An Oil Search spokeswoman said the company had been looking at areas in North Africa and the Arabian peninsula for four or five years.

“PNG is still the focus but Yemen provides some diversification,” she said.

Oil Search started production from the Qishn sandstone on Block 43 in the Nabrajah oil field on July 12, its first oil production outside PNG.

The company has also discovered a significant new oil pool in the deeper Basement and Kohlan Formations on Nabrajah, which it estimates – when combined with the producing Qishn reservoir – could have gross recoverable reserves of 40-70 million barrels.

Basement well test data from the N2 gas well and N-5 oil wells imply they boast a 210 metre gas column; a 250 metre oil column; and a possible 600-metre plus oil column. The company said further appraisal drill was need to address reserves.

Evaluation of the Basement oil trend could lead to the company seeking new leases in upcoming bid rounds, Oil Search said.

Prospects are good near Nabrajah. The Kharir Field (Block 10) is producing 30,000 bopd and is estimated to have 200 million barrels of oil in place. The Sunah Field (Block 14) as reserves estimated at 60-200 million barrels after 10 years of production.

Participants in Nabrajah are Norway’s DNO ASA 56.67% (operator), Oil Search (Yemen) Limited 28.33% and The Yemen Company 15%.

In addition to the Block 43 drilling, a two-well exploration program in Block 15, offshore Yemen, will start late this year. Unlike the onshore operation, this program will be Oil Search-operated.

Elsewhere in the Middle East, Oil Search will particpate in its first Egyptian well in 2006 with operator SiPetrol, and the company has successfully bid for Area 18 offshore Tripoli in Libya. Seismic is being acquired and the first well is to be drillled in 2007; the operator is Petrobras.

While the Middle East is a new frontier for Oil Search, it has not contributed to the stellar result the company unveiled in its report for the second quarter of 2005. One of the highlights of that was a 39% improvement on its oil production over the first quarter and a 76% hike in its operating revenue over that quarter.

Part of the oil production hike has been attributed to the company was recovering from the closure of the Kumul oil loading terminal in quarter one.

The company’s oil sales for the second quarter totalled 2.66 million barrels of oil at an average realised oil price for the period of $US53.34 a barrel.

Oil Search reported a second quarter operating revenue of $148.4 million, 76% up on the first quarter and 50% up on the corresponding period for 2004.

First half revenue for 2005 is $US232.8 million up on the $US170.1 million for the first half of 2004.

The company also signed two substantial conditional gas sales agreements with Alcan and AGL. Oil Search also reached conditional agreement with AGL, for it to

acquire a 10% interest in the PNG Gas Project through the acquisition of equity in the Kutubu and Gobe licences from Oil Search.

At the end of June, Oil Search had $US207 million cash and debt of $US147 million.