The Block, which covers an area of 492 square kilometers is located approximately 140km south east of Erbil and 50km south west of Suleimaniah. It lies in a highly prospective area around 50km south east of the giant Kirkuk oil field and on trend with the major Taq Taq and Chemchemal oil and gas discoveries. The Block itself contains a large surface anticline with the possibility of multiple reservoir targets, in common with many existing fields in the area, providing strong encouragement for exploration success.
The terms of the PSC are in accordance with the terms and conditions published by the KRG. Sterling has 100% interest in the PSC subject to back in rights for the KRG and local industry partners.
The PSC has an initial 3-year exploration period during which Sterling plans to acquire some 200km of 2D seismic and drill at least one exploration well. The Company will start work immediately, having already established an office in Erbil in early 2007. It is anticipated that expenditure over this period, including initial costs, could be in the order of $35 million.
Sterling's signature of the PSC, together with other recently signed agreements with the KRG, brings the number of international oil companies now working in Kurdistan to 25.
Commenting today, Harry Wilson, Chief Executive of Sterling Energy Plc, said:
"We have worked closely with the KRG and are now delighted to have signed this PSC. Kurdistan is a vastly under explored area with huge potential and the prospective Sangaw North Block adds significant high impact exploration to our portfolio. We opened an office in Erbil earlier this year and are now ready to commence exploration operations there. The passage of the Kurdistan Region Oil & Gas Law and the Model PSC have provided an excellent framework for oil and gas investment in Kurdistan and we aim to further develop our activities in Kurdistan and the wider Middle East region.
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