Italy's Eni to Take Control of BP's Libya Assets Despite Insecurity
October 08 2018 - 4:40PM
Dow Jones News
By Benoit Faucon
Eni SpA has agreed to acquire a controlling stake in BP PLC's
assets in Libya and plans to resume oil exploration there, the
Italian energy giant said Monday.
The company will join a handful of others betting on prospects
in the war-torn nation. Some companies are investing in Libya
because "oil prices are high and the political situation is
reasonably stable," said Jason Pack, president of U.S.-based
consultancy Libya Analysis. "That means more oil will come
out."
Insecurity had forced BP to suspend searches for oil and gas as
part of three $900-million projects four years ago.
The country descended into chaos following a 2011 civil war that
toppled dictator Moammar Gadhafi. Last month gunmen carried out a
deadly attack on the offices of Libya's state-run company National
Oil Corp., an incident for which the radical Islamic State later
claimed responsibility.
But in recent months, NOC has also negotiated a return to
operations in fields and ports formerly blocked by militias,
boosting its output by up to roughly 1 million barrels a day. That
has led to renewed appetite for its oil concessions.
Eni said it has signed a letter of intent to acquire a 42.5%
stake in the assets held by the U.K.'s BP PLC, the companies said
in a press release. The share purchase will give the Italian major
operatorship of the projects, where it intends to restart
exploration next year, they said, without providing details on the
terms of the deal.
"This agreement is a clear signal and recognition by the market
of the opportunities Libya has to offer and will only serve to
strengthen our production outlook," NOC Chairman Mustafa Sanalla
said. "This initiative will hopefully drive further inward
investment and facilitate higher production levels."
Last week, NOC said Russia's state-controlled Tatneft had agreed
to return to Libya seven years after suspending operations. The
Libyan company also has held discussions with Gazprom, Russia's
largest government-owned company, to reactivate a giant gas project
in Libya.
The asset transfers reflected oil companies' unequal situations,
said Mr. Pack, who frequently advises firms operating in Libya.
Those in Southern and Eastern Europe are backed by their
governments and have less stringent safety and security
constraints, unlike their peers in the U.K. and the U.S., he
said.
In March, Total SA bought a 16.33% stake of an East Libyan
concession from Marathon Oil Corp. for $450 million, though the
French company remains embroiled in a dispute with NOC over the
purchase.
Write to Benoit Faucon at benoit.faucon@wsj.com
(END) Dow Jones Newswires
October 08, 2018 16:25 ET (20:25 GMT)
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