Libya drawing foreign interest in oil, refining and gas sectors

Sep 29, 2005 02:00 AM

Libya is drawing widespread foreign-investor interest in its oil, refining and gas sectors as the second oil-exploration bidding round since sanctions were lifted nears its conclusion, Tarek Hassan-Beck, a member of Libya's National Oil Corp. management committee, said.
The first round attracted 122 bidders and awarded 57 blocks, but didn't draw aggressive interest from oil majors, who thought the terms too stingy.
The second round will award 44 blocks in 26 contract areas, National Oil Corp. executives said.

A third oil-bidding round is expected late this year or in early 2006, Hassan-Beck said on the sidelines of the World Petroleum Congress in Johannesburg. Libya anticipates five or six future bidding rounds, which will total some 261 blocks, averaging two rounds a year.
"When the business environment changed, we actually had a stampede," Hassan- Beck said. The ConocoPhillips-led Waha group of oil companies, which had contracts to develop Libyan oil prior to the implementation of sanctions, is nearing a new agreement with Libya, Hassan-Beck told.
"We're getting closer and closer to bringing them back," he said.

Libya provided details about the previous bidding rounds in the Libyan National Oil Corp.'s Exploration and Production Sharing Agreement IV, including a breakdown of more than $ 132 mm in signature bonuses paid by the oil companies that won blocks in the first round.
Libya believes in open disclosure of oil-contract awards to guard against bribery and corruption and is committed to reforms in its energy sector, Hassan- Beck said. The country wants "to show everybody we are trying to be bullet-proof, walk on water," he told an oil-industry audience.

Oil-development plan
Libya's 2005-2010 exploration plan calls for drilling at least 50 wildcat wells a year, 3D seismic surveying of 4,000 sq km a year and 2D seismic surveying of 10,000 km a year. National and joint-venture companies will carry out the activity, which will cost more than $ 4 bn, according tothe National Oil Corp.
International oil companies are expected to spend more than $ 7 bn on exploration activity over the 10-year period, Hassan-Beck said. The country aims to find at least another 20 bn barrels of oil equivalent through ongoing exploration, he said.

Libya's current oil reserves total nearly 40 bn barrels, according to slides provided by the country's delegation.
Libya's oil production borders on 1.7 mm bpd, while its total production capacity is 1.8 mm bpd, Hassan-Beck told. The country hopes to grow its oil production to 3 mm bpd by 2010- 2011, Libyan delegates at the conference said.

Revamping refineries
Libya also plans about $ 3 bn in upgrades and expansion to its refining and petrochemicals facilities, as global refining capacity is stretched and refined-products prices are soaring. Libya plans to change the product slate at its largest refineries to maximize production of gasoline that meets European fuel specifications, National Oil Corp. Refining Department Manager Saelm Takitl said.
Libya is interested in forming joint ventures to develop refining assets, with foreign partners providing financing, marketing and technical experience in return for the possibility of taking shares in existing plants.

The country remains open to investment proposals and hasn't issued deadlines for these plans, Takitl said. Libya currently has 380,000 bpd of existing refining capacity: the 220,000-bpd Raslanuf, 120,000-bpd Azzawiya, 10,000-bpd Sarir, 20,000-bpd Tobruk and 10,000-bpd Brega plants, Takitl said.
At Raslanuf -- a seafront, export-oriented refinery -- and domestic-oriented Azzawiya, the National Oil Corp. plans to reduce fuel-oil production while raising gasoline production, Takitl said.

Gas a priority
As global natural gas demand grows, Libya is talking with several companies interested in investing in gas production and distribution projects there. The country currently produces 1.5 bn sq cfpd and had 54 tcf of discovered gas reserves as of Dec. 31, 2002, according to Libyan delegates.
But as other African countries such as Nigeria begin selling more of the natural gas that used to simply be burned off into the atmosphere when produced along with oil, Libya also wants to aggressively monetise this resource.
"We now have gas a priority in Libya," Hassan-Beck said in a presentation. Previously, the presence of gas was seen as an "unhappy coincidence," he said.

The North African country aims to develop and produce several gas discoveries, improve the pipeline network and revamp and upgrade liquefied natural gas facilities that enable natural gas to be cooled into a liquid form and transported by ship to markets around the world.
Libya will consider all uses for its natural gas, including gas-to-liquids technology, once it has further developed and grown its reserves, said Kashim el-Marimi, manager of a Libyan gas-processing complex.

Source: Dow Jones Newswires
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