Petrel have announced their results today, with their customary discursive comment on matters in Iraq:
http://www.investegate.co.uk/Article.aspx?id=200906170700120075U
...........we have not been paid for the work done on our large Subba and Luhais contract.
Since signing the US$197 million contract in 2005 and receiving US$20 million advance into a JV account from the Iraqi authorities, Petrel has completed approximately 50% of the project work. The work has been approved by the authorities. We have billed US$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. With extreme reluctance, we put the Subba and Luhais project on care and maintenance in October 2008, and temporarily disbanded a world class technical team.
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. This proposal is well received in certain circles, but the lack of a Hydrocarbon Law makes it difficult to implement.
It is difficult to convey to shareholders to understand the current position in Iraq. The turmoil and chaos of the past six years has impacted on almost all administrative structures. The civil service, oil ministry and banking system have all seen significant changes in personnel. Political changes have further impacted on staff and policy. The Iraqi environment of 2008 / 2009 differs starkly from that of 2004 / 2005, when we tendered for, and won, the contract.
Our strategy has been to complete the development of Subba and Luhais as a first step to building an Iraqi oil company. We continue to explore every avenue to reach a settlement, but Petrel, and our contractors must either be paid or the contract must be changed, so that Petrel can take oil as payment. The agreements of September 2008 and March 2009 were comprehensive, covering payment, revisions to work programmes and rapid remobilisation. We are working assiduously to have the agreement implemented.
The impasse on Subba and Luhais is affecting our other operations in Iraq..........
.......completing almost 50% of a US$197…
