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Honeywell has said it currently has $360m worth of contracts in Iraq, Dow Jones has reported.

The US-based engineering firm has a contract with China National Petroleum Corporation (CNPC) to develop process control systems and fire and gas detection systems at the Ahdab oil field, Tarek Nahl, the company's Middle East sales manager, told the news service.

Honeywell is also upgrading a control and process system at the 140,000 barrels-a-day Baiji refinery, 200km north of Baghdad, Nahl said.

It also has contracts with the country's state South Oil Co to develop process and control and fire and gas detection systems at the Subba/Luhais oil field in southern Iraq, and is developing a process control system for Basra's crude oil export pipeline project currently under construction.

(Source: Dow Jones, AME Info)

Petrel Resources has announced its preliminary results for the year ended 31st December 2010:

Highlights:

• The Subba and Luhais oil field development contract in Iraq is virtually completed.
• Petrel has received all US$7 million due from the sale of the Company's shareholding in Subba and Luhais. Petrel maintains a 10% profit interest.
• Petrel has applied to participate in the 4^th Oil Licencing Round in Iraq.
• The Company await parliament approval on the Tano 2A licence block in Ghana where Petrel holds a 30% interest.
• Reprocessing of over 760 kilometres of seismic lines on Tano 2A has identified a number of promising areas.
• Petrel has submitted applications for blocks in the Porcupine Basin area offshore Ireland.
• The company has over US$6 million in cash.

John Teeling, Chairman, commented:

"Waiting is frustrating for shareholders, management and employees. We are waiting for necessary approvals in Ghana on the Tano 2A block. We are waiting for a hydrocarbon law in Iraq to clarify our position on the Western Desert block 6. We are an applicant in the current licencing round in Iraq, but that too will take time. We have gone back to our 1980s origins by using our extensive Irish offshore database to apply for blocks in the new licencing round. We are well funded and ready to move once necessary approvals are obtained."

Statement Accompanying the Preliminary Results:

Petrel has been in existence for almost 30 years. This will undoubtedly come as a surprise to many shareholders who know only of our Iraqi activities. It was set up in 1982 to explore for oil offshore Ireland - but that venture failed. Following an abortive and expensive incursion into US oil and gas, the company value was virtually written off. David Horgan, currently the Managing Director, bought the shell in the mid 1990s and financed it, initially for African exploration in Namibia and Uganda. Then an opportunity opened in 1999 to go into Iraq, which was and is the best hydrocarbon province in the world. We exited Africa.

In Iraq we worked with the Ministry of Oil under the Saddam regime. Since 2003 operating in Iraq has become more difficult, complicated and dangerous. In the last eight years Iraqi oil development has languished with production levels only now getting back to pre-war levels. There is no clear set of rules, there is no new Hydrocarbon Law. We had an early success getting access to a 10,000 sq km block in the Western Desert and a very substantial success in 2005 with the award of the Subba and Luhais US$197 million (Engineering Procurement and Supervision of Construction) development contract to a Petrel/Makman partnership. But repeated changes in rules and personnel made it difficult to operate. Nevertheless we obtained two further Technical Cooperation Agreements in Iraq, to produce evaluators of both the Merjan and Dhurfiya fields. The world's supermajors have rushed in and accepted service contracts on sub-economic terms.

Shares in Petrel Resources (AIM:PET) jumped 11% this morning following the company's update on its operations in Iraq.

The board announced that Petrel has received the final US$2.5m payment due in relation to the Engineering, Procurement and Supervision of Services (EPC) contract on the Subba and Luhais oil field development. The company retains a 10% profit interest in the project. Completion meetings with the Iraqi authorities are scheduled during May 2011.

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.

It should be noted, the 10,000km2 area formerly known as 'Iraqi Western Desert Block 6' is not one of the blocks on offer in the current round. The new, 'Block 6' advertised by the Iraqi authorities is not in any way connected with the 'Western Desert Block 6'. The long term, continued interest of Petrel in this area is known to the relevant authorities in Iraq.

David Horgan, Managing Director, commented:

"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.

We have identified specific targets in the blocks included in the Fourth Hydrocarbon Licensing Round. Petrel is now completing a detailed submission to the authorities. The closing date for application is 19th May. The blocks on offer are interesting for gas and oil but do not include the 10,000km2 area known as 'Iraqi Western Desert Block 6'.

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, and remaining issues are being resolved.

We expect renewed progress in the coming months to drive forward the development of Iraq and particularly its hydrocarbons industry, to the benefit of all stakeholders. We have a strong balance sheet with over US$6m in cash and are well-placed to take advantage of opportunities.'

Shares in Petrel Resources (LSE: PET) were up 14% this morning following the release of its interim results.

Chairman John Teeling confirms that "the focus of Petrel remains firmly on Iraq, but the parameters of operating in the country are changing", and reflects in his summary on Petrel's continuing 'Iraqi odyssey':

Interim Results for the Six Months to end June 30^th 2010

-      Subba & Luhais project successfully remobilised and proceeding on schedule

-      Cash owed to Petrel has been received

-      Continued commitment to Iraq with return to African roots as diversification

The focus of Petrel remains firmly on Iraq, but the parameters of operating in the country are changing.  The steady disengagement of foreign military personnel reduces undue overseas influence and boosts the legitimacy and self-confidence of the Iraqi authorities.  Democratic elections were successfully run in March 2010, though the lack of an emphatic winner complicated Government-formation.  Six months later there is still no government.  This has serious implications for the development of the oil industry.  Much will depend on the new Minister.  We expect that policies will be improved and streamlined to arrest the decline in oil production and to encourage exploration and development.  The terms must be reasonable.  Iraq is capable of producing at least 9 million barrels a day, but current production is under 3 million.

