Midmar Energy has announced its international expansion with the signature of a joint venture agreement between its associate company, Mesopotamia Petroleum Company ("MPC") and the Iraqi Drilling Company ("IDC") (the Iraqi state-owned drilling company) in Baghdad. The new joint venture, known as the Iraqi Oil Services Company LLC ("IOSCO"), has been created with the objective of drilling a large number of new wells in the Republic of Iraq, thus significantly increasing oil and gas production. This historic agreement is the first joint venture of its kind between the Iraqi Ministry of Oil and a foreign oil company since the fall of the regime of Saddam Hussein in 2003.
In 2005, Midmar formed MPC, alongside its partners, as an oil and gas company established for the specific purpose of undertaking operations in Iraq. Midmar has a 31.70% interest in MPC. The new joint venture, Iraqi Oil Services Company LLC ("IOSCO"), is owned 51% by IDC and 49% by MPC. IOSCO's primary objective is to facilitate the Ministry of Oil's stated targets for boosting hydrocarbon production by approximately 50%, from approximately 2.0 million barrels per day ("bpd") in 2008 to 3.0 million bpd as soon as possible, and to 4.4 million bpd within the next four years.
IOSCO will purchase and operate 12 new drilling rigs in Iraq and secure contracts for drilling programs in the oil fields controlled by the state owned South Oil Company (SOC), Missan Oil Company (MOC), Oil Exploration Company (OEC) and the North Oil Company (NOC). The parties to the joint venture intend to invest a total of $400 million in the Joint Venture. As part of its commitment, MPC intends to supply IOSCO with the necessary integrated drilling and completion methods and technologies to dramatically boost hydrocarbon production volumes.
MPC's role in the venture is focused upon project and business management using the latest techniques developed within the industry, drilling rig procurement and management, and training and resource development programs to further develop the expertise of IOSCO personnel. Midmar’s associate company, Firstdrill Limited, a global project management company, has extensive international experience in all aspects of project management, including well design and engineering, and will work closely with IOSCO.
MPC personnel bring to IOSCO a wide breadth of experience in the international petroleum industry and MPC's management has collectively been involved in oil and gas exploration, development, drilling, completion and workover throughout a wide range of geologic conditions. They have taken part in operations in a variety of areas including the North Sea, the Central Asian Republics and South East Asia both off and on shore. This combination of this technical expertise and operational experience has been the key reasons behind Iraqi Drilling Company bringing in MPC to act as its joint venture partner in the formation of IOSCO.
MPC has appointed London-based investment bank, JPMorgan Cazenove, as its financial adviser and placement agent in connection with a potential major equity fundraising to support MPC's contribution to the joint venture's drilling operations.
Commenting on the announcement, Dr. Thomas Redman, Managing Director of Midmar, said, "The signature of the agreement between MPC and its Iraqi partners, IOSCO, successfully demonstrates our stated objective of expanding our interests internationally. Our strategy in forming MPC was to focus on oil and gas opportunities, allowing us to apply our expertise to this area, an objective that will be fulfilled through this historic agreement. Our associate company, Firstdrill Limited, will also play an important role alongside MPC and IDC. We are honoured to be working with IOSCO and the Iraqi Ministry of Oil in supporting the future development of the Country's expertise and its oil and gas resources."
Foreign Secretary David Miliband said, "I welcome the signing of the Joint Venture between Mesopotamia Petroleum Company and the Iraqi Drilling Company which was agreed today, the first such joint venture between a UK company and the Ministry of oil. This is an important signal of the long-term commitment the UK has to Iraq in terms of trade, commerce and economic co-operation. It is also an important message to British business that Iraq is open for business."
His Excellency Dr. Hussein Al Shahristani, Iraq's Minister of Oil, said, "I am very pleased to see a new company established in Iraq between the Iraqi Drilling Company and Mesopotamia Petroleum Company, and look forward to seeing it actively working on the ground in the very near future.This new Company can play a significant role in increasing Iraq's oil production by drilling wells that are needed to develop Iraq's oil fields."
Idriss Al-Yassiri, Director General of IDC, said, "IDC and its management and administration are happy to have this joint venture signed, and our work starts from today. Our business plan is to follow as a roadmap. This Company (IOSCO) has great potential inside
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