Shell confirms new Libya agreement

Oil giant Royal Dutch/Shell has signed an agreement with Libya's state oil company to explore for oil and gas.

The long-term strategic partnership which marks the re-entry of Shell into Libya's oil industry after more than 10 years coincided with British prime minister Tony Blair's visit to Tripoli to meet Libyan leader Colonel Muammar Gaddafi.

Shell did not disclose any financial details.

British officials said Shell was expected to announce a $200m (€164.25m) gas exploration deal with Libya initially.

There was the potential for this figure to rise to $1bn (€821m) in the long term.

Shell wants to expand its gas business and has long been keen to enter Libya.

Only around 25% of Libya's natural resource exploration is covered by agreements with foreign companies.

Previously, sanctions and the Libyan government's stringent financial terms have left much of the country unexplored.

Today's deal will assist Libya expand its natural gas production and increase its European exports.

Gas can be used domestically to free up more oil for export.