Exploration and production programs in Libya are facing significant delays because of a shortage of drilling and workover rigs, according to Phoenicia Group, a Libya-based investment and trade consultancy firm.
The scarcity of equipment also means higher prices for available rigs, which is straining already high E&P costs in the area.
A Phoenicia spokesman told OGJ that some projects are facing delays as long as a year. “Day rates for both drilling and workover rigs have gone up by as much as 15-25% in some cases, and in others it can be as much as 40-60%. It really depends on the company and the circumstances. Contracts need to be done early before rigs are brought into the country.”
Ryad Sunusi, Phoenicia’s interim president and chief executive, said, “Libya needs at least 40 rigs for the next 10 years to support [international oil company (IOC)] exploration programs, and this represents a great opportunity for the Libyan private sector to get involved, in forming [joint ventures] with overseas drilling and workover contractors, as outlined by GPC Decree 443/2006.”
IOCs wishing to do business in Libya must do so through JVs with a Libyan partner, according to GPC Decision 443/2006, which was passed last November by the General People’s Committee, Libya’s executive decision-making body.
Foreign partners can take a maximum share of 65% and have the majority of representatives on its board. The Libyan partner, however, legally must have a minimum 35% stake in any joint stock company.
According to Phoenicia, major oil services companies such as “Schlumberger, Halliburton, Weatherford, and others are scrambling to conform to the new decree, and newcomers keen to pinpoint Libyan partners.”