Joined: 05 Oct 2005
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Published: Sunday, 16 September, 2007, 06:32 AM
Libya, holder of Africa’s largest oil reserves, is preparing to contract foreign companies to develop untapped fields after an increase in energy prices made it an economical means to raise output. After awarding more than 50 exploration permits in the past two years to more than 40 companies, the North African state will offer contracts starting next year for known fields that haven’t been developed because they are too small or too complex, the head of Libya’s oil industry said. About 300 such fields may add 4bn to 5bn barrels to the nation’s reserves, Shokri Ghanem, head of state-run National Oil Corp, said in an interview in Vienna on Thursday. At today’s price of about $75 a barrel, the deposits are worth at least $300bn, or six times Libya’s gross domestic product. National Oil plans to develop more than half of the fields, “those that only require more money and are straightforward to operate,” Ghanem said. “The others are difficult and we will need to tender them.” Oil prices have tripled in four years, prompting companies to return to deposits that weren’t considered worthwhile before. Libya’s oil industry, seeking to recover from two decades of sanctions, has one of the world’s lowest extraction costs, sometimes as little as $1 a barrel, according to the US Department of Energy. Ghanem said the “national strategy” to develop untapped fields will offer two kinds of agreements for international companies, one that allows them a share in the oil and one that just gives them a fee for the work, called a services contract. “Companies usually prefer the production-sharing formula as it allows them to add reserves to their balance sheet and ensure future business and supplies to their refineries,” said Francis Perrin, an analyst at the Paris-based Arab Petroleum Research Center. In the past two years, companies including ExxonMobil Corp and Occidental Petroleum Corp have won exploration permits in the country. With 5bn barrels, the 300 fields would amount to 12% of Libya’s crude-oil reserves, or 243 days of US oil consumption, according to BP estimates. Libya, a mostly desert nation slightly bigger than Alaska, has only a third of its inland territory covered by agreements with oil producers. The country has also given drilling rights to companies offshore. – Bloomberg |
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