An end to US sanctions has seen companies such as Occidental and Chevron Texaco return to Libya for the first time in nearly 20 years and is already providing a huge boost to the companies operations and profits.
Occidental Petroleum's earnings have been boosted four per cent by its revived Libyan oil production. The company's holdings in Libya include three producing areas and interests in 13 exploration blocks and involve a total area of 130,000 square kilometres making the Occidental the largest foreign player in Libya's oil and gas acreage. Officials estimate newly restored Libyan production has contributed 22,000 barrels-a-day to the company's 2005 production volume.
The trend is also evident with Marathon and ConocoPhillips. Each holds a 16.33 per cent interest in the Waha concessions ranging over 13 million acres in Libya's Sirte basin. The companies with Amerada Hess formed the Oasis consortium which produced 400,000 b/d before being forced to withdraw
Marathon expects to add more than 160 million barrels of oil equivalent to the company's proven reserves following re-entry into Libya. The company also anticipates the addition of up to 45,000 b/d of its oil production in 2006.
Amerada Hess says it will add in excess of 85 million barrels of oil equivalent to the company's proven reserves as a result of its re-entry to Libya and about 25,000 b/d of oil production.
US firms dominate
The government's strategic aim of more than doubling its oil production in the next five years is off to a promising start following two substantially over-subscribed licensing rounds and the return of American oil companies to the country. Most of the initial spoils went to US companies such as Amerada Hess and ChevronTexaco which was licensed to explore the Marzouk basin south of Tripoli.
The attraction is proven oil reserves of more than 39 billion barrels, the world's eighth largest reserves and representing some 3.3 per cent of the world's total crude. Libya is capable of producing much more but needs both technological know-how and the capital resources of international oil companies to do this. As a result more licensing rounds are expected later this year.
More than $30 billion in foreign investments is being sought to raise oil production from its current 1.65 million b/d to 3 million b/d. Asian and European oil firms won many of the contracts on offer in the second round. Five Japanese companies including Nippon Petroleum and Mitsubishi have been awarded exploration permits.
China National Oil and Gas Exploration and Development Corporation has won a bid to explore a 2,500 square kilometre offshore area, the first time China has entered oil exploration in Libya. Indonesia's Pertamina has also signed oil and gas exploration deals.
Libya may ask foreign oil majors to help in the revival of oilfields that have become run down after decades of use and lack of enhanced recovery technologies during the 11 years of international sanctions that were only rescinded in 2003. Prime Minister Shukri Ghanem has said that companies may for the first time be allowed to own the oil and book reserves under production sharing agreements.