Dragon Oil (LON:DGO) said the Iraqi exploration project it is taking part in has taken a further step forward.
The Iraqi Ministry of Oil and the consortium of companies involved have today initialled the exploration, development and production service contract (EDPSC) for Block 9 in Iraq.
This is the first step in a formal process before the signing of the final contract, which is anticipated later this year.
Dragon Oil owns 30 per cent of a joint venture that has been awarded the rights to Block 9 in the Basrah Province of southern Iraq.
Kuwait Energy is the operator with 40 per cent, and the remaining 30 percent are held by Turkish Petroleum Corp.
If Block 9 is found to be commercial during the five-year exploration period, the consortium can apply to develop the block over a 20-year period.
Chief executive Abdul Jaleel Al Khalifa said: “This move into Iraq demonstrates our endeavour to diversify Dragon Oil's portfolio. It will also facilitate working with our consortium partners to bring success in the development of Iraq's hydrocarbon resources."
The firm’s flagship asset is the highly cash generative Cheleken oil field in the Caspian Sea, where it is scaling up production to 100,000 barrels a day by 2015.
In recent months it has been assessing several opportunities to expand its business into new areas.
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Dragon Oil says Iraqi exploration venture making progress
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