LIBYA - The Foreign Oil Producers.

There are seven foreign oil producers in Libya, having joint ventures controlled by NOC. Their total production now is averaging 503,000 b/d. They will shortly be joined two JVs and total oil production by foreign companies will reach 640,000 b/d by 2004 (see OMT).

Suspension of the UN's limited embargo in April 1999 has made life much easier for the foreign operators as they can now travel by air and get imported oil equipment in place without delay.

Agip North Africa & Middle East: Agip, an operator in Libya since 1959, has a number of blocks where it is exploring for oil and gas. It produces oil from Bu Attifel and the Rimal-Khatib group onshore and El Bouri offshore. Agip NAME is a wholly-owned company registered in the Channel Islands.

Agip NAME's oil production capacity has fallen from 320,000 b/d in 1992 to 230,000 b/d, with actual output now averaging 170,000 b/d, because it has not been able to import EOR equipment. The worst affected is the Bu Attifel field, a giant requiring a water injection system because reservoir pressure has begun to fall rapidly since 1994. It is said that even if it manages to install an advanced EOR system at Bu Attifel, Agip's sustainable capacity is not likely to change much in the near future; but this would prevent a major decline in reservoir pressure.

Bu Attifel was discovered in 1968 at 14,300 feet in the eastern side of the Sirte Basin and was put on stream in late 1970. One of the deepest fields in Libya, it produces oil of 41[degree sign] API gravity. It has a total of 39 wells, of which about 30 are producing. Its capacity has declined from 170,000 b/d to 100,000 b/d, due to a rapid fall in reservoir pressure.

Of the five discoveries made in Libya in 1990-1994, two were oil-rich structures near Bu Attifel found by Agip. The first one was found east of Bu Attifel and tested about 11,000 b/d of oil from the Nubian sandstone at 15,800 feet. The reservoir was said to contain 300m barrels. The second find south of Bu Attifel tested 5,000 b/d, with oil in place estimated at over 500m barrels. But the US and UN sanctions have made it difficult for Agip to restore Bu Attifel's production level to 170,000 b/d and raise it to 240,000 b/d by 2000, as was intended in early 1990.

Rimal-Khatib are small oil structures near Bu Attifel found by Agip in 1965 at 14,000 feet. Their output is added to that of Bu Attifel.

A $234m gas separation and treatment plant at Bu Attifel started operating in late 1993. The plant was built by Snamprogetti and Bonatti in two years and four months. It has the capacity to treat 384 MCF/day of dry gas, with 291 MCF/day coming from Bu Attifel and 93 MCF/day from the Nafoorah and Jisarah fields, as well as produce 25,000 b/d of condensates. The gas is transported by a 132 km pipeline to Marsa El Brega. As part of Bu Attifel development projects initiated since 1990, NOC has built a 140 km pipeline carrying 30,000 b/d of condensates from Bu Attifel to the coast.

El Bouri field, in the Pelagian (Tripolitanian) shelf, is Libya's first offshore field with a huge cap of gas. Discovered in 1976, it is located on Block NC 41-B, which is a 37,700 sq km tract in the Libyan sector of the Gulf of Gabes. El Bouri lies under the sea at a depth of 8,700 feet, producing 26[degree sign] API oil. It is under about 170 metres of water, 150 km north-west of Tripoli. The field covers an area of 32 km by 5 km. It is said to contain about 4-5 bn barrels of oil and 2.5 TCF of gas in place. Of the oil reserves, some 650m barrels are recoverable. The field is near the 7th November Block which is equally owned by Libya and Tunisia and is being developed by a Nimir Petroleum and Petronas partnership.

El Bouri came on stream in August 1988 at the rate of 12,000 b/d. A $2 bn development programme had been agreed between NOC and Agip in March 1983. The first phase involved the drilling of 50 wells from two offshore platforms (DP3 & DP4) supplied by Belleli and Micoperi for $230m. By end-1988 production had risen to 20,000 b/d. In 1989 it rose to 60,000 b/d, after 23 new wells were hooked up. Another 27 wells drilled in 1990-1991 raised capacity to 70,000 b/d by mid-1991. Drilling, processing and service units for the platforms were provided by Saipem and Hyundai under a $155m contract. A 1.3m barrel floating oil storage and mooring facility was supplied by Equipements Mecaniques et Hydrauliques of France. John Brown Offshore of Britain was the project manager.

In December 1993, Agip signed a wide-ranging agreement with NOC under which, among other things, it was to embark on a second phase for El Bouri to expand its capacity to 150,000 b/d. This required the drilling of 55 more wells from three new wellhead platforms - DP1, DP2 and DP5. The target was reached in 1995. But the field's output fell later because it required EOR facilities and now it is averaging less than 70,000 b/d.

El Bouri has had a high gas/oil ratio of some 800-900 cubic feet/barrel, which limits its recovery rate. The ratio was reduced in 1992 after the drilling of six horizontal wells. Since then there have been plans to bring the ratio down to about 600 cubic feet/barrel with a 15-well horizontal drilling project.

The December 1993 agreement with NOC improved the E&P terms to the extent that Agip was encouraged to expand El Bouri and acquire several blocks in the Ghadames and Sirte Basins. The new terms reportedly included an increase in Agip's share of El Bouri's oil production from 19 to 30%.

Under the same deal, Agip did a feasibility study for the development of gas- rich offshore Block NC-41, adjacent to El Bouri, El Bouri's gas reserves and an onshore field called Al Wafaa. Al Wafaa, found in 1991 by NOC's Sirte Oil Co., straddles the border with Algeria in the Ghadames Basin and is an extension of Algeria's Alrar gas field. (In August 1997, Agip made a gas discovery on its Ghadames Basin Block NC-175, with the wildcat drilled to a depth of 2,524 metres about 39 km south-east of Algeria's Alrar field and Al Wafaa. The well tested 16.26 MCF/day of gas from a Memouniat formation).

The Agip study, completed in late 1995, gave a very positive conclusion. It recommended development of NC-41's and Bouri's gas reserves and those of Al Wafaa for a production stream of 10 BCM/year by 2004 and export of 8 BCM/year to Italy through a marine pipeline. NOC subsequently approved Agip's plan and the two agreed for the Italian company to develop both Al Wafaa and NC-41. Al Wafaa's development was under a separate deal with NOC

NC-41 contains oil and a giant gas deposit in a Pelagian Basin having characteristics partly similar to that of El Bouri. In April 1995, Agip said it tested 900 b/d of oil and 16 MCF/day of gas on the block in a well drilled to appraise a Metlaoui formation at a depth of 2,499-2,518 metres. Later in that year it tested 21 MCF/day of gas at a depth of 2,615-2,637 metres from a well called "Scarabeo 3". On the basis of these and earlier tests, Agip's proposed development of NC-41, Bouri and Al Wafaa reserves - in one programme called Western Libya Gas Project (WLGP) - was approved in March 1996 by the General People's Committee (Libya's parliament). An accord to develop the reserves and to export gas to Italy was signed in June 1996 between NOC and Agip. A gas supply accord was signed in January 1999 by Snam and Agip Gas BV. The development and pipeline projects would require about $5 bn. Agip has spent $500m on the block, including the cost of several wells drilled, and is expected to invest another $3 bn.