OIL AND gas company Providence Resources has brought in a new partner to begin exploration work on a key area off the Irish coast, writes Barry O'Halloran.

Providence, which is listed on the London and Dublin stock markets, said yesterday that, along with its existing partner, Sosina, it had signed a farm-out deal on its Spanish Point gas prospect with Barclay's Bank-backed Chrysaor. Chrysaor will begin appraising the exploration block, 175 miles off the Clare coast, in return for a minimum 30 per cent interest in the block.

"Chrysaor then has the option to earn up to a maximum 70 per cent interest in the event that two wells are subsequently drilled on Spanish Point," Providence said in a statement yesterday.

Providence chief executive Tony O'Reilly jnr told The Irish Times that Chrysaor could drill two appraisal wells with a view to establishing Spanish Point's likely productivity.

He pointed out that, in 1981, Providence's predecessor, Atlantic Resources and Phillips, established that Spanish Point holds a significant quantity of gas. He explained that it would not have been viable to exploit it at that time, as Ireland had little in the way of infrastructure to ship the fuel to market.

Mr O'Reilly said the well could hold up to 1.4 trillion cubic feet of gas, which would put it on a par with the Corrib field that Shell and Statoil are developing off Mayo. That field alone contains enough natural gas to meet Ireland's projected needs for the next decade.

Mr O'Reilly said yesterday that the Chrysaor deal is positive news for the company. "It gives us the opportunity to advance the asset with little risk to our shareholders," he said.

Barclay's Capital, Natural Gas Partners (NGP) and its management own Chrysaor, which was established in 2006 to work on developing and exploiting dormant oil and gas reserves. The company has £100 million in funding. It is currently drilling appraisal wells in the Solan licence to the west of the Shetland Islands. This and Spanish Point are its main assets.

Providence also has interests in Britain, the US and in Nigeria.