Petrel Resources - moderated discussion/research part II

part 2

"Only very exceptional, quite eccentric people like ourselves are going to work there for the next two years," David Horgan, managing director of Petrel Resources, based in Dublin, which signed a $200 million cash contract in September to increase production in two southern oil fields to 200,000 barrels a day from 50,000.

"The oil majors will do studies comfortably from London or California," he said, because those executives are not willing to take the same risks.

This phenomenon is being repeated elsewhere, as untapped oil reserves are increasingly concentrated in politically risky areas where global oil companies fear to tread, specialists say.

"We're getting a boil up on the fringe," said John V. Mitchell, an associate fellow at Chatham House in London, a research firm that specializes in international issues. Small companies "are expanding in places like Iraq, Nigeria or Angola," he said. "They're prepared to take high risks, and the host government is making space for them."

The risks are balanced by the possible financial reward. "For a very small company, if they do well, it transforms them," Mr. Mitchell said.

Mr. Horgan of Petrel Resources said security risks had substantially increased in Iraq. His company has been working there since before the war and has built up good contacts in the oil ministry, where, at all but the top levels, many executives remain from prewar days. The company encountered its first real problems when it started doing exploration work in the Western desert early in 2004, Mr. Horgan said. Petrel received a letter in calligraphic Arabic that said, "Anyone who works with the oppressors will be decapitated and burnt," he said. The letter ended by apologizing for any inconvenience, he added.

Petrel has since stopped sending executives to the western desert to do seismic or geologic evaluations, and does not hire employees from countries in the coalition that invaded in 2003.

Asked why they are willing to take such risks, executives from smaller companies emphasize legacy and excitement, but rarely money.

"You do not just do it for the money," Mr. Horgan said. Instead, he said, he is trying to make sure he has an interesting job.

"If I just wanted cash," he said, "I would have gone to Wall Street."