Exploration:It has been another good year for commodities. Oil has rarely been out of the news, rising to record levels of close to $80 a barrel and the demise of the dollar has raised the profile of gold. Diamonds remain a girl's best friend, and while you may ask what titanium actually is, its rise in value will be the make or break of one Irish company.

While such raw minerals may seem far removed from everyday life, their increase in value is in fact very good news for several Irish resource companies. Sites that were once considered too small to be worth drilling are now becoming increasingly attractive and many small Irish companies that have been plodding along for years are coming into the spotlight.

In simple terms, what's causing problems for the likes of airlines and other high energy users is good news for resource companies with exploration licences.

Up steps the raft of Irish mining companies, a list so extensive it's hard to keep track of what's going on where. There are about 30 companies in the sector, ranging from fully-fledged producers like Tullow Oil to exploration minnows such as African Diamonds.

While they all differ substantially in size and activity, the majority have at least one thing in common - they operate outside of the State.

There are a few exceptions, such as Island Oil & Gas and Providence Resources, which are both drilling in the Celtic Sea, but, despite having significant drilling programmes for next year and, in Providence's case, a farm-out agreement with oil giant Exxon Mobil, both have yet to prove their worth.

In fact, the biggest and most successful of the Irish resource companies, Tullow Oil, is now registered in the UK. Still, with Irish origins and a substantial number of Irish investors, the company remains on the radar of analysts here and is continually held up as the example to be followed by smaller rivals.

And what an example it is. After pulling off a large deal at the end of 2004 with the acquisition of Energy Africa, Tullow did the same this year with the purchase of Australian Hardman Resources.

Tullow, whose Dublin share price rose 46 per cent in the first 11 months of the year, is now not only a major player in the North Sea gas market, but also has stakes in a raft of assets around the world, searching for oil in places the majors don't want to look.

According to Tom Hickey, Tullow's finance director, it's that willingness to think beyond the obvious that is key to the future success of Ireland's exploration and production sector. "What we are looking at is places where the majors don't want to be," says Hickey, "places that are considered to be too risky or too small."

This strategy seems to be working for others too. After testing the waters in Sudan and the Philippines, Michael Carvill, managing director of Kenmare Resources, plumped for Mozambique for his exploration project and found one of the largest titanium deposits in the world.

It may have taken almost 20 years, but the Dublin-based company is about to begin production at its Moma Titanium Minerals mine and, by the middle of next year, hopes to be producing 6 per cent of the world's titanium.

Shares in Kenmare were up 12 per cent in the first 11 months of the year even though, like many of its rival Irish exploration groups, the company has yet to make any money.

Another one to watch, according to industry commentators, is oil and gas company Petroceltic - the most traded resource stock in Dublin. Headed by oil veteran John Craven, Petroceltic, which has risen 36 per cent since it listed on Dublin's IEX in August, recently reported positive results from one of its sites in Algeria. With the increased concerns about security of gas supplies from Russia and what one analyst describes as "a lot of meat on the bones", the company is the focus of increasing attention.

Newcomer Petroneft, looking for oil and gas in Russia, has also attracted attention, with its share price doubling since it listed in Dublin in September.

Dragon Oil, meanwhile, has disappointed. Despite being one step ahead of most of its rivals by already producing about 20,000 barrels of oil per day, the lack of news has seen its shares shed 9 per cent in the first 11 months of 2006.

"These companies' share prices are very sensitive to news flow," says Job Langbroek, a resource analyst at Davy, adding that some of them are very liquid and followed closely by Irish investors. Dragon, however, will remain on the watch list.

Other names to look out for, according to analysts, are Aminex, which produces oil and gas in the US and has exploration activities in Tanzania, North Korea, Madagascar and Egypt; Ormonde Mining, which is searching for gold, copper and silver in Spain; and Glencar, which is focused on exploration and development of gold deposits in Africa. Aminex was down 19 per cent in the first 11 months, while Ormonde and Glencar were up 56 and 74 per cent respectively.

Then there's Pan Andean and African Diamonds, both part of the empire of serial mining entrepreneur John Teeling.

While Pan Andean is already producing oil and gas in the US and Bolivia, Dr Teeling believes African Diamonds is sitting on more diamond resources than originally thought in Botswana.

These companies, though, have yet to prove they have what it takes. For now it is a case of wait and watch, as it will be with Dr Teeling's new venture, Connemara Mining, a zinc explorer that's due to list in London and possibly Dublin next year.

With so many companies on the scene, most commentators agree that Ireland is ripe for a breakthrough in the resource sector. However, exploration has proved an investment graveyard for Irish investors in the past.

While the abundance of companies increases the chances of a breakthrough, the relatively small size of most of the indigenous players could be their downfall. The smaller the company, the lower the chances of raising adequate funding and, at more than $200,000 a day to operate a rig in Irish waters, exploration is not a cheap business.

Consolidation, it seems, is inevitable. In fact, December saw Dr Teeling buy shares in one of his own companies for the first time on the open market - a move understood to be defensive in removing a possible predator from the shareholder register.

Not everyone has the money to do this, so it remains to be seen whether Ireland will be home to so many mining and exploration minnows this time next year.