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Mending a bad boy image Delegation touts Libya’s untapped oil and gas wealth; eyes $30B investment; Canadian companies encouraged to move early before U.S. lifts sanctions Gary Park Petroleum News Calgary Correspondent
Back on the global stage after being consigned to the pariah category, Libya is wasting no time spreading the message that its petroleum industry is open for business.
A delegation from the National Oil Corp. was in Calgary in late March and early April drumming up its potential, right on the heels of an announcement by Royal Dutch/Shell that it had signed a $200 million exploration deal with National Oil.
The Libyan officials said that was a mere kick-off to a possible multi-billion-dollar influx of foreign investment to raise production to 2 million barrels per day.
Tarek Hassan-Beck, the planning director at National Oil, said that after 10 difficult years as an international outcast, Libya is “preparing for a prosperous 10 years.”
He estimated that an extra $2 billion a year might be needed to achieve the “projects we foresee in the upstream and midstream” and possibly as much as $30 billion in foreign investment through 2010. Only one quarter of country has been explored The prizes are proven reserves of 36 billion barrels of oil and 54 trillion cubic feet of gas, based on exploration covering only one-quarter of the country.
Hassan-Beck told reporters that production costs average $3 per barrel, with some companies operating at $1.50 per barrel, to generate 1.5 million bpd of oil and 1 billion cubic feet per day of natural gas.
Because many of the “elephant” finds were made in the 1960s, National Oil believes recoveries and reserves could easily be doubled, given advances in technology, he said.
In addition, Libya has dreams of growing its natural gas output to become a leading producer in North Africa.
Hassan-Beck said that once the U.S. administration removes sanctions, companies such as Occidental Petroleum, Amerada Hess, Marathon Oil and ConocoPhillips are eager to return to fields they once operated.
Occidental had assets yielding 170,000 bpd frozen when sanctions were imposed in 1986, while the Oasis Group, comprising the other three companies, was pumping 850,000 bpd in 1986.
In addition, President Moammar Gadhafi last year proposed privatization of the industry as part of measures he is taking to open Libya to foreign investment. Canadian companies see window of opportunity The visit by the Libyan delegation was hosted by the Exporters & Importers Association of Alberta, which believes there is an early opportunity for Canadian companies to seize what may be a narrow window of opportunity before the U.S. majors swarm back.
Other sponsors included Petro-Canada, Talisman Energy and Nexen — Calgary-based producers with extensive international experience, much of it in global hot spots — along with oilfield services contractor Precision Drilling.
Petro-Canada, following its 2002 takeover of Germany’s Veba Oil & Gas, has reserves in North Africa and the Near East of 133 million barrels of oil equivalent, which averaged 145,900 boe/d in the final quarter of 2003. Libya contributed 50,800 bpd and Syria contributed 91,700 bpd. The target for 2004 from the region is 133,000 boe/d.
With one eye on Libya, Petro-Canada is moving ahead with expansion of its Syrian interests, undeterred by threats of U.S. sanctions against a country labeled as a “state sponsor of terrorism.”
The Canadian integrated oil company announced on April 1 that along with Occidental and United Kingdom-based Petrofac it is negotiating the possible development of a natural gas project in Syria.
An Occidental spokesman, referring to the threatened sanctions, said that because no money is committed at this stage, nothing is being risked.
The U.S. Energy Information Administration has estimated Syria’s proven gas reserves at 8.5 trillion cubic feet, of which 3.6 tcf is in the Palmyra area, which has 15 discoveries and is the object of the negotiations.
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