phases of the work, in accordance with the original Joint Venture Agreement of December 2005, but maintains a role. Petrel no longer has any liability or exposure to any possible project losses but maintains a profit share. Mobilization for the project, which has been in suspension for 20 months, will begin shortly.
Under the terms of the agreement reached between Petrel, Makman, its local Iraqi partner, and SCOP, an arm of the Iraqi Ministry of Oil:
1. Petrel will receive a total of $7 million, of which $2 million has been received, and two further bank guaranteed payments of $2.5 million each in 2 tranches over 12 months;
2. The Petrel/Makman joint venture will complete the development, with Makman assuming primary responsibility for the final phases of the work, including bulks procurement and implementation;
3. Petrel will receive a 10% profit interest based on audited accounts;
4. A new Letter of Credit for the balance of the contract is being put in place by the Iraqi authorities;
5. Mobilisation begins as soon as possible.
6. All necessary official approvals have been delivered.
Petrel will now focus on developing direct oil exploration activities in Iraq.
"Development work will re-start immediately," said David Horgan, managing director of Petrel. "Successful resolution of all outstanding issues against a challenging background shows the goodwill that exists and determination of the authorities and our Iraqi partners to overcome all obstacles and realize Iraq's great potential."
"Petrel is an oil explorer, not a services contractor, so we are pleased to be able to refocus on growing our exploration interests in Iraq, which in our opinion remains the world's best oil province," he concluded.