Mauritania is due on Thursday to start producing the country’s first oil from the Woodside-operated Chinguetti project, which is expected to produce 75,000 barrels per day.

However, last-minute glitches could delay start-up for a couple of days, SMH director of operations Ismail Abdel Vetah told Reuters. SMH is Mauritania’s state-owned oil company.

Abdel Vetah said Mauritania should be producing 300,000 barrels per day within three to four years, once other Woodside-operated offshore fields – Walata (previously known as Tiof), Tevet and Labeidna – come into production.

But he believes that the biggest elephants could be found onshore in the Taoudeni Basin, an area about the size of France that straddles the border with Mali. The first wells in this basin are likely to be drilled by a joint venture between Chinese giant CNPC and Perth-based junior Baraka Petroleum.

The government’s share of revenue from Chinguetti and future oil production will be directed into the special state account and used exclusively for the state budget.

“The account will store all oil income of the state, such as resources generated by ... oil production, as well as royalties, taxes and other oil receipts,” Ebbe was quoted as saying.

This development follows an ongoing dispute between Woodside and the Mauritanian Government over amendments to production-sharing contracts in the country.

The government has said the amendments improperly reduced its share of revenue. The minister who signed them is now in prison.

Abdel Vetah said the amendments reduced the state’s share of oil revenue, lowered taxes and removed bank guarantees that were in the initial contracts, and they would cost Mauritania $US1 billion ($A1.35 billion) over the next 10 years if they were not annulled.

But Woodside said it believed the amendments were valid and binding on all parties.

If the dispute is not settled in three months’ time, it will be put before the International Chamber of Commerce in Paris.

The areas under dispute involve production permits outside the Chinguetti development, but include Tevet and Walata (Tiof).