Libya Boosts Oil-Field Security

By BENOÎT FAUCON

Libya is boosting security at its oil fields to avoid a repeat of the deadly terrorist attack last week in neighboring Algeria, the Libyan deputy oil minister said, as the hostage crisis reverberates through the global energy industry.

Libya will also send more troops to police its border with Algeria, which runs close to the gas field attacked by the Islamist militants, Libyan Deputy Oil Minister Omar Shakmak told The Wall Street Journal on Wednesday.

Kyodo/Reuters

Algerian workers stood at the In Amenas gas plant near the Libyan border on Jan. 16, in a photo secretly taken by one of the hostages.

Mr. Shakmak said he had no knowledge of a particular threat to Libya, but said Tripoli was sending more troops to the border and to desert oil fields, and boosting communications capacity, as a precautionary measure in response to the Algeria attack. "We have a concern since last week," he said.

The assault on the In Amenas field, which is operated by BP BP.LN +0.90%PLC, Statoil ASA STL.OS +0.48% and Algerian state oil company Sonatrach, left at least 37 foreign workers dead and exposed a formidable new threat for oil companies operating in the Sahara region.

Several regional experts have highlighted Libya's oil industry—where many international companies including U.S.-based ConocoPhillips, COP -0.72% Italy's EniSpA ENI.MI -0.31% and France's Total SA FP.FR -0.01% operate—as one of the most likely targets of a terrorist attack following the Algerian incident.

Many of the country's oil and gas exploration and production sites are located in the sparsely populated deserts of western Libya, not far from the Algerian border. Following the toppling of former dictator Moammar Gadhafi in 2011, experts said, Libya also suffers from lax security.

"The government is weak and the early signs indicate [Libya] will take longer than anticipated" to stabilize the security situation, said Tarek Alwan, head of SOC Libya Ltd., which advises oil companies on the North African nation.

There is evidence that heavily armed militias, some tied to al Qaeda, are operating in the country. In September, terrorists attacked the U.S. Consulate in the eastern Libyan city of Benghazi, killing four Americans including the U.S. ambassador.

Algerian authorities believe the Islamist terrorists attacked the In Amenas complex after crossing over from the Libyan side of the border, which is about 20 miles from the site, a senior Algerian security official said. The weapons they used were also thought to have originated in Libya, the security official said.

Algerian authorities believe the terrorist group was led by an Algerian national and included citizens from many North African countries.

—Sarah Kent contributed to this article.

Libya helps give Italy's Eni a Q1 profit boost

Italy's largest energy company Eni SpA said Friday that its first-quarter profits rose 42 percent on increased production in Libya and higher prices.

The Rome-based company said net profit for the first three months of 2012 was (EURO)3.62 billion ($4.78 billion), up from (EURO)2.55 billion in the same period last year, even though oil and natural gas production was down a modest 0.6 percent at 1.674 million barrels a day.

Eni shares nevertheless were trading up 0.1 percent to (EURO)16.58 on the Milan Stock Exchange.

Eni's Libyan production was cut off during the first quarter of last year due to the armed conflict in the country that endangered oil workers and blocked exports. Production is expected to reach levels achieved before the conflict of 280,000 barrels of oil equivalent a day by the second half of the year.

"Eni delivered excellent results thanks to the ongoing recovery of production in Libya and higher oil prices, despite the difficult market environment," Eni CEO Paolo Scaroni said in a statement.

Eni, however, said European refining operations were unprofitable. Eni said that was due to high raw oil prices, overcapacity in European refineries and sluggish fuel demand on higher consumer prices.

The company forecasts 2012 to be "challenging" due to the ongoing crisis and volatile market conditions.

Scaroni highlighted Eni's deal with the Russian oil giant Rosneft earlier this week to explore the Arctic, saying it "underpins our exploration opportunities for many years to come, further boosting our prospects for long-term growth".

Eni is active in Russia, where it has started production at the giant Samburgskoye field in Siberia. Production there is expected to reach 43,000 barrels of oil equivalent a day.

Eni also reported successful exploration in Mozambique, and signed a contract with China National Offshore Oil Corporation to explore an offshore basin in China.

By Colleen Barry

AP Business Writer

Libyan wealth fund to appeal against asset seizure in Italy

Libya's sovereign fund said on Thursday it would appeal to recover around 1.1 billion euros of assets, including stakes in top Italian companies, that were seized in Italy last month at the request of the International Criminal Court.

Italian financial police had seized the assets saying they belonged to members of the Gaddafi family, but the Libyan Investment Authority (LIA) said that was not true.

"These assets belong to LIA, which in turn is controlled by the governemnt of Libya on behalf of the Libyan people," the chairman of the fund's management committee, Mohsen Derregia, said in a statement.

