Mauritanian Prime Minister Sidi Mohamed Ould Boubacar said today that Chinguetti operator Woodside had refused to change its position on the issue despite a month of negotiations.

Boubacar did not say how much the government stood to lose if the amendments were applied but Mauritanian financial sources estimated it would amount to $US200 million ($A266 million) per year.

Boubacar declared the amendments null and void. But he said Mauritania was determined to "use the law, nothing but the law" to protect its interests. Under the terms of the contract, this will mean arbitration in European court.

The dispute concerns amendments to four offshore production-sharing contracts operated and negotiated by Woodside.

Boubacar said the amendments reduced the state's share in the oil revenue, lowered taxes and removed bank guarantees that were in the initial contracts.

He said the amendments – signed by former petroleum minister in February 2004 and March 2005 – were "outside the legal framework of normal practice”, the Prime Minister said.

The amendments, which are supplementary to the PSCs, were negotiated with the former Minister of Energy and Petroleum and approved by the Mauritanian government and the parliament before becoming law early last year.

But in August last year, a bloodless coup ousted the existing authoritarian regime.

Then in December the former petroleum minister Zeidane Ould Hmeida was arrested. Last month he was charged with "serious crimes against the country's essential economic interests", forgery and corruption, according to an official statement.

Due to begin production this month, Chinguetti is the first oil development in the impoverished West African nation, and the new government expects oil development to generate economic growth of 20% cent this year.

Both Woodside and the government have said the dispute will not affect development and production at Chinguetti.

Roc Oil CEO John Doran told EnergyReview.net that so far discussions between Woodside and the Mauritanian government were "normal business."

"The key thing here is that the joint venture decided to go ahead with the development of Chinguetti on the basis of these PSCs," Doran said.

"What you have to consider is that when oil is above USS$60 per barrel, every government wants a piece of the pie."

Woodside operates the Chinguetti joint venture and the four offshore production sharing contracts on behalf of several joint venturers, including Hardman, Roc Oil, BG Premier, Petronas, Dana Petroleum, Energy Africa and the Government owned Societe Mauritanienne des Hydrocarbures.

Meanwhile, Perth-based Baraka Petroleum has said its oil and gas agreements with the Mauritanian government are "safe and sound".

The junior is trying to distance itself from the controversy. It has partnered with Woodside in some onshore blocks, but these are not affected by the dispute.

However, Baraka's shares fell on Friday, dropping more than 5%, down 1.5 cents to 28 cents.

Woodside Petroleum also fell, going down $1.50 or 3.3% to close at $43.85 on Friday. Hardman Resources was down 9.5 cents or 4.7% to $1.925. Roc Oil was down 16 cents or 5.1% to $2.98. All three of the Australian Chingutti partners’ share prices continued to fall today.

But Baraka has made up lost ground in morning trading, recovering to 29.5 cents by midday Sydney time.