west aust. article

African LNG vision firms for Hardman
By Michael Weir

UK ENERGY utility British Gas is eyeing off a big Mauritanian gas resource controlled by Perth companies Woodside Petroleum and Hardman Resources for a potential liquefied natural gas development.

The development would be based on the Banda gas discovery, which despite its massive gas reserves had been viewed as the poorer cousin to the oil-rich and therefore more easily developed Chinguetti and Tiof fields off the coast of Mauritania.

British Gas, the former Government-owned utility now listed in London and New York, last month paid $US132 million ($177 million) to buy a 12.5 per cent slice of Hardman's Mauritanian portfolio.

The deal delivered a windfall $US99 million profit to Hardman, which had only picked up the additional holding two months earlier for the bargain price of $US33 million.

Hardman managing director Ted Ellyard revealed yesterday British Gas was "particularly interested" in the potential for gas reserves big enough to develop LNG export projects in Mauritania.

A preliminary estimate, based on only one well, has indicated gas reserves at Banda could be about three trillion cubic feet, but this could be upgraded following the drilling of a planned appraisal well this year.

"So, the Banda reserves are possibly already large enough for a stand-alone LNG development," Mr Ellyard said.

"However, we're optimistic that substantially more gas reserves will be discovered in other prospects during the forthcoming drilling program.

"Mauritania is well located for a short transport route to supply LNG to the east coast of USA and into Europe."

If Banda is developed there is also likely to be a domestic market on the small African nation.

Hardman also revealed yesterday an aggressive 10-well drill program for Mauritania for 2004.

Operator Woodside had previously only confirmed a much smaller program and the bullish news helped Hardman shares surge 8¢, or 6.5 per cent, to $1.31.

Mr Ellyard said up to six exploration wells could be drilled plus three appraisal wells on Tiof and one on Banda.

The drilling program is likely to swallow about 80 per cent of Hardman's $77 million exploration budget for this calendar year.

The development decision for the Chinguetti oilfield, the first of the Mauritanian projects to be put into production, is expected by the middle of this year.

Mr Ellyard said the ANZ Bank in London had already been working on project financing $US70 million of Hardman's $US100 million share of the development cost.

The balance would come from the company's balance sheet or could be funded by IFC, part of the World Bank, which was already reviewing the project.

Mr Ellyard also revealed yesterday the company was in negotiations to farm out the drilling of a deepwater well later this year or early next year on the highly prospective Guyane prospect in South America.

He said seismic work on the acreage, of which Hardman owns 97.5 per cent, had defined a "giant-sized" prospect with the potential for more than one billion barrels of recoverable oil.