LIBYA - The NOC Operations.

NOC has a number of fields and is engaged in exploration. It is also the authority which allocates as well as awards new EPSA blocks. Its four operating units run fields taken over from IOCs, including big fields which used to be operated by US firms and accounted for the bulk of Libya's 3.3m b/d capacity in 1970. Oxy returned as a minority partner in ZOC and a US group returned to WOC as NOC's minority partner. At times in 1970 Libyan production rose to 3.7m b/d.

In mid-2006, NOC estimated investments of about $3,500m a year were required to achieve its goals - roughly double its budget for capital and operating expenditure. But it can rely on a great deal of support from IOCs, most of which are keen to be in Libya. From 2004, when international sanctions were lifted, to March 2006 reformers in Tripoli and foreign executives had been frustrated by infighting between the Energy Secretariat (ministry) and NOC over what approach to take in negotiating with IOCs. Lack of a clear direction had been blamed for delays, both on projects and on an EPSA licensing round scheduled for the spring of 2006. In March 2006, a major cabinet reshuffle saw the closure of the Energy Secretariat. Former secretary-general (prime minister) Shukri Ghanem was made chairman of NOC, placed in sole charge of the Petroleum sector. In June, Ghanem began a root-and-branch review of the industry, which was to lead to a restructuring, spearheaded by the sale of NOC's affiliated oil services companies.

NOC's structure had developed through the sanctions era. That became out of date. NOC had no business doing things like oilfield catering or drilling. Ghanem moved to strip back NOC to focus on its core business of managing the country's oil and gas reserves. Among the units being spun off are the National Oil Well Drilling & Workover Co., National Oil Fields & Terminals Catering Co., North Africa Geophysical Exploration Co., Hamada Pipeline Company and Jowf Oil Technology. NOC went into talks with European oil firms about part-privatisation of the Brega Petroleum Marketing Co. Ghanem was also bringing home the London-based Umm al-Jawaby and the Duesseldorf-based Mediterranean Oil Services (Medoil) - two overseas procurement companies set up during the sanctions period for sourcing oil sector staff and technology.

In November 2005, in one of his final acts as PM, Ghanem oversaw a major reshuffle of oil sector personnel, with new heads appointed at many of NOC's E&P operating companies (see background in omt1LibyaJuly4-05).

NOC directly finances development in fields operated by its subsidiaries, with each of the foreign partners or JV covering its 40% share of the venture. NOC also finances exploration work carried out by its subsidiaries. Since 1990 NOC has embarked on the following EOR and field development projects - some of which delayed due to the sanctions:

An EOR programme based on water injection at the Sarir field, for which a contract was signed in 1990 between the field's operator Arabian Gulf Oil Co. (Agoco) and Mannesmann of Germany, to increase its production capacity from 200,000 b/d up to 600,000 b/d. But work was stopped after the UN's April 1992 embargo as Mannesmann, scaling down its involvement in Libya, terminated the contract. Some limited work on the field was contracted subsequently and Sarir's capacity is not likely to expand beyond 250,000 b/d.

A further development of the offshore el-Bouri field, on Block NC-41, operated by Agip North Africa Middle East (NAME) on a production-sharing basis, to raise its capacity from 70,000 to 150,000 b/d by 1992. There, too, work was very slow and the target was only partly attained in 1995. But reservoir pressure at el-Bouri fell again in 1996 and in the subsequent years production dropped to 70,000 b/d. (El-Bouri's associated gas reserves have been estimated at 70 BCM. There is also a big gas cap over el-Bouri's oil reservoir, which has being developed as part of a 10 BCM/year stream completed in late 2004).

Construction of a 140 km pipeline to carry 30,000 b/d of condensates from the Bu Attifel field, operated by Agip, to the coast. The completion of this project was also delayed.Boosting the production capacity of Bu Attifel from 160,000 to 240,000 b/d, together with the construction of a gas treatment plant to process about 300 MCF/day of dry gas and 25,000 b/d of condensate. But work on all this was very slow and now Bu Attifel and satellite fields are producing less than 100,000 b/d.

Developing two new gas fields onshore, owned by NOC, known as Attahaddy (defiance) and Assumud (steadfastness). Work on these was implemented according to plan and the fields now are producing natural gas.

Developing several oilfields: one in the Murzuk Basin which was done by Repsol of Spain and the field went on stream in late 1996, Kebir near the Tunisian border operated by Agoco, and Mabrouk in the Sirte Basin where Total has installed an EOR system.

Exploration and field development in the offshore 7th November Block, a 3,000 sq km tract in the Gulf of Gabes jointly owned by Libya and Tunisia. The company in charge, called Joint Oil Co. (JOC), was awarded the E&P deal for this on Feb. 1, 1997 to a partnership of Nimir Petroleum of Saudi Arabia and Petronas Carigali of Malaysia.

Occidental (Oxy) has returned to Libya in a big way. But before finalising its deal with NOC for the fields to which it returned later in the year, Oxy on March 6, 2005, signed with NOC nine exploration and production sharing agreements (EPSAs) awarded on Jan. 29.

Under these, Oxy has 90% interest in onshore blocks 106 and 124 in the Sirte Basin, blocks 131 and 163 in the Murzuq Basin and block 59 in the Cyrenaica Basin. Abu Dhabi government-owned Liwa Energy holds the remaining 10%.

Oxy also holds 35% in offshore blocks 35, 36, 52 and 53, with Liwa holding a 10%. Woodside Petroleum of Australia has 55% and is the operator for these blocks.