aussie five to tap oil in africas hot spots

Aussie five to tap oil in Africa's hot spots
Kevin Andrusiak
March 29, 2007

FIVE Australian companies have joined forces to take on the heavyweights in the rush to lock up lucrative oil and gas ground in the relatively unexplored regions of Africa.
In a unique alliance in the domestic oil and gas industry, listed companies Baraka Petroleum, Beach Petroleum, Adelphi Energy and Arc Energy have joined with engineering and energy consultant Advanced Well Technologies to pool knowledge and resources in order to target African regions which are better known for their civil and political unrest.
West Africa, in particular, which includes nations such as Nigeria and Angola, has become one of the world's most prospective oil and gas regions as energy majors look to secure long-term supply.

The region is believed to contain some of the world's biggest untapped hydrocarbon deposits and has attracted the interests of majors such as Royal Dutch Shell.

Hardman Resources had good success in tying up acreage in the mid-1990s, but Australian success in the region has been relatively disappointing.

West Africa is also well suited to shipping routes and, because most of the prospective ground is offshore, it requires minimal contact with local authorities.

Industry estimates suggest West African oil and gas will supply 25 per cent of the US energy market needs by 2015.

The World Economic Forum was told last year that Africa's known oil reserves stand at about 110 billion barrels, or about 9 per cent of total known world reserves.

Of that, Nigeria is said to hold 35 billion barrels and Angola about 9 billion.

Importantly for Africa, China remains its favourite trading partner in terms of oil.

Similarly, Africa's gas reserves are just as impressive and the continent is believed to contain 7 per cent of the world's 6300 trillion cubic feet of reserves.

The five Perth-based companies in the alliance have signed a memorandum of understanding to look for and acquire what they term "high-value" projects with an initial focus on Africa.

Under the terms of the MOU, costs will be shared and any member can elect not to proceed with a project at various break-free points.

Baraka Petroleum, the smallest of the four publicly listed companies, is the brains behind the alliance.

It already has farm-in arrangements in offshore Mauritania and Mali.

Combined, the four listed companies have a market capitalisation of about $1.5 billion, with Beach Petroleum by far the biggest, with a market cap of just over $1 billion.

"This MOU is unique in that no company is bound to take part in any or all of the opportunities," Baraka managing director Mark Fenton said.

"For smaller companies like us, this represents a unique opportunity to increase the size of deals we can participate in, a reduction in our overall risk levels and a pooling of resources."