Afghanistan may attract more energy firms as Exxon shows interest

Mon Jul 16, 2012 2:13am EDT
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By Amie Ferris-Rotman and Ramya Venugopal

KABUL/SINGAPORE (Reuters) - More top-tier energy companies are likely to join the race to explore for oil and gas in Afghanistan after the world's biggest publicly traded firm, Exxon Mobil (XOM.N: Quote), changed perceptions of what the country may hold by showing interest in drilling.

Energy majors are exploring new frontiers in pursuit of fresh reserves as they exhaust existing fields and Afghanistan, after decades of conflict, remains little explored.

While the U.S. government estimates the country holds a fraction of the reserves of surrounding giant Middle East producers, its potential is enough to attract Exxon Mobil and that factor, by itself, is likely to lure more.

Kabul, which has long depended on international donations to finance its economy, now hopes revenue from raw materials will help the country stand alone, especially as an impending pullout of most foreign troops by the end of 2014 is creating donor fatigue.

"Exxon would not go into an area unless the areas are very promising. They are not looking for potatoes," said Chakib Khelil, former Algerian oil minister, now an energy consultant in Paris.

The search for fresh assets by big companies such as Exxon, which produce a lot could mean "going to the Arctic, going deep off-shore and going into new areas like Afghanistan," he added.

Eight firms including Exxon this month expressed interest in an oil and gas auction of six blocks in the Afghan-Tajik basin, after a tender was won by China National Petroleum Co (CNPC) late last year.

Afghanistan has about 1.9 billion barrels of undiscovered technically recoverable crude reserves, the United States Geological Survey (USGS) said in 2011, although it didn't say how much of it was economically recoverable.   Continued...