Petro-Canada to invest in Libyan exploration

Petro-Canada signed an agreement Dec. 10 with Libya's National Oil Corp. for the two companies together to invest $7 billion in exploration and development in the Sirte basin of northern Libya.

By OGJ editors
HOUSTON, Dec. 10 -- Petro-Canada of Calgary signed an agreement Dec. 10 with Libya's National Oil Corp. (NOC) for the two companies together to invest $7 billion in exploration and development in the Sirte basin of northern Libya.

Terms call for NOC to convert existing participation agreements and old exploration production-sharing agreements to six new EPSA IV agreements. New agreements are to last 30 years compared with an existing 2015 expiration date.

Petro-Canada agreed to pay 50% of development costs and will receive a 12% entitlement share of production. In addition, Petro-Canada will pay a $1 billion signature bonus with the first of three payments due upon contract ratification, expected in 2008.

"Through these agreements we have achieved our long-standing objective of extending our partnership with NOC in Libya," said Ron Brenneman, Petro-Canada's president and chief executive officer.

Petro-Canada estimates gross resources of almost 2 billion bbl of oil associated with the redevelopment program, which includes pipeline and facility upgrades, development drilling, and waterflood expansion.

Currently, Petro-Canada's Libyan concessions produce 100,000 b/d (gross). Under the new agreements, production from the redevelopment program is expected to double in 5-7 years.

In addition to the redevelopment costs and signature bonus, Petro-Canada also proposes to invest $460 million in exploration during 7 years in the Sirte region.

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