Energy giant wants to extend its reach into Northern IraqBy MARKUS ERMISCH, SUN MEDIA
Talisman Energy is zeroing in on northern Iraq as the Calgary-based company is trying to extend its global reach.
The company said yesterday it expects to initially spend about $95 million on two oil blocks in the area controlled by the Kurdistan regional government (KRG).
Company spokesman David Mann said the "KRG has a big potential to become a new core area for Talisman."
Talisman will gain a 40% stake in an established production sharing contract area, with Canada's WesternZagros Resources Ltd. holding 40% and the KRG retaining the remainder.
The company also entered into a two-year seismic services agreement with the KRG on another block, after which it will have the option to gain 60% and commit to one well in the first year.
Additionally, it will pay $220 million to build social infrastructure in the KRG zone, such as roads and hospitals.
The news comes a month after CEO John Manzoni announced that Talisman will sell about $3-billion worth of its less productive international assets.
Proceeds from the sales will be invested in North American unconventional natural gas plays as well as in expanding Talisman's global footing, most notably in Southeast Asia and the North Sea.
Compared to southern Iraq, which is still marked by civil unrest, the northern part of the country is relatively safe and has been awarding contracts to international companies for some time.
"As that part of the world goes, it's very stable," Mann said.
"It seems to be somewhat of a haven in the midst of some fairly troubled areas."
The population in northern Iraq, he said, is generally in favour of development.
But despite the relatively more peaceful conditions, Mann said Talisman gas checked into the security of the area.
He said that spending money on social infrastructure is not an unusual requests, noting that it fits with the company's corporate practices.