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.

Benghazi aspires to become Libya's business capital

* Eastern city wants to restore status as business centre

* Residents say marginalised for decades under Gaddafi

* Benghazi wants return of oil body to city

By Marie-Louise Gumuchian

BENGHAZI, Libya, Jan 23 (Reuters) - At a construction site on Benghazi's waterfront, engineer Seraj Bushada proudly points to a giant hole in the ground that will make way for a 48-floor office tower that city officials hope will help transform part of this port city into a modern business district.

Unlike the capital Tripoli, Benghazi, Libya's second-biggest city, has few modern high-rise developments.

Construction of the $300 million Three Towers project, which will include two smaller blocks housing luxury apartments and a hotel, was delayed due to the uprising against former dictator Muammar Gaddafi, which began here nearly two years ago.

The project is now due for completion in 2015 and is being promoted in Benghazi's bid to regain its former status as the country's business capital and end what residents see as decades of marginalisation under Gaddafi.

"We have to work together to realise this dream," Bushada said.

Turning that dream into reality will be a challenge. Security is a major concern for foreign investors in the city, highlighted by the attack on the U.S. diplomatic mission in September in which the U.S. ambassador and three other Americans were killed.

Only last week a car bomb killed a Benghazi police officer, the second such attack in as many days and the government is considering imposing a night time curfew on the city.

Many Benghazans, however, are calling for the country's new constitution - due to be drafted in coming months - to give the city powers to manage its own affairs and a share of the eastern region's resources.

While the revolution succeeded in overthrowing Gaddafi, they argue, it has failed to spread wealth more evenly in Libya. Benghazi is the main city in eastern Libya, which provides around 80 percent of the country's oil wealth, yet the city is still dependent on the government in Tripoli for funding.

Some residents and officials are calling for the constitution to officially restore Benghazi as Libya's business capital, a status it held under King Idris until his overthrow by Gaddafi in a coup in 1969. With an estimated population of nearly 1 million, it is roughly half the size of Tripoli.

"Everything was here before, Benghazi is the best place to be the economic capital," said businessman Kais el-Bakshishi of the "Benghazi Economic Capital" campaign, which counts about 700 members including local businessmen, activists and academics.

"The main reasons are its strategic location - a gateway to Africa and Egypt and historically the people of Benghazi are traders. A lot of businessmen in Tripoli are from Benghazi."

STRIKING A BALANCE

Perched on the Mediterranean sea, Benghazi was the first city to revolt against Gaddafi and later became the rebels' main base before Tripoli, some 1,000 kilometres (620 miles) away, fell in August 2011.

City officials' first priority is to push the central government to move state companies such as the National Oil Corporation (NOC) and Libyan Airlines, which were based here under King Idris but later moved to Tripoli, back.

"If we can get these back to Benghazi, we can make it the economic capital," said Abdelhamid Elhadad, head of the industrial and oil committee of the Benghazi local council.

"We are trying to restore Benghazi to what it once was," he said, sitting in the council's new offices - where posters claiming "Together we will build our city" hang next to signs banning weapons.

The NOC was formerly the Libyan General Petroleum Company, which was founded in Benghazi in 1968. After the NOC was established in 1970 it relocated to Tripoli.

"The objection is that it is like before - everything is controlled by Tripoli; this is not why the revolution took place," said Tahani Mohammed Ben Ali, head of the Benghazi workers' union at Libya's biggest oil firm Arabian Gulf Oil Company (Agoco).

"There are infrastructure, health, education needs here."

With the country still volatile, Libya's new rulers - led by Prime Minister Ali Zeidan's cabinet and the general national congress - know they have to strike a careful balance to appease regional rivalries.

That plays in Benghazi's favour and the oil ministry has proposed splitting the NOC into an exploration and production company based in Tripoli and a refining and petrochemicals company in Benghazi. Residents in eastern Libya as well as activists and oil workers vehemently oppose the plan, however, and say the whole company should relocate to Benghazi.

"If someone steals something from you, you want it back," Ben Ali said.

Other plans for enhancing Benghazi as a business hub include improving its infrastructure.

Its port is outdated while the airport, which has just one cramped hall, had been slated for an upgrade when the war began.

"The plan before was for 5 million passengers a year, now we want 15 million passengers a year," Bakshishi said.

South Korean company Nemo Partners is building a temporary passenger terminal at the airport. But progress on expanding the airport has been slow as the central government is reviewing previous foreign investment deals in the country before it approves new ones.

Benghazi officials are also considering building a free trade zone and have proposed public works projects to provide jobs, namely for the former rebel fighters who have yet to lay down their weapons.

