UPDATE 1-Anadarko sees potential in Mozambique oil exploration

(Adds details on Mozambique sector, drill rig shortage)

By Paul Simao

CAPE TOWN, Nov 1 (Reuters) - Anadarko Petroleum Corp. (APC.N) said on Thursday it saw "huge" potential for its oil exploration programme in Mozambique, one of Africa's new frontiers for oil and gas drilling.

The Houston, Texas-based independent oil and gas producer, which has assets in several other African nations and elsewhere in the world, won the rights last year to explore in Mozambique's prized Rovuma Basin.

"We think there is a huge amount of potential there," Philip Loader, Anadarko's vice president of exploration, said at the Africa Upstream 2007 oil conference in Cape Town.

Loader, however, added that the effort was not without risk.

The Rovuma Delta covers 60,000 square km (23,170 sq mile) in the impoverished southeastern African country's northern Nampula and Cabo Delgado regions.

Mozambique has opened its doors to foreign oil companies in an effort to build up its economy, which was devastated by a civil war that followed independence from Portugal in 1975.

Oil exploration activities slowed during the lengthy conflict as foreign investors looked elsewhere in Africa.

The return of companies like Anadarko has bolstered the Mozambique government's determination to open up other parts of the economy to foreign investment.

Loader also said that Anadarko, like other oil companies, was struggling to overcome a worldwide shortage of drill rigs that is threatening to hamper exploration, especially in western and southern Africa.

He said Anadarko had entered into long-term drill rig contracts in the Gulf of Mexico and was considering extending the strategy in other parts of the world.