German RWE delays Libya oil start up

The oil arm of Germany's power giant RWE said on Wednesday it would postpone a start up of its large oil fields in Libya, still awaiting an agreement with local authorities on the structure of the venture.

"We are now at the place where we need to build up a joint venture with NOC, all the formalities are in place we are now waiting for NOC to go into registration with us," Christoph Schlichter, senior vice president for North Africa at RWE Dea said on the sidelines of a conference in London.

RWE had initially hoped to start production in 2014-2015 but that date is no longer realistic, said Schlichter.

"They (Libyans) are keen to get new investments on the rise quickly to provide more jobs. But their focus has been ramping up (existing) production," he said referring to a full shut down of Libyan production last year due to a civil war.

The company undertook an exploration campaign in Libya between 2003 and 2010 and made eight discoveries at blocks NC 193 and NC 195. The fields were declared to be commercially viable just prior to the start of the 2011 Libyan conflict, so development plans with NOC could not be finalised.

The discoveries are in the order of 100 million barrels but it is too early to estimate a production rate, added Schlichter.

RWE is the top power producer in Germany and it has been expanding abroad to focus predominantly on Norway, the UK, Egypt, Libya and Algeria, as well as on Denmark and Poland and the Caspian region.

In Algeria, state-owned Sonatrach gave final approval in February this year for a $3 billion development of the North Reggane gas field project.

RWE has a 19.5 percent stake in the project led by Spanish oil and gas company Repsol with Algeria's Sonatrach and Italian utilities company Edison.

The start of production further depends on the timely construction of the GR5 pipeline, which has been delayed several times. The pipeline will connect South West gas fields with Algeria's largest gas field and gas hub, Hassi R' Mel.

"We started field development of Reggane North, together with Sonatrach, Edison and Repsol," said Schlichter, "From what we hear, the (GR5) pipeline should be ready by end 2015. And we will start after, in 2016."

Production is expected to stabilise at 8 million cubic metres a day for the first 12 years Reggane is in operation. 

Source: Reuters 

Wintershall's Libya oil output at 70,000 b/d; builds pipeline

Germany's Wintershall is currently producing just over 70,000 b/d of oil in Libya, or around 70% of its output level from before the civil war in the North African country, a senior company official said Monday.

Speaking at a conference in London, Wintershall vice president Klaus Langemann said the company's output was being restricted by infrastructure constraints and that production would rise once a new oil export pipeline in Libya was completed.

"We are at more than 70% of our original production capacity, and we are producing a little beyond 70,000 b/d," Langemann told the conference.

Before the unrest in Libya began in February 2011, Wintershall was producing around 100,000 b/d from its fields in the country. 

Langemann said the company's production facilities suffered no damage during the civil war, and that it was able to boost production up to around 50,000 b/d within a week of the end of the war.

He also said that Libya had asked Wintershall to help build a new export pipeline together with the state-owned NOC and Agoco.

"We acted quickly, and the pipeline is now under construction," Langemann said. "It will be finalized early next year."

This will help the company restore its pre-uprising output, Langemann told Platts later on the sidelines of the conference.

"It's just a question of pipeline infrastructure," he said. "The wells could produce more -- indeed our reservoir engineers told us the shut-in had helped the reservoir 'relax', which is a good thing." 

EXPLORATION EFFORTS

Langemann also said Wintershall was committed to a long-term future in Libya, although he said the company's exploration efforts would depend on the terms offered for new blocks.

"The terms are tough in Libya," he said, referring to the EPSA IV contract system.

"In the last rounds it was shown that companies over-bid," he said.

Libya has Africa's largest oil reserves, estimated at some 47.1 billion barrels, and there is expected to be a concerted effort by international companies to increase exploration with a view to developing the country's resources since the death of former Libyan leader Moammar Qadhafi.

Asked whether Wintershall would take part in any future exploration bidding rounds in Libya, Langemann said: "We wouldn't rule it out." For now, though, Langemann said the political framework for expanding Libya's oil sector was not yet in place.

"The decision-making regime is not there at the moment," he said.

Separately, Langemann also said Wintershall was looking at projects in the UAE, specifically bringing in technology to help Abu Dhabi improve its oil recovery rates.

He said Abu Dhabi currently is short on gas as it reinjects large volumes to help oil production.

"Looking at Abu Dhabi, they are deficient in gas -- we can bring the know-how on enhanced oil recovery to allow them to use gas for the domestic market," Langemann said.

Wintershall signed a memorandum of understanding with the head of the Abu Dhabi National Oil Company (ADNOC) in May 2010 on possible joint exploration and development of a gas and condensate deposit in Abu Dhabi.

Source@ Platts

British Petroleum (BP) to resume operations in Libya

A BP logo is seen on a petrol station in London November 2, 2010.

Credit: Reuters/Suzanne Plunkett

By Hamid Ould Ahmed

BP is to resume exploration activities in Libya that it suspended because of last year's uprising, re-starting a relationship which under ousted Libyan leader Muammar Gaddafi landed the firm in the centre of a political storm.

BP's return is a milestone in the recovery of Libya's energy sector, though this was tempered by an announcement from Royal Dutch Shell (RDSa.L) that it would pull out of fields in Libya on the grounds that they were not worth developing.

BP closed down operations in Libya and withdrew its expatriate workers in February last year, days after protests broke out in eastern Libya which with help from NATO warplanes and missiles eventually forced Gaddafi from power.

The oil firm follows other majors, including Eni (ENI.MI) and Total (TOTF.PA) in restarting Libya operations, despite lingering worries about security and the possibility the new authorities will try to re-negotiate contracts signed under Gaddafi.