"We want to look after the factories around Benghazi, we need to boost manufacturing," Elhadad said. "We have an industrial area of around 1,000 hectares, we want to have a real industry here, we want to build more hotels."

Elhadad wants Benghazi to be twinned with cities like Istanbul or Marseille to promote ties and plans to write to the mayor of New York, seeking to attract U.S. interest.

Industry in the area focuses on cement, and cable and steel pipe factories, as well as oil services, but badly needed foreign investment is only trickling in.

The International Monetary Fund forecast Libya's economy shrank 60 percent in 2011 due to the conflict but expected it to expand by 122 percent in 2012 and 17 percent this year.

TRADE PICKS UP

Benghazi still faces many of the same problems as the rest of Libya. Rubbish is piled up on its streets and beaches; jobs are in short supply; and weapons are everywhere as the government has failed to control rival armed factions since the end of the uprising.

However, it has seen more commercial activity in the past year and dozens of new clothing, food and consumer goods shops have sprung up.

"Things are getting better, lots of new businesses were established after the revolution," an Egyptian worker at a supermarket in the city, said. "And people are spending."

One local businessman said retail business in Benghazi had tripled since before the war, but did not cite a source for the figure: "The former fighters have money so they are spending."

At a conference this week, businessmen and campaigners laid out plans for Benghazi's economic revival, but many acknowledged security remained a priority.

Last week Italy - the former colonial power - suspended activity at its consulate in Benghazi and withdrew staff for security reasons after unidentified gunmen opened fire on its consul's armoured car.

The consul was unhurt but the incident recalled the attack on the U.S. mission, in which American intelligence officials say Islamist militants with ties to al Qaeda affiliates were most likely involved. Last week's hostage crisis in Algeria has added to security concerns in North Africa.

"How can you turn Benghazi into an economic capital when there isn't even any security?" Khaled Al-Nomi, a shop assistant, said. "Things are getting worse here, not better."

Many Western businessmen are adopting a wait and see approach towards Libya, keen to see whether the interim government can get a grip on security. Arab and Turkish businessmen are more prominent.

Local Benghazans stress that the violence is more against security officials than civilians, but the attack on the U.S. mission has been a setback.

"Some companies up until last year visited Benghazi," Tarek Alwan, managing director of London-based consulting firm SOC Libya, said.

"Some were actually progressing towards establishing local agents, but since the security is not fully stable in the city, I think many pulled out." (Additional reporting by Ghaith Shennib; Editing by Andrew Torchia and Susan Fenton)

Oil Ministry plans to split NOC in two; “unlikely” to placate Benghazi

Oil refinery in Brega. The NOC’s refining activities would be headquartered from Benghazi under the proposal.

The Ministry of Oil is proposing to separate the National Oil Corporation’s exploration and production activities from refining, establishing two separate bodies to be respectively headquartered in Tripoli and Benghazi.

The initiative comes a little under two months after a plan to give Benghazi effective responsibility for exploration, production and refining services in eastern Libya was put on hold following protests in Tripoli.

It is believed that the revised proposal is designed to placate oil workers and activists in eastern Libya who want Benghazi to have a greater say in the running of the country’s oil industry.

“In the oil and gas ministry, we have a near-term plan with respect to the [eastern] region,” new Oil Minister Abdelbari Al-Arusi said in a statement on the NOC’s website.

“[The body] will be called the ‘National Corporation for Oil Refining and Petrochemicals Industry’ and will oversee all companies operating in this area. It will launch projects and secure funding for them.”

In Tripoli would be headquartered the ‘National Corporation for the Exploration and Production of Oil and Gas’. The two departments would also have branches in Tripoli and Benghazi respectively, and would be under the Ministry of Oil.

According to the head of the NOC’s oilfield services arm, however, the proposal is unlikely to placate eastern discontent as currently conceived.

“I don’t think Benghazi will accept it”, Mohammed Albadaly, CEO of Jowfe, told the Libya Herald. “They want exploration and production, not refining. There are far fewer commercial activities in downstream, whereas upstream you have drilling, exploration, production, pipelines and so on”.

Albadaly said that the proposal would more likely be accepted by Benghazi if reversed, to give exploration and production responsibility to the east and leave refining in Tripoli, but that fierce resistance is likely to be encountered in the capital either way.

“A lot of the NOC’s employees are older; they have families and they have roots. They don’t want to move and they don’t want to lose their jobs. That’s why there was so much resistance to Decree 100”.

Under Decree 100, the proposal that was previously shelved, the NOC’s hitherto inconsequential Benghazi branch would have been given de factocontrol over the oil industry in eastern Libya, home to some 80 per cent of the country’s oil fields.

