Woodside Petroleum Pulls Out of Tanzania

   By Ross Kelly 
 

SYDNEY--Woodside Petroleum Ltd. (WPL.AU) pulled out of an exploration joint venture in Tanzania with Beach Energy Ltd. (BPT.AU), leaving its smaller Australian rival to ponder whether to continue to drilling in the East African country.

Less than a year after buying into the exploration permit at Lake Tanganyika, Woodside decided not to take part in the next phase of exploration, Beach said Wednesday.

It means Woodside will transfer its 50% stake in the exploration permits to Beach, which will reclaim 100% ownership. Beach said it's "currently assessing all options" for the block.

Woodside's withdrawal marks the second blow for Beach this year after Chevron Corp. (CVX) in March pulled out of a shale-gas joint venture with the Australian company in the Outback. It also comes after Beach hired a former senior Woodside executive, Robert Cole, to be its new chief executive.

East Africa has become a new frontier in global energy markets following some mammoth deepwater natural gas discoveries off the coast of Tanzania and Mozambique. Tumbling oil prices, however, are forcing companies including Woodside and Chevron to reassess their spending plans.

Beach's assets comprise the entire South Block of Lake Tanganyika, a giant inland lake of water more than 600 kilometers long and almost 100 kilometers wide.

The magnitude of any investment there would depend on where the best prospects are located. Developing prospects closer to land would be cheaper because a horizontal well could be drilled from the shore, whereas deepwater targets in the lake's center would require a specialist rig.

Write to Ross Kelly at [e-mail]

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