A NEW hydrocarbon law to enable development of known resources in Iraq should be passed by the end of the year, David Horgan, managing director of Irish exploration company Petrel, told shareholders at the company's annual general meeting yesterday.

The focus of Petrel's operations is in Iraq, where it had been seeking an agreement to develop three existing oil fields in southern Iraq while applying for exploration acreage in the western desert.

A new law would pave the way for international investment in Iraq's oil sector.

Particularly it would provide clarity for production-sharing agreements between independent oil companies and the Iraqi government, shareholders were told.

"It is a critical issue. If it does pass, the industry will be transformed," Mr Horgan said after the meeting.

Petrel chairman John Teeling told shareholders that progress in Iraq was slower than expected.

"We thought it would be quicker," he said. "It is taking more time."

However, shareholders were told that security had improved in the country.

With progress slow and uncertain in Iraq, a number of shareholders asked why the company had not concentrated on developing its prospect in the East Safawi block in Jordan where it has signed a production-sharing agreement with the Jordanian Natural Resources Authority.

However, Dr Teeling described the Jordan project as a "blue sky" development whereas it is known that Iraq accounts for at least 12 per cent of conventional oil reserves.

"Jordan is early-stage oil exploration," he said. "The future is Iraq."

However, Mr Horgan said that development in either country was not mutually exclusive.

"We can do both in parallel," he said.