KRG Regional Oil and Gas Council approves 4 new PSCs

2 October 2007 Erbil

The Kurdistan Regional Government (KRG) Ministry for Natural Resources today announced that the KRG Regional Oil and Gas Council has approved four new production sharing contracts (PSCs) and sanctioned two new refinery projects in the Kurdistan Region in Iraq. The announcement came a day after the Council unanimously decided to award the contracts at its second formal meeting.

The Ministry for Natural Resources today executed two of the approved production sharing contracts (PSCs) for oil and gas exploration and development in the Kurdistan Region:

· Award of the Miran Block (1,015 square kilometres) in Suleimaniah Governorate to Heritage Energy Middle East Limited, a wholly owned subsidiary of Canadian listed oil company Heritage Oil and Gas. The Miran Block is a low to medium exploration risk area.

· Award of the Sindi/Amedi Block (2,358 square kilometres) along the Iraq/Turkish border to Perenco Kurdistan Limited, a wholly owned subsidiary of Perenco S.A., the privately held French oil exploration and production company. The Sindi/Amedi Block is a high exploration risk area.

The signing of the other two PSCs with experienced international companies will follow shortly. If commercial discoveries are made, these two PSCs will provide an estimated aggregate return/profit of over 85% to Iraq and around 15% to the contractors.

The contract signed with Hunt Oil in August this year was also within these terms. The existing KRG contracts, signed prior to Kurdistan Region Oil and Gas Law, will also, where necessary, be brought into conformity with the guidelines, and as required by that Law. The details of commercial terms of all contracts will soon be published by the KRG as required by the Law.

All contracts issued by the KRG are in the form of the Model PSC, also published on 29 June. Under the four PSCs, the KRG has the right to up to 25% participation interest, and it has retained the right to assign up to another 25% to qualified Iraqi and international companies to further stimulate the local economy.
Downstream projects
· Miran area Refinery: Heritage has also agreed to fully fund (on a joint-venture basis) the completion of a new 20,000 barrels per day refinery in the Taq Taq / Miran area, to be completed within two years.
· Taq Taq Refinery: The KRG’s Regional Oil and Gas Council has also approved a project for a refinery to be fully funded, commissioned and constructed by the Taq Taq field oil project operators (Genel/Addax) and other local and international investors. The refinery will also be expected to produce another 20,000 barrels per day. This refinery will be completed within eighteen months.


The KRG is in continuing negotiations with a number of international oil companies, downstream operators and local companies for further upstream and downstream projects.