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Libya Slams Shell for Exploration Halt, Record in Country

07/08/2012 | 11:13am US/Eastern

By Summer Said

DUBAI–Libya’s state oil company Sunday criticized Royal Dutch Shell PLC (RDSB) for its decision to abandon exploration blocks in Libya, and said that Shell “has generally not achieved any encouraging results” in the North African country.

In a statement posted on its website, Libya’s National Oil Corp., or NOC, said it hadn’t received prior notice from Shell of its intention to give up its exploration permits, which covered several areas in the Sirte basin.

“Historically and since its entry to Libya, Shell has generally not achieved encouraging results in either the exploration or the production of oil and gas,” it said.

Shell officials weren’t immediately available for comment.

In late May, Shell announced its intention to suspend and abandon drilled wells and stop further exploration work in Libya due to disappointing results, though it insisted it was still interested in the country, which holds Africa’s largest oil reserves.

The move cast a cloud on Libya’s oil recovery as Shell had originally planned sizable investments in the exploration blocks.

NOC said that Shell’s negative view of the prospects of its exploration permits wasn’t justified, because other oil companies had made discoveries in the same areas.

Libya’s oil production has fast recovered since the toppling of strongman Moammar Gadhafi last year. But foreign companies still complain of tough contract terms and of persistent insecurity.

In 2004, Shell signed preliminary deals with Gadhafi’s regime potentially worth billions of dollars involving exploration work and the upgrade of a plan producing liquefied natural gas.

After interrupting operations when the civil war started in early 2011, Shell had previously said it was studying a return to Libya following the toppling of the Gadhafi regime.

U.K. oil giant BP PLC (>> BP plc), which signed a $900 million exploration deal in 2009, recently said it would resume operations in Libya within months.

-Benoit Faucon in London contributed to this report.

Write to Summer Said at [email protected]


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