Libya: Germany eyes Oasis acreage
Middle East Economic Digest, May 18
Pressure is building on the National Oil Corporation (NOC) to utilise prime acreage held for the US' Oasis group of companies since the implementation of economic sanctions in 1986. NOC has requested a clarification of the group's intentions to reactivate its concession agreements and entered into fresh negotiations with European operators over the redundant acreage, sources say.
Diplomatic sources in Washington revealed in early May that Germany's Wintershall has been in talks with NOC about licences to drill in Oasis' concessions. Wintershall, part of the BASF conglomerate, is Germany's biggest producer of oil and natural gas overseas, and maintains a significant presence in Libya.
Utilisation of the Oasis acreage, which has been maintained by the local Waha Oil Company for 15 years, could double Libyan production from more than 1.4 million barrels a day (b/d) to as much as 3 million b/d. "We are one of several companies bidding for drilling rights," says a spokesperson for Wintershall. "It is our understanding that this will not violate the rights of any third party."
The company would face stiff legal opposition and the possible freezing of its US assets under the Iran Libya Sanctions Act (ILSA) of 1996 if it were to go ahead with drilling.
The Oasis group, made up of Amerada Hess, Conoco, Marathon Oil Company and Occidental Petroleum Corporation, has been quick to respond to the threat of losing out to the German operator. "We would be disappointed if this were the case," says a spokesperson for Amerada Hess. "The Oasis group's position is clear: we would like to go back but Washington's decision on the renewal of sanctions will determine our involvement."
US companies are prevented from operating in Libya by ILSA, which limits investments of more than $20 million in either country (MEED 4:5:01, Cover Story). ILSA comes up for possible renewal on 5 August and lobbyists are beginning to intensify their efforts to influence Washington's final decision. "There is already a strong political lobby in Washington that precludes Wintershall's involvement," says an industry source. "NOC may be just testing the water." |
