Libya is reassessing the terms it offers foreign companies to explore for oil as the OPEC member seeks to entice more partners and boost crude output while resolving worker protests that are curbing exports.
“The conditions are under review so as to improve relations with the companies in a win-win context and promote long-term investments,” Nuri Berruien, chairman of state-owned National Oil Corp., told an oil conference in Tripoli Tuesday.
Libya plans to hold its next bidding round for exploration rights in mid-2014, Berruien said. The auction would be the North African country’s first since the ouster of Moammar Gadhafi in 2011.
Eni, Royal Dutch Shell, Exxon Mobil, Repsol, Total and Gazprom are among about 30 companies that won licenses in four auctions held from 2005 to 2007. Libya organized the rounds after the United States in 2004 lifted economic sanctions it imposed nearly 20 years earlier over accusations that Gadhafi supported terrorists.
The new terms would sweeten financial incentives for companies exploring in remote areas, according to Najmi Karim, chairman of Libya’s petroleum law review committee. “We will seek to reward risk,” he said in an interview in Tripoli.
The terms Libya offered in previous rounds “were considered just about competitive,” Eurasia Group North Africa analyst Riccardo Fabiani said in an email. “The international oil companies were attracted mostly to the fact that Libya was relatively under-explored after decades of international sanctions and isolation, and therefore the potential was considered high.”
The county’s production peaked at 3.3 million barrels a day in 1970, the year after Gadhafi took power. The most it has pumped since then was about 1.8 million barrels a day in 2008.
Libya, with Africa’s largest proven oil reserves, is producing at a daily rate of 200,000 to 240,000 barrels, Berruein said, a fraction of the post-Gadhafi era high of 1.6 million barrels that it reached last year. Worker protests over pay, jobs and promotions have crippled operations at oil terminals in recent months, curbing shipments.
Berruien said he was “confident that the oil and gas sector will overcome all these emergency circumstances and go back to its previous situation.” Production and exports would return to normal in “a short time,” he said.
Libya restored about 25 percent of its production capacity when output resumed at the Sharara and El Feel, or Elephant, fields after talks between the government and striking workers, the state-run news agency Lana reported, citing Abdulwahhab El-Gayedi, the head of parliament’s oil-industry crisis group.
The two fields combined should increase Libya’s oil production by about 400,000 barrels a day, he said.
“Libya is resource-rich but not fulfilling its production potential,” Ferdinando Rigardo, regional manager of Repsol, said at the conference in Tripoli. Madrid-based Repsol is the operator at Sharara.
Libya was losing as much as $130 million a day in potential because of the worker protests, according to the finance ministry. Oil revenue accounts for 75 percent of the government’s income, the U.S. Energy Information Administration says, and the lost revenue is complicating Libya’s struggle to recover from the 2011 civil war that ended Gadhafi’s rule.