He said LIA would file an appeal with the appeals court in Rome on Friday.

The seized assets include stakes in Italy's largest bank by assets UniCredit, oil and gas giant Eni, defence group Finmeccanica, carmaker Fiat, truckmaker Fiat Industrial and soccer club Juventus .

Reuters: (Reporting By Silvia Aloisi)

Libyan oil minister says output about 1.5 mln bpd

Libyan oil production has climbed to about 1.5 million barrels per day (bpd) and the North African country hopes to reach pre-conflict levels by mid-year, Oil Minister Abdulrahman Ben Yazza told a news conference on Monday.

"We have reached 85 percent (of pre-conflict levels)," Ben Yazza told the Oil & Gas Libya 2012 conference. "We hope to reach our target by the middle of this year."

Libya produced 1.6 million bpd before last year's uprising, which led to the ouster and killing of leader Muammar Gaddafi, brought flows to a virtual standstill.

Libya this week hosts its first oil and gas conference since the end of last year's war. (Reporting by Marie-Louise Gumuchian and Ali Shuaib; editing by Jason Neely)

Source: Reuters 

Global Witness: Libya's oil sector 'murky'

LONDON, April 18 (UPI) -- "Murky" practices by Libya's state-owned National Oil Co. highlight the need to reform the country's energy policies, Global Witness said.

The advocacy group said it obtained documents from Libya that indicate the country's oil revenues were grossly mismanaged under Moammar Gadhafi's government.

Global Witness said the documents suggest low-quality crude oil was sold on false pretenses to Exxon Mobil, which cost the company about $4 million. Other companies like Norwegian fertilizer company Yara received "large discounts" on natural gas prices from the Libyan National Oil Co.

"Murky dealings within Libya's National Oil Company, and the systematic mismanagement of the country's oil wealth have effectively denied millions of dollars to the people of Libya," said Giulio Carini, a campaigner at Global Witness.

Italian energy company Eni revealed in early April that it was being investigated by the U.S. Securities and Exchange Commission for alleged illegal payments to Libyan officials.

Global Witness called on the Libyan interim government to release all of its records on oil contracts for the sake of transparency.

"The case for reform of the country's oil sector could not be stronger or more urgent," said Carini.

Eni cooperates in U.S. probe into Libya contracts

Italian oil and gas group Eni is cooperating with U.S. authorities in a probe of oil contracts in Libya, its chairman said on Tuesday.

"We are an open book. We are cooperating with authorities and we'll see how the situation develops," Giuseppe Recchi said on the sidelines of a conference when asked about an investigation by the U.S. Securities and Exchange Commission.

The SEC has requested from Eni documents related to an ongoing probe into "certain illicit payments to Libyan officials" possibly violating the U.S. Foreign Corruption Practice Act, Eni said in its 2011 annual report filing to the SEC.

Separately, Libya has started investigating foreign oil companies over their past relationships with the former Muammar Gaddafi government.

Source: Reuters 

Libya's NOC confirms 'routine' probe into oil contracts with foreign majors

Libya's prosecutor general is reviewing oil contracts with international oil companies concluded by the ousted regime of Moammar Qadhafi as a routine measure, the National Oil Company's marketing director Ahmed Shawki said Monday.

"We don't have any information about actual investigations inside the NOC. We don't have any issues so far with the international oil and gas contracts, and business is going forward," Shawki told Platts by telephone from Tripoli.

He was commenting on a report in the Wall Street Journal that the transitional government in Tripoli and the US Securities and Exchange Commission were investigating the activities of a number of oil companies such as Italy's Eni, the biggest operator in Libya, and France's Total.

The Wall Street Journal in a report Sunday quoted Abdelmajeed Saad, the deputy Libyan prosecutor, as saying that the companies were being investigated for alleged "financial irregularities."

The newspaper cited a March letter from the prosecutor's office to the NOC internal auditor asking him to supply oil company documents. It said the letter mentions oil transactions between NOC and international traders Vitol and Glencore as examples of documents it was seeking. It added that while the probe is focusing on Qadhafi-era contracts, the letter indicates that the request includes activities during the civil war last year.

But Shawki stressed that the work being carried out by the prosecutor general was a routine review of all production-sharing contracts and oil sales contracts as part of the transitional government's commitment to transparency and to make sure there were no irregularities.

"So far, I don't believe NOC has any problems with international oil companies, or contracts signed during the Qadhafi regime," Shawki said.

"As I said before, this is just a routine due diligence work done by the General Prosecutor for financial and contractual irregularities, and nothing more than this," he added.

Shawki said he could not comment about oil sales contracts concluded by the transitional government during the crisis because he was not involved. 

