One hundred twenty foreign oil companies submitted offers for certain oil and gas E&P contracts in Libya in the second exploration licensing round since the normalization of business relations between Libya and the United States. Libya is offering contracts with the National Oil Corp. (NOC), the state-owned integrated oil company that controls the country's petroleum industry.
Nineteen of the plots offered were in areas already producing oil such as Sirte (center of the country); Ghadames (west); and Murzuq (southwest). The others are in Cyrenaica and Kufra (both in the east).
Exxon Mobil Corp.'s subsidiary, ExxonMobil Libya Ltd., won one contract for exploration in the center of the country in Cyrenaica Basin Contract Area 44 along with Japanese giant Nippon Oil Corp. and PT Pertamina of Indonesia. Contract Area 44, which comprises 2.5 million acres, is located in the Cyrenaica Basin offshore in water depths ranging from approximately 10 feet to more than 10,000 feet. ExxonMobil was the only US oil company named as a high-bidder in the license round.
BG Group won exploration licenses in Area 123 (blocks 1 & 2), and Area 171, (blocks 1, 2, 3 & 4). BG will assume 100% ownership and operatorship of the exploration and production sharing agreements (EPSA) for Area 123 (blocks 1 & 2) and a 50% interest in the EPSA for Area 171 (blocks 1, 2, 3 & 4) in partnership with Statoil (operator). The award of the three licenses is subject to ratification by the General People's Committee of Libya, following which an aggregate cash consideration of $15.5 million will be payable on the signing of the EPSAs.
Blocks 1 and 2 of Area 123 are located onshore in the Sirte basin and cover approximately 4,750 sq km in total. The EPSA work obligation for both blocks involves acquiring seismic and one exploration well on each block. Area 171, which contains four blocks, is located onshore in the Kufra basin and covers approximately 11,000 sq km. The EPSA work obligation for this Area involves acquiring seismic and two exploration wells.
Inpex in partnership with Total was the winning bidder for the Area 042 Block 2 & 4. The block is located in the Cyrenaica basin, in the northeast part of the country and covers 3,419 sq km.
Inpex has a 40% participating interest in the block and Total is the operator (60%). Inpex and Total will execute the EPSA of the block with NOC in November.
Norsk Hydro won a new 100% percent-operated exploration license in the Murzuq basin in Libya. Block 146-1 is southeast of Hydro's prolific E&P portfolio in the Murzuq Basin.
The second bid round attracted 48 international oil companies submitting a total of 99 bids for 26 blocks. Block 146-1, which was the most contested block in the Murzuq bsin, attracted eight bids.
Hydro has been active in Libya since early 1990s and today has oil production from three fields and substantial exploration activity. Two more fields will begin production in 2006.
Statoil was awarded operatorship for two. The group will have a 100% holding in license Cyrenaica 94 and a 50-50 share with British Gas (BG) in license Kufra 171.
The bids were based on a so-called "X factor", which is the percentage share Statoil needs to cover its investments and return, with a signature bonus in addition. The X factor for license 94 was 24.9%. Statoil also has to pay a signature bonus of $2.95 million. For license 171, the X factor was 19.8% and the signature bonus for Statoil and BG totaled $1.001 million.
"Competition for blocks in Libya is fierce, and we're very pleased to get our first operatorships in this country," says Brian Mitchener, vice president for global exploration in Africa in Statoil's international E&P business area.
"We plan to shoot seismic in 2007 and expect to drill the first exploration well in 2008 at the earliest." In license 94, the group is committed to gathering 3,000 km of 2D seismic and drilling one well. In license 171, the group will shoot 2,000 km of 2D seismic and drill two wells.
Eni won four exploration permits. The exploration permits cover an overall area of 17,876 sq km and are located in the Murzuk and Kufra southern basins, in the southern part of the country. As a result of the permits acquired in Murzuk, Eni has strengthened its position in a high potential region where the El Feel giant field has already been producing.
The area awarded in the Kufra basin represents an important commitment in an equally high potential territory in the southeastern part of the Libyan desert. The exploration activity of Eni includes six new exploration wells and 7,500 km of seismic surveys.
Eni has been awarded the greatest number of permits as an operator in a tender which received applications from over 50 foreign companies.
Eni has been present in Libya for approximately 50 years and has recently completed two major projects in the country on time and within budget, the development of the oil field of El Feel in the Murzuk, which will reach a production of 150,000 boe/d and the Western Libyan Gas Project, which will allow a production of 10 bcm of gas per year, 8 billion of which is to be exported to Italy through the trans-Mediterranean Greenstream pipeline.
In Libya, Eni equity production is about 190,000 boe/d.
Libya has proven reserves of 29.5 Bbbl of oil, the country's main source of revenue. Occidental Petroleum Corp., which has submitted several offers, announced in late July that it had become the first US oil company to resume production in Libya since the US imposed economic sanctions nearly two decades ago.
