DRAGON Oil, the Dublin listed exploration company with interests in the Far East and the former Soviet Union, is to spend up to $35 million (£22 million) for a stake in oil producing interests in the Caspian Sea.

Dragon has reached agreement in principle with Larmag Energy to acquire an effective 30 per cent stake in the Block 11 joint venture off the coast of Turkmenistan.

Dragon says engineering studies indicate that the fields are capable of achieving a peak production of over 75,000 barrels per day.