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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1657)	5/16/2000 6:09:00 PM
From: Tomas	Read Replies (2) \| Respond to of 2742

Libya Hammers Out New Gas Exploration Terms By Sara El-Gammal LONDON, May 16 (Reuters) - Libya's National Oil Company has hammered out a framework for gas exploration terms for the first time which are tough but similar to those offered for oil, industry sources said on Tuesday. Libya's state-owned National Oil Company last week announced a total of 137 blocks were up for grabs in a new licensing round, and included a gas clause. Under current production sharing agreements known as EPSA-3, gas is negotiated separately and is not explicitly defined. "At the moment, it's negotiated on an ad hoc basis for gas...There will still have to be some form of negotiations but at least now the framework is hammered out for gas," said one industry source. The sources said NOC told 48 foreign oil firms - some of them newcomers to the North African country - that they could seek a licence extension beyond the three years specified in EPSA-3 to accommodate the market. NOC would have first priority to the foreign company's share of gas at an agreed discount. If the discovery was small, gas would head into the domestic market and if large, the firm would be allowed to export the gas. NOC did not specify its definition of small and large finds, they said. Oil companies would have the option to integrate small discoveries into a single development. The sources said the exploration and production sharing agreement, which includes two elements known as Factor A and Factor B, has a sliding scale for the foreign party's share of gas. Both factors B and A - which depend on the ratio between the cumulative value of crude or gas received and cumulative expenditure - are negotiable and form part of a formula which works out the cost oil and companies' share of net crude or gas. Factor B, the base production factor which depends on the average daily output level in a year and restricts the share of gas or oil that the foreign party gets, would start at one, the sources said. "That is pretty much what the case is currently anyway," said one oil analyst referring to EPSA-3 terms for oil output. "That means, if production is low, the B value is close to one, but as you get close to 100,000 bpd, the number drops well below one," explained one industry source. "In a highly productive development, you then get less and less share." EPSA-3 indicates that crude output between 1-10,000 barrels per day (bpd) has a base factor of 0.95, while production of 10,000-25,000 bpd has a base factor of 0.65. Libya, with an average daily output of 1.4 million bpd, has been trying to attract foreign investment after the United Nations suspended sanctions last year when it handed over for trial two men suspected of blowing up an airliner over Lockerbie, Scotland. Several new faces attended last week's meeting including BG , which has been having preliminary discussions with NOC about a range of gas opportunities throughout the gas chain. Others seeking a foothold in Libya included Royal Dutch/Shell which exited the country in 1991 after failing to make commercial discoveries, Russia's Yukos, Japan's national oil company JNOC, Malaysia's Petronas and South Africa's Sasol.