Addax, Genel Enerji to Spend $120M on Iraq Oilfield Plans

DUBAI Mar 20, 2007 (Dow Jones Newswires)

Addax Petroleum Corp.,(AXC.T) a Toronto Stock Exchange-listed oil company, and its Turkish joint venture partner Genel Enerji A.S. will spend as much as $120 million on exploring and developing an onshore oilfield in Iraqi Kurdistan that could produce 200,000 barrels a day of crude oil by 2009, a company official said Tuesday.

Addax and Genel Enerji, which have set up a 45:55 joint venture called Taq Taq Operating Co., or TTOPCO, to operate in Iraq, will complete drilling of a third appraisal well in the Taq Taq development area in the country's north by early April, Addax asset manager Pradeep Kabra told Dow Jones Newswires on the sidelines of a Dubai conference.

The joint venture plans to drill another two wells this year and to complete a 3D seismic survey covering the Taq Taq development area, located northwest of Kirkuk, and a 2D survey covering additional exploration prospects, in the third quarter, Kabra said at the 4th Mideast Upstream conference.

Pending the final outcome of the appraisal campaign, the companies will go ahead with the full field development, which is expected to yield about 200,000 barrels a day of oil by 2009, Kabra added.

Test results for two appraisal wells already completed recorded flows of 29,790 barrels a day and 26,550 barrels a day, according to TTOPCO's Web site.

The joint venture company signed a revised production sharing agreement, or PSA, with the Kurdistan regional government in November. The move followed the conclusion of the original PSA between the Kurdish authorities and Genel Enerji in 2004.

Under the agreement, the Kurdish regional government has the option to take a 20% stake in TTOPCO, Kabra said.

Iraq, holder of the world's third largest oil reserves, is seeking investments into its ailing oil infrastructure to boost output from the present 2 million barrels a day to at least pre-Iraq-Iran war levels of 3.5 million barrels in the 1980s.

Poor maintenance and under-investment in the past 20 years, and frequent attacks on the country's oil infrastructure since the country's invasion by the U.S. in 2003 have left the sector in a desperate state.

According to Iraq's new draft hydrocarbons law, Kurdish authorities will have to review contracts already signed with international oil companies and are required to have the agreements approved by an independent consultant appointed by the federal oil and gas council, to be established by the draft law.

"It is reasonable to say that the existing contract is within the scope of the constitution," Kabra said.

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