DUBLIN- AND London-listed exploration company Dragon Oil is investigating purchasing contracts involving former executives following irregularities discovered during a routine audit.

The company, 52 per cent owned by the government of Dubai, issued a statement yesterday saying that it was investigating “certain possible irregularities identified in its procurement procedures”.

“These irregularities involve possible improper conduct between certain former managers in the company’s marketing and contracts departments. The internal audit and KPMG (Dubai) have been engaged to assist in this in-depth assignment.”

Dragon added that it was taking legal advice on all issues linked to the investigation and had either informed, or was in the process of informing, the relevant authorities. The company did not say if the procurement – purchasing goods and services – involved other businesses.

Dragon is an oil exploration and production company whose activities are focused mainly on fields in the Caspian Sea off the Turkmenistan coast.

The investigation has forced the company to delay the publication of its 2008 results, which were due out next week, until it has had time to consider the investigation’s initial results and assess any impact on its financial position.

It has pledged to update shareholders on the investigation’s progress before the end of March.

Chief executive Dr Abdul Jaleel Al Khalifa yesterday described the situation as completely unacceptable. “The board is moving swiftly to investigate the possible irregularities and will take actions to ensure that purchasing procedures are operating properly and that appropriate actions are taken,” he said.

“An initial review suggests that the matter will not have a material impact on the financial position of the company. Dragon remains committed to executing its strategy of developing its oil and gas production activities . . .”

Dragon produces over 40,000 barrels of oil a day on average from 52 wells in the Caspian Sea field. Its shares were down almost 20 per cent at €1.48 in Dublin at 4.30pm yesterday.