Petrel Resources, the listed explorer chaired by Mr John Teeling, warned yesterday that it continued to face political risks in its efforts to get oil well development and exploration contracts in Iraq.

Speaking after its annual general meeting (a.g.m.) in Dublin, chief executive Mr David Horgan said the company was down to the last two or three in tendering for contracts to develop wells to the north of Baghdad.

The biggest is Khurmala, in the Kurdish-dominated north of Iraq. Mr Horgan said the region was under Baghdad's control. Khurmala has established reserves of 120,000 barrels a day, and will cost in the region of $250 million (€207 million) to develop.

The second is Hamrin, which is 200km north west of Baghdad. This has established reserves of 100,000 a day and will cost over $100 million to develop.

The company believes it is in the final two or three tenders for both fields, which the Iraqi authorities want developed.

It is also due to submit a tender for a third well, Subba and Luhais, in the south of Iraq and is seeking a licence to explore a block in the country's western desert, which Mr Horgan said had a one-in-three chance of holding viable reserves.

Mr Horgan said Petrel could raise the finance to develop the wells, subject to the company clarifying a number of issues relating to title.

However, he stressed that the main risk to all the Irish firm's activities in Iraq were political.

"The fact is that there is no security in Iraq except the goodwill of the local people," he said, "and we have worked very hard on winning that."

It is likely to take up to two months before Petrel will know if it has been successful in bidding for well development contracts. The company is listed on the London Stock Exchange.