The coup, which resulted in the overthrow of President Maaouya Ould Sid Ahmed Taya in favour of current President Ely Ould Mohamed Vall, initially prompted criticism from the United States and the African Union.

It also spooked investors, including many Australians holding shares in Woodside Petroleum, Hardman Resources, Roc Oil and Baraka Petroleum, all of which have Mauritanian assets.

However, the military regime has met its commitment to hold free and fair elections, and parties opposing the pre-coup regime have won the bulk of the votes, further vindicating the ousting of the old order. The former ruling party is in third position.

Observers from the European Union, Arab League, African Union and French-speaking countries said they had not noticed significant irregularities in the election of municipal and national assemblies.

Neither members of the junta nor those of the transitional civilian government can stand as candidates, but under a new law at least 20% of elected representatives will be women.

The new government will have access to substantial petroleum revenues that could help lift the nation out of poverty – if it does not succumb to the so-called “oil curse”.

In oil-rich developing countries, public contracting in the oil sector is plagued by revenue vanishing into the pockets of oil executives, middlemen and local officials, according to international anti-corruption organisation, Transparency International (TI).

In a special report on corruption and oil, TI said countries dependent on petroleum revenue for their livelihood (with the exception of Norway) were among the world's most economically troubled, authoritarian, and/or conflict-ridden nations.

The vast bulk of oil reserves lie in countries where the rule of law and democracy are weak, and public service recruitment is based on nepotism and patronage rather than merit.

“The state becomes a kind of ‘honey pot’ to be captured by private interests and pubic officials,” Stanford University Professor Terry Lynn Karl wrote in the TI report.

“Oil is so essential and so profitable. There is no other legal commodity that engenders such easy opportunities for instant wealth over such a long period.”

This issue drew some attention after last year’s sudden administration change, which saw the new government locked in a dispute with Woodside over changes to an agreement the company had made with the former government.

The new regime said amendments to the initial agreement had been improper and would reduce the government’s revenue from Woodside-operated production sharing contracts by about $US200 million ($A260 million) per year.

The issue was resolved after Woodside paid $100 million to settle rather than take the dispute to arbitration in Paris.

But now, at the behest of Greens Senator Christine Milne, Australian Federal Police are now investigating the arrangement reached by Woodside with the post-coup government, which resulted in those four amendments being dropped and in the former Energy Minister being released from jail under an amnesty.

Woodside said there was no basis to any allegations against it, but the company accepted that a formal investigation was the appropriate way to resolve the issue.

Woodside was well aware of the threat that corruption posed, chief executive Don Voelte told the 2005 Australian Petroleum Production and Exploration Association Conference in Perth.

“Companies like ours, and the governments that host them, must be on guard for risks that go hand-in-hand with exploration success in developing nations … [including] the risk that oil revenues will be misappropriated, poorly managed or inequitably distributed,” Voelte said at the time.

“Woodside is fully committed to working with the communities in which we operate to make oil a blessing, not a curse.”

Woodside has joined the Extractive Industries Transparency Initiative, an international protocol aimed at increasing transparency in transactions between governments and companies in extractive industries in order to limit the potential for corruption.

This issue has become increasingly important for Mauritania, which is now among the top African countries in terms of mineral wealth.

Applications for exploration permits have centred on petroleum, copper, gold, diamonds, iron ore and phosphates. Explorers include oil and gas players such as Australia’s Woodside, Hardman, Roc and ambitious junior Baraka Petroleum, and international majors such as China National Petroleum Corporation, BG Group, Dana Petroleum and Gaz de France.

This recent boom in investment follows a bust in the early 1990s when the Gulf War prompted major US companies to withdraw and caused many potential investors to take an arm’s length approach to Arab nations (Mauritania’s population is of Arab and African descent).

But in the mid ’90s, a handful of explorer drove the gradual resurgence of the resources industry.

Baraka managing director Max de Vietri had been operating on and off in Africa for almost 30 years and was able to peg a huge gold holding in Mauritania because of limited interest in the country.

De Vietri, who speaks French fluently, said he has found the Mauritanian Government proactive and helpful in attracting foreign investment.

“They’re good guys – approachable people who will respect you if you show them respect,” he said.

He was then alerted to the petroleum opportunities in the Salt Basin area, where he picked up two well proposals abandoned by Texaco and Mobil when the war broke out.

De Vietri took the former Mobil offshore block to Europe and Australia for consideration but found few companies wanted to look at the proposal.

Perth-based junior Hardman did have a look and arranged a deal, which subsequently led to a joint venture in 1998 with Woodside (one of the companies that did not want to speak to de Vietri initially), then to the Chinguetti discovery in 2001, which came onstream this year.

Chinguetti is now one of several oil fields that have emerged off the Mauritanian coast.

De Vietri says Baraka’s onshore petroleum blocks covering the coastal Mauritania and the Taoudeni Basin across both Mauritania and neighbouring Mali hold targets that “could be some real elephants”.

While Mauritania has successfully created an attractive investment environment to make the most of its mineral endowment, it is still an emerging economy.

According to the United Nations, the gross domestic product per capita in Mauritania in 2004 was $US420 compared to the average European GDP of $30,380, while just over 50% of the population in Mauritania was still illiterate and only 44% of children attended primary school.