BP starts operations in Libya amid Shell exit

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British Petroleum said on Wednesday it is resuming exploration activities in Libya which were suspended last year due to the violent uprising against former Libyan leader Muammar Gaddafi. The announcement comes amid Royal Dutch Shell’s decision to halt oil exploration in the country due to ‘disappointing results’.

BP signed a contract in 2007 with former Gaddafi regime committing to drill five offshore and 12 onshore wells in the North African country. The British oil giant could not start drilling after collecting seismic data due to the civil war.

“The lifting of force majeure is a significant milestone in BP’s plans to return to the exploration of onshore and offshore blocks,” Mike Daly, head of exploration at BP, said in a statement.

The oil firm joins other corporations such as Eni and Total in restarting Libya operations, despite mounting security worries and the possibility that the new authorities will try to re-negotiate contracts signed during Gaddafi era.

The agreement was a “significant milestone in BP’s plans to return to the exploration of onshore and offshore blocks,” Daly said in a statement after meeting Nuri Berruien, the head of Libya’s National Oil Corporation, in Tripoli.

BP’s then chief executive Tony Hayward travelled to Tripoli in 2007 to sign a $900 million contract with Gaddafi regime, giving the London-based company the right to explore onshore and offshore fields in Libya, home of Africa’s largest proven crude reserves.

Shell shocked

The Royal Dutch-Shell unit in Libya informed the Libyan government-run National Oil Corporation (NOC) of the decision.

“Shell Exploration and Production Libya has informed the National Oil Corporation that it intends to suspend and abandon drilled wells and stop exploration in Libyan licenses LNGDA and Area 89,” a Shell spokesman said.

“Despite an extensive seismic and drilling campaign in these licenses, results have been disappointing and further exploration cannot be economically justified,” the statement added.

The spokesman insisted that the NOC has acknowledged the company’s decision and agreed to actively pursue new upstream business opportunities.

“Shell continues to view Libya as an important country in its portfolio and will maintain a representative office to pursue upstream business opportunities with the Libyan NOC,” the statement concluded.

Shell appears to be the sole firm pulling out of Libya, while BP, Eni and Total restart operations in the country despite concerns about security and the potential renegotiation of contracts signed under Gaddafi’s rule.

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