Libya to invest $10 billion in oil field development

Libya plans to invest 12.1 billion dinars ($9.92 billion) in the development of 24 wells in fields it calls “technically, financially, and economically proven.”

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Sept. 16 -- Libya plans to invest 12.1 billion dinars ($9.92 billion) 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 Tripoli’s move to prioritize contract awards to existing players in the Libyan upstream “may present opportunities” to Italy's Eni SPA, France's Total SA, Spain's Repsol YPF SA, and Austria's OMV AG.

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, US Sen. 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 Libyans’ foul actions.”

BP nonetheless 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 NOC in May 2007 during a visit by then-British Prime Minister Tony Blair. 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.

Contact Eric Watkins at hippalus@yahoo.com.

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