Chevron is reported to have indicated its intention to withdraw from Libya at the end of its existing five-year exploration licences. Speaking at a press conference on 2nd October, National Oil Company's (NOC) Exploration Director Haj Fitouri stated that other IOCs who were not expected to extend their stay included Australia's Woodside Petroleum and Abu Dhabi's Liwa Energy.
Among those expected by NOC to remain are Occidental, which has a continuing link as a partner in the Zuetina Oil Company, and also Hess, Petrobrás, Medco Energy, Oil India and Sonatrach. NOC saw the withdrawal of this significant number of major companies as “expected” because no commercial oil had been discovered during their exploration programmes. Head of NOC Dr Shukri Ghanem has been very quick to indicate that Occidental retains an interest and is an NOC partner for the longer term.
While NOC's prognosis of a decline in the overall number of IOCs which will remain in Libya is undoubtedly correct, it is less certain which of the companies will stay and which will remain in some capacity. With the licenses from the first EPSA IV licensing round due to end in the near future – and very little new oil having been found in the past five years - many IOCs will be weighing up their options about whether to extend their licenses, leave the country or remain in the hope of negotiating a separate bilateral deal outside any licensing round. They will obviously be taking other factors into consideration, including their existing world-wide portfolio; more attractive opportunities elsewhere; the very onerous fiscal terms imposed by NOC; the way in which the goal-posts are always being moved by NOC; local content demands; etc.
Given Ghanem's insistence that he is prepared to be flexible when negotiating new terms for the IOCs, it is, therefore, possible that Chevron, which has already downsized its Libyan operation very considerably, will decide to stay and negotiate bilaterally with NOC.
For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.
© 2010 Menas Associates
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