Economic PulseInflation still key threat, says Subbarao

REUTERS

NAIROBI Aug 27 (Reuters) - Canadian oil and gas exploration company Horn Petroleum said on Monday it had encountered only water in a well it drilled in Somalia's semi-autonomous Puntland region earlier this year, the first to be sunk in the country since civil war erupted two decades ago.

The well, Shabeel North-1, reached a total depth of 3,945 metres and is now being plugged, Horn said.

Because there were no shows of oil and gas, Horn Petroleum determined a second well it drilled earlier in the year, Shabeel-1, also was dry and said the company would not test it further for hydrocarbon potential.

"While we were disappointed that we were not able to flow oil from the first two exploration wells in our Puntland (Somalia) drilling campaign, we remain highly encouraged that all of the critical elements exist for oil accumulations, namely a working petroleum system," Horn's chairman Keith Hill said in a statement.

While there has been speculation about finding oil in the anarchic Horn of Africa country for decades, it has no proven hydrocarbon reserves.

The prospect of oil beneath Dharoor's sandy, arid plains has elicited excitement among officials of the impoverished region. The companies estimated there could be as much as 300 million barrels of recoverable oil in the northern part of Somalia.

Somalia, mired in conflict since warlords in the early 1990s and then Islamist militants reduced the government to impotence, represents one of the final frontiers in Africa to be explored.