Shell’s Pulling Out of Libya [View all]

[tabatha]

By Ibrahim A. El Mayet

In a statement on Monday Royal Dutch Shell announced it will cease exploration activities and abandon drilled wells in Libya citing harsh contracts and current insecurity as major factors in the decision. Like many International oil companies (IOCs) Shell has had disappointing exploration results in their Libyan concessions in recent years which led the company to consider further exploration works to be economically unsound. The move does not represent a departure from Libya; the company will maintain its representative office in Tripoli and continue to engage with the Libyan authorities and the National Oil Corporation (NOC) for future opportunities.

It seems that the new Libyan authorities have been slow to meet the hopes of IOCs for more preferable terms and the current interim government would rather maintain the contracts that are based on EPSA IV agreements terms to stay the same. These issues will have to be addressed by the new government which will be formed after the elections scheduled for 19th June.

While Libya is keen to protect it sovereign assets, Libya’s oil industry depends on the engagement of IOCs. Following Shells decision, Germany’s Wintershall the second largest IOC in Libya (accounting for nearly 6% of Libyan output) has issued a warning that the current terms could impact on decisions regarding future investment in Libya. Libya faces many challenges in maintaining current levels of production at mature fields and finding and developing new oil fields as well. Yet most of the large Libyan territories remain unexplored as a result of past sanctions and disagreements with foreign oil companies.

While Libya holds the largest oil reserves in Africa and the eight largest oil producer in the world its oil is even more attractive due to its low cost of oil recovery, high oil quality and proximity to European markets, Shell’s pulling out represents a message from key players in oil industry to the Libyan government and that is ‘we do not see eye to eye’.

Source: Tripoli Post

http://www.tripolipost.com/articledetail.asp?c=2&i=8476

Yep, it was "all about oil". Yet oil companies have not found any changes since Gaddafi was in power.