Gazprom Signs PSA for Libyan Offshore Hydrocarbon Block

MOSCOW Mar 26, 2007 (Dow Jones Newswires)

Russian natural gas giant OAO Gazprom (GSPBEX.RS) has signed an agreement to explore and develop Libya's offshore hydrocarbon block No. 19, Gazprom said in a statement Monday.

Gazprom will explore the 10,288 square-kilometer block, located in the Libyan section of the Mediterranean sea, under a production sharing agreement signed with Libya's National Oil Co., Gazprom said.

Gazprom deputy Chairman Alexander Medvedev and the head of Libya's National Oil Co. Shokri Ghanem also discussed ways the two companies could cooperate in the future, including possible joint ventures for oil and gas production in Libya and for marketing liquefied natural gas.

The two men also discussed Gazprom's further participation in license auctions in Libya, Gazprom said.

Libya has offered up 41 onshore and offshore energy fields to energy companies in the country's third bidding round since U.S. sanctions were lifted in 2004.

Gazprom didn't give any estimate of the resources of block No. 19, but said about $200 million would be invested in the project.

Gazprom didn't give any estimate of the potential resources of block No. 19.

News of the PSA-signing comes only a few days before a meeting of the Gas Exporting Countries Forum in Doha, Qatar, on April 9. The GECF is a loose organization of natural gas producing countries that includes Russia and Libya.

Unconfirmed Russian media reports have suggested that the meeting could serve as a platform to announce a new organization aimed at imitating the Organization of Petroleum Exporting Countries, or OPEC, for the natural gas sphere.

While Iran has voiced support for a "gas OPEC," Russian President Vladimir Putin has been noncommittal, saying only that the creation of such an organization was an "interesting" idea.

Analysts have said that controlling global gas prices by restricting supply would be more difficult than with crude oil due to the nature of the global natural gas trade, which is built around long-term contracts.

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

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