Gulfsands has been conducting business development activities in Iraq since 2003 and has formed a subsidiary for its operations in Iraq as well as opened an office in Baghdad.

In January 2005 the Group signed a Memorandum of Understanding with the Ministry of Oil in Iraq for the Maysan Gas Project in Southern Iraq, following completion of a feasibility study in August 2004, and is currently finalising details of a definitive contract. The project involves the engineering, procurement, construction and operation of a gas gathering system, gas liquids plant and power plant that will gather, process and transmit natural gas currently being flared as a waste by-product of oil production, and will produce electricity to supply the local grid. The project has regional importance not only because of the acute need for power in the area but also because the present practice of gas flaring results in significant environmental damage to the region.

Gulfsands is actively engaged in discussions with respect to financing and potential equity partners.

The Group's primary medium term objective in Iraq is to secure oil and gas exploration and developments projects, and discussions have taken place with certain third parties with this intent. The Group has no reserves in Iraq at present.