Three U.S. oil majors have reached agreement to resume oil and gas production in Libya after a two-decade gap. After stock trading closed Dec. 29, ConocoPhillips, Marathon Oil and Amerada Hess said they were returning to their former energy fields in Libya after abandoning the country when U.S. sanctions were imposed in 1986.
State-run Libyan National Oil Corp. will hold 59.16% of the venture in Libya's Waha concessions, ConocoPhillips and Marathon Oil will each hold 16.33% and Amerada Hess will hold 8.16%
"This agreement provides a strong basis for us to invest in our aligned goals for increased reserves and production and in the training and development of our Libyan workforce," said Jim Mulva, chief executive of ConocoPhillips, the biggest of the three firms.
The concessions produce about 350,000 barrels of oil per day and encompass almost 13 million acres (5.3 million hectares) in the Sirte Basin, which the U.S companies said, "contains sizeable undeveloped oil and gas resources." The trio agreed to pay $1.3 billion to restart their participation. The payment extends the terms of the concessions for 25 years, to 2031-2034. They also paid $530 million to regain access to frozen assets in Libya.
ConocoPhillips said it expected to add about 45,000 net barrels of oil per day (bpd) to its global production after re-entering Libya. Marathon targeted an extra 40,000-45,000 bpd, and Amerada Hess about 20,000-25,000.
Following the bombing of a discotheque in West Berlin frequented by U.S. military personnel in 1986, the U.S. bombed Libya and imposed broad economic sanctions.
But in recent years Libyan leader Moamer Kadhafi has sought to come in from the cold by, most notably, renouncing a previously secret program to build weapons of mass destruction. U.S. and European sanctions on Libya were lifted in 2004 and since then, Western companies have flooded into the country, encouraged by a wave of privatizations in what was a tightly controlled socialist economy.
In October, Libya awarded 44 oil exploration permits to predominantly Asian and European companies after a first batch was awarded earlier this year mainly to U.S. firms. Exxon Mobil earlier this month announced the signing of an agreement with Libya to explore offshore energy deposits in an area comprising 2.5 million acres.
Libya has proven oil reserves of 36 billion barrels and Kadhafi's government says that figure could be as high as 100 billion. It has vowed to invest $30 billion over the next 10 years to increase oil production.
Copyright Agence France-Presse, 2006