Petrel Resources Regulatory News (PET)

27 Mar 2006 15:09

Petrel Resources PLC27 March 2006 Petrel operational update on Iraqi activities Petrel Resources plc (AIM:PET), the London AIM-listed company working in theIraqi oil industry, announces an operational update: Subba & Luhais Oil Field Development project is moving ahead • Project personnel mobilised • Engineering work underway at Petrel offices in Europe • Joint Venture with local partner • Letter of Credit opened and activated • No insuperable security problems encountered Project Personnel Mobilised and Engineering Work Underway During March Petrel and partners held technical meetings with the Iraqi Ministryof Oil State Company for Oil Projects (SCOP) to present design work to date andto review our overall schedule. Early mobilisation of our Engineering Team allowed Petrel to progress ahead ofschedule. Processing and design conditions were agreed. Prior involvement of major suppliers (such as Gas Compression Systems) confirmedthe technical and commercial basis of supply as we had originally tendered. Weanticipate placing long lead orders during the 3rd quarter of 2006. SCOP also confirmed their desire to utilise the associated gas produced from theLuhais field - rather then the historical method of flaring. Accordingly weestablished a Work Group to prioritise and expedite plant deliveries to achieveearly revenue. This will also provide environmental and operational benefits.This confirms official confidence in our abilities and commitment to helpdevelop the Luhais and Subba oil fields. Our focus is now twofold; on design definition as part of our Front EndEngineering Design program for SCOP review and acceptance in the 3rd quarter of2006 and, secondly, in securing equipment and delivery conditions for the LongLead items and pipeline material. Letter of Credit opened and activated: We agreed with the Iraqi Ministry of Oil (SCOP) and the Trade Bank of Iraq (TBI)the conditions and procedures for the issue of the Project Letter of Credit (LC)from the TBI that made available the circa US$20 million advance payment. Thiswill also provide acceptable collateral for further payments from TBI andissuance of subsidiary Letters of Credit to our major suppliers. We set up a trading account with the TBI to handle finances on behalf of theMinistry of Oil. Our Joint Venture partner submitted the necessary collateralfor Performance Bonds and Bank Guarantees. Joint Venture with local partner progressing well: As previously announced Petrel established a joint venture with a large Iraqigroup, Makman, to develop the Subba and Luhais project. Together we have established structures and responsibilities within the JointVenture Company. We have mobilised personnel to the Project offices in Baghdad,London, Italy and Istanbul with support from our own corporate office andMakman's office in northern Iraq. Our Iraqi partners bring local contacts and experience. Makman has almostcompleted detailed design on two other oil field projects in Iraq and are nowplacing purchase orders for these. We expect this knowledge and experience toreduce our project risks and cost. Petrel Managing Director, David Horgan summarised: 'Our project development is proceeding according to plan. Petrel has attractedexcellent partners and suppliers. We have built a team experienced inovercoming technical challenges in fluid environments. The project is fullystaffed and work is underway. There are risks but they are manageable. Petrel has expanded its presence inBaghdad and elsewhere in Iraq. The Subba & Luhais Project provides aninfrastructure for advancing all our activities in Iraq. The Iraqi authorities continue to give encouragement and support. We lookforward to the formation of the national government following successfulelections with a high participation rate. We have encountered no insuperable security problems'. Contacts: David Horgan + 353 87 292 3500John Teeling + 353 1 833 2833Jim Finn + 353 1 833 2833 Bell Pottinger Corporate & FinancialNick Lambert +44 (0)7811 358764 Rowan DartingonBarrie Newton +44 (0)117 933 0011 This information is provided by RNS The company news service from the London Stock Exchange