China National Petroleum Corp has agreed to spend as much as US$8.6 million for a stake in an oil and gas exploration block near the coast of Mauritania. CNPC International, an overseas unit of CNPC, will acquire a 65 per cent stake in the onshore Block 20 in Mauritania by funding all the exploration costs. These could run up to US$8.6 million, according to a statement by Australia- based Baraka petroleum yesterday
Baraka Petroleum was the sole owner of the block. Under the contract, it will have the remaining 35 per cent shareholding in the venture. The block, which covers more than 10,000 square kilometres, is considered the most promising onshore part of the Mauritanian Coastal Basin, said Baraka's statement, filed to the Australian Stock Exchange yesterday.
It lies about 180 kilometres southeast of Chinguetti, the west African country's first commercial oil discovery. The block is also close to potential gas markets in the Mauritanian capital Nouakchott and the Senegalese capital Dakar, it said. "CNPC has the proven technical skills and experience necessary to unlock the potential of Block 20," Baraka Petroleum's Chairman Shane Doherty said in the statement.
"CNPC International has been looking to expand its presence in Mauritania and this farm-out agreement is a logical acquisition for them," the statement said. CNPC International already holds an exploration permit to the north of Block 20. As the operator of the two adjacent blocks, the company can achieve operational efficiency.
Under the contract, CNPC International's investment will fund a seismic survey of the Herron prospect and will "substantially" fund the drilling of the planned Herron-1 exploration well. Baraka Petroleum expects the joint venture to drill an exploration well in the second quarter of next year.
The agreement is still subject to the approval of the Mauritanian authorities.