Chinese stop oil exploration in North Cmr over security risks - Official

The Nigerian Islamic sect Boko Haram's expanding insurgency into Cameroon, which is believed to be behind the kidnapping of 10 Chinese workers in May, has prompted China's oil firm, Yan Chang Logone Development Holding Co., to suspend exploration in Cameroon's Far North Region, sources at Cameroon's National Hydrocarbons Corp., known as SNH, told Dow Jones Newswires Tuesday.

State-run SNH, which manages and markets Cameroon's oil industry, is in a joint venture, production-and-sharing contact with the Hong Kong-based company. Yan Chang, which had reached a $62 million exploration / production-sharing contract with SNH in 2009, is the first Chinese corporation to explore for oil in Cameroon.

It is the second time in a year that work has been interrupted on the site where the testing of three wells suggest there are huge oil and gas reserves.

Yan Chang has been operating on two oil blocks in Waza in the Far North Region, where 10 Chinese road construction workers were kidnapped in mid-May by suspected armed militants of Boko Haram. The hostage-takers also took a dozen vehicles and explosives belonging to the road constructor.

Boko Haram is believed to be involved in at least five abductions-mainly of foreigners in the area, which is very close to Nigeria's Borno State that is known as the stronghold of the sect.

But the group that has been holding over 200 Nigerian schoolgirls whom they seized in mid-April, hasn't claimed responsibility for capturing the Chinese workers.

"The Chinese embassy recalled all its workers in the Far North Region and this coincided with the suspension of work on the oil fields we're operating there with our partner-Yan Chang Logone Development Holding Co. Ltd.," SNH's Director of Exploration Simon Tamfu told Dow Jones Tuesday.

The Chinese embassy in Yaounde couldn't be reached for comment and a spokeswoman at the Yan Chang office in the West African nation's port city of Douala refused to speak on the matter.

The SNH manages and trades oil on behalf of the Cameroon government and forecasts Cameroon's daily oil output for 2014 will be around 90,000 to 100,000 barrels a day, up from about 63,000 bpd recorded in 2013.