The tiny Irish stock on the brink of landing 'the first' post-sanction oil deal in Iraq. Ref 'Fleet Street Letter' 12-04-04..

Morning all,
I found this which might be of interest, bearing in mind PET`s involvement in Sudan and the rumours surrounding a tie in with Heritage oil.


October 19, 2004
Posted to the web October 19, 2004

Antoaneta Bezlova
Beijing

China's thirst for oil is jeopardising the country's ambitious drive to be seen as a trustworthy world power and Beijing's recent performance at the United Nations Security Council in a bid to thwart sanctions against Sudan has only made matters worse.

Beijing is already at pains fighting accusations that its explosive economic growth is partly to blame for the run-up in world oil prices. Now, the growing threat of United Nations sanctions on Sudan and Iran, which between them supply 20 percent of China's oil imports, puts Beijing in an awkward situation of having to choose between safeguarding its investments and protecting the country's international image.

Last month, the Chinese government barely managed to water down a U.N. Security Council resolution, which threatened to halt Sudan's oil exports if it did not stop the atrocities in the Darfur region where pro-government Arab militias are terrorising the region's population.

Some 70,000 have died as a result of Darfur's conflict - many starving or succumbing to illness, the U.N. says.

The Security Council is committed to reviewing the situation in Sudan on a monthly basis and could therefore take action in the near future.

The European Union issued a renewed threat of sanctions against the African nation as a EU delegation led by Dutch Foreign minister Bernard Bot, whose country holds the rotating EU presidency, visited Khartoum last week.

China's ambassador at the U.N. Wang Guangya has indicated that Beijing would veto any future resolution that imposed sanctions. But the stream of negative reports from Sudan suggests that Beijing will soon find itself isolated.

"China is out on limb on this one," noted one Beijing-based diplomat. "Russia and Pakistan are far behind it. Beijing cannot be seen blocking a solution to major humanitarian crisis being investigated for genocide."

China, together with Russia, Pakistan and Algeria abstained from voting on the U.N. Security Council resolution of Sep.18.

However, western diplomats in Beijing think that if China is forced to choose between preserving its oil investments and damaging its larger efforts to be seen as a responsible world player, it will take a long-term view and protect its international image.

But the conundrum is a difficult one. To keep its economic engine running at high speed, China needs ever-increasing amounts of oil. Any significant interruption in supply would put growth at risk, with consequences not only for the country but also for its web of trading partners and investors.

Recent power blackouts that have hit Chinese factories underscore the need to maintain supplies.

By itself, Sudan represents an important piece in China's oil puzzle.

China obtains 6.9 percent of its oil imports from the African country. In the past five years, Beijing has developed several oil fields, built a 930-mile (1,512 kilometer) pipeline, a refinery and a port. By far, Sudan represents China's largest overseas investment, worth three billion U.S. dollars.

The government in Khartoum is believed to have a grip on Africa's greatest unexploited oil resources, even greater than those of the Gulf of Guinea.

Sudan's crude production is set to hit 500,000 barrels a day in 2005 but oil analysts say this represents only 15 percent of Sudan's total reserves.

With China's oil imports expected to rise by about 35 percent this year, a failure of the Chinese oil enterprise in Sudan could seriously undermine its efforts in becoming a major global player in the petroleum business.

Securing overseas oil resources is seen by the Chinese leadership as an effective strategy to wean the country away from its heavy reliance on imports.

But another vital source of oil resources for the country could be cut off if the United Nations imposes sanctions on the regime in Iran. The International Atomic Energy Agency will consider in November whether Teheran is in breach of the nuclear Non-Proliferation Treaty and if it needs to be referred to the Security Council for possible sanctions.

Iran supplies 13.6 percent of Beijing's oil imports, and China is competing with several other countries to develop its big Azadegan oil field. China Petroleum and Chemical Corporation (Sinopec), in partnership with Shell, is also bidding for substantial flows from Iran's oil.

A recent U.S. Central Intelligence Agency (CIA) report, too, does not augur well for China.

The CIA report singles out China as one of the countries that breached U.N. sanctions against Iraq and subverted the oil-for-food programme.

Chinese leaders are anxious to secure overseas supplies for the long term but they don't want the country to be seen as supporting states that may be in breach of international law.