Five departments were to have been established, in the fields of petro-chemicals and refining, exploration and production, human resources, administration and finance. Having only been signed off on 4 October, NOC Resolution 100 was in force for less than a week before being suspended in the face of fierce opposition from staff in Tripoli.

Speaking to the Reuters news agency, Deputy Oil Minister Omar Shakmak described the latest plan as “a matter of reorganisation. We will receive feedback from experts within the oil sector and civil organisations … and upon that, a proposal will be submitted to the government,” he said.

Source: Libya Herald

Canoel Announces Expansion Into Libya

Canoel International Energy Ltd. ("Canoel" or the "Company") (TSX VENTURE:CIL) is pleased to announce that it is opening a representative office in Libya and is processing the opening of a local company registered under local Libyan laws.

Canoel has identified Libya as a country in which it will in the future seek to identify opportunities to conduct business and purchase exploration or production assets.

In Africa, Canoel already owns a small stake in Mafula Energy Ltd., a Zambia registered company, which has been awarded an exploration permit.

Andrea Cattaneo, the company's CEO, states "We are excited to start a settlement into Libya. We trust that this fast developing country will be a promising area where to deploy our exploration and & production skills."

Canoel's business plan is to grow through international acquisitions and exploration and to increase the production and reserves from its international inventory of oil and gas projects.

Libya's 2012 total oil and gas revenues are expected to be $54.9 Billion US Dollars.

(source: Libyan National Oil Corporation, NOC)

Earnings from oil exports account for more than 90% of Libya's National Income.

Security Fears Cloud Libyan Oil Growth

By BENOÎT FAUCON, WSJ

Heightened security fears after the killing of the U.S. envoy to Libya will further slow the return of foreign oil workers to the country, potentially threatening Libya's plans to boost oil output and grow its economy, according to oil company executives and consultants.

"It's a serious blow to Libya in terms of security," said Tarek Alwan, head of consultancy SOC Libya, which advises international companies investing in the North African nation. "It will delay the return of international oil companies and expatriates."

Oil companies were beefing up their security precautions on Wednesday in the aftermath of the killing of Ambassador Christopher Stevens and three other American diplomats by suspected religious extremists in the eastern city of Benghazi. One European oil company told visiting foreign staff to stay at their Tripoli hotels as a precautionary measure, according to a Libyan oil professional.

Following the ousting of Moammar Gadhafi last year, Libya has surprised analysts by bringing its oil production close to pre-revolution levels much faster than analysts had expected.

Foreign oil companies with production interests in Libya—such as Germany's Wintershall AG, Eni SpA ENI.MI -0.33% of Italy and Total SA FP.FR -0.35% of France—have sent back expatriate workers.

But even before the U.S. envoy's killing Tuesday, attacks on Western interests in June and political protests this summer had already caused some oil-service companies and those with exploration concessions to revise their staffing plans for Libya.

That threatened the country's plans to boost output to 2.2 million barrels a day over the next three years, up 40% from present levels. Such an increase would be enough to overtake Angola to become the eighth largest producer in the Organization of the Petroleum Exporting Countries.

Back in July, Libyan production dropped by 200,000 barrels a day for a short period when protests over parliamentary elections disrupted operations at the country's largest terminal in el-Sider, in eastern Libya.

When it resumed its operations in May, BP BP.LN -0.45% PLC, which has by far the largest exploration plans in Libya, involving investment of $900 million, said the move would pave the way for a return of its expatriates. But three months on, a spokesman for the British company said it had yet to send its foreign staff back because the situation isn't considered safe enough.

Mr. Alwan said he knew of one international consultancy active in the oil sector had that pulled out completely from Benghazi, the capital of Libya's eastern region where the majority of the country's oil is produced, after a British diplomatic convoy was attacked in June.

When foreign staff return, Libyan oil managers say they are sometimes guarded by armored convoys when traveling to and from the airport. Restaurants where they plan to dine are checked first by security guards.

Once Libya accelerates plans to boost production, the reluctance of foreign oil workers to return could leave the country short of specialists in gas-injection equipment—needed to boost production from existing fields—and geologists and seismic workers needed for exploration of new fields, according to a Libyan oil manager at a large European oil operation.

Still, some Libyan officials are hopeful that the formation of a new government—expected to take place soon following elections in July—will lead to serious measures to improve security.

The tragedy "will be an incentive to be more dedicated about security," said Ahmed Shawki, head of marketing at the state-owned National Oil Co. "Other [oil-producing] countries had a worse situation," he added. "Look at Iraq."

