FINANCIAL TIMES: US groups win Libyan oil exploration permits: BP and Royal Dutch/Shell Group also missed out. (ShellNews.net) 31 Jan 05

By Kevin Morrison in Vienna and Doug Cameron in Houston

Published: January 31 2005

US oil companies made a triumphant return to Libya at the weekend when they beat European rivals to scoop the majority of new exploration licences in the first auction of permits since Washington-led sanctions were lifted last year.

Of the 15 new permits, worth a total of about $200m (£106m) according to Libyan national news agency reports, 11 went to US companies, led by Occidental Petroleum.

European companies, many of whom continued to operate in the north African country throughout the 18-year period of sanctions, came away empty handed.

But Libya denied that this reflected a deliberate bias to woo back US companies to the country which holds Africa's biggest reserves of oil. Hammouda el-Aswad, the Libyan governor to the Organisation of Petroleum Exporting Countries, said: "This was a very transparent process."

Speaking in Vienna where he was attending an Opec policy meeting, he said that the European companies were used to operating under better terms than those offered in the latest auction and suggested that their latest bids were not competitive.

But European companies could get another chance next month when 40 permits are due to be offered in a second licensing round. Among those who missed out were Total of France, Repsol of Spain, Italy's Eni and OMV of Austria, all of whom operated in Libya during the period of sanctions. BP and Royal Dutch/Shell Group also missed out.

The lifting of sanctions followed Libya's financial compensation to the families of those killed in the 1988 Lockerbie bombing and a commitment to end its development of weapons of mass destruction.

Despite the tense US-Libyan relations of the past two decades, Tripoli views US oil companies favourably as the country's oil industry was largely developed with American expertise.

Occidental Petroleum, which won nine licences in partnership with Liwa of the United Arab Emirates, was one of four US companies operating in Libya before it was asked to leave by Washington when President Reagan imposed sanctions in 1986. Amerada Hess, another US company that left in 1986, also picked up a licence, while ChevronTexaco, which last worked in Libya 28 years ago, was also awarded a permit. ExxonMobil, the world's largest listed oil company, was unsuccessful with its licence bid.

Amerada and Occidental may soon see their former oil producing concessions returned. Fathi ben Shatwan, the Libyan energy minister, said a final decision on the former concessions was likely "in a month or less". He added that the licences gave the foreign oil groups about a 30 per cent share of any future production in the areas covered by the permits, the rest goes to Libya's National Oil Corporation.