Energy giant Shell confirmed its return to Libya today after agreeing the terms of its first major project in the country for 30 years.
A partnership with Libya’s National Oil will see Shell “rejuvenate and upgrade” a liquefied natural gas (LNG) plant on the Libyan coast, as well as explore five areas in the oil and gas producing region of Sirte Basin.
The agreement, which is expected to be formally signed in the next few days, comes a year after National Oil and Shell announced they were in talks about a long-term strategic partnership in the Libyan gas sector.
Shell had operations in Libya between the 1950s and 1974 – when the country’s oil industry was nationalised – although the Anglo-Dutch group did carry out some exploration work in the late 1980s.
British Prime Minister Tony Blair ended two decades of international isolation for Libya by staging an official visit to the country last year.
Executive director for exploration and production Malcolm Brinded said Shell was “delighted” to be back in Libya.
He added: “I am excited about concluding this major agreement. Libya’s integrated gas industry has enormous potential, based on its large gas resources and favourable geographic location.”
Under the agreement, Shell will rejuvenate and upgrade the Marsa Al-Brega LNG plant at a minimum cost of $105m (€81.7m), rising to a possible $450m (€350.2m).
That could increase the plant output from 0.7 million tonnes per annum to some 3.2 million tonnes a year. Subject to gas availability, Shell will also work with NOC to develop a new LNG facility.
The agreement also grants Shell gas exploration rights in five blocks, covering 20,000 square kilometres at a cost of $187m (€145.5m).
The exploration programme will start immediately with the acquisition of seismic data in 2005/6 followed by exploration and appraisal drilling.