Neither Glencore nor Vitol could be contacted for comment because of the Easter holiday.

However, both Total and Eni have said that they are cooperating with the SEC investigation.

Eni said in a Form 20-F filing to the US SEC last week that on June 20, 2011, it received from the US regulator "a formal judicial request of collection and presentation of documents (subpoena) related to Eni's activities in Libya from 2008 to 2011."

It added that the subpoena "is related to an ongoing investigation without further clarifications nor specific alleged violations in connection to 'certain illicit payments to Libyan officials,' possibly violating the US Foreign Corruption Practice Act." The company had further received a request at the end of December 2011 for collection of further documentation aimed at integrating the previous subpoena, it said.

"Eni is fully cooperating with the US SEC," it said.

Total also referred to an investigation in similar filing to the US SEC.

"In June 2011, the US SEC issued to certain companies, including, among others, Total, a formal request for information related to their operations in Libya. Total is cooperating with this non-public investigation," the French major said without elaborating further.

The investigation comes at a crucial time for the new Libyan leaders as they try to grapple with a surge in violence in the aftermath of the revolution, which ended in October with Qadhafi's ouster and death. 

It also comes as Libya, an OPEC oil producers and major exporter to Europe, is ramping up its oil production, currently estimated at 1.4 million b/d, just short of a pre-crisis level of 1.7 million b/d.

Source: Platts 

Libya, U.S. Probe Oil-Company Deals

By BENOÎT FAUCON, SUMMER SAID and LIAM MOLONEY

Authorities in the U.S. and Libya are investigating oil giants such as Italy's Eni SpAE -0.02% and France's Total SA FP.FR +0.79% over their past relations with the fallen Libyan regime, potentially casting a cloud on the companies' ambitions to expand their foothold in the country with the largest oil reserves in Africa.

Last year, a civil war that toppled Libyan leader Col. Moammar Gadhafi nearly shut down the country's crude production, stressing global oil markets. But as oil-company operations return to normal, the probes may complicate the oil companies' business in the country.

Enlarge Image

Reuters

A civil war nearly shut Libya's crude output last year. Pictured, rebels headed toward a refinery in August.

The Libyan general prosecutor's office is investigating "Libyan and foreign operators in Libya" for possible "financial irregularities," its deputy head, Abdelmajeed Saad, said in an interview.

In a March letter reviewed by The Wall Street Journal, the prosecutor's office formally asked the head of audit at Libya's National Oil Co. to supply oil-company documents. The letter mentions oil transactions between NOC and international traders Vitol Group andGlencore International GLEN.LN +5.75% PLC as examples of documents it is seeking. Though the Libyan probe focuses mostly on the Gadhafi era, the letter indicates that the request involving the traders includes the period of the country's civil war through the present.

The companies investigated also include Eni, the biggest foreign oil player in Libya, and Total, Mr. Saad said.

Neither the letter nor the deputy prosecutor mentioned any specific allegations involving the companies they named.

NOC's marketing manager, Ahmed Shawki, confirmed that NOC and its dealings with foreign companies, in general, are "under investigation from the general attorney."

"NOC submitted all documents. [The prosecutor's office is] doing the right thing," said Mr. Shawki, who wasn't in charge of the company under the late Mr. Gadhafi. He said he did "everything according to the law," but declined to comment on the Gadhafi era.

NOC Chairman Nuri Berruien declined to comment.

News of the Libyan probe comes after the U.S. Securities and Exchange Commission sent formal requests to Eni and Total related to the companies' Libyan businesses. U.S. oil giant Marathon Oil Corp. MRO -0.92% also said in its annual SEC filing in February that it was asked to hand over documents about its Libyan operations.

Eni said in its recent annual filing with the SEC that the U.S. investigation is in connection with "certain illicit payments to Libyan officials, possibly violating the U.S. Foreign Corruption Practice Act." The Italian company said the request covered the period from 2008, when Eni and others renegotiated contracts in Libya, to early 2011, when the civil war erupted.

Total also recently disclosed a request from the SEC in a filing, but didn't elaborate, except to say other companies also had been targeted.

The SEC, Eni, Glencore and Marathon all declined to comment. Total and Vitol were unavailable for comment.

The new Libyan regime, which faces its first elections in June, is under pressure to shed light on oil deals under Mr. Gadhafi, whose overthrow was driven partly by discontent over alleged corruption.

Mr. Saad, of the general prosecutor's office, said that if wrongdoing is established "the fine will be at least double the amount of money" lost to the Libyan government. Also, "it will affect securing any future contract," he said.

