Petronas upbeat on Morocco oil exploration

RABAT, May 1 (Reuters) - After four years drilling off the Moroccan coast, Malaysian state energy firm Petronas (PETR.KL: Quote, Profile, Research) is optimistic it will find commercially viable reserves of oil and gas, the company said on Thursday.

Morocco is the only Maghreb country that does not produce oil and more than 25 companies are scouring prospects across the kingdom, drawn by zero corporate tax and a 25-percent ceiling for the state's part in future concessions.

Petronas is searching an offshore area near the Moroccan capital Rabat until September this year and a further exploration phase would continue its activities until 2011.

"In the current exploration phase, we are drilling to the depth of slightly more than 4,200 metres...," a company spokesman said in emailed replies to questions from Reuters.

The drilling, it said, had proved to be "challenging."

"The area has an untested petroleum system, so detailed seismic interpretation and understanding of the basin and reservoirs will be extremely crucial."

"We remain optimistic and will continue with the evaluation of seismic interpretation based on our drilling results," Petronas added.

Soaring crude prices have given oil companies the money and the incentive to search in areas where the risk of failure is greater and the cost of energy extraction higher.

Petronas, which contributes nearly a third of Malaysia's state revenues, has embarked on fresh upstream investments after several financial deals.