Libya Eyeing Expansion of Gas Exploration, Output

The Head of Libya's National Oil Corp., Shokri Ghanem, has his eye on expanding gas exploration and production in a bid to raise exports to Europe, as well as privatizing oil refineries and the petrochemical sector.

Once an international outcast, Libya now wants foreigners to take a greater stake in the oil market and in turn encourage local firms to play a larger role as well.

The Libyan government has relied on foreigners to scout for new wells and bolster current production, "if they're ever going to come close" to a target of three million bpd, an analyst explained.

Libya's National Oil Company Chief has talked about the need for foreign investment over the last few years, but this time Ghanem's words follow one of 2009's biggest shocks was Qaddafi's suggestion to nationalize the country's oil and gas interests, a consideration that seemed to echo the early days of the Libyan revolution when the industry was partially nationalized. These words set the stage for the National Oil Corp. to renegotiate long-term contracts in Libya's favor with major oil companies operating in the country, such as Italy's ENI, the United States' Occidental, PetroCanada, France's Total and Spain's Repsol, analyzer added.

But Libya's interference in negotiations between Verenex and the China National Petroleum Co. over the sale of the Canadian firm's exploration contract drove down Verenex's share price by 30% and forced it to sell the contract to Libya at 70% of the original offer to China, he said.

Ghanem's latest declarations are obviously attempts to "put a positive face on an industry that has not been going well in the last 12 to 18 months," the analyzer said, adding that these events have prompted great uncertainty in the oil and gas industry, and a lot of that's their own fault. - Al Shams