Libyan government gives go-ahead for new energy auction

May 06, 2005 02:00 AM

The Libyan government has given the go-ahead for Libya to offer a second oil and gas bidding round to foreign oil majors, a top Libyan oil official said.
Abdulla Salem El-Badri, chairman of the Libyan National Oil Co., told that as part of the latest auction, 26 energy contracts will be awarded Oct. 2 to international oil majors. He said the projects include 44 oil and gas blocks, based both offshore and onshore.
"We are optimistic and hopeful the latest round will be a big success, El-Badri said. He said NOC will hold roadshows in Tripoli and London in coming weeks to promote the round.

In January, Libya's first exploration and production-sharing agreement auction since 2000, attracted $ 150 mm in investment and bids from more than 60 companies, including most US oil majors and many smaller independents.
Many foreign oil majors are believed to be holding out for this round when more attractive acreage is expected to be offered. Certainly international oil firms lured by billions of barrels in oil reserves are eager to get a foothold in the North African country. Shell reached a comprehensive agreement for gas exploration and liquefaction with NOC, its first major project in the country in 30 years.

The return to Libya is seen as a way to boost the oil major's dwindling reserves and strengthen its position as the world's largest producer of LNG.
"Its an educated guess as to what kind of reserves we are expecting to find as part of this deal," El-Badri said. "But we certainly expect to find enough gas to upgrade our existing LNG project and develop a new LNG facility."

Under the 30-year agreement, which confirms a preliminary deal signed in March 2004, Shell will upgrade Libya's Marsa Al-Brega LNG plant at a minimum cost of $ 105 mm. The Anglo-Dutch company said the expenditure could rise to $ 450 mm, eventually increasing the plant's output from 0.7 mm tpy to 3.2 mm tons.
But El-Badri said negotiations continue to drag between Libyan oil officials and executives from Marathon Oil, Amerada Hess and ConocoPhillips, known as the Oasis Group, about returning to Libya's Waha oil concession. The companies, which together make up the Oasis Group, were forced to leave Libya when US sanctions were imposed nearly two decades ago.

"We continue to press on. But I really hope something will happen soon, as things are generally coming together here," he said.
A US industry source close to the negotiations said recently, "it is not a simple matter of just returning. We are continuing to move forward and hopefully we will have a resolution soon."

Source: Dow Jones
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