Two companies approach Maldives for oil exploration

Two companies have approached the Maldives government about the possibility of prospecting for oil on the Indian Ocean archipelago, where the last survey in 1992 came up dry, the government said.

"We have had proposals from two parties. It's at an early stage," Deputy Trade Minister Abdulla Salih told Reuters. "It is going slowly at the moment because of a lot of changes at election time."

He declined to name the companies.

The archipelago, ruled for the last 30 years by President Maumoon Abdul Gayoom, is due to hold its first multi-party presidential elections by Oct. 10.

The Maldives is a chain of 1,200 mostly uninhabited atolls 800 km (500 miles) off the southern tip of India, known for luxury beach vacations and its environmental consciousness in developing the tourism that sustains its $1.05 billion economy.

Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) was the last to explore the Maldives, but found no trace of hydrocarbons after surveys and drilling an exploratory well to 900 metres (3,000 feet).

Ahmed Naseem, who headed the Shell survey on behalf of the Maldivian government, said companies had carried out exploration because the islands were formed in the same volcanic activity that created India's Bombay High offshore oilfield.

"It was a huge investment. They would not have left unless they were sure the structure did not allow for oil. But that may not apply throughout the Maldives," Naseem said.

Exploration in the country dates from the early 1970s, when several two-dimensional seismic surveys were carried out in the lagoons of the country's 22 coral atolls and the country's Inner Sea and four exploratory wells were drilled.

The prospect of oil exploration on the islands may strike some as jarring, since Gayoom has been one of the most vocal leaders speaking out against global warming.

His nation is seen as among the most under threat from rising sea levels with three-quarters of its islands standing no more than 1.3 metres sea level.

A U.N. climate change panel predicts seas will rise 59 cm (2 feet) by 2100, which means many of the Maldives' islands would be uninhabitable.

Gayoom, Asia's longest-serving leader, told Reuters in April that he wanted steeper cuts in greenhouse gas emissions, but not from the polluting international flights upon which the Maldives' tourism industry relies. (Writing by Bryson Hull; Editing by Jason Neely)

Source: By Judith Evans (Reuters)