By Ola Galal
May 10 (Bloomberg) -- Libya, holder of Africa’s largest oil reserves, is reviewing a proposed national resource law to boost transparency in exploration deals and include areas like natural gas and refineries, the country’s top oil official said. “The previous law doesn’t have gas, this law will encompass gas and downstream,” Shokri Ghanem, chairman of Libya’s National Oil Corp., said in an interview in Doha, Qatar, today. “It will also emphasize that oil and gas blocks should be awarded through a bidding process. It emphasizes transparency and competitiveness.”
The new bill, to be debated in parliament in two to three months, will not affect existing agreements with the North African country’s partners, Ghanem said. Libya is in the final stage of talks with Dow Chemical Co. over a 50-50 joint venture ethylene plant in Ras Lanuf and is currently evaluating offers from foreign companies to take a stake in the Zawia refinery, he said. Libya’s investment authority may also take a stake in an Indonesian refinery in Java.
International oil companies like Royal Dutch Shell Plc, Eni SpA and Repsol YPF SA are producing and exploring for oil and gas in Libya. The country ships natural gas to Europe via pipeline to Italy and in liquid form to Spain.
Investors and companies seeking to invest in the North African country have been waiting for a law to add clarity to cooperation in projects there, Sara Hassan, a Middle East and North Africa analyst at IHS Global Insight in London, said.
Lack of Clarity
“As long as the law has approval from above, it will be passed” in parliament, she said. “Resource nationalism is the reason this has taken so long to introduce. The lack of clarity has been causing problems for some time.”
Libya blocked last year the purchase of Verenex Energy Inc. by China National Petroleum Corp. and decided to buy the Canadian energy producer itself for a lower price. International oil companies like Eni and Repsol in 2007 and 2008 extended production contracts with Libya at more advantageous terms for the country.
Ghanem said that $75 a barrel is “not a new floor for oil” and that the Organization for Petroleum Exporting Countries could not control the fluctuation in prices because it’s due to speculation.
“Whether it goes to $90 or $70, we can’t take a decision except based on fundamentals and we cannot see a real role for fundamentals now,” he said.
Libya, a member of OPEC, pumped 1.53 million barrels of oil a day in February, according to output estimates compiled by Bloomberg. It holds Africa’s largest reserves of crude oil.
--With assistance from Anthony DiPaola in Dubai. Editors: Raj Rajendran, Mike Anderson.
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