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Shell plans to pump £340m into Libya for gas exports

THE TIMES: Shell plans to pump £340m into Libya for gas exports

4 May 05

By Carl Mortished, International Business Editor

SHELL has secured a foothold in the development of a Libyan gas export industry, agreeing to invest up to $637 million (£337 million) in the country that a year ago emerged from pariah status when its leader, Colonel Gaddafi, renounced weapons of mass destruction.

Shell has agreed to rejuvenate and upgrade a liquefied natural gas (LNG) plant on the Libyan coast in a deal that also gives the company the right to explore for gas in an area covering 20,000 square kilometres of the Sirte Basin, a major oil and gas producing region.

The Anglo-Dutch oil company claimed yesterday to be the first foreign oil company to re-enter Libya since international sanctions were imposed after the bombing of a PanAm airliner over Lockerbie in 1988. Malcolm Brinded, Shell’s head of exploration, said that he was excited about the deal: “Libya’s integrated gas industry has enormous potential, based on its large gas resources and favourable geographic location.”

Yesterday’s deal emerged after negotiations that followed the visit by Tony Blair to Tripoli in March last year, where he met Colonel Gaddafi and Shell revealed that it was in talks with Libya’s National Oil Corporation.

Several US companies, including Occidental Petroleum, have since won oil production rights in a competitive licensing round in which no European firm was successful. Industry experts said the US bids conceded much of the profits to the Libyan partners.

Shell said that the LNG project would strengthen its supply position in the Atlantic basin LNG market. The company would not reveal its share of the LNG to be produced by the Marsa Al-Brega plant, which Shell will upgrade, increasing its output from 0.7 million tonnes to 3.2 million tonnes a year.

Shell will initially invest $105 million, rising to $450 million, in the plant and it has the option to build a second plant, subject to finding sufficient gas.

The Libyan gas deal will heat up competition to supply LNG to markets in Western Europe and the US where high gas prices have recently encouraged investment in massive schemes.  

Energy companies and oil-producing nations must invest more in expanding capacity, according to the International Energy Agency. The energy watchdog said investment in oil and gas production, refining, power generation and transmission was too low to meet expected growth in demand.

FROM REVOLUTION TO EXPLORATION

1977: Colonel Gaddafi declares “people’s revolution”.

1984: WPC Yvonne Fletcher killed outside Libyan Embassy, London, sparking breakdown in UK-Libyan relations.

1988: PanAm flight 103 explodes over Lockerbie, killing 259 passengers and 11 people on the ground.

1991: US accuses two Libyan intelligence officers of Lockerbie bombing. UN imposes sanctions on Libya.

1999: Two suspects handed over for trial; UN sanctions suspended; relations between UK and Libya restored.

2003: Libya admits Lockerbie responsibility and signs $2.7 billion restitution deal for victims. UN lifts sanctions. Libya abandons weapons of mass destruction programme.

2004: Tony Blair meets Colonel Gaddafi in Libya.

2005: Libyan auction of oil and gas exploration licences. 

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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