Monday, 24 October 2011

Heritage strikes first deal

Heritage Oil Corporation , the London Stock Exchange-listed oil exploration company, has made a bold step into the Libyan market. In early October, it struck the first major post- Colonel Mu'aamar Qadhafi business deal by buying a majority stake in the well-connected Benghazi-based Sahara Oil Services Holdings , which was established in April 2009 and has an operational yard and equipment based in Benghazi.

The company announced on a 4th October that it had bought a 51 per cent stake in Sahara for $19.5 million. It said that Sahara 'has the necessary long-term permits and licences to provide onshore and offshore oil field services in Libya as well as the rights to own and operate oil and gas licences.'

Heritage said that it was 'looking to play a significant role in the future development of the oil and gas industry in Libya' and that it was 'exploring ways to assist the National Transitional Council (NTC) and the state oil companies to rehabilitate certain of their existing fields and recommence production.' The deal was a characteristically aggressive step by the company, whose charismatic CEO is Tony Buckingham . Before he became an oil man in 1999, he was the inspiration behind the foundation of the famous Africa-focused private security company Sandline International .

A number of sources have told Libya Focus that Heritage had been attempting to provide oil field security services to the NTC. The NTC rejected its proposal, along with those of many other private security providers. Its position is that all security and all armed personnel in Libya must be Libyan. Having found a Libyan partner, Heritage may have overcome this initial hurdle. In his statement, Buckingham said that Heritage via Sahara was 'uniquely positioned to pursue field rehabilitation activities and be awarded exploration and production licences.' He described the acquisition as 'consistent with Heritage's first mover strategy of entering regions with vast hydrocarbon wealth where we have a strategic advantage. Ongoing discussions with the NTC and other stakeholders continue to highlight opportunities with the potential to transform Heritage.'

The company has established a base in Benghazi in the past five months and says it 'has been in discussions with senior members of the National Transitional Council, the National Oil Corporation, and certain subsidiaries.' According to a report in Petroleum Economist , Heritage is represented in Libya by Christian Sweeting , who has lobbied Foreign Secretary William Hague to expedite visa applications from four Sahara employees to visit the UK. Hague did not get involved.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2011 Menas Associates

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