Puntland region extends contract with Africa Oil

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The government of Somalia's semiautonomous northern region of Puntland has extended an oil drilling agreement with Africa Oil for an extra year, the company said in a statement.

Monday's statement said the agreement had been extended until Jan. 17, 2012.

The joint venture between Africa Oil, Range Resources Ltd. and Lion Energy Corp. requires the partners to drill one well by July 27 and another by next Jan. 17. A new partner, Australia's Red Emperor, has also joined the venture.

"We look forward to the upcoming wells in the rift basins of Puntland which we believe could hold similar potential to the geologically related basins in Yemen which contain more than 6 billion barrels of discovered reserves," Africa Oil chief executive Keith Hill said.

Most of Somalia is has been torn apart by civil war for 20 years. The weak U.N.-backed administration is limited to a few blocks of the capital of Mogadishu and Islamist insurgents hold much of southern and central Somalia.

But Puntland has a functioning government and is considered relatively stable compared with the rest of the country. On Sunday it put out a statement criticizing the Mogadishu-based government for failing to deliver security and services and urging international donors to deal with Puntland directly.

Africa Oil says the East African rift basin is one of the last explored territories. It says the land in its concessions have numerous oil seeps indicating the possible presence of reserves.