The company has purchased a 20% shareholding in A&T Petroleum, a wholly-owned subsidiary of Turkey-based Petoil Petroleum and Petroleum Products International Exploration and Production.

A&T Petroleum is operator and holds a 50% interest in the Bina Bawi exploration and production sharing contract (EPSA), located in the Kurdistan region of northern Iraq.

Under an agreement, Oil Search has the option in one year to convert its 20% shareholding into a 10% direct interest in the Bina Bawi EPSA.

Oil Search managing director Peter Botten told the Australian Stock Exchange this morning that the Kurdistan region was a “relatively stable” part of Iraq, which had seen increasing levels of foreign investment in recent times.

“We regard our relatively small investment in A&T Petroleum as an early positioning strategy in Iraq’s re-emerging oil and gas industry, balanced against the ongoing political issues and challenges within greater Iraq,” he said.

The Bina Bawi EPSA lies over the northern extension of the oil and gas prolific Zagros Fold-belt, about 90km north of the giant Kirkuk oil field and on trend with the Taq Taq oil field to the southeast and the recent Tawke-1 oil discovery to the northwest.

A large 30km by 10km surface anticline has been delineated within the Bina Bawi EPSA, which is estimated by Oil Search to contain potential mean oil reserves of 1.6 billion barrels within the primary Triassic reservoir objective. Secondary reservoir potential in the prognosed Lower Cretaceous and Jurassic sections offer additional reserves upside to the structure.

An exploration well on this feature, Bina Bawi-1, was spudded about a week ago, and is expected to take about 65 days to reach a total depth of 3050m on a dry hole basis.

Botten said the company acquired its shareholding in A&T Petroleum for “reasonable cost.”

“Bina Bawi represents an excellent opportunity for Oil Search to participate in a high quality exploration area with substantial reserves potential, yet with relatively low technical risk,” he said.

“The purchase has also further cemented our relationship with Petoil, one of our partners in Block 3, in Yemen.”

PNG loading resumes

Oil Search also announced that loading operations at its Kumul offshore terminal in PNG resumed overnight, with a full return to normal loading and production operations expected to be completed by tomorrow.

The PNG Department of Petroleum and Energy lifted a restriction on loading operations at Kumul yesterday after inspecting repairs to the terminal.

The company was forced to undertake repairs at Kumul after it was damaged during a loading operation earlier this month that led to 6700 litres of oil spilling into the ocean.

As a result of the suspension of operations at Kumul, Oil Search was forced to shut-in production at both its producing Gobe and Kutubu oil fields in the Highlands region of PNG, however, the company says it now started to progressively restore production.

Oil Search estimates that approximately 920,000 barrels of gross production, of which 420,000bbl net to Oil Search, were deferred during the shut-in period.

However, the company said it was able to bring forward planned maintenance work at its Kutubu central processing facility and both the Agogo and Gobe production facilities, which it said would have otherwise impacted on production later in the September quarter.

Earlier this week, Oil Search responded to what it described as “erroneous” reporting in local PNG press with regards to the environmental impacts of the spill.

“The company would like to confirm that the incident was actively managed and monitored, in line with Oil Search’s stringent safety and environmental policies and procedures.”

Immediately following news of the spill last week, Gulf Governor Chris Haiveta claimed locals living on the coast had reported dead marine life.

Oil Search maintains it has not seen any physical evidence to confirm these claims, saying it has conducted reconnaissance flights over the region following the spill and sent out community affairs representatives to speak with local villagers.