(Adds interview with managing director)
LONDON (Thomson Financial) - Petrel Resources PLC said its oil fields in southern Iraq are on track to be on stream by 2010, despite mounting violence and unrest in the country.
The fields -- Subba and Luhais -- are capable of pumping up to 240,000 barrels a day, said Petrel, the contractor for the 197 mln usd project.
Petrel said it continues to search for more projects in war-torn Iraq and is looking forward to the passage of the Hydrocarbon Law, which it believes will open up 'significant opportunities' for the company.
'We have worked in Iraq for eight years and understand the potential and the need for oil development in the country,' said chairman John Teeling.
'The imminent passing of the Hydrocarbon Law will offer numerous development opportunities. With the backing of our partner, the Japanese giant Itochu Corp, we hope to participate in these developments,' he said.
The long-awaited Hydrocarbon Law, expected to be passed this year, aims to open up Iraq's vast but largely undeveloped oil industry to foreign investors.
In 2006 Petrel and Itochu signed a strategic alliance agreement covering future exploration work in Iraq.
Itochu assisted Petrel in the exploration and technical study of the Merjan field. The technical and geological review of the field has been completed and the results submitted to the Iraqi authorities.
Petrel's managing director David Horgan told Thomson Financial News in an interview that the group is unperturbed by the political uncertainty that has prevailed after the fall of Saddam Hussein in 2003.
'We're not worried about politics in Iraq. We've worked with the fifth government in Iraq, (plus) four years under Saddam,' he said.
Petrel's projects have not been affected by the escalating insurgency, Horgan said, describing the southern part as a 'much safer' place than the northern and central areas.
'We're happy to stay in Iraq over the long term. We don't see any reason why things won't work out in the end,' he stressed.
The group found Iraqi oil officials 'very honourable' and are only hoping to adopt the 'best practice' standards in order to attract more foreign capital, said Horgan.
Iraq's proven oil reserves stand at about 115 bln barrels, and are the world's third largest after those of Saudi Arabia and Iran. The cost of producing oil in the country, estimated at below 2 usd a barrel, is probably the lowest in the world, according to industry experts.
Several companies have sought alliances with Petrel, Horgan said, noting that Itochu will be top of its list should it decide to get a partner in future contracts, including Block 6.
The 10,000 square kilometre Block 6, located in the western desert, is believed to be holding around 3-5 bln barrels of oil.
Petrel gave an update on its Iraqi projects after it unveiled a pretax loss of 415,570 eur in 2006, against a loss of 481,535 eur previously. It has yet to make revenues.
At 1.41 pm, Petrel shares were unchanged at 61 pence. monicca.egoy@thomson.com mbe/lce COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
