Libya’s oil and gas and attempts to restore the strength of the economy (Getty)
the power National Foundation The Libyan Oil Company announced today, Wednesday, the return obtained by the Libyan state from the investment with the Italian company “Eni”, ranging between 13 and 18 billion dollars, after recovering the capital and operating expenses, from the production of natural gas deposits in the two marine regions “A and E”.
The company said it cares about independence, professionalism and impartiality in order to preserve the flow of oil and gas, asking it “not to involve it in political conflicts Or violation of its powers guaranteed by law.
NOC Confirms $8 Billion Investment Will Bring Libya Back to the Forefront and Encourage Oil Imports Investors in the oil and gas sectorwhich will lead to the economy moving, creating many job opportunities and increasing income levels, and the announcement of this project will push the companies contracted with the exploration blocks to start their activities.
The Corporation listed the reasons for implementing the project, including: “Gas production at the Al-Wafa and Al-Salam fields will start declining in 2025, with an estimated amount of more than 440 million cubic feet per day , which will result in a shortage of gas needed for local consumption if losses are not compensated by investments and increased production.” This will force the Libyan state to import gas to fuel power plants and cover domestic consumption.
He specifies that the percentage assigned to the Italian company is not the profit sharing ratio, but rather the percentage allowed for the recovery of capital costs in the project, known as “Maximum Cost Recovery Allocation”, i.e. the percentage allowed to be recovered from production to recover the capital costs of the project.
He specifies that the percentage of the agreement signed in 2008 is equal to 40% of production, starting from the date of the commercial announcement of the start of the project, to drop to 30% after ten years, which is the estimated period for cost recovery .
In the year 2013, the commercial announcement of the project was issued, but for various reasons it has not been implemented until today, and the Company considered that the implementation of the project should be a priority, and therefore, on August 24, it held a meeting with the management of “Eni”, during which he demanded that the company implement the project.
The company balked at first, as it had security and political concerns, but after many meetings it responded and asked that the deal cover the project components first. To determine the costs of its implementation before delving into the economic feasibility.
After agreeing on the project components, Eni has requested that the cost recovery rate be adjusted from 40% to 45%, from 40% to 38%, reduced to 37% if the project costs are less than $7 billion , and rises to 39% if project costs exceed $13 billion, and returns to 30% ten years after project implementation begins.
The Company confirmed the success of the negotiating team in reducing the percentage from the 40% as agreed to 30%. The co-payment begins after costs are recovered, and remains as it is in the agreement signed in 2000, noting that the Exploration expenses in the two marine regions totaled $1.2 billion, and were fully recovered before the project was implemented by other producing fields, adding, “This was a major flaw in the signed agreement.”