NEW OIL/GAS DISCOVERY in LIBYA

Arabian Gulf Oil Company which is a wholly owned by NOC reports that it has drilled the F1-NC4 New Field Wildcat well to a total depth of 10,300 feet. The well is located in Ghadames Basin approximately 150 km Southwest of Tripoli City. The initial production testing from Memouniat, Lower Acacus & Middle Acacua established an oil & gas flow as follows:

Well Name	Formation	Tested Interval (feet)	net pay (feet)	Choke Size (Inch)	Oil Rate bbls/d	Gas rate MMCF/D	Oil Gravity API
F1-NC4	Memouniat	10,000-10,020	20	½	38 Condensate	6.840	62
	Lower Acacus	8,972-8,983	11	½	1,248	0.999	37
		8,298-8,306	8	½	888	0.440	38
		8,111-8,119	8	½	1,050	1.012	39
	Middle Acacus	7,748-7,759	11	½	1,247	1.620	39
		7,701-7,713	12	½	937	3.786	39

Source: NOC website

Libya’s NOC Says 2012 Oil, Gas Revenues To Total $54.9 Billion

Libya’s National Oil Corp (NOC). expects to generate $54.9 billion in revenue from oil and natural gas this year, according to a release posted on its website.

The revenue would come from exports and taxes on oil companies operating in the North African country, the NOC said.

Source: Bloomberg 

Libya Seeks U.S. Investment in Areas From Oil to Tourism

Libya is seeking to boost its oil production by a third to 2 million barrels a day by year-end, surpassing last year’s pre-conflict level, Libyan ambassador to Washington Ali Aujali said.

How fast Libya returns to pre-war levels or surpasses them “depends also on the oil companies, how fast they are returning” to restart or expand operations, Aujali said, speaking at a Bloomberg Government breakfast in Washington yesterday.

Beyond oil, Libya is eager for American investment in tourism, health care and education, he said. The nation, whose governance is still in flux, plans to hold the first election for the national assembly next month after four decades of rule by dictator Muammar Qaddafi.

“The environment is great” for U.S. companies, in large part because the Obama administration is credited by Libyans with pressing for NATO military action that helped topple Qaddafi last year, Aujali said.

“They appreciate what the Americans did,” he said, and American flags are often flown alongside Libyan ones around the country.

Libya’s governor for OPEC, Samir Kamal, set expectations lower than Aujali did, telling reporters last week in Vienna that the government hopes to reach 1.6 million barrels a day by year-end.

Aujali said the North African nation has restored crude oil production to more than 1.5 million barrels a day, or 90 percent of official production figures before Qaddafi was ousted in a violent uprising. The months-long conflict sent production levels plummeting to 45,000 barrels a day in August, according to a monthly Bloomberg survey of oil companies, producers and analysts.

Rising Output

Libyan production was restored to 1.45 million to 1.55 million barrels daily by the end of May, according to figures from the Organization of Petroleum Exporting Countries.

Oil Minister Abdul-Rahman Ben Yezza said last week that Libya plans to spend about $10 billion to develop long-term oil and natural gas projects and increase its crude production capacity. He said the country also has a five-year plan to increase production to about 2.2 million barrels a day.

Aujali said “we need more investment” to develop the oil industry and fulfill a longer-term goal of restoring Libya’s crude production capacity to its historical high. The U.S. Department of Energy estimates it exceeded 3 million barrels a day in the 1960s.

Aujali cited ConocoPhillips (COP) (COP), Exxon Mobil Corp. (XOM) (XOM) and Occidental Petroleum Corp. (OXY) (OXY) as among U.S.-based multinational energy giants that have returned to Libya, and urged other U.S. companies to invest in all sectors of Libya’s economy.

American Opportunities

American companies need to “be more involved, to be more aggressive to visit Libya to see where they can make business,” he said, so they don’t lose opportunities to other countries such as Italy, which has been proactive in seeking business prospects.

Aujali cited health care, infrastructure, education and tourism as sectors in which the Libyan government is seeking foreign investment. He said tourism remains one of the least- developed industries, citing Libya’s 2,000 kilometers (1,243 miles) of beaches and its cultural attractions, including Leptis Magna, one of the best-preserved Roman ruins in the Mediterranean,

Aujali said Libya is seeking American universities and hospitals interested in assisting with training and technology and setting up branches or partnerships, as many have done in the Persian Gulf and North Africa.

Unfrozen Assets

Libya is looking to the U.S. and NATO countries to help rebuild after a bloody conflict that cost the nation billions of dollars in lost trade and revenue, according to the International Monetary Fund. The revolution killed 30,000 people and wounded 50,000 others, according to the Libyan government.

