Libyas Oil & Gas Sectors Leading New Ventures?
by Cyril Widdershoven
As reported by several news agencies and researchers, political developments coupled with world class prospectivity has propelled Libya from a modest 20th position in 1998 to the number 1 country for new exploration, development and production ventures in 2000. Robertsons International New Ventures Survey, now in its 14th year, polls oil companies all over the world involved in exploration and production ventures outside of North America and asks them to rate, in a confidential questionnaire, their level of interest in new ventures in 146 countries. Responses were received from 76 companies which will account for an estimated 70 percent of total oil company worldwide upstream spending in 2000. Global country rankings are prepared and analyzed to determine the factors behind year-on-year movements up or down the rankings.
The top ten countries for 2000 are:
Libya
Iran
United Kingdom
Australia
Algeria
Iraq
Indonesia
Angola
Brazil
Egypt
The Middle East continues as the most popular region with solid performances from Iran (2nd), Iraq (6th), Qatar (13th) and Oman (16th), and promising risers including Abu Dhabi (+6), Bahrain (+12), Dubai (+14) and Israel (+18). Africa makes up good ground in the regional rankings moving from sixth to third on the strength of impressing.
The resurgence of the oil price during 1999 and 2000 has brought with it a cautious increase in E&P spending, with 62 percent of companies indicating higher E&P budgets for this year. But significant increases in upstream expenditure will probably not occur until investor confidence is restored in the energy sector. The unexpected highs of international crude oil prices will however increasingly stimulate this.
Libyas example is becoming a leading sample, that will be followed with great interest.
Libyas leader Muammar Gadaffi is becoming one of the most visited or watched oil personalities of the last months. However, Gadaffi accused this month industrial countries of abusing oil producing regions and failing to show sensitivity to those areas whose oil drove the world economy. In a letter to government leaders about the latest oil price increase, which have provoked unrest and protes at high prices in much of Europe, Gadaffi said The policies adopted by superpowers towards these regions are crazy, rash and threatening and these areas have become very hot and explosive. He added that regions which possess oil must be registered as sensitive and vital areas and there must be a guarantee to avoid handling them with roughness. This new approach of Libya to become again a more vocal oil exporter has been stimulated by Venezuela President Hugo Chavez last month, reasserting Libyas influence in OPEC. Chavez met with Gaddafi as a part of a tour of fellow member nations of OPEC, stressing the importance of cooperation between OPEC members to maximize oil benefits and control fluctuating prices. These international political developments are watched with great interest by all international E&P companies trying to get involved in the attractive Libyan E&P sectors. Last month, Lundin Oil AB and Edison Gas entered into a Joint Bidding Agreement with a view to bid jointly on new areas offered by the Libyan National Oil Corporation (NOC). Lundin Oil CEO Ian H. Lundin commented, Libya has always been a core area for us and we look forward with great anticipation to expand our interests in partnership with the Edison people who bring an enormous amount of knowledge and expertise to the table.
The new round covers approximately 70 percent of the country. It includes 112 onshore blocks and 20 offshore blocks in both mature areas such as the Sirte and Ghadames basins, less explored (but proven) areas such as the Murzuk and Cyrenaica basins and frontier areas such as the Kufra basin of southern Libya.
Libyas prominence and importance as an oil producer is based on over fours decades of exploration and production sharing with international companies. With over 35 billion barrels of reserves discovered to date, predicted ongoing potential is for at least the same amount of remaining discoveries to be made. Libyas proximity to key European energy markets will be further capitalized on with the installation of a Trans-Mediterranean gas export pipeline to Italy. This provides additional exploration incentive for gas discoveries and adds real value to an already competitive production base. Lundin Oil has been actively exploring in Libya for more than 10 years and is currently developing a 100 million barrel oil field known as Naga North and West on Are NC117, of which it has a 100 percent working interest.
At the end of last month (August) international oil giant Royal Dutch/Shell (Shell) was reported to be negotiating a number of exploration blocks in Libya, as was reported by company officials. Following an invitation by (Libyas state owned) National Oil Company, we are engaged with them in commercial discussion regarding a number of blocks, a Shell spokeswoman reported to Reuters. Shells renewed interest in Libya almost nine years after pulling out became apparent when it attended an NOC presentation in Tripoli in May which outlined terms and acreage for an oil and gas exploration licensing round. Shell pulled out of Libya in 1991 after relinquishing acreage in the Ghadames basin when onshore Block NC-153 failed to amount t a commercial find. It had operated the tract after buying into an 80 percent stake from Italys Societa Energie Monte Edison.
Industry sources said Libyas NOC has now opened up two data rooms in Tripoli to allow companies to review information available on all the blocks on offer. Earlier in July, the sources said only data for 14 exploration blocks bundled into three packages mixing prime acreage with high-risk areas, was available for viewing. All acreage is available for review. The rooms were busy the first two week. They (the Libyans) have been having two companies in per week, an industry source reported in August. Only oil companies which have prequalified for the round are being allowed to view the data. The race for the three packages, particularly package one, would likely to be a close one. The first package consisted of M1 in oil-rich Murzuk basin, offshore Mediterranean blocks 0-9 and 0-10, block S-36 in the Sirte basin and an area in little-drilled Kufra basin in the southeast. The source stated that the data rooms would stay open for the next months, but NOC has yet to notify interested companies of a deadline to submit bids. Some companies have been waiting for guidance from NOC on whether they should be submitting bids or waiting for a timetable after viewing the data.
Shell in the meantime has been closely watching progress on UK independent Lasmos progress on the giant Elephant field, discovered in 1997 in the Murzuk basin and estimated to hold 500 million barrels. The project now appears to be back on course with the UK company hoping to proceed with engineering procurement tenders in the next months.
It seems as if Libya has become a little diamond in the crude oil crown of the world. However, not everybody is always that positive. Bula Resources Plc Chairman Albert Reynolds told shareholders this month that he shares their frustrations that the Irish oil and gas explorer has not been able to strike an oil contract in Libya. Nothing would have pleased me more than to be able to make an announcement today, or indeed earlier in the year, said Reynolds at the companys shareholder meeting in Dublin. But I am not yet in a position to do that. Reynolds said new licensing terms and a restructuring of Libyas National Oil Company signal a change and acceleration in pace for license awards to be concluded in the future. The companys shares soared as high as 1.2 euros in January on speculation it had discovered an oil field in Libya. Bula has been short-listed to submit tenders for the development for the development of the Kharmala Dome-4 in Iraq, Reynolds also stated to the meeting.
Prospects will be excellent, political risk factors and investment regulations will have their own autonomous impact on developments. Libya is becoming a rich oil-country again, Gadaffi can reap the rewards of his endeavors at last.
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Reprinted as submitted.