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Shell plans major LNG investment in Libya

Lloyds List: Shell plans major LNG investment

“IT’S good to be back in Libya, says Malcolm Brinded, executive director for exploration and production at oil major Shell, as he announces the start of a huge new liquefied natural gas project centred at Marsa Al-Brega.”

Wednesday Sept 14, 2005

IT’S good to be back in Libya, says Malcolm Brinded, executive director for exploration and production at oil major Shell, as he announces the start of a huge new liquefied natural gas project centred at Marsa Al-Brega.

Shell and Libya’s National Oil Company are refurbishing and upgrading the existing LNG plant at Marsa Al-Brega on the Libyan coast, and exploring for hydrocarbons in the prolific onshore Sirte Basin.

US independent Marathon is looking at developing LNG facilities in Libya in the longer term, perhaps after 2009, says chief executive Clarence Cazelot.

In 1971, Libya became the second country to export LNG, following Algeria’s example, but after years of sanctions, the facilities fell into disrepair.

Shell is planning to spend at least $105m, rising possibly to $450m, which will eventually increase the output from Marsa Al-Brega from 0.7m to some 3.2m tonnes per annum.

In the longer term, if sufficient gas can be piped to the coast, Shell and NOC will develop a new LNG facility.

Mr Brinded says: ‘Libya’s integrated gas industry has enormous potential, based on its large gas resources and favourable geographic location.

‘I look forward to our co-operation and believe that this is the beginning of a new lasting and fruitful partnership with Libya.’

Shell’s exploration plans see gas exploration rights in five blocks, covering some 20,000 sq km, and require Shell to spend at least $187m in E’P activity. The exploration programme will commence immediately in the allocated blocks with the acquisition of 2D and 3D seismic data over the coming 18 months followed by exploration and appraisal drilling.

Libya’s proven natural gas reserves are currently estimated at a massive 52 tcf. However, Libyan estimates of the reserves in the largely unexploited and unexplored fields are considerably higher and could reach 70 tcf-100 tcf. Europe and North America are the obvious markets for Libyan LNG, says a Shell spokesperson.

In the US, Shell has one-third of the regasification capacity at the Cove Point east coast terminal in Maryland. The oil major is also involved in several projects for new import facilities in the US and Mexico. Earlier this year, Shell teamed up with Italian energy group ERG in a project to develop its first LNG regasification terminal in Europe, to be located in nearby Sicily.

Libyan gas exports to Europe are increasing rapidly, with the Western Libyan Gas Project and $6.6bn Greenstream underwater gas pipeline coming online.

Previously, the only customer for Libyan gas was Spain’s Enagas. However, the WLGP a 50’50 joint venture between Italy’s Eni and NOC has now expanded these exports to Italy and beyond.

From this year, some 8bn cu m per year of natural gas will be exported from a processing facility at Melitah, on the Libyan coast, via the 370-mile underwater Greenstream pipeline to southeastern Sicily.

After that, the gas will flow to the Italian mainland, and then onwards to the rest of Europe.

The 32-inch Greenstream pipeline, which is 75% owned by Eni, came online in early October 2004, with first flows coming from the Wafa onshore gas (and oil) field near the Algerian border.

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