“You supported this revolution at a critical time,” he said. Still, “the new road is not built,” so the U.S. needs to stay involved to ensure the democratic transition is completed.

The Obama administration has done everything possible to assist Libya’s government, including making available $31 billion in Libyan government assets under U.S. jurisdiction that was frozen as a penalty on Qaddafi’s government, Aujali said.

The only Libyan assets that remain frozen by the U.S. are about $3 billion belonging to the Libyan Investment Authority, the government-managed sovereign wealth fund and holding company based in Tripoli, he said. The authority needs to be reorganized under a dependable board of directors before “we feel safe” asking for the funds to be released, he said.

Election Plans

Libya has scheduled elections for July 7. Aujali said 145 political parties have formed, with 3,000 candidates vying for 200 legislative posts. About 80 percent of eligible voters have registered, underscoring excitement about the democratic transition, he said.

Still, the situation remains volatile, Mustafa Abdul Jalil, chairman of the National Transitional Council, said in an interview with state-run Qatar News Agency June 17. Libya risks descending into civil war if the current unstable security situation persists, he was quoted as saying.

Aujali said his country has studied other nations’ models for reconciliation and justice following long dictatorships during which many were persecuted. Libya is “not starting from zero. There are many with experience in the history and we learn from them.”

‘No Revenge’

While some members of the old regime are under arrest, “there is no revenge at the time being against the Qaddafi regime,” he said. “Reconciliation is important. But in the first place, justice has to be made.”

Aujali said he expects a speedy resolution of the “misunderstandings” in the case of a team from the International Criminal Court in the Hague that was detained June 7 by Libyan authorities. Libya accused Australian defense lawyer Melinda Taylor of trying to smuggle documents to Qaddafi’s son Saif al-Islam Qaddafi in a Libyan prison. The Libyan government accuses Qaddafi’s son of directing the killing of thousands during his father’s regime and during the rebellion.

“The Libyan people, they have the right before anybody else to try Saif al-Islam in Libya,” Aujali said of the effort to try him in the international court in the Netherlands.

Source: Business Week

Libya eyes refund of Goldman, SocGen losses

The Libyan sovereign wealth fund is investigating investment losses of $1.75 billion on structured products managed by Goldman Sachs (GS.N) and Societe Generale (SOGN.PA) to see whether it can claim compensation, the fund's chairman said on Wednesday.

Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA needed to review these investments and how they were managed.

"These were investments made in 2007 to 2008, and some of those losses are quite surprising. We've had losses for around $1.75 billion, of which $900 million was on a single investment with Goldman Sachs," Derregia said.

"We will have to see how these structured products were created, valued and managed. Then we will talk to the investment houses and see if we can claim a refund."

Asked what kind of structured products were involved, Derregia said: "It's not clear to me."

Goldman Sachs declined to comment and Societe Generale could not immediately be reached for comment.

Derregia was appointed head of the LIA in April and is sifting through tens of billions of dollars in holdings and investments made by the fund worldwide during the regime of Muammar Gaddafi, which was overthrown last year.

"To have a clear oversight of everything will take time; it won't be done in one or two months," Derregia said. "Clearly, there will have to be some write-offs, although they are not huge."

The total value of assets managed by the LIA (about $60 billion) had fallen by less than the LIA feared, Derregia added. "It's now midway between $50 billion and $60 billion. People in Libya feared we had lost 50 percent of our assets. It's not like that."

ASSETS SEIZED

Derregia was in Italy to speak to authorities and the financial community about the LIA's holdings in the country, which were seized in March by Italian financial police on the grounds that they belonged to members of the Gaddafi family.

The holdings, worth about 1.1 billion euros ($1.39 billion), include stakes in Italy's largest bank by assets, UniCredit (CRDI.MI), the oil and gas giant Eni (ENI.MI) and carmaker Fiat (FIA.MI).

The LIA has appealed against the seizure, saying that those holdings belong to the LIA, held on behalf of the Libyan government. Derregia and his lawyers said this view was backed by the Italian economy ministry's Committee of Financial Security, which he met on Tuesday.

The next hearing in the case is on July 12.

Derregia said that the LIA would keep its 1.8 percent stake in UniCredit and could buy more shares in the bank if this was in its own interest.

He said it would not make sense to sell down its Italian portfolio now, given current market conditions. "Clearly the value of the shares has declined substantially. There is no incentive for us to sell the shares now or in the foreseeable future."

Asked whether the fund would buy Italian government bonds battered by the euro zone debt crisis, he said: "We hold a lot of assets denominated in euros, and we already have enough bonds."

Source: Reuters 

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