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Libya wants top dollar for prized oilfields

Speaking to executives of oil multinationals in Tripoli, National Oil Corp chief Shokhri Ghanem said he expected ”excellent offers” from firms bidding to help the north African OPEC member raise oil and gas output.

“In this round we expect to get excellent offers and expect companies will spend large amounts of money for exploration -- this will give excellent percentages (of production from a given field) to the Libyan side,” he told Reuters.

“The offer that is best for Libya is the one that will win.”

The north African country, emerging from years of international isolation, is well aware of the event’s rarity value. Producer nations from Bolivia to Russia want more cash and control at a time of record-high prices.

NOC says less than a third of Libya, Africa’s fourth-largest country with a population of five million, has been explored for hydrocarbons. Its estimated reserves of 37 billion barrels put it among the top 10 oil reserve owners.

“We want our country to take its place as a great producing country,” Ghanem told the executives.

Libya last year held its first post-sanctions licensing rounds, praised for their transparency. But stiff competition meant the winning terms were so aggressive companies may struggle to make a profit even with oil above $70 a barrel.

“There is plenty of business to do in the oil and gas sector,” said Saad Djebbar, a specialist on Libya at Chatham House research institute in London.

“But competition is very high. The companies are competing like mad.”

Third round

Libya’s latest oil offering, the third since the lifting of US sanctions in 2004, lists 12 offshore blocks and 29 onshore areas.

Ghanem said he was pleased with the first two rounds.

“In the first and second round there were good offers where the percentages we got were high. That was due to the competition, Libya’s oil potential and its geographical position,” he said, referring to Libya’s proximity to its major customers on the northern shores of the Mediterranean.

The onshore areas include the mature Sirte basin, the semi-mature Ghadames basin and the frontier regions of Murzuq, Kufra and Cyrenaica.

Companies have until Sept 9 to apply for permission to participate. Results are expected on December 20.

“The fundamentals of this process are competition and transparency,” Ghanem told Reuters. “The conditions are clear and the dates are clear, specified and known.”

Libya wants to attract foreign investment to help it increase its oil output to more than 3.0 million barrels (bpd) per day by 2010/12 from about 1.6 million bpd at present.

Ghanem reiterated that he plans to raise the country’s output to 2 million bpd by mid-2007.

“There is a tremendous welcome coming from the companies,” Ghanem told Reuters. “What we want to emphasise is that this round shows the importance of Libya regarding the petroleum industry in the world and the great potential for investment.”

Many of the executives attending the Tripoli event were from Asian energy companies.

Nobuyuki Ogura, of Japan Petroleum Exploration Co. (JAPEX) which won two blocks in the second round, told Reuters: ”Although the last round was attractive I feel this round is better for geological reasons.”

“This round is interesting and it is better in terms of its management...The (Chinese) government is interested in the north African region,” Feng Kai, a manager with China National Petroleum Corporatuion (CNPC), told Reuters.