Race begins for Libya's oil

THE world's biggest energy companies are preparing to fight it out for a stake in Libya's alluring oil and gas industry.

Of 122 companies that registered to apply for oil and gas exploration permits under the latest government licensing programme, 63 have been given the green light to submit bids, says Tarek Hassan-Beck, a top executive at the Stateowned National Oil Corporation (NOC).

The list is a roll-call of the world's top oil firms. BP, Royal Dutch/Shell, ChevronTexaco, ConocoPhillips and ExxonMobil are in the running, as well as smaller explorers such as Marathon Oil. Industry insiders expect China's State-owned energy companies to provide US and European rivals with stiff competition.

Tripoli's exploration drive will open the floodgates to billions of pounds in foreign investment in the oil and gas industry, which badly needs capital and modern technology if the authorities are to meet their ambitious target of almost doubling oil output to three million barrels a day by 2010.

Hassan-Beck also says the government is contemplating setting up a liquefied natural gas terminal at a cost of billions. Experts say BP and ExxonMobil, dominant players in the LNG business, are likely to be interested. Shell signalled its interest in such a venture in March. As Tony Blair met Libyan leader Colonel Gaddafi in Tripoli, the Anglo-Dutch major unveiled a tentative partnership with NOC, which it said could lead to 'integrated upstream and LNG-export projects'.

Occidental Petroleum, ConocoPhillips, Marathon and Amerada Hess, the US companies that were forced to withdraw from Libya in 1986 as relations between Washington and Tripoli nose-dived, are said to be close to negotiating the resumption of old production licences.

Delegates from several US firms said in Tripoli this week that they are keen to be involved in all areas of the country's energy business. That signals a determination to catch up with European rivals, including France's Total and Spain's Repsol YPF. Unfettered by US sanctions, they have already forged strong positions.

BP has yet to outline its Libya strategy but, given the pressures of replacing daily output of four million barrels of oil equivalent with new reserves, it is no surprise it is among those vying for exploration rights. The results of what amounts to an auction of potential oil and gas fields are expected in late January.

The Libyan investment climate has changed radically as the country has restores links with the West. Although some restrictions remain on the export of US equipment, sanctions have been lifted and Gaddafi has instigated a raft of free-market reforms.