by Terry Murden

23-08-09 Those who see oil as the motive behind all western dealings with the Middle East will no doubt be feeling vindicated by the deals currently being struck in Libya by British energy companies.
Libya is already Africa's leading oil producer and also has huge natural gas resources, but it remains largely unexplored because of the effects of repeated sanctions on the country.

The UK government and British companies now joining the queue to invest are well aware that licences to explore depend on the goodwill of the Libyan regime.
Lord Trefgarne, the former trade minister who chairs the Libyan-British Business Council, said that there would be "benefits" for British firms from the decision to release Megrahi.
He said: "In Libya, business matters and political matters are inextricably entwined."

It was during a visit to Libya two years ago by the then Prime Minister, Tony Blair, that BP and its joint venture partner, the Libya Investment Corporation, agreed a deal thatwould see the company return to the country after a 30-year absence. BP withdrew from Libya in 1974 when its oil industry was nationalised.
The stakes for all parties involved are huge. In May 2007, the company signed a $ 900 mm exploration and production contract with Libya's state-owned National Oil Company to explore 54,000 sq km of the onshore Ghadames and offshore Sirt basins. The acreage awarded in the North Ghadames block alone is the size of Kuwait. The acreage in the offshore Sirt basin is the size of Belgium, or nearly three North Sea quadrants.

BP has now begun seismic testing with a view to starting work early next year. The company will spend $ 50 mm (£ 30 mm) on education and training projects for Libyan professionals during the exploration and appraisal period and a further $ 50 mm from the start of production.
The deal marked another stage in Libya's gradual return to the international fold since the US lifted its sanctions in 2004. The following year, Royal Dutch Shell signed a contract to return to the country. BG Group, the UK-based gas producer, has also been awarded exploration and production rights in Libya.

Overseas investment is key to Libya's aspirations as a major oil producer, as it attempts to recover from a decade of sanctions that were lifted by the United Nations in 2003 and the US a year later. That has led to the US almost doubling its daily import of oil from the country.
The deals Libya has signed since then represent a significant step forward in meeting the country's objectives laid out in its Exploration Master Plan for 2005-2015, envisaging $ 7 bn of investment, largely from international oil companies.

The Libyan economy is heavily dependent on the hydrocarbon industry, which, according to the International Monetary Fund, accounts for more than 95 % of its earnings from exports, up to 90 % of tax revenues and 70 % of its gross domestic product.
The Oil and Gas Journal estimates that Libya has 44 bn barrels of oil reserves -- the most in Africa --which makes it a key member of the Organisation of Petroleum and Exporting Countries.