CAIRN Energy has suffered another setback off North Africa with its latest exploration well.

The Edinburgh-based company noted that Kosmos said a well it drilled off theWestern Sahara area had failed to find oil or gas in commercial quantities.

Cairn had a 20 per cent stake in the well.

It is the third well Cairn has drilled off Morocco without making a commercial find.

However, Kosmos said the drilling had boosted confidence in the exploration potential of the area concerned.

The well was drilled on the Cap Boujdour licence under a permit awarded by the Moroccan government.

Andrew G. Inglis, chairman and chief executive of Kosmos, said the well had significantly de-risked further exploration in the area by demonstrating the presence of the geological elements required to create oil and gas.

He added: "Going forward, the key exploration challenge is finding reservoirs of commercial size and quality."

Cairn, led by chief executive Simon Thomson, did not comment on the result.

Renowned for making bumper finds in India, Cairn acquired acreage off Morocco under Mr Thomson's plan to develop a portfolio that would balance potentially transformational work in relatively under-explored areas with less risky activity in the North Sea.

Cairn appears to have fared much better in another so-called frontier area off Senegal.

It made two finds off the West African country in the space of a month late last year.

Initial estimates suggested both were significant finds.

The success off Senegal provided a boost for Cairn, which suffered costly reverses off Greenland before starting work in African waters.

Cairn did not mention Greenland in an operational update it issued in January.

Cairn is embroiled in a tax dispute with the Indian government. The company is barred from selling the remaining stake in its former Indian subsidiary while the dispute continues.

The company saw the value of the stake plunge from $1.1bn at 30 June to around $700m at 31 December, reflecting the sharp fall in the price of crude.

Cairn insists it has paid all taxes due in the country.

In March last year Cairn announced a well on the Juby Maritime block off Morocco had confirmed the presence of heavy oil but had been plugged and abandoned without testing.

In December 2013 a well Cairn drilled on the Foum Draa block did not find any oil or gas reservoirs but confirmed a deep water hydrocarbon system.

Cairn spent years drilling in India before making the giant Mangala find in 2004.

It will issue annual results next week.