The head of Libya's National Oil Corporation, Nuri Berruien, and Michael Daly, BP's executive president for exploration, agreed in Tripoli on Tuesday to lift force majeure, the legal mechanism under which BP suspended its operations last year.

The agreement was a "significant milestone in BP's plans to return to the exploration of onshore and offshore blocks," Daly said in a statement.

BP's then chief executive Tony Hayward travelled to Tripoli in 2007 to sign a $900 million contract giving the company the right to explore onshore and offshore fields in Libya, home of Africa's largest proven crude reserves.

But the deal quickly became entwined in a furious political row about Abdel Basset al-Megrahi, the Libyan convicted of the 1988 bombing of a U.S. airliner over the Scottish town of Lockerbie.

Megrahi died in Tripoli earlier this month, three years after Scottish authorities released him on the grounds he was terminally ill and did not have long to live. He had returned to a hero's welcome in Tripoli.

Megrahi's release caused a storm of anger in the United States, where many of the victims of the Lockerbie bombing were from. The U.S. Senate Foreign Relations Committee launched an inquiry into whether there was any connection between Megrahi's release and BP winning the exploration deal in Libya.

The company and the British government have always denied any connection between the two, although BP did say it lobbied for Megrahi's transfer to Libya.

SECURITY SITUATION 'MANAGEABLE'

Libya now is preparing for its first ever democratic elections, but the new government is weak and struggling to keep in check armed volunteer militias.

A BP spokesman said security was going to be "the determining factor on how quickly we move."

"At the moment we feel security and safety is sufficiently manageable."

It was likely to be months before BP had everything in place to re-start its exploration work, the spokesman said.

"The first thing we need to do is re-establish the contracts for drilling and logistics," he said.

"We need to get contractors back in for the onshore and offshore drilling .. Then it's back to work as soon as possible."

Shell said its decision to pull out of its Libyan contracts did not show any lack of faith in the oil sector, and said it would keep an office open in Libya to look into new deals.

In a statement, the company said it would abandon drilled wells and stop exploration on its two Libyan licenses. It said its departure had nothing to do with security issues and was taken on a purely commercial basis.

"Despite an extensive seismic and drilling campaign in these licenses, results have been disappointing and further exploration cannot be economically justified," a Shell spokesman said. "We have agreed to actively pursue new upstream business opportunities."

Asked about Shell's decision, NOC chief Berruien told Reuters by telephone: "All I can say right now is that Shell is not withdrawing from Libya. They are staying."

Source: Reuters

www.soclibya.com 

Libya currently producing nearly 1.5 mil b/d crude: NTC official

Libya is currently pumping nearly 1.5 million b/d of crude and expects to achieve "normal" pre-war production levels of 1.6 million b/d by mid-2012, Abdulbaset Abadi, a member of the oil committee at the National Transitional Council, said Wednesday.

Speaking at the MEED Libya Focus Day in Dubai, he said Libya was seeking foreign assistance to raise the country's oil production capacity to 2.2 million b/d in 2015 and 3 million b/d in 2020. The country's current production capacity is estimated at about 1.6 million b/d.

International oil companies with production sharing contracts signed with the regime of the late Libyan dictator Qadhafi that are due to expire in 2012 will get contract extensions on account of Libya's 2011 revolution, Abadi said.

Libya plans to announce the structure of new enhanced production sharing agreements to replace the Qadhafi-era contracts in 2015, he said. 

Separately, NTC deputy chairman Mustafa el-Huni said Wednesday at the same event that Libya's 2012 budget assumes crude oil production of 1.5 million b/d and exports of 1.3 million b/d.

The national budget of Libyan Dinar 68 billion ($54.38 billion) for the 2012 calendar year, approved in February, is also based on projected natural gas output of 16 billion cubic meters this year, he told delegates.

The budget includes Dinar 38 million earmarked for development spending, including investment in civil and petroleum sector infrastructure, Huni said.

The NTC projects government revenues from the petroleum sector of about $45 million in 2012. The remainder of the budget will be funded from Libyan assets that were frozen in overseas accounts during the country's 2011 revolution, he said.

Huni reaffirmed Libya's intention to honour all agreements with foreign investors signed by the Qadhafi regime.

"We have no intention to nationalize or do something radical," he said.

"Libya is in essence a moderate country that will look at implementing moderate policies." Elections for a National Congress to replace the NTC are scheduled for June. The 85 members of the NTC have pledged not to run for office in order to minimize the transitional government's influence on the election, Huni said.

Abadi said in his presentation that a number of new oil and gas discoveries in Libya in 2009 and 2010, including 24 reported in 2010, had raised the country's proven and probable reserves to an estimated 45 billion barrels of crude oil and 55 Tcf of gas.

US Geological Survey data put the potential for further Libyan oil discoveries at more than 8 billion barrels, including 4.7 billion barrels of conventional onshore crude, while undiscovered gas potential was put at more than 43 Tcf, Abadi said.

He presented an encouraging picture of the current state of Libya's oil export facilities: while the terminal at the port of Sidra had been destroyed by pro-Qadhafi forces, there were no significant operational problems at Brega, Marsa or Tobruk, and only minor damage at Ras Lanuf.

The Libyan petroleum sector's major immediate requirements were the replacement of numerous 4X4 vehicles destroyed in the recent conflict, telephone and Internet services at oil and gas facilities, security services to protect expatriate workers and workforce housing, Abadi said.

The biggest short-term bottleneck was likely to be communications infrastructure, which would take some time to extend to remote oil and gas facilities, he said.

www.soclibya.com

Source: Platts  by Tamsin Carlisle,  and edited by Jonathan Fox