June 1, 2007
Libya has announced it will sign a
$900 million exploration deal with
British Petroleum (BP), paving the way
for its return to the North African
country after a 33-year absence.
Shukri Ghanem, head of Libya's
National Oil Corporation, said:
"We are going to sign an oil
exploration and prospecting accord on
Libyan territory."
BP have been in discussions with Libya
for several years and signed a
memorandum of understanding in 2005.
A spokeswoman at BP in London said the
company was checking details of the
announcement with its office in Libya
but could not confirm the statement.
Robert Wine, a spokesman for BP in
London, said: "We are also
looking at opportunities for natural
gas exploration and are hopeful of
reaching an agreement soon."
A spokesman for Tony Blair, the
British prime minister, confirmed the
deal, as the prime minister arrived in
Tripoli ahead of a five-day tour of
Africa.
Expansion
"We are going to sign an oil
exploration and prospecting accord on
Libyan territory"
Shukri Ghanem, head of Libya's
National Oil Corporation
Blair's trip to Libya
An energy industry source said that
there was confusion over whether it
was an oil or a gas deal, which
reflected the uncertain nature of
energy exploration.
"It is primarily gas. But
obviously until they start digging and
doing tests, they're not quite sure
what else they might find. It might be
oil, it could well be gas, but
primarily it's gas," the source
said on condition of anonymity.
Libya, a member of the Organisation of
Petroleum Exporting Countries (OPEC),
is the African continent's second
largest oil producer at 1.7 million
barrels per day.
It also has natural gas reserves
estimated at 1,314 billion cubic
metres.
Mohammed Ali Zainy, an energy
economist at the Centre for Global
Energy Studies, said Libya could be an
important supplier to Europe, which is
finding ways to diversify its sources.
"Russia seems to have a problem
supplying gas to Europe … Europe is
concerned about the security of
supply," he said.
Opening up
Libya is seeking massive investment to
boost its energy sector, which saw is
development stunted under UN sanctions
imposed after a US airliner was downed
in 1998 over the Scottish town of
Lockerbie, killing 270 people.
But Libya accepted responsibility in
August 2003 and agreed to pay $2.7bn
in compensation to victims' families,
leading to an end to the sanctions.
Libya's agreement not to pursue
nuclear, chemical and biological
weapons in 2004 led to further
interest from international oil
companies and increased diplomatic
relations with the West.
Since then, mass privatisations have
continued to occur in what is a
largely government-controlled economy.
BP, which first became involved in
Libya almost half a century ago,
discovered the giant Sarir oilfield in
the Sirte Basin in 1961, marking the
start of a rapid expansion of the
north African country's oil sector.
In 1971, BP's assets were nationalised
by Muammar Gaddafi, who took power in
a coup in 1969
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