S.Africa eyes Mauritania oil, boosts ties

NOUAKCHOTT, June 19 (Reuters) - South Africa is interested in exploiting oil reserves in new producer Mauritania and will open an embassy this year in the West African country to step up bilateral relations, South Africa's energy minister said.

"It would be cost effective if we will buy the oil in Africa, so we are interested in Mauritania's oil and we have indicated that," South Africa's Mineral and Energy Affairs Minister Buyelwa Sonjica told Reuters in Nouakchott.

Mauritania began producing crude oil in early 2006, forecasting output of 75,000 barrels per day (bpd) from the offshore Chinguetti field opened by Australia's Woodside (WPL.AX) and now operated by Malaysia's Petronas [PETR.UL].

Difficulties extracting oil from the field's complex reservoir structure have resulted in Chinguetti's output falling below 15,000 bpd. But other companies, including French major Total (TOTF.PA) are prospecting in other parts of the large, mostly desert, country and hopes are high.

South Africa has little known oil potential and relatively small gas reserves, but it has broad expertise in the fields of energy and mining.

The two countries signed an agreement last November to cooperate on energy affairs, including on skills and training.

"We will take whatever South Africa can bring us in terms of skills and technical assistance," Mauritania's Oil and Mines Minister Moustapha Kane said.

Sonjica said South Africa had already nominated an ambassador to Mauritania and would open an embassy in the capital Nouakchott by the end of the year in the interests of boosting ties between the two countries.

South African companies already have a number of supply contracts with Mauritania's state iron ore mining company SNIM, which accounts for some 12.5 percent of the country's economy and is planning to expand operations due to high steel prices. (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com) (Reporting by Vincent Fertey; writing by Alistair Thomson)