Libya Tells Little As Firms Flock To Upstream Show
Petroleum Intelligence Weekly, April 26
Libya's grand reentry onto the world oil
stage following suspension of United
Nations sanctions turned out to be a better
indicator of potential interest than it was of
Libyan terms and conditions. A conference in
Geneva last week was heralded as a platform
for Libyan National Oil Co. to announce new
acreage offers and fiscal terms that are
aimed at luring investment back into the
country.
About 400 people attended from a
range of companies that included majors
Royal Dutch/Shell and Texaco, as well as
several smaller US and most European oil
firms. In the event, they got few details from
NOC - although probably enough to sustain
keen interest in an oil province as potentially
prolific and low-cost as Libya's. NOC told
participants only that new acreage would be
available later this year, incorporating some
blocks around big producing fields that are
operated by NOC affiliates - including some
areas once held by US firms and thought
previously to be subject to standstill
agreements.
One concrete piece of information that
was revealed by Libyan Oil Minister
Abdullah al-Badri is that acreage will
be offered in a formal licensing round, and
not to favored companies, as in the past.
Another key issue still to be resolved is
double taxation, something that has
concerned Lasmo recently in relation to
spending on its Elephant discovery and
Lundin Oil in relation to its En Naga find
{38#13-03}.
It also remains to be seen whether
terms will be changed under which the
government take rises quickly on discoveries
larger than 50-million barrels.
Private companies maintain that this is a
major disincentive to large developments.
Libya's promise to offer some of the
undeveloped acreage operated on behalf of
the US firms that were forced to withdraw
from Libya in 1986 could prove to be the
biggest break for international oil firms.
But Tripoli appears to have ruled out the
possibility of enhanced oil recovery contracts
in major producing fields, despite some
strong arguments in their favor. Officials
promised to offer acreage relinquished not
only by state Agoco, but also by the Waha
Oil Co. The 400,000 barrel a day Waha field
is part of the acreage of the former Oasis
group, made up of Conoco, Marathon, and
Amerada Hess.
There was talk of service companies
being brought in to bolster production
even in the developed fields that were
formerly operated by those US firms,
which pulled out under order from US
President Ronald Reagan in 1986. Their
interests are maintained through a standstill
agreement that technically expired in 1989,
but is tacitly maintained by Libya. Nagmeddin
Arifi, chairman of Zueitina Oil Co., formerly
Occidental's Libyan subsidiary, argued that
by spending $1.5-billion on its older fields -
particularly Waha and Agoco-operated Sarir -
Libya's " stretch" production capacity could
be quickly increased by some 300,000 b/d, to
2-million b/d, while keeping total costs below
$3 a barrel. NOC now has average costs of
$2.37 a barrel, comprised of 6- for finding,
11- for operating, and $2.20 for development.
While many assume that UN sanctions will
soon be lifted, following their suspension at
the time of the recent handover of the Pan
American bomb suspects, prospects remain
dim for removal of unilateral US sanctions -
despite removal of European Union
restrictions. US firms are certainly not
hopeful of an early return, and officials in
Washington say that even a final lifting of UN
sanctions in early July will not necessarily
spell an end to US sanctions. |
