After years of isolation, brought on by UN sanctions, Libya is today easing itself back into the world economy and is keen to lure foreign investments to its oil sector. It is a move that is supported and encouraged by country’s leader, Mouammar Qadhafi.
UN sanctions were imposed against Libya in April 1992, after it refused to turn over two Libyan nationals, accused of responsibility for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.
The sanctions were suspended on April 2000, when the United States, Britain and Libya agreed on conditions for the hand-over for trial of the two men in the Netherlands.
A key Libyan goal is to increase the oil production in the country from a stagnant 1.4 million barrels per day to 2 million bpd, over a five-year period. This clearly is achievable only with massive foreign help and investment.
Last November, Libya unveiled a new long term energy plan, which included $10 billion in foreign investments in oil and gas exploration over the coming decade.
According to Ahmed Abdel-Karim , the head of the National Oil Company of Libya ( NOC ), $6 billion in investments will be allocated to existing oil and gas fields, $3 billion to refineries and $500 million to the upgrade of a petrochemical plant.
Libya is about to tender 70 percent of its oil and gas acreage for exploration. Eventually 137 blocks will be put up for tender, covering 835,000 square kilometers of territory.
In the meantime, up for grabs are 96 blocks—53 in the Sirte basin, 13 offshore, six in the Ghadames basin, 13 in the Murzuk basin, eight in the Cyrenaica basin, three in the Tripolitania basin, and the entire Kufra basin.
But the conditions of tenders are harsh. There are no royalties, signature bonuses or withholding taxes. Libya will take 50 percent share in the projects, but it will a full share of operating costs, and 50 percent of the development costs.
According to Abdel-Karim detailed negotiations with potential investors will start early in 2001 and agreements will be signed in June 2001.
Several companies are reportedly establishing consortiums in order to maximize their odds for winning concessions.
When, on September 1, 1969, Qadhafi came to power in a military coup at the age of 27, one of his first acts was to nationalize the mainly U.S.-owned oil fields.
But companies such as AGIP of Italy and Total of France have produced about 30 percent of Libya's oil since the 1980s, with its own oil company producing the rest.
In 2000, a new law was introduces, which restrictions on foreign companies operating in the country. operators stretching back nearly 40 years. This will open up the nationalised oil and gas sectors to tenders from foreign investors.
The new law was announced by Libya’s energy minister, Abdullah al-Badri, at a Geneva conference in April, 2000. Registration for the conference almost doubled when news was received that the UN sanctions were being relaxed.
Oil reserves in Libya are are around 30 billion barrels or 3 percent of known world resources, and 3 trillion cubic meters of natural gas. – ( Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
