LIBYA - Profile - Omar Fathi Bin Shatwan.

Immediately after the annual GPC meeting in March 2004, a restructuring of the petroleum sector began in anticipation of a scramble for new E&P blocks and other investments in Libya by foreign companies. One of the main GPC decisions was the setting up of an energy secretariat (ministry) under Omar Fathi Bin Shatwan, an expert voted for this key post. There was a separation of role in this sector, with the secretariat in charge of sovereign matters such as setting oil policy or E&P negotiating strategy, and NOC executing decisions set by the secretariat and approved by Ghanem's cabinet. From 2000 - when the secretariat was abolished - until then NOC used to play both roles.

A look into Bin Shatwan's perspective was given in a June 27, 2005 interview with him published by Petroleum Argus. On various E&P licencing options being studied, he said, "we are now looking at opening up for different kinds of agreements. Our new hydrocarbon law (to replace the current one issued in 1955) will allow us to have different kinds of agreements - concessions, service agreements with risk, service agreements without risk, join ventures and EPSAs [exploration & production sharing agreements]". Asked when the new law will be passed, he replied: "Well maybe at the next meeting of the [annual] general people's congress [GPC]. We have already finished with [drafting] it at the secretariat of energy and handed it to the cabinet. The cabinet is now analysing it and will give it to the general people's congress. Hopefully by the end of this year something will happen on this. It will be passed".

Bin Shatwan did not hide the fact that he had differences with NOC Chairman Badri and Dr. Ghanem over the EPSA-IV process (see OMT). Asked to comment on his earlier mention of revising negotiations, he replied: "Well, there is a problem. You see we moved from direct negotiation [with selected IOCs] to open bidding... Some people say we were in the middle of discussions when we changed. We are not refusing those negotiations completely, but there is a problem. The cabinet has asked us not to finalise those negotiations, but we moved to open bidding and those blocks should move to open bidding. So there is a problem, but we are still trying to solve it". In this, Bin Shatwan was implying that the auction process resulted in a number of small companies outbidding the majors by offering terms more attractive to NOC than to themselves, while NOC needed the capabilities of the majors to find more oil and gas and quickly boost Libya's production capacities.

The majors agree with Bin Shatwan's argument, as Libya needs complex but advanced IOR and EOR systems to stop the decline in existing oil fields, as well as the majors' good record of finding new reserves and expanding production capacities at top speed - capabilities which several of those firms which have won E&P blocks in Libya still lack. ExxonMobil, Chevron, ConocoPhillips and BP are among majors which have been outbid in Libya's January 29, 2005 round.

Bin Shatwan wants OPEC to increase Libya's oil production quota. He insists Libya's production capacity now is 1.7m b/d, saying: "At the beginning of next year we might be producing 2m b/d - 100,000 b/d extra capacity will be from [the ENI-run] Elephant [oilfield], the rest will be from the Gulf [of Sirte]".

Asked about Libya's floor for crude oil prices being at $40/barrel for Brent, Bin Shatwan replied: "Yes, that is still our position. We believe in Libya that $40/b Brent is the floor. But that is our position, not OPEC's". Asked if there was a trigger price for a further rise in OPEC production quotas, he said: "No, no, it is through consultation [among OPEC ministers".

Bin Shatwan favours integrated ventures in Libya. In March 2005 he was quoted as saying: "Most of the [major foreign] firms would like to enter the upstream, not the downstream, so we have a new strategy of connecting both the upstream and the downstream. If someone wants to take a stake in the downstream as well as the upstream, maybe we will give them some priority or some advantage". Shell this year finalised a wide-ranging agreement which, among other things provides for an integrated gas E&P and LNG venture with NOC (see Gas Market Trends No. 3).