Blackstairs Energy, a new Irish exploration company headed by Gerry Sheehan, the former international exploration and new ventures manager for Tullow Oil, has signed a joint venture agreement with Canadian group Vangold Resources to search for oil in Armenia.

Blackstairs, whose investors include well-known Dublin solicitor Stephen Miley, recently signed a petroleum exploration and production sharing contract with the Armenian government, giving it a five-year licence to explore for oil on three blocks in southern and central Armenia.

Under the terms of the agreement announced yesterday, Vangold will contribute half of the $2.4 million (€1.8 million) cost of exploring for oil at the sites.

The three blocks cover a total area of 13,775 square kilometres, though Gerry Sheehan, Blackstairs' managing director, said that while the terms for blocks four and five had been finalised, discussions were still ongoing regarding block six.

Blackstairs will act as operator for the project, which will start with satellite imagery studies to ascertain exactly where the detailed seismic studies should be focused.

The licence runs for five years, with two options to extend it for a further two years each time.

Mr Sheehan said Armenia is largely under explored and has in the past tended to be ignored.

Another Canadian group Transeuro Energy is due to start a drilling programme on a block near to Blackstairs' licence soon, and the outcome of this may dictate the next moves by Blackstairs, he said.

Mr Sheehan said he was pleased to have Vangold on board and said that this particular project fits well with the strategies being pursued by both companies.

Vangold is listed on the Toronto Stock Exchange.