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The Guardian: Shell steps on the gas as Libya comes in from the cold

The Guardian: Shell steps on the gas as Libya comes in from the cold

Terry Macalister

Wednesday May 4, 2005

Shell announced plans yesterday to invest up to $637m (£335m) in Libya, the biggest new investment since the country came in from the political cold.

A landmark oil and gas agreement with Muammar Gadafy’s government will see up to $450m spent on potentially quadrupling the size of the Marsa al-Brega liquefied natural gas terminal. This could eventually lead to LNG being exported to Britain and is a tangible success for Tony Blair, who went to Libya 12 months ago to signal relations had thawed with the west.

The country has been a no-go area for most oil companies but this changed 18 months ago when it promised to renounce the pursuit of nuclear, chemical and biological weapons. The US dropped a trade embargo in September.

Shell and other foreign oil companies were active in the north African nation from the 1950s until 1974 when the industry there was nationalised.

US companies such as Occidental Petroleum are negotiating to win back their assets while others have been awarded new exploration acreage.

The Shell deal, first mooted during Mr Blair’s visit, will trigger an immediate search for gas by Shell on five blocks in the prolific Sirte basin. Any finds would be piped to Marsa al-Brega to be prepared for shipment.

Malcolm Brinded, Shell’s executive director of exploration and production, said his company was “delighted” to be back there.

“Libya’s integrated gas industry has enormous potential based on its large gas resources and favourable geographical location,” he said.

Shell has invested billions of pounds worldwide in LNG projects with production facilities being constructed in places such as Nigeria and Russia aimed at supplying north America and southern Europe.

The company has recently signed an agreement to help develop a gas import facility in Sicily, which would be a convenient home for future LNG exports from Marsa al-Brega.

Shell has so far not pursued LNG import opportunities in Britain but company officials privately say that future “spot” cargoes from Libya could end up in the UK.

Marsa al-Brega, on the Libyan coast, has a capacity to produce 700,000 tonnes a year but this could be increased to 3.2m tonnes under the Shell deal with the National Oil Corporation of Libya.

On world markets, oil yesterday continued to trade at around $50 a barrel.,,1475769,00.html

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