Development of Dragon Oil's interest in the Caspian Sea had been deferred due to the slump in the share price of the Irish exploration and production company, the chairman, Mr Arifin Panigoro, said yesterday at the announcement of interim results. Mr Panigoro said the share price had been depressed by recent announcements, including his own one in May that he is selling his 46 per cent stake in the company because of the conditions in his home country, Indonesia, and the stated intention of Bell, the Philippine company, in June to dispose of its 18.8 per cent interest.

He was convinced, he said, that because of the difficulties energy companies were experiencing due to the collapse in oil prices, "we are close to the point at which there will be general takeover activity in the energy sector".

"Our realised price for oil sales, after transportation and related costs, in the Caspian has fallen by 45 per cent from an average of $10.2 per barrel during 1997 to an average of $5.6 per barrel in the first half of 1998," he said.

The prospect of raising further equity capital was now ruled out until the sale of the shares had been resolved. Dragon Oil made a $6,755,000 loss in the six months to June 30th, compared to a pre-tax profit of £1.3 million in 1997. "Action is currently being taken to focus cash outlays on those activities required to maintain current production and associated operations," Mr Panigoro said.