Image-conscious, China has also sought to fight off global market accusations that its soaring domestic demand is to blame for record high oil prices. This week, Chinese officials pledged to slash crude oil imports to 25 percent of the country's total consumption by 2020.

"China should and has the ability to keep its oil dependency rate to the level of 25 percent of total oil consumption," Wang Tao, a former senior Chinese oil official said recently.

Projections for future Chinese oil demand vary significantly. Chinese economists say Beijing's imports of crude will jump to 50 percent of its consumption in 2020. On the other hand, the U.S. Energy Information Administration forecasts that by 2020 China would import two-thirds of its crude oil for its energy requirements.

If oil from Iran and Sudan were cut off by sanctions, China would have to increase its demand on other overseas suppliers. But this would be tricky to achieve given the delays and problems that have dogged China's major projects for oil pipelines from Kazakhstan and Russia.

I don't know if this is important or not, but from the AGM statement today for PRE.......A number of new exploration projects are under evaluation. One, onshore Texas, another in the Middle East.....

This just released, looks like they will be "In light of these discussions, companies will submit new offers concerning the development of the two fields and we are expected to sign contracts next month," al-Shammaa told Dow Jones Newswires."

Does this mean they will be submitting new offers as the contracts have indeed been changed from Cash to Risk sharing agreements? What do you guys think?

BAGHDAD (Dow Jones)--Iraq will sign oil contracts with international companies next month for the development of two oil fields, a senior Iraqi oil official said Thursday.

Head of the State Company for Oil Projects, Ahmed al-Shammaa, said two upstream contracts for the development of the Khormala Dome, in northern Iraq near Kirkuk, and Hemrin, northeast of Baghdad, were discussed in Amman this week with international energy firms.

"In light of these discussions, companies will submit new offers concerning the development of the two fields and we are expected to sign contracts next month," al-Shammaa told Dow Jones Newswires.

Al-Shammaa, who headed Iraq's negotiating team in Jordan, declined to name the companies involved in the talks.

Irish independent Petrel Resources (PET.L) is known to be one of the companies bidding for the contracts.

Last week, Iraq's Oil Minister Thamer al-Ghadhban said the two contracts would be ready to sign soon.

He said a third upstream contract for Subba & Luhais in southern Iraq has been delayed as the technical and economic aspects of the deals weren't yet ready.

Production from all these fields is expected to reach 300,000-350,000 barrels a day within two years from the start of development.

Oil ministry officials have estimated investment needed in the fields will amount to around $500 million to $600 million.

Last year, Ghadhban said the ministry would start to develop these fields this year.
-By Hassan Hafidh; Dow Jones Newswires; +964 7901 912 214; hafidh8@hotmail.com

(END) Dow Jones Newswires

apparently this is just out and was posted on advfn

BAGHDAD (Dow Jones)--Iraq will sign oil contracts with international companies next month for the development of two oil fields, a senior Iraqi oil official said Thursday.

Head of the State Company for Oil Projects, Ahmed al-Shammaa, said two upstream contracts for the development of the Khormala Dome, in northern Iraq near Kirkuk, and Hemrin, northeast of Baghdad, were discussed in Amman this week with international energy firms.

"In light of these discussions, companies will submit new offers concerning the development of the two fields and we are expected to sign contracts next month," al-Shammaa told Dow Jones Newswires.

Al-Shammaa, who headed Iraq's negotiating team in Jordan, declined to name the companies involved in the talks.

Irish independent Petrel Resources (PET.L) is known to be one of the companies bidding for the contracts.

Last week, Iraq's Oil Minister Thamer al-Ghadhban said the two contracts would be ready to sign soon.

He said a third upstream contract for Subba & Luhais in southern Iraq has been delayed as the technical and economic aspects of the deals weren't yet ready.

Production from all these fields is expected to reach 300,000-350,000 barrels a day within two years from the start of development.

Oil ministry officials have estimated investment needed in the fields will amount to around $500 million to $600 million.

Last year, Ghadhban said the ministry would start to develop these fields this year.
-By Hassan Hafidh; Dow Jones Newswires; +964 7901 912 214; hafidh8@hotmail.com

(END) Dow Jones Newswires

Will we get an RNS regarding this, as it knocks on the head any contract announcement sooner than next month, probably later on if the offers are to be resubmitted? Oh this is dragging on!

Pretty much all sells since that news...

