Libya to sweeten terms for foreign oil companies
Vienna, December 14, 2012
Libya plans to improve the terms for foreign oil firms ahead of its next licensing round and could begin seeking bids in the third quarter of 2013, the Opec member's new oil minister said.
Organization of the Petroleum Exporting Countries ( Opec) member Libya has reserves of over 40 billion barrels, but analysts have warned that some of the toughest terms in the business could act as a deterrent for companies, some of which have yet to return after the 2011 civil war.
Abdelbari al-Arusi, in charge of the ministry for just a month, said he has made it a top priority to consult with foreign oil firms on how to make the country more attractive.
"I've met different people from foreign companies, and they are complaining about EPSA IV (the last round of Exploration and Production Sharing Agreements), like Shell for instance. For EPSA V, there will be better conditions," Arusi said.
"I would say August or maybe July we will start looking for bids," he added, without providing further details of the planned changes.
In the last bidding round, after the government in 2004 opened up territory that had been off-limits for years, oil companies scrambled for deals and accepted some of the industry's tightest exploration and production terms.
In an interview with Reuters last week, Arusi said Libya could see another licensing round within the 15-month term of the interim government, adding "it depends on the situation here in Libya". Other senior oil officials previously said there would be no new deals for at least a year.
Africa's third largest oil producer has boosted output faster than many analysts expected to around 1.5-1.6 million barrels per day after the civil war, and the focus is now shifting to expanding exploration of its vast desert acreage.
Royal Dutch Shell suspended drilling and abandoned exploration on two Libya blocks due to disappointing results, it said in May, while other firms are wary about resuming exploration because of concerns about safety.
Arusi, speaking to Reuters on the sidelines of his first Opec meeting in Vienna, said no decision has been made on carving up responsibilities between the new oil ministry and the National Oil Corporation, headed by Nuri Berruien.
The hydrocarbons sector, which accounts for around 90 per cent of government revenue, was run by the NOC before the revolution, and its former head, Shokri Ghanem, represented Libya at Opec.
In a sign that the oil ministry under Arusi could become more assertive, he said he would give final approval to 2013 crude oil contracts worth around $50 billion.
He added that the ministry would also assess feedback from Libya's clients that its light, sweet crude oil had been priced above the market in 2012.
"I've heard complaints. We're going to look at that," he said.
One of the other major challenges faced by Arusi will be how to respond to demands from Libya's oil-rich east to gain more control over the hydrocarbons sector.
Arusi has announced a proposal to separate Libya's exploration and production activities from refining, by creating two separate NOC bodies that would be based in Tripoli and Benghazi.
The capital would be the headquarters for an exploration and production company, and a separate company headquartered in Benghazi would deal with refining and petrochemicals.
Asked if there were any plans to give the Benghazi branch of the NOC autonomy over its oil revenues, he said: "Not oil, no. The plan is to have a body responsible for refining and petrochemicals."-Reuters