In late 2004, Ivanhoe Energy signed a memorandum of understanding (MOU) with the Iraqi Ministry of Oil to evaluate a specific, large heavy oil field and its commercial development potential using Ivanhoe Energy's HTL technology. Since that time, Ivanhoe Energy has carried out a detailed analysis and has generated data regarding the applicability of its HTL upgrading technology for the development of the field. The necessary approval by the Iraqi Ministry of Oil for Inpex Corp.'s participation has been received. Additional details about the project are protected under confidentiality agreements and will be released as permitted and appropriate.
The agreement between Inpex and Ivanhoe Energy provides Inpex with a significant interest in the venture, with Ivanhoe Energy retaining a majority interest. Both parties will have joint leadership participation in the pursuit of the opportunity. The agreement requires a payment by Inpex to Ivanhoe Energy as a contribution toward Ivanhoe Energy's past field studies and related costs. Should Ivanhoe Energy and Inpex proceed with the development and deploy Ivanhoe Energy's HTL technology, certain technology fees would be payable to Ivanhoe Energy.
"We are very pleased to be involved in the pursuit of this opportunity," said Kunihiko Matsuo, Chairman of Inpex Corp. "Additionally, we are interested in supporting the development of Ivanhoe Energy's HTL(TM) technology, which is expected to have the potential to improve the economics of heavy oil production the world over." Inpex, Japan's designated national flag oil and gas development company, is engaged in oil and gas exploration and production activities worldwide, including Asia and Oceania, South America, the Middle East and the Caspian Sea regions.
Joe Gasca, Ivanhoe Energy's President and CEO, said, "Our HTL technology is the foundation for this partnership with Inpex Corp. This agreement is a significant milestone for Ivanhoe Energy as we establish the relationships to build a strong and sustainable heavy oil business based on our unique technology."
"Success in establishing these commercial relationships parallels the significant progress we have made in the advancement of our HTL technology as we accelerate plans for full commercial deployment," continued Joe Gasca. "This long-term opportunity, which combines Ivanhoe Energy's enhanced oil recovery expertise with our patented HTL technology, complements a number of other initiatives that we have underway that focus on both the Canadian oil sands and heavy oil basins in other parts of the world."
Leon Daniel, Ivanhoe Energy's Deputy Chairman, said, "This strategic partnership between Ivanhoe Energy and Inpex Corp. combines our patented HTL heavy oil upgrading technology with the technical and financial strength of Japan's largest upstream oil company, including its advanced oil recovery technology. This is an important step for us in the competitive pursuit of a project of this magnitude."
Ivanhoe Energy intends to use its proprietary, patented heavy oil upgrading technology to upgrade the quality of heavy oil and bitumen by producing lighter, more valuable crude oil at lower costs and in smaller-sized plants than conventional technologies. The process also produces by-product energy that can be used to generate steam or electricity.
Ivanhoe Energy is an independent international heavy oil development and production company focused on pursuing long-term growth in its reserves and production using advanced technologies, including its proprietary heavy oil upgrading process. Core operations are in the United States and China, with business development opportunities worldwide.
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