I do not think this is bad news. Just a small point "next month" starts in 3 days!If we did get an RNS which said how few companies were involved or gave pointers to PET being in pole position it would give the share price a shot in the arm(IMO)

No it's not bad news, but I think if they have to re submit and those have to be checked and they need to talk again, it will be later rather than sooner.

Which is a pity cos my job finishes today and I have no job to go to and no money and a house to run!!!

Ive just topped up some more! any sign of weakness or impatience is a sign for me to add to this stock! long live those with faint hearts, every time they sell i top up. When they are announced, ill have a nice bottle of Krug on them!

Tokyo: IMO the story has not changed. We do know that PET is one of the companies involved in the bidding and the only questions centre on why they have been asked to re-submit the bid/s...suggestion is because it is going to be risk sharing (Good news)... and of course when will the deal be signed, and announced? Well I did read on this BB that we were looking at a November announcement, and that still seems to be in the timeframe. So we will all have to be a little patient as these things take time. If some people (traders looking for a very quick profit) decide to sell on this news...good news again as we can all buy some more at a lower price!! Live the dream! John

If we have any money left...

107606 - hang in there buddy, if this really is a risk sharing agreement, then your shares are gonna be worth a lot more in November, when they sign the contract...well that is still up in the air, in light of this article, and I know a few people have said they have e-mailed this to PET, they will probably now have to comment on it, and if the words "possible risk sharing deal" are mentioned, I would think it will be going back to 150 very soon before any confirmed contract news. Look back through old PET news and you'll see DH said that if given the oppurtunity they would elict for Risk sharing agreements, the Japanese firm are after crude, it all seems to come together. We could be getting some sort of news very soon


All IMHO

Tokyo

Ill eat rocks and soil till then...

evry sympathy 107606..You should do whats right for your position.If you have a lot invested it could be your salvation or your downfall. Been where you are , got the tee shirt. Good Luck

I havent got a huge investment, just enough to make a tidy return when the time comes, but not too much that I will die in abject poverty if the unthinkable happens! Just need another job...

willfagg were you the one who knows Diss?

another post from the other side, just posted but it sort of mirrors what I said earlier(but in more detail), hope this helps 107606.

1: Head of the State Company for Oil Projects, Ahmed al-Shammaa, said two upstream contracts for the development of the Khormala Dome, in northern Iraq near Kirkuk, and Hemrin, northeast of Baghdad, were discussed in Amman this week with international energy firms.

= More than 1 firm. (if quote is correct).

2: "In light of these discussions, companies will submit new offers concerning the development of the two fields and we are expected to sign contracts next month,"

= Why submit new offers? SEEMS NEW TERMS AGREED..IF HAPPY SIGN REVISED TERMS THAT HAVE COME FROM DISCUSSION!
= Risk sharing available so cut down your capital costs you are charging us.
= New terms agreed in principle ie re risk sharing. Go back to your lawyers, backers and company heads and agree if acceptable.

Iraq hasn't the time to mess about because they need new oil on stream and they need the majors in. Likewise you don't have a look at the tenders and say hey you are too expensive go away and give us a new price AT THIS LATE STAGE.

Horgan went to Iraq determined to seek Risk sharing agreements as the better option. He had a Japanese investment house with $250m backing in exchange for crude. Are the Iraqis going to turn a way crucial outside investment when last week Allawi said the best way forward was for risk sharing agreements. The Japs and others have probably said look more big investment would follow!

The majors aren't going to come in for crumbs or a pittance and Iraq will need to show that, in what they hand Pet or the other company (if there is one). It's likely more than one company because with the insurgency risk Iraq won't put all it's eggs in one basket.

The above is why no RNS from Pet and I think they are more than happy at this stage.

Cheers Tokyo, you're a good man (I think...)!

Cheers 107606 - I try to be, but we are all gonna need balls of steel to hold on to this, as the MM's are now gonna try every trick in the book to get your shares, if a risk sharing agreement is truly on the table, then PET are going to be targeted by the big boys later.

IMHO

Tokyo

Tokyo

You comment above that the implication of discussion with 'international energy companies' implied more than one firm - but it could be read as a consortium of firms, rather than competitive bids. If there were still competitive bids it is difficult to see how the whole matter could be resolved within a month. To me, one month is only time to finalise contracts with a preferred bidder. Would not Petrel be accompanied by risk-sharing partners last week?

Eric