BP warms to Libya

The announcement that BP is injecting money into Libya may mark the start of the large-scale international investment Libya's National Oil Company (NOC) has been looking for.

The country has been on the hunt for a cash injection for several years. It needs money for its ageing refinery sector, hit hard by years of sanctions. In fact the NOC has hinted in the past that it may be prepared to offer access to upstream acreage, in return for assistance upgrading its refining sector. Shell, for instance, concluded a deal in May 2005, upgrading an LNG plant in return for exploration rights in five Libyan blocks.

The BP deal, in partnership with the Libya Investment Corporation (LIC), will see the company explore around 54 000 km2 of the onshore Ghadames and offshore frontier Sirt basins. Successful exploration could lead to the drilling of around 20 appraisal wells. Tony Hayward, BP group chief executive, described it as ‘BP's single biggest exploration commitment'.

But it's not just about exploration, BP has made a two-pronged deal to pass on some of its expertise. A BP statement said "the company will spend US $50 million on education and training projects for Libyan professionals during the exploration and appraisal period, and, upon success, a further US $50 million from commencement of production. The education and training programmes will be designed and managed in partnership with the NOC."

This will clearly be a boost to the technical expertise the country's oil sector needs. The link between the education investment and the need for success makes it clear BP wants results, before it commits all its cash.

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