BP to resume exploration in Libya while Shell abandons wells

Image source: BPImage source: BPRoyal Dutch Shell has confirmed it is to suspend its interests in oil and gas exploration blocks in Libya, while BP has announced that it is to recommence oil exploration in the country

A Shell spokesman confirmed the move to Dow Jones Newswires by saying the company, “intends to suspend and abandon drilled wells and stop exploration in [its] Libyan licenses.

“Results [before the outbreak of war] have been disappointing and further exploration cannot be economically justified.”

While Shell insists it will remain in Libya and continue to engage with the National Oil Company (NOC), a lack of security and difficult contract terms have been blamed for the move.

Shell’s decision is in stark contrast to BP’s move to lift force majeure concerning its Libyan exploration and production sharing agreement (EPSA) with the NOC.

Force majeure has been in place since February 21 last year when the civil war between pro- and anti-Gaddafi forces broke out in Libya.

The NOC and BP signed an agreement on May 29 detailing how the impact of force majeure will be mitigated under BP’s existing contract terms.

The agreement was signed by Dr. Nuri Berruien, chairman of the NOC, and Felipe Posada, regional president for BP in North Africa, during a visit to Tripoli with Dr. Michael Daly, BP’s executive vice president for exploration.

“The lifting of force majeure is a significant milestone in BP’s plans to return to the exploration of onshore and offshore blocks in our existing EPSA contract,” Daly said.

“We look forward to working with the NOC and our partners in the Libyan Investment Authority to safely implement our drilling programme.”

Nuri Berruien, chairman of the NOC, said, “We thank BP for its commitment to Libya by lifting the force majeure.

"The NOC will work with BP to deliver the objectives of the EPSA and extends all help and support to BP in order to implement the agreed work program as per existing EPSA terms.”

BP has acquired over 31,000 sq km of 3D seismic data over blocks offshore Libya in the Sirt basin and onshore in the Ghadames basin since the EPSA contract was approved in December 2007.

The EPSA contract includes a commitment to five wells offshore and 12 wells onshore.

Exploration work was interrupted in 2011 before drilling operations had started.

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