Petrel Resources (LON:PET) , the AIM quoted oil and gas company run by Irish resources entrepreneur John Teeling, has received the final US$2.5m it is owed under a settlement deal related to the Subba and Luhais oil field development in Iraq. Petrel first got involved in the field in September 2005 when, together with its partners, it won a development services contract with the Iraq Ministry of Oil to develop existing reserves to raise production from under 50,000 barrels of oil daily to over 200,000 barrels of oil and 120 million cubic feet of gas daily. The contract was dogged with problems which eventually led to Petrel agreeing a deal to hand over operatorship to its JV partner Makman in return for US$7.5m, a 10% profit interest in the project and no exposure to future losses.

Since Subba and Luhais is successfully nearing completion, Petrel is now preparing a detailed proposal to participate in the recently announced Fourth Licensing Round in Iraq. Specific blocks have been identified, with a focus on the oil-prone acreage becoming available from January 2012. The closure date for pre-qualification documents is 19th May 2011. The company noted that a new ‘Block 6’ advertised by the Iraqi authorities in the current round is not in any way connected to a 10,000 sq km area formerly known as ‘Iraqi Western Desert Block 6’, where Petrel has a long-term interest.

David Horgan, the managing director of Petrel, said: “We reaffirm our commitment to Iraq. The Subba and Luhais Joint Venture company has paid Petrel the final US$2.5 million due. We maintain a 10% profit interest in the project, but the prevailing circumstances in Iraq, especially delays and materials inflation, means that any profit is likely to be small. The Subba and Luhais project is now nearing successful completion, after the parties overcame operational obstacles. Successful delivery of all equipment and services to site, without injury, loss of life or equipment is a major achievement for everyone involved with this important project. This experience proves that with goodwill, enthusiasm and unremitting effort, large-scale work can be satisfactorily delivered notwithstanding the prevailing circumstances.”

Horgan added: “A successful election in March 2010 led to many months delay in the formation of a new government, which in turn hampered the planned rapid development of Iraqi oil. A new Administration has taken charge,…

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