Fierce bidding has begun for Libyan oil

Successive finds of massive oil wells in Libya in the recent months, is attracting international oil majors to invest in the country's vast hydrocarbon reserves.

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By  Jyotsna Ravishankar Published  December 3, 2005

Total and Repsol, European energy groups, have found more oil in Libya. The two oil companies said that a well in the Murzuq Basin, in the Sahara Desert, had flowed at 4,650 barrels per day (bpd) after encountering “a significant oil column”. The successful well is the oil companies’ sixth discovery in the area, 500 miles (800km) south of Tripoli, the Libyan capital. It followed a recent major discovery in October, whose well flowed at 2,000 bpd. Total and Repsol’s other partners in the block are OMV, the Austrian group; Norsk Hydro, of Norway; and the Libyan National Oil Company. Until recently, international energy companies could not invest or participate in the energy sector because of international sanctions. US and EU trade sanctions against Tripoli were lifted last year, after Libyan leader Muammar Qaddafi agreed to renounce weapons of mass destruction. Libya is thought to have proven oil reserves of 39 billion barrels, the ninth-largest reserves in the world. Experts believe that large parts of the country remain under-explored and offer significant potential for discoveries. The country is also a major producer of light crude oil, the kind favoured by refineries. Libya has already announced ambitious US $30 billion plans to raise oil production, which was around 1.6 million bpd last year. Tripoli wants production to reach two million bpd by 2010 and three million bpd by 2015, and has been looking to foreign companies to provide investment. The International Energy Agency (IEA) based in Paris, in its recent outlook for energy production and demand said, “It could take Libya another 15 years to reach its 3 million bpd oil output target.” The IEA also said Libya will need to attract a massive US $41 billion of investment by 2030, if it is to push ahead with developing its oil sector. It blamed sluggish economic reforms as the major hindrance to the development of Libya’s oil sector. However, IEA deputy executive director, William Ramsey, told Oil&Gas Middle East that Libya’s start certainly looks very promising. “They do have certain infrastructure problems and also arduous geographical conditions, but despite that they seemed to have achieved a fair amount of success with at least attracting the majors,” he said. The world’s oil groups are struggling to replenish their reserves and are drawn to Libya’s fossil fuel riches, despite its tough conditions. Last month, several European and Asian oil groups picked up new exploration acreage in Libya after fiercely contested bidding. Successful bidders included BG Group, the FTSE 100 Company, Eni, of Italy, Total and Statoil, of Norway.

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