Uchenna Izundu
International Editor
LONDON, Nov. 27 -- Occidental Petroleum Corp. will continue to carry out exploration and redevelopment in Libya's Sirte basin for another 30 years under revised contracts signed with Libya's National Oil Corp. (NOC). The fields contain an estimated 2.5 billion bbl of oil reserves. With an investment of almost $5 billion over 5 years, gross production of 100,000 b/d is expected to triple over that period.
OMV AG also will participate, taking a 25% interest, while Oxy holds 75%. The partners will design and implement major field redevelopment and exploration programs consistent with the newly established exploration and production-sharing agreement IV (EPSA IV) contractual framework now implemented in the Libyan oil industry. Under EPSA IV, the consortium will receive 10-12% of the gross production on an after-tax basis, depending on the specific field.
The partners will invest money on new technologies to increase the recovery rate from existing oil fields and for additional exploration activities. "Oxy and OMV will collectively contribute 50% of the development capital, and NOC will contribute the remaining 50%," Oxy said.
"The new contract also provides for a $1 billion signature bonus payable over 3 years reflecting the group's long-term participation for the next 30 years in fields containing substantial proven reserves," Oxy said.
Analysts Raymond James & Associates Inc. said the revised terms were improvements for the partners because "the per-barrel economics increase under the new terms, more than offsetting the lower reported volumes, thereby leading to an increase in overall operating profit."
The agreement means that Libya is now a core region for OMV and Oxy with opportunities for growth as Libya wants to double oil production to more than 3 million b/d in the near future. All of the partners will complete final documentation as quickly as possible.
Contact Uchenna Izundu at [email protected].
