Dragon Oil drills first well in Iraq

Dubai producer expects output to rise 10% this year.

Dubai’s Dragon Oil has drilled its first well in Iraq and expects production to rise 10 per cent this year.

The company, which is 51 per cent owned by Emirates National Oil Company, is part of a consortium that spudded an exploration well late last month and is targeting two reservoirs. Testing is expected after June.

The consortium, which is led by Kuwait Energy with a 70 per cent stake, was the sole successful bidder in a 2012 auction of Iraqi oil rights that many international companies deemed not worth the risk, given a low per-barrel fee.

Because of a clause in the Iraqi constitution, Baghdad does not allow foreign companies to book reserves, as companies do under production-sharing contracts.

In Turkmenistan, Dragon Oil’s sole producing area, drilling has been delayed for the latter half of 2014 because of late rig deliveries.

“Due to the delayed start or anticipated later start of drilling by the rigs on site or arriving to the Cheleken contract area later this year, we now anticipate that the production growth in 2014 will be around 10 per cent on the basis of 14-16 wells being completed during the year,” the company said. “The drilling programme is now expected to be weighed more towards the second half of the year.”

The company pumped an average of 73,400 barrels per day there last month, down from 74,000bpd in the same period last year.

Shares of Dragon Oil in London inched down 4 pence to 566.50 pence by midday after the announcement.

Follow us on Twitter @Ind_Insights