Libyan adventures under pressure? Lockerbie's ghost haunting petroleum sector.
by Dr. Cyril Widdershoven
The unexpected conviction of one of the suspects in the Lockerbie affair, and the direct link with people in the Libyan government circles, are putting renewed pressures on the liberalization projects of the last year.
At this moment, the National Oil Corporation (NOC) is waiting for the situation on the Lockerbie affair to become clarified before opening the closed bid envelopes for the licenses to develop three packaged exploration blocks, industry sources in Tripoli say. The 31 January conviction of one of the two Libyan defendants has set in motion a complicated legal and diplomatic process that could take months to resolve.
Another factor slowing progress is last years internal upheaval within NOC. The corporations chief, Abdullah Salem al-Badri, was appointed deputy minister for services affairs in October. His position at NOC was taken over by Ahmed Abdulkarim. At present, it is still not clear whether this will be a permanent appointment. A lot of the delays which people in all sectors are experiencing are due to the present circumstances, says a senior industry source. People are waiting for the Lockerbie verdict and an announcement on Abdulkarims future role.
NOC has given no indication as to the identity or even the number of companies that have submitted bids by the 15 January deadline for the licenses. The UKs BP and the Royal Dutch/Shell Group through its subsidiary Shell Libya Petroleum Development Company, Italys Agip, Spains Repsol YPF and Frances TotalFinaElf had all expressed interest in the licenses at an earlier stage.
Agip, the largest foreign producer operating in Libya, is so far the only company to have confirmed its participation. The company, in partnership with Malaysias Petronas and Japans Teikoku Oil Company, has placed a bid for the prime acreage on offer in the M1 area of the Murzuq basin. The package also includes offshore blocks in the Sirte basin and an undefined area in the Kufra basin.
Agip, a wholly owned subsidiary of Italys Eni, has established equity production of around 80,000 barrels a day from the Bu Attifel field located in the Sirte basin and from the offshore Bouri field in the NC-41 Block. The company is looking to consolidate its position in Libya following its successful takeover last December of the UK exploration company Lasmo. The acquisition giving Agip a majority interest in the 600 million barrel Elephant field in the Murzuq basin could eventually add 150,000 barrels a day to the companys production figures.
Additionally, Canada is increasing its presence in the North African country. A Canadian minister stated that Ottawa intends to forge closer ties with Libya in the oil and gas industry, as part of a move to offer its expertise to three North African countries. International Trade Minister Pierre Pettigrew made the statement related to a very heavy Canadian trade mission which is currently visiting Algeria, Libya and Tunisia. Representatives of 19 companies are taking part in the mission and are participating in OGNA2001, which has been held in Tunis last week. Pettigrew said Canadian technology was in demand in the Maghreb countries, which include Tunisia, Libya, Algeria and Morocco, and that Canadas potential there still has to be tapped.
The trip will be the first major Canadian trade mission that will include Libya in its itinerary. Major countries, up till this moment, have been treating Libya as a pariah. The Canadian firms in the trade mission are set to offer such services to Libya, Algeria and Tunisia as exploration, engineering consulting services, training, testing and monitoring equipment. They will also offer chemicals used in oil production and in other areas of the industry. Canadas decision to move into the oil and gas industry in North Africa comes after the recent rise in oil and gas prices, which have resulted in a spurt of activity in exploration.
At present, Canada produces 2.7 million barrels of crude oil a day, making it the 10th largest producer in the world, and 2.2 billion cubic meters of natural gas a day, making it the third largest natural gas producer in the world. Libya, by comparison, produces 1.37 million barrels of oil and 20 million cubic meters of natural gas a day, but its estimated crude oil reserves stand at 29.5 billion barrels, and 75 percent of its territory has still to be explored. Algerian and Tunisian production and reserves are smaller, but Canada imports a substantial quantity of oil from Algeria.
However, all of this will be uncertain when the real question of What is Libya going to do in relation to the Lockerbie verdict? will become present. No real decisions will be made without the ultimate resolution of the whole question. No lifting of sanctions will be realized without Libya paying the $700 million, or the possibility of re-addressing the conflict with the USA. At present, there seems to be a stalemate. Ghadaffi is not willing to accept the obvious real-politics, to pay for damages and political misinterpretations. Resolution of this yearlong international scandal has to be solved, without delays to give Libya the chance of re-entering the international fray of E&P hotspots of the world. The time is near, the willingness of E&P operators to invest is there, now it is time to act. Paying $700 million, yes, will mean admitting your mistakes and involvement but also will mean a clean sheet on which prosperity, economic welfare and growth can be build.
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Reprinted as submitted.