BP’s (NYSE:BP) CEO Bob Dudley said that the company was evaluating plans to resume exploration in Libya after stopping operations in February because of the political unrest in the country.  The company has been asked by the new government to return to the country to continue its drilling plans that were part of a 2007 agreement with the prior regime. Mr. Dudley made the announcement at the World Petroleum Congress held in Doha, Qatar this year. Competitor ConocoPhillips (NYSE:COP) is also looking to restart its production in the country.
Access to new resources
Libya’s oil output fell from 1.6 million barrels/day (Mb/d) before the revolution to 45,000 barrels a day during the war.  Output by the end of this month may come close to 1 Mb/d according to OPEC Secretary General Abdalla el-Badri, and it may take a full year before production levels reach their former highs. Oil companies are seen lining up to develop the country’s reserves, which are the largest in Africa, and the new government has shown a willingness to work with foreign oil firms. Access to new reserves is necessary for energy companies to maintain their output. Mr. Dudley said that the industry needed to add a production equivalent to Saudi Arabia’s each year in order to offset a decline in existing fields.  As discovering new reserves becomes increasingly difficult, access to Libya’s resources may come as a welcome relief to players such as BP.
Libya’s oil output reached its peak in the 1970s at 3.4 Mb/d, then started falling as foreign oil companies started to pull out and sanctions were placed on the country.  BP’s plans in the country include both onshore and offshore drilling, which could help it boost production in the medium term.Notes:
- BP, Shell Plan to Resume Exploration, Boost Production in Libya, Bloomberg [↩] [↩] [↩]
- End of Easy Mideast Oil Means Work for Exxon, BP: Energy Markets, Bloomberg [↩]