the australian

All the while we get headlines like this, the shareprice is going to struggle

Mauritanian PM declares Woodside deal 'null and void'
Nigel Wilson, Energy writer
February 07, 2006

MAURITANIAN prime minister Sidi Mohamed Ould Boubacar, says agreements signed last year with Woodside and its partners covering offshore petroleum permits are "null and void".

But Woodside, which operates an exploration and production venture that is Australia's biggest investment in Africa, yesterday said it was reassured that the Mauritanian leader had also said the law would be observed in pursuing the Government's claims.

Woodside and its partners, which include Australian-listed Hardman Resources and Roc Oil, have spent hundreds of millions of dollars in Mauritania.

But the dispute is not affecting plans to bring Mauritania's first oilfield - the $US705 million ($945 million) Chinguetti development - into production later this month.

Last week the companies notified the stock exchange of a dispute with the Mauritanian Government concerning amendments signed into law last year covering four production-sharing contracts (PSCs).

The areas in dispute cover production permits outside the Chinguetti development but are understood to cover gas and oil reservoirs discovered at Tevet, Banda and Tiof about 90km offshore from the Mauritanian capital Nouakchott. Tiof was last year reported by Woodside as holding around 287 million barrels of recoverable oil.

Banda is a gas discovery overlying an oil reservoir, while Tevet is also an oil and gas find, but within tieback distance of the Chinguetti production facilities.

But French media reports on the weekend quoted Mr Boubacar as saying Mauritania was determined to "use the law, nothing but the law" to protect its interests.

The Prime Minister was quoted as saying the amendments reduced Mauritania's share in the oil revenue, lowered taxes and removed bank guarantees that were in the initial contracts.

He said Woodside had refused to change its position despite a month of negotiations. The amendments, signed by the former regime's petroleum and energy minister, Zaydane Ould Hmaidah, were "outside the legal framework of normal practice to the great detriment of our country".

Woodside declined to comment on the accuracy of these statements.

A company spokesman said under the terms of Woodside's arrangements with the Mauritanian Government an unreconcilable dispute would go to an independent European court for arbitration.

Media reports that Mauritania was seeking to recover $US200 million a year from the four PSCs seemed wide of the mark.

The share prices of two of the three Australian Mauritanian joint venturers continued to fall.