Libya’s National Oil Corporation (NOC), BP and Eni have signed an agreement that is expected to lead to Eni and BP working together to resume exploration activities on a major exploration and production contract in Libya. Chairman Mustafa Sanalla said over the weekend in a written response to questions. He expects BP and Eni to resume exploratory drilling near the Tunisian border in the first quarter. Political divisions and internal fighting have plagued Libya since 2011, when longtime leader Moammar Qaddafi was overthrown and killed.
The parties agreed to work towards Eni acquiring a 42.5 percent interest in the BP operated exploration and production sharing agreement (EPSA) in the country. Output at its biggest oil field Sharara declined in July after an armed group kidnapped four workers. BP had completed some seismic work at the contract areas when Qaddafi was toppled from power. On completion, Eni would also become operator of the EPSA. BP currently holds an 85 percent working interest in the EPSA, with the Libyan Investment Authority holding the remaining 15 percent. Eni has existing exploration and production activities and infrastructure adjacent to onshore areas of the EPSA.
The EPSA includes three contract areas, two in the onshore Ghadames basin and one in the offshore Sirt basin, covering a total area of around 20,849 square miles. Originally awarded in 2007, work on the EPSA has been suspended since 2014. The companies intend to finalize and complete all agreements by the end of this year, with a target of resuming exploration activities in 2019. “This agreement is a clear signal and recognition by the market of the opportunities Libya has to offer and will only serve to strengthen our production outlook,” NOC Chairman Mustafa Sanalla said in a company statement.
BP Group Chief Executive Bob Dudley said, “this is an important step towards returning to our work in Libya”. “We believe that working closely together with Eni and with Libya will allow us to bring forward restarting exploration in these promising areas,” Dudley said in a BP statement. ENI CEO Claudio Descalzi described the development as an important milestone. “This is an important milestone that will help to unlock Libyan exploration potential by resuming EPSA operations that have remained suspended since 2014,” he said in an ENI statement. “It contributes towards creating an attractive investment environment in the country, aimed at restoring Libya’s production levels and reserve base by optimizing the use of existing Libyan infrastructure,” he added.