"With regards to our development field in the south, we could work there now, " said the company's managing director, David Horgan.

Petrel are confident that the government will ratify its claim to the oil rights for a large chunk of land in the western Iraq, Western Desert Block 6.

The company may also aim to get a 'super giant' oilfield, which would yield over 10 billion barrels of oil. The new law would end the legal limbo in the Iraqi oil industry, which did not allow foreign oil companies to enter into production agreements there.

Petrel currently has contracts to study the Merjan oil field in central Iraq and to assist the state to bring the Subba & Luhais oil field in southern Iraq under production. Although the law does not specify the terms of production agreements, Horgan said that it was likely that Petrel would get 60 to 70% of the oil produced by its fields until it had recovered the cost of its investment and 20% after that.

However, Jon Marks, editor of Iraq Focus, a London-based specialist newsletter aimed at the oil industry, said it was unclear whether it was safe enough to extract oil at Petrel's proposed fields.

"There has been a decrease in violence in Baghdad due to the US push but it has been displaced to other areas, " he said. Marks added that there was a good chance that insurgents would start attacking foreign oil contractors. Although Petrel's proposed fields were the best geological prospect in Iraq, few other oil companies were confident of extracting oil outside the relatively stable Kurdish area in the north of the country.