Sun Resources to Evaluate Libyan Exploration Opportunities

Sun Resources has decided to assess exploration and production opportunities in Libya. As publicized over the last six to nine months, Libya is in the rapidly accelerating process of joining the world community at large and is opening up its economy to new investment in a number of industries.

The oil and gas industry, the main stay of the country, is one such industry where there is a need to arrest declining export capacity currently running at 1.5 million barrels of oil per day from a peak of 3.3 million barrels of oil per day in 1970. Libya is estimated to have 36 billion barrels of oil and 50 trillion cubic feet of gas, yet its basins have been lightly explored, the main reason being political events over the last 30 years.

In recognition of the national need, the Libyan government is redrafting outdated petroleum legislation and improving investment terms so previously undeveloped small fields can be developed. The new Production Sharing Agreement (PSA4) soon to be announced is expected to reflect these needs.

Sun Resources has been involved in extensive research over the last 12 months and the culmination of this activity in the last few weeks has been:

1. Finalizing registration of a local company in Libya to carry out oil and gas exploration and development activities. This is expected to be completed in December quarter 2004.

2. Joining a Libyan Study Group to assess part of the vast number of small/mid size undeveloped onshore fields and discoveries containing high quality, low sulphur crude.

The Libyan Study Group

Sun Resources is now part of a 14-company study group under the management of Houston based Concessions International, Inc. and Roxanna Associates. The purpose is to assess opportunities in Libya, particularly the small, undeveloped discoveries in the main producing basins (Sirte, Murzuk, Ghadamis, Tripolitania). Presently there are at least 175 onshore discoveries in the country that are undeveloped or that warrant investigation. These discoveries cumulatively have an in ground potential of over 3 billion barrels of oil. The majority of these discoveries are a one well test on 2D seismic. Predictably on further exploration work these discoveries could grow.

The Study Group has pooled resources to share the cost of a Phase 1 evaluation of 45 of the more prominent undeveloped onshore discoveries which range in size from 20 to more than 100 million barrels, and are in part clustered near pipeline infrastructure. Based on the results of Phase 1 to be completed in December quarter 2004, the group will move to a Phase 2 pre-acquisition evaluation and negotiation phase with the government/owners on chosen targets either as individual companies or as joint venture entities. The Study Group is comprised of a mix of companies; some are substantial, with the financial and operational capabilities to take the lead in the negotiations and ultimately the operations of acquired concessions.

Sun Resources' involvement is consistent with a strategy of moving into high potential under exploited and explored areas with partners that have, and can assume, strong operational responsibilities in exploration, development and production.

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