The new agreement allows field operator Al-Furat Petroleum Company (AFPC)to deepen and widen the 38 fields it has developed under the three concessions it has held in the Thayyem Field, in the central western region of Deir Al-Zor, since the late 1970s. These areas are not authorised for drilling and development under the existing agreements. Under the new deal, AFPC is committed to drilling 10 new wells up to 5,000 metres in depth.

AFPC currently produces around 250,000 barrels a day (b/d) of light crude oil from the field - down from a peak of 400,000 b/d in 1992. Minister for Petroleum and Mineral Resources Ibrahim Haddad has said the new agreement could add 30,000 b/d to production.

'Production will gradually increase over the next two-three years. Maybe starting at around 5,000 b/d next year and possibly delivering up to 60 million barrels over the next four years,' said an AFPC source.

The duration of the new agreement is linked to the existing production agreements, which are due to expire between 2008 and 2014. Shell says it hopes to start negotiations to extend these agreements for a further 10 years.

Drilling of the new wells cannot start until the new agreement has been ratified by the prime minister and the parliament, expected in the next two months.

Shell owns 37.5 per cent of AFPC with Petro-Canada owning 12.5 per cent and SPC 50 per cent.

SPC is currently studying offers for oil and gas exploration production sharing agreements (EPSAs) for 12 blocks tendered in its third round of oil exploration contracts (MEED 27:6:03).