Libya to invest $10 billion in oilfield development

LOS ANGELES, Sept. 16 – The government of Libya plans to invest 12.1 billion dinars ($9.92 billion) of its own money in the development of 24 wells in fields it calls “technically, financially and economically proven.”

The investment will be undertaken by Libya’s state-owned National Oil Corp (NOC), its subsidiaries and current foreign partners, according to an official statement issued after a Cabinet meeting.

"No new parties would be allowed to participate in that plan," said the statement, according to the government news agency Jana.

The government's plan calls for boosting production from the Waha-Jalou oil field by 100,000 b/d at a cost of 1.6 billion dinars and increasing output at the Nafoora-Oujlaa-Khleej oil field by 130,000 b/d at a cost of 1.3 billion dinars. No other details were released.

Analyst BMI said that Tripoli’s move to prioritize contract award to existing players in the Libyan upstream “may present opportunities” to Italy's Eni, France's Total, Spain's Repsol YPF and Austria's OMV.

However, the analyst expects “BP and Royal Dutch Shell to avoid making any high-profile new investment deals with Libya in the immediate term” in order to disassociate themselves and the British government from suggestions that oil industry concerns in Libya may have motivated the release of convicted Lockerbie bomber Abdel Baset al-Megrahi on Aug 20.

Last week, U.S. Senator Charles E. Schumer called on the British government not to bid on or agree to any oil contract with Libya after speculation that Megrahi's release was due to a secret deal between the British and Libyan governments.

"If the British government wants to dispel these disturbing rumors once and for all, agreeing to Libyan oil contracts is not the way to do it," Schumer said. "The Libyans have clearly shown their disdain for the international community by holding a welcome home ceremony for this terrorist, but it's up to the British to show the world that they reject the Libyan's foul actions.”

BP none the less plans to drill its first Libyan well in the second half of 2010 as part of a $900 million exploration program, according to company spokesman, David Nicholas.

BP signed an accord with Libya's National Oil Corp in May 2007, during a visit by Tony Blair, then the British prime minister. The agreement allows BP to explore 21,000 sq miles and in 2007 the company said it planned to drill at least 17 exploration wells.

Your take?

Libya is one of the poorest country in Africa blessed with a rich oil reserves....and its plan to invest themselves in their own oilfields can be a strategic move...oil in the coming future will become the need and to let some company of another country invest in your country's oil fields is not a wise step....And libya is doing correct in not allowing technoligically proficient companies to bid for their oil fields...Also Libya is politically unstable and to get competitive advantage in terms of oil reserves it is always better to have this (OIL) national asset in your own hands....

Wed Sep 16, 04:02:46 PM CDT