Ramco Energy plc, the Aberdeen-based energy investment company, announces that its associated company MPC and the Iraqi Drilling Company (“IDC”) the Iraqi state-owned drilling company have signed a joint venture (“JV”) agreement.

Highlights:
• The JV will be known as Iraqi Oil Services Company LLC (“IOSCO”)
• IOSCO will be 51% owned by IDC and 49% by MPC
• IOSCO has been created for the purpose of drilling a large number of new wells – aiming to significantly increase oil and gas production in the Republic of Iraq
• This is the Iraqi Ministry of Oil’s first joint venture agreement of its type signed with a foreign company since the fall of the regime of Saddam Hussein in 2003
• MPC and IDC together intend to invest a total of US $400 million (£274 million) to enable IOSCO to purchase and operate 12 new drilling rigs and for the provision of working capital. The first tranche of investment will total US $90 million (£62 million)
• MPC has appointed JPMorgan Cazenove, as its financial adviser and placement agent
• IOSCO is committed to playing a leading role in developing local Iraqi expertise
• Ramco Energy holds an 32.66% interest in MPC

In Baghdad last week the Iraqi Government and MPC signed a joint venture agreement between MPC and IDC, the Iraqi state-owned drilling company.

The joint venture, which will be majority Iraqi owned (51% IDC, 49% MPC), will be known as Iraqi Oil Services Company LLC (“IOSCO”) and has been created for the purpose of drilling a large number of new wells and thereby significantly increasing oil and gas production in the Republic of Iraq. This is the Iraqi Ministry of Oil’s first joint venture agreement of its type signed with a foreign company since the fall of the regime of Saddam Hussein in 2003.

IOSCO’s main objectives will be to provide integrated drilling operations in Iraq for the state-owned oil companies, together with any international companies which are awarded licences in any forthcoming licensing rounds. The JV deliver a wide range of oil services. The parties to the joint venture intend to invest a total of $400 million to enable IOSCO to purchase and operate 12 new drilling rigs and for provision of logistical support and working capital in order to deliver state-of-the-art performance in its operations. Furthermore, IOSCO is committed to playing a leading role in developing local Iraqi expertise and resources in all aspects of the joint venture including integrated drilling technology.

MPC’s experienced team possesses the critical technical and management skills essential to achieving success in upstream sector projects. MPC’s role in the venture will be focused on project and business management using the latest techniques developed within the industry, drilling rig procurement and management, and training and resource development programmes to further develop the expertise of IOSCO personnel.

MPC has confirmed that it has appointed London-based investment bank, JPMorgan Cazenove, as its financial adviser and placement agent in connection with a major equity fund-raising to support MPC’s contribution to the joint venture’s drilling operations.

Commenting on the announcement,

Foreign Secretary David Miliband said:
“I welcome the signing of the Joint Venture between Mesopotamian Petroleum Company and the Iraqi Drilling company which was agreed today, the first such joint venture between a UK company and the Ministry of oil.

This is an important signal of the long-term commitment the UK has to Iraq in terms of trade, commerce and economic co-operation. It is also an important message to British business that Iraq is open for business.”

His Excellency Dr. Hussein Al Shahristani, Iraq’s Minister of Oil said:
“I am very pleased to see a new company established in Iraq between the Iraqi Drilling Company and Mesopotamia Petroleum Company, and look forward to seeing it actively working on the ground in the very near future.

This new Company can play a significant role in increasing Iraq’s oil production by drilling wells that are needed to develop Iraq’s oil fields.”

Idriss Al-Yassiri, Director General of IDC said:
“IDC and its management and administration are happy to have this joint venture signed, and our work starts from today. Our business plan is to follow as a roadmap. This Company (IOSCO) has great potential inside and outside of the country of Iraq. Both sides are committed to making it successful, and all the circumstances for success are in place.”

Steve Remp, Chairman of MPC and Ramco, added:
“IOSCO is a much needed venture which will make an early contribution to Iraq’s goal of increasing oil production. It will combine Iraqi talent with the latest in internationally proven drilling equipment, techniques and project management skills. Our longer term ambition for IOSCO is to see it emerge as a partner with Western oil consortia in future field development projects.”

(OilVoice)