Libyan National Oil & Shell Ink Major Gas Deal

The National Oil Corporation of the Great Socialist People's Libyan Arab Jamahiriya (NOC) and Shell Exploration and Production Libya GmbH have reached a long-term agreement for a major gas exploration and development deal. The agreement covers the rejuvenation and upgrade of the existing Liquefied Natural Gas (LNG) Plant at Marsa Al-Brega on the Libyan coast, together with exploration and development of five areas located in the heart of Libya's major oil and gas producing Sirte Basin. The contract follows the Heads of Agreement signed in March 2004 between NOC and Shell, in which both parties agreed to establish a long-term strategic partnership in the Libyan gas sector.

Under the agreement, Shell will rejuvenate and upgrade the Marsa Al-Brega LNG plant at a minimum cost of $105 million, rising possibly to $450 million, which will eventually increase the plant output from 0.7 to some 3.2 million tons per annum. Subject to gas availability, Shell will also undertake jointly with NOC the development of a new LNG facility.

The agreement also grants Shell gas exploration rights in five blocks, covering some 20,000 square kilometers at a minimum commitment cost of $187 million. The exploration program will commence immediately in the allocated blocks with the acquisition of 2D and 3D seismic data in 2005/6 followed by exploration and appraisal drilling.

The Marsa Al-Brega LNG plant is operated by the Sirte Oil and Gas Production and Manufacturing Company (SOC), an NOC affiliate, with gas supplied from the Sirte basin. NOC, SOC and Shell will cooperate to detail the scope of work required for the LNG rejuvenation and upgrade project, which will be carried out in phases to suit gas availability.

The General People's Committee of the Great Socialist People's Libyan Arab Jamahiriya has approved this agreement.

Shell's Executive Director for Exploration and Production, Malcolm Brinded, said: "We are delighted to be back in Libya and honored to work together with NOC to develop a modern LNG industry, and explore for and develop gas in the prolific Sirte Basin. This is another major opportunity to apply Shell's LNG skills and leadership. I am excited about concluding this major agreement. Libya's integrated gas industry has enormous potential, based on its large gas resources and favorable geographic location. I look forward to our cooperation and believe that this is the beginning of a new lasting and fruitful partnership with Libya."