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.

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

Azerbaijan Offers to Build Refinery, Filling Stations in Libya

Azerbaijan has proposed building an oil refinery and gasoline filling stations in Libya, the Azeri Foreign Ministry said in an e-mailed statement today.

Azerbaijan could build the refinery on its own or with Libya, Azeri Ambassador Agasalim Shukurov said at a meeting with Abdulrahman Ben Yezza, Libya’s oil and gas minister, according to the statement. State Oil Co. (ATPG) of Azerbaijan, known as Socar, is building a refinery in Turkey’s Izmir region. It also has filling stations in Azerbaijan, Ukraine and Georgia.

By Zulfugar Agayev from Bloomberg 

NEW OIL DISCOVERY BY TATNEFT

NOC announces Wednesday 28/1/2010 that TATNEFT being partners in an Exploration and Sharing agreement, report initial information concerning the exploration well B1-82/04 New Field Wildcat in Ghadamis Basin.

The well is located approximately 345 km South of Tripoli. The well B1-82/04, drilled in Ghadamis Basin area 82 to a total depth 8,750 feet, encountered hydrocarbons in Ouen Kasa with a net pay 11 feet. The initial production testing from Ouen Kasa established an Oil Rate of 829 bbls/d , Choke Size 32/64 (Inch), Oil Gravity 37.31 API This well represents the second discovery in area 82, which was awarded by NOC in December 2005.

TATNEFT drilled the well as an operator under an EPSA agreement with NOC with interest distributed as Follows: First Party Interest (NOC Libya) 89.5 %. Second Party Interest (TATNEFT) 10.5 % (Operator)

Libya discovered seven new oil deposits in 2009

The Libyan National Oil company (NOC) announced on Thursday that seven new oil and gas deposits were discovered in 2009 in the country.

The report on activities in the oil sector released on the internet site of NOC, stressed that the oil companies which discovered those deposits were, the Austrian company, Woodside, which discovered an oil deposit in the basin of Ghadams, about 900 km South of Tripoli and the Canadian company, Verenex which discovered a gas deposit in Ghadams.

The Algerian company, Sonatrac also announced discovery of oil deposits in the basin of Ghadams, 230 km south of Tripoli, while the Spanish company, Repsol discovered on-shore oil reserves from 40 km south-west of Benghazi, 1,050 km east of Tripoli.

Similarly, the Libyan company, Golf Arabic Petroleum, discovered oil deposit at 190 km south of Tripoli in the basin of Ghadams and the Russian company, Tatnafet discovered an oil deposit in the basin of Ghadams, 345 km south of Tripoli.

The US company, Hess, also discovered onshore oil and gas in the deep seas of the Mediterranean, 56 km north of the Libyan coasts on the Gulf of Sirte central Libya.

The NOC paper also stressed the profits in terms of technology transfer made in favour of Libya by international companies which transferred their engineering works and services to the country, which enabled the NOC to promote the competences of the local staff and to develop training in that domain.

However, the secretary of NOC managing committee, Dr Shoukri Ghanem, announced recently that Libya recorded huge revenues thanks to the revision of canvassing and sharing agreements on oil production which are estimated at US$10 billion.

He also said that his country did not intend to invite companies to tender for new blocks in 2010 because of the collapse in the gross prices and the increase in invitations to tender on the global market.

Sources say that Libya, which is the third African oil producer, after Nigeria and Angola, with reserves estimated to date at 41.5 billion barrels, intends to increase its reserves to 6.5 billion barrels in 2010, with a planned production of 2.9 million barrels per day in 2015.

Tripoli - Pana

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 hopes Verenex buy will not take long

Libya's plan to buy Verenex Energy Inc should not take long and it is well-placed to finance the deal, the country's most senior energy official said on Thursday.

Libya has said it will exercise its right to pre-empt a friendly C$10-a-share bid for Verenex from China National Petroleum Corp (CNPC) . It has yet to make a formal offer.

"Sometimes it's very difficult to give an exact time-frame, but I hope it will not take long," Shokri Ghanem, the chairman of Libya's National Oil Corporation, told Reuters television.

"Libya has quite a good fund," he said. "Most of the funds are invested in cash and cash is the king now, so I don't think we'll have a big problem regarding finance for this deal."

Verenex holds promising oil assets in Libya, home to Africa's largest oil reserves which has attracted a wave of interest from oil companies after the end of international sanctions.

With the assumption of debt, the C$10 a share offer from CNPC is worth C$499 million, the companies said when it was announced on February 26. The stock was unchanged at C$8.95 as of 1827 GMT.

Ghanem has previously stated that Libya would offer the same price as the C$10-a-share agreed by CNPC. He did not specify a purchase price in his comments on Thursday.

He said Libya had chosen to buy Verenex for commercial reasons.

Source: Reuters

Two new oil & gas discoveries in Libya

The Libyan state-owned National Oil Corporation (NOC) has reported two new oil and natural gas discoveries - one with Algerian partner Sonatrach in the Ghadames basin and the other with Spanish partners Repsol YPF SA and OMV AG in the Sirte basin.

NOC said Sonatrach made the first discovery on Block 65 in the Ghadames basin with the wildcat A1-65/02 well. The well was drilled to 9,033 ft TD about 230 km south of Tripoli, encountered both oil and gas in the Mamouniyat formation at intervals of 8,532 and 8,560 ft.
Testing of the wildcat showed oil of 48.8° gravity flowing at 1,344 b/d and gas flowing at 1.88 MMcfd through a 28/64-in. choke, NOC said.

NOC holds a 75% stake in the Block 65 license, while Sonatrach holds the remaining 25% stake, which it acquired in 2005.

NOC's second reported discovery, in the Sirte basin about 500 km east of Tripoli, was with the A1-NC202 wildcat, drilled to 15,815 ft TD in 50 m of water.

NOC said the A1-NC202 discovery found both oil and gas in the Demah formation at intervals of 4,442 and 4,484 ft. Testing of the well showed 26° gravity oil flowing at 1,264 b/d and gas flowing at 0.58 MMcfd through a 32/64-in. choke.

Repsol YPF operates the NC202 Block, which was awarded in 2003. Repsol YPF holds 21% interest, while NOC has a 65% stake, and OMV holds the remaining 14%.