Petroceltic in €40m project to drill for gas in Algeria

IRISH EXPLORATION company Petroceltic is set to begin a $60 million (€40.5 million) gas-drilling programme in north Africa next year.

Shareholders yesterday approved a share placing that will give Spanish player Iberdrola a near 23 per cent stake in the company, resulting in a cash injection of $55 million.

Petroceltic has exploration licences for the Isarene area in Algeria, where previous exploration has discovered quantities of natural gas. Executive chairman Brian O’Cathain told The Irish Times yesterday the company was preparing to embark on a comprehensive seven-well drilling programme next January to assess the area’s potential.

He said this would cost between $55 million and $60 million. The Iberdrola deal means the programme is fully funded.

In a statement issued by the company after its annual general meeting in Dublin yesterday, Mr O’Cathain said Isarene “has the potential to add significant shareholder value and, together with Iberdrola, we intend to look for new opportunities for growth in our areas of focus”.

He said Isarene was originally drilled in the 1950s and 1960s, when gas was discovered but not sufficient quantities of oil. “But they were not looking for gas; gas had no value then,” he pointed out.

Petroceltic has already carried out some exploration, including drilling two wells, and conducted seismic tests to establish whether it has potential oil and gas reserves. These operations cost a total of $36 million.

Petroceltic is confident that, with its partner, it will secure the drilling rigs needed to carry out the planned drilling programme.

The company also told shareholders yesterday that Alnaft, Algeria’s government exploration licensing agency, had informed Petroceltic it had qualified to bid for any onshore permits it may offer over the next three years.

Petroceltic also has considerable interests in Italy, Europe’s third-biggest oil producer.

It earns $1 million a year in royalties from the Marathon Oil-operated gas field off the south coast of Ireland. US-based Marathon is looking at selling its interest in this field, which supplies fuel to Bord Gáis. Mr O’Cathain said any sale would not affect Petroceltic’s earnings from the field. The share price fell 8 per cent to nine cent on the Dublin market yesterday.