Libya to Launch Gas Bidding Round Later in 2007

VIENNA Mar 14, 2007 (Dow Jones Newswires)

Eager to tap into abundant natural gas reserves, Libya is planning to hold a bidding round later this year to develop gas fields onshore and offshore, the head of the country's oil industry said Wednesday.

"I can't pinpoint an actual date yet but we are talking about 10 to 15 blocks, a mixture of offshore and onshore," he said.

This comes as global energy companies are eagerly looking for new opportunities to boost their flagging hydrocarbon reserves. This has been made more difficult in recent months as many key oil producing countries tighten the screws on their resources making access for foreign companies harder.

But investing in Libya isn't easy with talks often mired in internal squabbling by hardliners and reformists. U.K. oil major BP PLC (BP), which has been negotiating with Libya for over two years to develop several gas projects, has seen talks stumble in recent weeks because it wants too large a stake in the projects, Libyan officials say.

Global energy majors are nervous about going in on bidding rounds, as many companies are willing to bid on what they deem uncompetitive terms.

Libya is estimated by the International Energy Agency to have more than 100 billion barrels of oil reserves and 40% of Africa's reserves. It has ambitious plans to nearly double its oil output within a decade to 3 million barrels a day, from 1.7 million barrels a day currently.

Gas output is forecast by the IEA to more than quadruple from 12 billion cubic meters in 2010 to 57 billion cubic meters two decades later.

"We want to concentrate on gas and developing its potential," Ghanem said.

Three years ago Royal Dutch Shell PLC signed an agreement with Libya to develop its gas industry and upgrade its Marsa el Brega liquefied natural gas terminal. Drilling for gas is due to start in the second half of this year.

Competition from Chinese and Russian companies in Libya's last bidding round for a number of oil blocks helped pin the average production allocation companies won from the 10 licenses on offer to around 14%, with China Petroleum Corp. (SNP) accepting less than 8%.

Copyright (c) 2007 Dow Jones & Company, Inc.


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