[lbo-talk] Spain's Repsol to boost oil production in Libya

uvj at vsnl.com uvj at vsnl.com
Mon Jun 19 17:00:50 PDT 2006


Reuters.com

Spain's Repsol to boost oil production in Libya http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-13T080034Z_01_L12455503_RTRIDST_0_ENERGY-REPSOL-LIBYA.XML&rpc=66

Tue Jun 13, 2006

By Joe Ortiz

TRIPOLI, June 13 (Reuter) - Spanish major oil company Repsol YPF (REP.MC: Quote, Profile, Research) will nearly double oil production in Libya over the next five years to about 450,000 barrels per day, its chairman, Antonio Brufau, said.

Speaking to reporters at Repsol's headquarters in Libya, the company said it expected to be producing around 400,000 bpd by 2010. But later in a briefing to his own staff, Brufau insisted that the target should be 450,000 bpd.

"The role that Libya plays in Repsol is self evident -- it doesn't bring a lot of reserves but it's the business that brings us the most added value," Brufau said in remarks embargoed for publication on Tuesday.

At a staff briefing on Monday, Brufau corrected a senior company official, who had said the production would rise to 400,000 bpd over the next five years.

"I think the figure is actually 450,000 -- don't forget the extra 50,000," the Repsol chairman said. Repsol can only book a small part of production as reserves in Libya because it has a minority share in the concessions it operates -- for example, 10 percent in the case of its biggest producer NC115 in the Murzuq Basin in the Sahara Desert.

The company cut its global proven reserves by 25 percent earlier this year. Repsol is currently producing 252,000 bpd in Libya, around 15 of the country's total production.

Repsol has stepped up its exploration in the North African country and will sink 22 exploration wells this year after only 11 last year and "many more" next year, Brufau said. The company has a very high success rate with an exploration success ratio of around 50 percent.

The industry average is around 10 percent and a senior Repsol official pointed out that current and future exploration in Libya is in areas where success is not as guaranteed as in previous areas.

Repsol made $1 billion in operating profit in Libya and around $550 million to $600 million in net profit last year, Brufau said.

The boost to activity in Repsol's Libyan activities reflects a change in emphasis in the company in its upstream (exploration and production) activities away from its roots in Latin America.

"We don't want to lose weight in Latin America, we want to gain weight in the rest of the world and I think we are succeeding," Brufau said, adding that Repsol's business in Argentina remains critical for the company as it brings reserves and cash flow.

"It's evident, however, that we have focused our investment in Latin America," Brufau said. "Now, we think it's a good idea to continue to invest there but also look elsewhere."

Repsol has 140,000 square kilometres of concessions in Libya, an area equivalent to one-third of the area of Spain. Brufau described its position in the country as a "tremendous" asset.

"Others will come and will pay a fortune," Brufau said. "We will be there and we'll see if it seems good for us. We have a position (in Libya) and a lot would like to have a position as good as us."

Libya is planning a third international licensing round later this year. Brufau said that Repsol would be present in the bidding while noting that the company had not been successful last time. Shokri Ghanem, head of the Libyan oil industry as chairman of the National Oil Corporation (NOC), said preparations for the third round were proceeding.

"We are now just finalising the blocks we are going to offer and we'll meet people and have a roadshow to explain it," Ghanem said. "Sometime around September or October, the decision will be made but we'll start the roadshow in two months time."

© Reuters 2006. All Rights Reserved.



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