Three U.S. oil companies have begun setting up operations in Libya, after an absence of nearly 20 years because of an embargo imposed after Washington accused the North African nation of sponsoring terrorism
Three U.S. oil companies have begun setting up operations in Libya, after an absence of nearly 20 years because of an embargo imposed after Washington accused the North African nation of sponsoring terrorism. Energy experts believe Libya could provide an important source of petroleum if expectations prove true.
Two Houston-based companies, Conoco-Phillips and Marathon Oil, are sending workers to Libya, as is New York-based Amerada Hess. All three had operated in Libya two decades ago as part of what was called the Oasis Group. The deal under which they are returning was announced on December 29 and went into effect on January 1.
Conoco-Phillips and Marathon each hold a 16.3 percent interest in the concessions. Amerada Hess holds an 8.2 percent interest, and the additional 59.2 percent is held by The Libyan National Oil Corporation.
Libya produces less than two million barrels a day of crude oil, putting it in the bottom third of nations in the Organization of Petroleum Exporting Countries. But, in 1970, the country was producing more than three million barrels a day and many energy analysts believe great potential lies beneath its desert sands.
David Pursell, a partner at Houston’s Pickering Energy Partners firm, which provides analysis for the industry, says big oil companies have made record profits in the past few years, but they have few places to spend that money to increase production.
‘The oil companies have lots of cash and limited places to invest,’ he said. ‘If you think five or six years ago, companies would invest incremental dollars into Venezuela or Russia and places that, today, do not look nearly as attractive to additional investment because of political instability, maybe changing tax regimes, etc., so going into Libya makes a lot of sense.’
The U.S. oil companies are hoping their advanced technology and drilling techniques will allow them to discover and develop oil deposits that might have escaped Libya’s state-owned company. But developing an oil field is a process that takes many years and there is always the risk that things could change for the worse, politically, down the road.
David Pursell says that is just one of the risks oil companies must take.
‘That is the nature of the oil and gas business,’ he explained. ‘You go where the opportunities are. You are balancing risk and reward and right now, that risk-reward looks pretty favorable when you think about Libya, but three or four years from now, that calculus could change.’
The three U.S. oil companies will be operating in a five-million-hectare area in the Sirte Basin. Much of the area is unexplored, but some analysts say conditions there could favor a big discovery.
Source : www.voanews.com