Mauritania's government vowed to use all possible legal actions to try to annul disputed amendments to oil production sharing contracts signed with Australia's Woodside Petroleum Ltd
. The dispute threatens to overshadow the scheduled production start-up this month of a major offshore oil project operated
by Woodside, which will turn the poor, largely desert-covered West African state into the continent's newest oil producer. Mauritania, whose new military rulers took power in a bloodless coup in August 2005, says it cannot accept the Woodside contract amendments, which were signed more than a year ago by a former oil minister who is now in prison facing trial for corruption. According to Reuters, Woodside says it believes the amendments, which were approved by the previous Mauritanian government and passed into law in 2005, are valid and binding on all parties. It has insisted the dispute does not affect its $530 million Chinguetti offshore oil project -- thought to contain up to 123 million barrels -- which is due to start output this month. Woodside will negotiate with Mauritania under
the contracts' dispute resolution procedures. It added that during the talks, expected to last three months, exploration would continue in the areas covered by the production sharing contracts.