Dragon Oil is moving its drilling rig to its oil production base in the Caspian Sea as part of a development plan to increase production.

The company's chairman, Mr Hussain Sultan, said it was proceeding on schedule to raise a $50 million loan to finance its ongoing joint-venture operation with the Turkmeni government. Speaking after Dragon's a g m in Dublin yesterday, Mr Sultan said the final commercial terms of the loan from the European Bank for Reconstruction and Development were being discussed as the company concentrates on its drilling programme at Cheleken, part of Turkmenistan.

Dragon is producing 7,800 barrels a day from its block 2 well, but at current oil prices, would need to produce double that volume to make it a commercially viable operation. "The field has substantial proven and probable reserves," Mr Sultan said.