Monday, January 31, 2005
US oil firms get Libyan licences
Kevin Morrison & Doug Cameron / Vienna/Houston January 31, 2005
US oil companies Occidental Petroleum, Amerada Hess and ChevronTexaco were awarded the majority of the 15 exploration licences issued by Libya on Saturday in a move that clears the way for US companies to return to the north African country for the first time since 1986.
European oil companies were not so fortunate. Repsol of Spain, Italy’s Eni and OMV of Austria, which have all operated in Libya during the 19 years of US sanctions, did not receive any new licences, while BP and Royal Dutch/Shell Group also missed out.
Los Angeles-based Occidental, which operated in Libya up until the imposition of economic sanctions, with its partner Liwa of the United Arab Emirates was awarded 9 of the 15 exploration Libyan oil permits. Amerada Hess and ChevronTexaco each received one licence.
Other winners include Australia’s Woodside Petroleum, Petrobras of Brazil, Indian Oil Corporation of India, Verenex Energy of Canada and Sonatrach, the national oil company of neighbouring Algeria.
Sam Laidlaw, executive vice president of business development at ChevronTexaco, welcomed the announcement. “It is an important step forward in our strategy to build core businesses in the region,” said Mr Laidlaw.
However, those companies that missed out may receive a second chance. Abdullah al-Badri, the chairman of Libya’s National Oil Company, said Tripoli would offer another 40 licences in a second licensing round next month.
About 120 oil companies initially registered an interest in the first round of licence bidding, but this list was narrowed to about 60 companies before the licences were awarded.
Other US oil companies may soon be returning to Libya with the Tripoli government likely to approve a deal within a month that will allow the Oasis Group consortium of US oil companies to return to concessions abandoned 19 years ago when President Reagan imposed sanctions on Libya.
Fathi ben Shatwan, the Libyan energy minister, said approval by Libya was likely “in a month or less.” Amerada Hess, Marathon Oil and ConocoPhillips are part of the Oasis group.
Oasis production peaked in 1969 at over 1m barrels a day, and declined to 400,000 b/d in 1986 when the operation of the concessions were taken over by the Libya’s National Oil Company.
Libya produces about 1.6m b/d and hopes to raise this to 2.1m b/d by the end of this decade. The North African country is also expecting foreign investment to rise rapidly to about $30 billion by 2010 with the opening of its energy sector.
Mr Shatwan said under the conditions of the licence gives the international oil companies about a 30 per cent share of any future production in the areas covered the permits, with 70 per cent going to Libya’s national oil company.
He said if oil is proven in the licence areas, Libya, which is a member of the Organisation of the Petroleum Exporting Countries, will fund half of the exploration and development costs.
Mr Shatwan hopes that the new wave of exploration activity may increase the proven oil reserves of Libya from the current 36 billion barrels. He said it could rise to over 100bn barrels, which equates to the proven reserves of both Kuwait and United Arab Emirates.
The award of new exploration licences is one of the most significant developments of Libya’s attempt to bridge business relationships with the outside world after the US lifted its economic sanctions last year after Libya agreed in 2003 to pay $2.7bn to the families of those killed in the 1988 Lockerbie bombing and to end programs to develop weapons of mass destruction.