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Financial Times: Woodside begins to pull up drills in Africa

By Leora Moldofsky in Sydney
Published: September 28 2007 03:00 | Last updated: September 28 2007 03:00

Australia’s Woodside Petroleum has begun to dispose of its underperforming African asset interests with the announcement yesterday of the sale of its assets in Mauritania to the Malaysian state-owned group Petronas.

Woodside said it had sold its 47.4 per cent stake in the Chinguetti project to Petroliam Nasional Berhad for $418m. The A$990m ($871m) project, off the coast of Mauritania, is also operated by Woodside.

The Perth-based company, which is part-owned by Royal Dutch Shell, said: “Woodside continues to examine its options in relation to its remaining African assets.”

In August, Don Voelte, chief executive, said the energy group was considering quitting Africa and restructuring its port-folio to focus on its lucrative liquefied natural gas business.

Woodside’s African port-folio includes exploration ventures in Libya, Kenya, Liberia and Sierra Leone, and a stake in a natural gas project in Algeria.

While Chinguetti was scheduled to produce up to 75,000 barrels of oil per day, output at the oil field has fallen well short of estimates since the project came on line in February 2006.

By last November, output had dropped to 20,000 b/d – less than a third of anticipated production – and by June this year it had fallen to 15,000 b/d.

The project was also marred by political instability. Woodside had to pay a $100m “project bonus” to the government after a dispute with Mauritanian authorities over the validity of oil production contracts.

Petronas, which already has a share in two blocks in Mauritania, said the acquisition reflected its “commitment and long-term aspirations in Mauritania’s oil and gas industry and complements its overall growth strategy in Africa”.

The Malaysian company has invested heavily in sub-Saharan Africa.

Additional reporting by John Burton in Singapore

Copyright The Financial Times Limited 2007

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