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Ramco shares plunge on Iraq joint-venture setback

Ramco shares plunge on Iraq  joint-venture setback
Ramco Energy saw its shares plunge 41% in early trading yesterday after it said state-owned Iraqi Drilling Company (IDC) had terminated a joint venture (JV) with Ramco associate Mesopotamia Petroleum Company (MPC).

Ramco Energy saw its shares plunge 41% in early trading yesterday after it said state-owned Iraqi Drilling Company (IDC) had terminated a joint venture (JV) with Ramco associate Mesopotamia Petroleum Company (MPC).

The Aberdeen-based energy investment company’s shares recovered some of the lost ground later but still closed down 19.5p, or more than 29%, at 47p.

It was announced at the end of February that MPC had agreed a JV with Iraqi state-owned IDC to create Iraqi Oil Services Company (Iosco) with the aim of drilling a large number of new wells and significantly increasing the country’s oil and gas output.

Ramco said one of the terms of the agreement was for MPC to confirm funding by a certain date of £27.4million to meet initial capital commitments and to preserve a 49% equity stake in Iosco.

The Aberdeen company said that although the deadline for confirming funding had passed, MPC had continued to work with financial adviser JP Morgan Cazenove to complete fundraising for it to meet its commitments.

It said the MPC directors believed they were entitled to an extension to the funding confirmation date and were seeking to agree this with IDC and were in direct discussion with Iraq’s oil ministry to resolve the situation.

Ramco chairman Steve Remp said: “While IDC’s decision to invoke the strict terms of the JV agreement is frustrating, it is consistent with the approach we have seen in dealing with governmental bodies in Iraq.

“We believe we are making good progress in fulfilling the initial investment requirements and together with MPC’s advisers remain in contact with the Iraqi government regarding progress on funding for this historic joint venture.

“The delays in securing funding have been due principally to the delays experienced with IDC in agreeing and signing the joint-venture business plan. This has now been completed.

“The respective IDC and MPC teams, who have come together to form the Iosco board and management, are engaged on a daily basis as part of the ongoing JV implementation, including submission of the JV’s first 60-well tender.

“MPC has not accepted the validity of this termination and continues to work to fulfil its funding requirements as soon as possible.

“I continue to believe Iosco remains the most valuable and strategically important tool available to Iraq’s ministry of oil to increase oil production and secure additional oil revenue as part of the government’s task of rebuilding the country.

“I am bringing this matter to the attention of Iraq’s minister of oil with a request that he intervene . . . to resolve this unfortunate turn of events and allow us to continue with this important project.”

Ramco owns about one-third of MPC.

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