Libya offers new oil blocks, first gas exports
By Sara El-Gammal
LONDON, May 11 (Reuters) - Libya has offered foreign oil firms large new swathes for exploration in a licensing round which includes a clause which for the first time allows the export of gas to external markets, industry sources said.
Libya's National Oil Company (NOC) on Wednesday held a presentation in northeast Libya attended by 40 oil companies to outline terms and acreage available in the licensing round.
``Now 70 percent of Libya is open for licensing,'' said one industry official who attended the meeting. ``It's a very significant step forward.''
Progress had been delayed by a recent cabinet reshuffle and a wait for new legislation replacing the country's 45-year old petroleum law.
The industry officials said the meeting, chaired by NOC chairman Abdullah al-Badri at a new facility at the Zawia refinery, had cleared up confusion about Libyan oil policy.
Oil giant Royal Dutch/Shell (quote from Yahoo! UK & Ireland: SHEL.L), which pulled out of Libya nearly nine years ago after failing to make commercial discoveries, attended the meeting in a bid to rekindle its presence in the North African country.
``We are interested in future opportunities there,'' confirmed a spokeswoman for Shell.
Investors in Libya already include Italian oil group ENI , France's Totalfina-Elf , Austria's OMV , Spain's Repsol-YPF and UK's Lasmo (quote from Yahoo! UK & Ireland: LSMR.L).
OPEC member Libya has been trying to attract more foreign spending after the United Nations suspended sanctions a year ago when it handed over for trial two suspects accused of blowing up Pan Am flight over Lockerbie, Scotland in 1988.
Tripoli controls average daily output of 1.4 million barrels a day and has proven reserves of some 29.5 billion barrels.
Unilateral U.S. sanctions still hang over Libya. Although it extended invitations to U.S. firms, none attended the meeting.
Industry officials who attended Wednesday's meeting said they were impressed.
``It was very positive, very well organised, well attended and very clearly presented,'' said one official present.
GAS CLAUSE INCLUDED IN NEW CONTRACTS
Tripoli in November offered out 96 blocks, but there was confusion over whether the offer came under current production sharing terms known as EPSA-3 or whether new public bidding rules would be introduced.
``They have now made clear the terms are EPSA 3 with some modifications. A key one is the introduction of a gas clause and they have actually presented the details,'' said another industry official.
``The gas clause in the contact didn't exist before,'' he said, adding that under current terms, firms negotiate gas explored, with NOC having a first call on the second party's gas for the domestic market.
``You would have to agree a discount rate between the two of you but now you will have the provision that you can export to external markets,'' he said.
The introduction of the gas clause in the contract, which was expected to be a feature of the new petroleum law, suggested an urgency among Libya's oil men to speed up the licensing process while red tape held up the draft legislation.
NEW BLOCKS ON OFFER, COST RECOVERY PERKS
Wednesday's meeting saw Libya widen the number of blocks on offer to a total of 137, including six which were already committed, the sources said.
Some 14 extra blocks were added in Ghadames Basin in the west, around 17 in Sirte Basin, the heart of Libya's oil output and two in Murzuk Basin where Lasmo's Elephant field with an estimated 500 million barrel reserve was discovered.
A couple of blocks were added offshore, some in the little explored Cyrenaica Basin in the northeastern part of the country while all of Kufra Basin in the southeast where little drilling has taken place was up for grabs, the sources said.
They said NOC planned a single data room which would be up and running in the next six to eight weeks. Companies could view material but would not be able to take it away or purchase it, the sources said.
Negotiations would start with bidding companies, although NOC has yet to set a closing date for the round.
One source said NOC appeared likely to favour bids linked between low risk and high risk acreage.
``If you wanted to bid for a highly prospective block you would then be required to link that with exploration in what they consider their frontier area,'' the source said.
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