Lundin Deal Puts Petro-Can Back in African Oil Scene
By Jeffrey Jones
CALGARY, Alberta, June 21 (Reuters) - Petro-Canada's $75-million purchase of Libyan oil assets from Lundin Oil AB puts the company back on the North African oil scene just four months after it appeared to be winding up efforts there.
Petro-Canada, the country's third-largest oil producer, refiner and marketer, said on Thursday it agreed to buy Lundin's 25-percent interest in the En Naga block in Libya's Sirte Basin, which contains two proven but undeveloped oil fields. It said it did not expect to be targeted by U.S. sanctions aimed at foreign oil firms operating in Libya.
The deal is part of a larger restructuring of Sweden's Lundin, which also included the sale of most of its other assets, excluding those in Sudan and Russia, to another Canadian energy heavyweight, Talisman Energy Inc.
In early March, it appeared Petro-Canada's days in North Africa were numbered when it said it broke off talks with Algeria aimed at developing a major natural gas project. The two sides had been in discussions for about two years.
The move came after Petro-Canada sold its interests in Norway to concentrate on its Canadian offshore oil, oil sands and natural gas holdings.
"We are still interested in North Africa, and we always maintained we'd evaluate international opportunities as they arose, and that's what happened with this," Petro-Canada spokesman Chris Dawson said.
The fields, which are 75-percent owned by the National Oil Co. (NOC) of Libya, contain reserves currently estimated at 84 million barrels, according to the U.S. Energy Information Agency. Petro-Canada believes that number could rise.
"There's two fields that have been established by three wells and defined by seismic. But we feel that ultimate reserves won't be determined until there is a more thorough delineation program," Dawson said.
The United States has threatened to punish foreign oil companies operating in Libya under its Iran-Libya Sanctions Act, but the company said it believed its investments would be too small to run afoul of the legislation, which is due to be renewed by August.
The Libyan project represented good opportunities for short-term production growth at an attractive price and keeps Petro-Canada operating in the region should it resume talks with Algeria for the gas project, said Martin Molyneaux, analyst with FirstEnergy Capital Corp.
"It's doable and profitable with very little downside risk," Molyneaux said. "You keep that team intact and working with the hope that the Algerian stuff comes together one way or another."
Petro-Canada continued to have a good relationship with the Algerian government and the national oil company Sonatrach, Dawson said.
The two sides had been discussing a regional gas project encompassing 23 gas fields producing a total of up to 400 million cubic feet a day before Petro-Canada walked away from the table.
The deal with Lundin Oil is slated to be closed during the third quarter, pending NOC's approval of Petro-Canada becoming operator, the company said.
Petro-Canada shares closed off C$2.30 at C$39 in Toronto on Thursday, down from their 52-week high of C$43.65.
($1=$1.53 Canadian) |