The agreement on Subba and Luhais means that Petrel has refocused on exploration activities.  The upside in exploration will be higher than that available through developing oil and gas fields under service contracts.

Under the current policy of awarding service contracts to international companies we have resolved all the outstanding issues with the Iraqi Ministry of Oil.  These were complicating and delaying completion of the Subba & Luhais EPC contract in southern Iraq.  The project has now been successfully remobilised and is proceeding smoothly within an agreed 14 month revised completion schedule. Both the Project Joint Venture company and Petrel have received the cash owed.

This is a satisfactory outcome for Petrel as it removes all obstacles to moving ahead with formalising our existing interests in Iraq in particular Western Desert Block 6 as well as possible future projects.

Jordan Exit:

As noted at the July 2010 AGM, we opted not to proceed with the East Safawi Block in Jordan.  We entered Jordan as a result of our analysis of the Iraqi western desert.  We were hoping that seismic and well log reinterpretation would reveal large oil targets or Risha-type gas targets.  Instead, the detailed analysis showed that sands at the targeted depth were thin and tight.  Our technical team instead developed a shallower Triassic type play similar to Libyan reefs.  This revealed a billion barrel potential target, but with high exploration risk.  In normal circumstances this would suit a large farm-in partner.  Following the Lehman Brothers failure and subsequent financial crisis, the risk appetite of potential partners evaporated.  Several companies who were interested could not get management approval to drill.  The Jordanian authorities have been very patient giving a 15 month extension.  Jordan is a good business location with excellent terms - but Petrel decided not to drill at its own risk.  This decision has no financial consequences as the expenditure and bond were written off in the 2009 accounts.

Ghana Entry

Though Petrel's focus is Iraqi oil, we have been offered an exceptional opportunity to diversify at low cost.  Ghana's Tano Basin has recently emerged as an exploration hot-spot, with four discoveries by Kosmos/Tullow, including the giant Jubillee oilfield.  Petrel seized the opportunity to take a 30% interest, with sister companies holding 60%, in a Petroleum Agreement on Tano Block 2A.  A local partner holds the remaining 10%.  This block covers 1,532km2 of highly prospective acreage.  The Ghanaian National Petroleum Company (GNPC) has provided available data, including 44 geological reports and extensive, good quality 2D seismic.   Analysis and processing of data is underway.

This agreement is subject to ratification by Cabinet and Parliament, which we expect in the coming months.

Summary

The Iraqi odyssey continues.  Since we entered Iraq in 1999 we have dealt with 5 governments, survived a war, faced down many threats and risks, all in pursuit of oil.  Iraq will in future years provide oil for a significant percentage of the world's energy needs.  We will be part of it.   The lengthy wait for a new Iraqi Government has strained patience.  Iraqi oil production is down but the principle of international company involvement is gaining acceptance.  This is an important step toward creating economic terms.  Financial markets are nervous but it is a time of opportunity.

But 11 years is a long time to wait and uncertainty continues.  By diversifying into Africa we return to our roots.  Ghana will be a major force in world oil.  We are taking the opportunity to participate at an early stage.

John Teeling

Chairman
...

Iraq's South Oil Company, working with the IOCs, has set quarterly
production targets for the country's southern oilfields for 2011,
according to documents obtained by Reuters.

Production is targeted reach an average of nearly 2.3m bpd by Q4 2011.

 Oilfields            Q1          Q2          Q3          Q4

 Rumaila           1,175,000   1,201,000   1,226,000   1,250,000

 West Qurna 1        260,000     270,000     285,000     300,000

 Majnoon              70,000      80,000      90,000     100,000

 Zubair              280,000     310,000     340,000     360,000

 Gharaf                  -           -           -        35,000

 Nahr Bin Umar        45,000      50,000      60,000      70,000

 Ratawi               10,000      14,000      18,000      25,000

 Luhais               60,000      70,000      80,000      85,000

 Tuba                 10,000      15,000      20,000      30,000

 Nassiriya            15,000      20,000      30,000      30,000

TOTAL              1,925,000   2,030,000   2,149,000   2,285,000

(Source: Reuters)

quarterly 2011 production targets for
Iraq's southern oilfields

At Monday’s AGM of Petrel Resources (LON:PET), the Dublin-based oil exploration company, managing director David Horgan told investors that Iraq is "the best place in the world for oil".

“Petrel has raised a total of US$15 million or £10 million from 1994 to date ... It has operated continually in Iraq since 1999 and has run a Baghdad office through sanctions, invasion, civil war and 5 governments ... We intend to remain in Iraq which remains the best and cheapest source of oil”.

Petrel now has $7 million in cash or near-cash and a market capitalisation of $24 million.

The company has resolved the status of its Subba and Luhais contract, in the south of the country, in which it retains a 10 per cent profit interest - first oil is expected within 13 months.

Despite being forced to look outside of the Middle East lately - it recently invested in a block in Ghana - Petrel remains committed to Iraq.

Related article:

• Petrel Cuts Subba Stake

26 April 2010 - Upstreamonline.com

London-listed Petrel Resources said its Iraqi partner, Makman, will assume the responsibility for the final phases of work at the Subba & Luhais oilfield development in southern Iraq.

Mobilisation for the project, which has been in suspension for 20 months, will begin shortly, Petrel said.

The transfer of responsibility is in line with a joint venture agreement between Petrel and Makman for the oilfield development.

In return, Petrel will receive $7 million, of which the first $2 million has been paid up, and the remaining $5 million will be issued in two tranches over 12 months.

Petrel will also receive a 10% profit interest in exchange for surrendering a 50% stake in the oilfield.

The Iraqi authorities have put in place a new letter of credit for the balance of the contract.

The UK player plans to focus on growing its exploration interests in Iraq.