Irish oil and gas explorer Petrel Resources has announced it is seeking new oil rights in Iraq in lieu of money it is owed.
In a statement issued with its full-year results this morning, the John Teeling-owned firm said that it has not been paid for work done on the development of the Subba and Luhais oilfield in southern Iraq, which is expected to produce 200,000 barrels a day when it comes on stream.
Petrel said that since signing a $197 million contract in 2005 and receiving $20 million advance into a JV account from the Iraqi authorities, it has completed approximately 50 per cent of the project work but has not received any payment yet.
"The work has been approved by the authorities. We have billed $54 million against the project Letter of Credit, but the funds have not been disbursed. Protracted discussions have been ongoing for sixteen months. Agreements have been reached, the latest in March 2009, where payments are promised but to no avail," the explorer said.
"What is frustrating is that solutions have been negotiated and agreed by both sides but not implemented. Petrel has proposed to the authorities that we are happy not to take payment in cash. Instead, we could take over operatorship of the field, complete the development ourselves, and take payment in the form of oil," it added.
Petrel said the proposal had been well received in some circles, but added that the lack of a Hydrocarbon Law makes it difficult to implement.
The explorer said that it wished to stay in Iraq as a principal rather than a contractor.
"The opportunity in Iraqi oil has not changed. Oil costs $2 a barrel to produce. There are over 70 known fields waiting to be developed. It makes absolutely no sense that oil production in Iraq is falling to less than 2.4 million barrels a day when it can rise to 10 million barrels a day. Iraq badly needs the revenue and the world needs the oil," the statement said.
Revenue for 2008 declined from €28.9 million in fiscal 2007 to €8.23 million in 2008 while the loss before tax widened to €0.76 million from €0.52 million a year earlier.
