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Bloomberg: Libya Plans to Offer Drilling Rights for Natural Gas in July

By Maher Chmaytelli

May 22 (Bloomberg) — Libya, the holder of Africa’s largest oil reserves, plans to offer exploration rights in about 20 plots of land in July to increase natural-gas output, the nation’s top oil official said.

“We will invite bids for exploration in early July,” Shokri Ghanem, the head of Libya’s state-run National Oil Corp., said in a telephone interview yesterday from the Libyan capital Tripoli. “The blocks to be offered will be located in areas where gas is likely to be found.”

The European Union is trying to import more gas from Africa and the Caspian Sea to reduce dependence on Russia, which now supplies about a quarter of the EU’s needs.

Foreign companies will be invited to bid for exploration rights in an auction similar to the three Libya has held since the lifting of U.S. sanctions in 2004, Ghanem said. The Libyan government will have a share in any discovery made, he said.

The North African nation awarded 45 plots in the earlier bidding rounds. Among the winners were Exxon Mobil Corp., Woodside Petroleum Ltd., Occidental Petrolem Corp., Eni Spa, BG Group Plc and China National Petroleum Corp.

Libya’s gas reserves of 52 trillion cubic feet are the fourth-largest in Africa, after Nigeria, Algeria and Egypt, according to BP Plc. It produces about 12 billion cubic meters of gas a year, 8 billion of which are exported to Italy by a sub-sea pipeline opened in 2004. Less than 1 billion are liquefied and sent to Spain on tankers. The rest is consumed locally.

Finding more gas may allow Royal Dutch Shell Plc or other companies to build a new plant for liquefied natural gas. LNG is gas cooled to a liquid so it can be shipped by tankers to places not linked by pipelines.

In 2005, Libya selected Shell as a partner to refurbish its LNG plant in Marsa Al-Brega, in the center of the country, and to increase its output from 700,000 tons a year to 3.2 million tons a year by 2010. Shell, which will spend as much as $450 million on the project, said the contract also provided the possibility of another LNG plant if enough gas was found.

To contact the reporter on this story: Maher Chmaytelli in Vienna at [email protected] ; Juan Pablo Spinetto in Vienna through the newsroom in London or [email protected]

Last Updated: May 22, 2007 02:36 EDT

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