Libya to Offer 15 Areas in New Licensing Round
Monday, August 16, 2004
Libya has begun its first upstream exploration licensing round since U.S. sanctions were lifted, offering concessions in 15 areas both on- and offshore.
The first open bid round will close January 10, 2005, according to information on the National Oil Corporation's (NOC) website. Final agreements are expected to be signed later that month.
It will be the first time in 18 years that companies from the United States will be allowed to compete for acreage in the country. U.S. sanctions were lifted in late April after Tripoli said it was scrapping its weapons of mass destruction plans.
It is also the first time the country has offered property in an open bid format, which companies hope will mean swifter results than recent upstream licensing efforts, which have dragged on for years amid direct negotiations.
Libya's vast under-explored territory and relatively cheap onshore recovery costs make it a very attractive location for investment, analysts say. It ranked second in the world for new ventures in an annual poll by UK-based consultants Fugro Robertson.
"The prospectivity is high, this is nothing new, but all this acreage has been on the block before," said one industry analyst. "They just didn't like the terms the companies were offering them."
He said that much of the territory has been under negotiation with other firms, but talks were eventually scrapped due to a lack of consensus over terms.
The new round will be awarded under newly revised Exploration and Production Sharing Agreement (EPSA) terms, called EPSA-4, which analysts expect to be more flexible than the previous incarnations. The competitive bidding will focus on two elements: the share of output given to the NOC and the signature bonus, according to one industry source.
Tripoli has also been at work on updating nearly 50-year-old legislation that governs oil investment, but this was not expected to apply to this acreage.
The bid round offers 15 exploration areas composed of four blocks each, although only two or three of the blocks are on offer in some areas. There are three areas in the Murzuq basin, where Repsol has recently had exploration success.