The pressure might complicate any future negotiation for international oil companies in Libya, one of the few countries still open to foreign investment at a time when others are tightening the noose on Westerners or are off limits due to sanctions. Eni, which normally gets about 14% of its total production form Libya, wants to double that amount and invest between $30 billion and $35 billion in the coming decade.

—Ángel González in Houston, Geraldine Amiel in Paris, Alexis Flynn and Iman Dawoud in London contributed to this article.

Write to Summer Said at summer.said@dowjones.com and Liam Moloney atliam.moloney@dowjones.com and Benoît Faucon at Benoit.Faucon@wsj.com

A version of this article appeared April 9, 2012, on page B3 in some U.S. editions of The Wall Street Journal, with the headline: Libya, U.S. Probe Oil-Company Deals.

No new Libyan oil round for at least a year

Reuters reported that Libya has enough companies exploring for oil and will not hold any licensing rounds for at least a year as it waits for demand prospects to improve, the OPEC member's top oil official said on Thursday.

"Our effort now is to develop what we have, rather than trying to find more new oil," Shokri Ghanem told Reuters after a meeting of the Gas Exporting Countries Forum in Doha.

Asked when a new round may be held, he said: "Not before one year. When you see the demand in the world is enough to absorb the available or excess capacity, then we will move".

After years of diplomatic isolation, Libya has opened up Africa's biggest proven oil reserves to dozens of foreign energy firms in a series of hotly-contested exploration rounds.

Those companies accepted tight revenue shares and an unpredictable, opaque operating environment for access to some of the world's most promising acreage.

Lower oil prices have made for a rockier ride this year for the foreign companies investing billions of dollars in Libya. Major firms operating there include BP, ENI and ExxonMobil.
Libyan leader Muammar Gaddafi briefly raised the idea of oil sector nationalisation, and a dispute with Canadian oil firm Verenex ended with shareholders forced to sell the company to Libya.

The western-friendly Ghanem stepped down for a few weeks and his authority was challenged by a new Supreme Council for Energy Affairs (SCEA).

In another measure that rattled international energy firms, a government directive appeared stating that foreign joint ventures must have a Libyan national as chief executive.
Ghanem, chairman of Libya's state National Oil Corporation (NOC) since 2006, moved to reassure foreign oil firms on Thursday.

"Foreign companies working in Libya, especially in exploration, they will not be compelled to have a Libyan CEO. The oil industry is in a special situation. This is more about other sectors."
Neither existing nor new joint ventures in the oil industry would be affected, he said.

"It is of course a hope, an aim, that we see some Libyans being the CEOs of companies in Libya but of course we appreciate in the meantime the special nature of the oil companies."

OIL POLICY

Ghanem said NOC was still in charge of oil policy, playing down the role of the SCEA which is dominated by conservatives close to Prime Minister Al-Baghdadi Ali al-Mahmoudi.
"It is the NOC that is now responsible for the policy and the practices of the oil industry in Libya," he said.

Asked if decisions were approved by the SCEA, Ghanem said: "No, by the cabinet. Otherwise it is the NOC which oversees the activities of the companies which suggest to them proposals."
The creation of the SCEA led to speculation that Libya's powerful old guard was trying to undermine the authority of Ghanem, who foreign investors see as a sympathetic partner.
Investors were also worried that if the council took an active role in decision making it could further slow the pace of energy project approvals.

Sluggish bureaucracy aside, the drop in oil prices has led Libya and other OPEC members to look again at some investments to boost oil production.

Ghanem said on Saturday that Libya would not meet a 2012 oil output capacity target of 3 million barrels per day.

When oil prices peaked, national oil companies decided it was worth producing more and many new investment projects were studied, Ghanem said on Thursday.

"But then there were cost increases and oil prices went down," he said. "There is also a glut in capacity ... so it became non-economical to pursue so many expansions."

Libya fund eyeing stake in Italy's Enel - WSJ

Libya's sovereign wealth fund may take a stake in Italian power company Enel SpA (ENEI.MI) as part of the utility's planned capital hike, the Wall Street Journal reported on Wednesday.

In an interview, Chief Executive Fulvio Conti said the Libyan Investment Authority had expressed interest in taking a minority stake.

The fund could either buy shares in the open market or subscribe to an 8 billion euro ($10.9 billion) capital increase that Enel is planning in order to cut its debt, the newspaper quoted Conti as saying.

"We would welcome their ideas. It is premature to say how much and if and when they would participate," he said.

Hafed Gaddur, Libya's ambassador to Italy, told the newspaper Conti had travelled to Libya a week ago to make a presentation to the head of the fund.

"We are evaluating it. No decision has been made," he was quoted as saying. ($1=.7336 Euro)

Source: MILAN, May 13 (Reuters)