The change in landscape initiated by the Arab Spring has provided several opportunities and challenges for international oil companies (IOCs) that operate in North Africa, said a senior industry expert.

Dr David Latin, senior vice president of Austrian energy group OMV, recently spoke to The Energy Exchange outlining these challenges as well as the steps taken to build a sustainable oil and gas industry in the North African region.

Prior to the war, oil in Libya accounted for 70 per cent of the country’s GDP, 95 per cent of exports and nearly 90 per cent of government revenue, estimates the International Monetary Fund, placing significant stress on OMV and other IOCs.

“Our industry provides significant value to the countries we operate in, in terms of jobs, revenues, infrastructure and community relation work,” said Dr Latin.

With the political environment still evolving as newly appointed officials take office, rapid decision making is one of the key challenges faced by OMV, Dr Latin stated.

Libya, the world’s ninth largest oil producing country with more than 47 billion barrels of oil, holds the largest oil reserve in Africa. This oil rich nation is ideal for IOCs to thrive however the current lack of capability building is a challenge as it constrains growth as well as the implementation of multi-billion dollar projects.

Dr Latin said: “We want to build local capability and to utilise local content and contracts wherever we are able, but we also want to be able to execute activities to very high standards in a relatively short period of time.”

Estimated unemployment rates in Libya and Tunisia at the end of 2011 are reported to be around 30 per cent and 18 per cent respectively.

In Tunisia due to high levels of unemployment and high employment expectations post Arab Spring IOCs faced a number of issues restricting operations.

OMV faced strikes, threats of strikes at drilling sites, a thirty-day shut down caused by a labour sit-in at one of the organisations production sites, the establishment of multiple labour unions and slower decision making at the government level, said Dr Latin.

In an effort to maximise local content and retain industry knowledge in North Africa, OMV is currently running specific development programmes, he added.

“We have set up an OMV graduate Academy and are in the conceptual stage of establishing the OMV/Moutanuniversitat Leoben Scholarship Program to focus on job creation by increasing educational and training initiatives,” he said.

“In Tunisia OMV will launch an Auto-Maintenance Shop after Ramadan and is conceptualising a Waste Recycling Business to develop local content through capability building and financial support.

“Furthermore OMV Tunisia is  actively researching how to help the State of Tatouine in South Tunisia to build skills through vocational training and an apprenticeship system targeting 15 – 18 year olds and focus on basic electrical, mechanical, English, IT and HSSE skills.”

OMV has a major investment programme in Tunisia, which provides strategic gas infrastructure and critical revenues for its Tunisian stakeholders in the next two to three years, and is a source of significant volume growth for OMV, Dr Latin said.

Around 10 per cent of the organisation’s current global production comes from Libya where they remain a committed partner with plans to grow their business over the next five years.  In addition, OMV is also actively evaluating opportunities in other North African countries, he added.

OMV is the lead sponsor for North Africa Oil and Gas Summit 2012 which will take place in Vienna, Austria from November 6 to 8.

The conference will bring together a plethora of speakers from world renowned IOCs and NOCs to learn how the region is evolving and the latest developments in the oil and gas industry. – TradeArabia News Service