Addax Seeks 2nd Partner for Iraq Taq Taq Oil Field

LONDON (Dow Jones Newswires), May 20, 2009

Canadian oil and gas company Addax Petroleum Corp. (AXC.T) is seeking a second partner to join its development of the large Taq Taq oil field in Iraqi Kurdistan, a person familiar with the matter told Dow Jones Newswires.

Addax wants to retain control of the development and keep existing Turkish partner Genel Enerji AS, but thinks bringing in a second partner with stronger ties to the government in Baghdad would overcome political sensitivities, the person said.

Oil contracts signed by the Kurdish regional government with companies such as Addax, DNO International ASA (DNO.OS) or Heritage Oil PLC (HOIL.LN) have provoked fierce criticism from the Iraqi central government in Baghdad.

The process of finding a partner is at a very early stage and Addax has not decided how much of its 45% stake in the field it could offer nor selected any potential candidates, the person said. Addax declined to comment.

After two years of refusing to permit exports, the federal government said earlier this month that for the first time it would allow the Kurdish region to start transporting crude from new fields from June 1.

But political uncertainty remains. Shortly after approving exports, Iraq's oil minister Hussein al-Shahristani said contracts between the Kurdish government and around 25 foreign oil companies remain illegal because Baghdad was not consulted before they were signed.

A large number of foreign oil companies, including most of the major international players, have been pre-approved by the Baghdad government to bid for oil licenses in southern provinces. Companies that have signed agreements with the Kurdish government have been largely excluded from this process.

Existing facilities at the Taq Taq field provide for production capacity of up to 40,000 barrels a day and Addax is in the process of expanding the facilities to 70,000 barrels a day capacity. Following initial exports by truck, a pipeline is expected to be constructed to allow full field development.

Iraq currently exports around 400,000 barrels a day from its northern Kirkuk oil fields in the Kurdish region.  

Copyright (c) 2009 Dow Jones & Company, Inc.