The National Oil Corporation foresees granting foreign partners joint venture stakes of about 40 per cent, twice the share of existing contracts signed under the former Muammar Qaddafi regime.
Libya pins its hopes on foreign investors to develop shale gas
Libya plans to allow foreign investors greater stakes in shale gas than in its closely held conventional hydrocarbons industry, part of a bid to create jobs and stability there.
National Oil Corporation (NOC) foresees granting foreign partners joint venture stakes of about 40 per cent, twice the share of existing contracts signed under the former Muammar Qaddafi regime, said Bashir Garea, the company’s exploration manager.
Unleashing fracking on Libya’s estimated 122 trillion cubic feet of shale gas – double the nation’s conventional gas reserves – could help to boost fuel security and create jobs, as it already has in North America.
“It’s continuous drilling to replace these wells,” Mr Garea said at a shale conference in Abu Dhabi yesterday. “This will solve the issue of unemployment in the country because it requires a lot of manpower.”
Although NOC is seeking foreign companies to conduct joint studies on shale, following Algeria and Tunisia into development of unconventional hydrocarbons, the discussions remain at an early stage.
More than two years on from the revolution, Libya’s government is struggling to revive conventional oil production and appease tribesmen, civil servants and militias who have refused to give up arms.
Mr Garea said NOC had learnt from seeing foreign partners abandon conventional hydrocarbon projects, such as Royal Dutch Shell’s exit from two exploratory blocks last year.
“Unfortunately, the IOCs [international oil companies] had very low shares, and then when drilling started and the results were not as expected they started complaining about low shares,” he said.
“The funding of these unconventional projects requires a lot of money. Definitely to have anybody to develop shale resources, you cannot go for 10 or 15 per cent. That would be uneconomical.”
Libya’s hydrocarbons industry has all but ground to a halt as oil worker strikes and port seizures have cut production to 250,000 barrels per day (bpd), down from 1.4 million bpd in July. Since then, Libya has lost an estimated US$7.3 billion in revenues, according to the oil minister Abdelbari Al Arusi.
It has also lost some European customers, who have replaced Libyan crude with Algerian and Nigerian supplies, and stands to lose a key production partner, Marathon, should the American company succeed in selling its stake in its joint venture at the Waha field.
Libyan oil officials hope to complete a draft of a long-awaited petroleum law that might provide more clarity for foreign investors by the first or second quarter of next year, although there could be delays, said Mr Garea.
“To have a petroleum law, you need to have a constitution first,” he said. “You cannot have a law without a constitution.”
It is also unclear where such a law could be upheld. Last month, the Cyrenaica Political Bureau, an autonomous group in eastern Libya, set up an oil export company separate from NOC and unveiled plans to create an independent central bank.
“Let us not talk about east and west here,” said Mr Garea. “There will be no discussion between east and west. It’s going to be for the whole country.”