Hess and Petroceltic are withdrawing from the Kurdish region of Iraq, where they acquired drilling rights four years ago.
In a statement, Petroceltic, which is based in Dublin, Ireland, said its drilling in the Dinarta blocks had encountered “significant operational challenges”.
“In light of this and the current oil price environment, the decision to withdraw from Kurdistan is the right one for the business,” the Petroceltic chief executive Brian O’Cathain added.
The two companies acquired rights in 2011 to drill on the Shakrok and Dinarta blocks, which lie to the south-east of the Tawke field and north-west of Taq Taq, also a large oilfield in the Kurdish region.
Hess, based in New York, has a 64 per cent interest and is operator, Petroceltic has 16 per cent and the Kurdish government holds the remaining 20 per cent.
Hess did not issue a statement and could not be reached for comment. In January, the company said it would spend 16 per cent less this year on exploration and development, at US$4.7 billion. The vast bulk of its spending is on shale oil in the US, but it had allocated money for its Kurdish interests.
The Petroceltic statement said “Hess and Petroceltic have jointly elected to withdraw from the Dinarta licence without any further drilling. All [production-sharing contract] work programme obligations have been fulfilled other than the required final remediation of the well sites.”
They did not make clear what would happen on the Shakrok prospect, where one exploration well was spudded last spring.
The companies suspended work last summer and pulled out staff when threatened by radical insurgents spilling over from Syria and eastern Iraq, but recommenced work in October.
Petroceltic has been struggling since last year, when a takeover bid from UAE-based Dragon Oil fell through.
amcauley@thenational.ae
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