Petrel Resources expects to be able to move ahead with its Iraqi oil projects next month after long-awaited changes to the country's oil legislation come into force.  Claire Shoesmithreports.

Addressing shareholders at the company's agm in Dublin yesterday, chief executive David Horgan said he had been told by members of the Iraqi government to be ready to travel to Baghdad to sign contracts next month.

The changes to Iraqi law, which have to be passed by the government, allow for full participation by private companies in exploring for and developing oil in Iraq, where Petrel currently has several projects.

He also said the terms of the new legislation, which will allow for production-sharing agreements between foreign players and the Iraqi government, were very favourable for companies such as Petrel, offering an estimated 20 per cent share in the oil produced, as well as a clause for claiming back costs. Petrel, which has had a presence in Iraq for 10 years, is currently developing the Subba and Luhais oilfield in the south of the country, which, once up and running, is expected to produce about 200,000 barrels of oil a day.

It is due to come on stream in 2010, although it will require the new legislation to change the current engineering procurement and development contract to a production-sharing agreement.

The company has also carried out a technical and geological review of the Merjan oilfield, and has been asked by the Iraqi government to look at the Halfaya field, a site that is estimated to contain about 14 billion barrels of oil.

In addition, Petrel has an exploration licence for Block 6, a site Mr Horgan claims is one of the most prospective blocks in the Iraqi western desert. However, this also requires the legislation changes before any exploration work can take place.