BP Close to Completing Libya Offshore Survey

Source: Bloomberg 9/7/2009, Location: Africa

BP Plc will complete a seismic survey off the coast of Libya next month, with a view to drilling its first well in the north African country in more than 30 years, amid controversy that trade may have played a role in the release of the Lockerbie bomber.

Europe’s second-biggest oil producer plans to drill its first Libyan well in the second half of 2010 as part of a $900 million exploration program, company spokesman David Nicholas said by telephone today.

BP signed an accord with Libya’s National Oil Corp. in May 2007, during a visit by the then U.K. Prime Minister Tony Blair. Its timing has raised political questions following the Scottish government’s Aug. 20 decision to free on compassionate grounds the terminally ill Libyan Abdel Basset Ali al-Megrahi, convicted of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.

“This is a long-term exploration agreement,” Nicholas said, adding seismic tests are “on track and progressing well. We said we expect to spend seven to 10 years exploring.”

The release of Al-Megrahi, who has prostate cancer, sparked claims the U.K. wanted him returned to Libya to bolster trade. He is the only person found guilty of the killing of 270 people in the Pan Am explosion.

BP confirmed last week that it raised concerns two years ago that a delay in concluding a prisoner-transfer agreement being negotiated with the Libyan government in 2007 might hurt the oil deal. Under the terms of the deal, Libya agreed to share any oil and gas fields discovered by the British oil company.

Prisoner Transfer
“BP did bring the attention of the U.K. government in late 2007 to our concerns about the slow progress of the prisoner transfer agreement,” Nicholas said today. “We were making no comment about the type of prisoner transfer accord, or any individual.”

“There’s no doubt there’s a big foreign policy interest we have in our engagement with Libya,” U.K. Education Secretary Ed Balls said yesterday on Sky News. “Nobody is saying that trade or oil or economics is getting in the way of doing the right thing. The right thing must be to cooperate with a state like Libya if they are changing and want to work to make the world a safer place.”

Prime Minister Gordon Brown last week denied intervening in Scotland’s decision to release Libyan Lockerbie bomber Abdel Basset Ali al-Megrahi, trying to quash opposition claims of “double-dealing.” The controversy is weighing on Brown’s prospects for re-election as his Labour Party has trailed the opposition for a year in opinion polls. He must call an election by June.

The U.K. opposition Conservative Party has called for an inquiry into al-Megrahi’s release.

Lockerbie Damages
“When Gordon Brown said there was no double-dealing, no deals for oil, I don’t think he was being straight with people,” George Osborne, spokesman for the Conservatives on financial matters, said on BBC Television’s Sunday A.M. program.

Libya formally accepted responsibility for the Lockerbie attack in 2003 and agreed to pay up to $2.7 billion in damages to families of the victims. Libyan leader Muammar Qaddafi finished settling claims of U.S. Lockerbie victims with a $1.5 billion installment last year.

Brown said yesterday that the U.K. will also support efforts by British victims of Irish Republican Army terrorism to seek compensation from the Libyan government.

Victims of IRA violence in the U.K. issued a fresh demand on Aug. 25 for Libya to pay compensation. The IRA fought to unite Ireland from 1969 before calling a permanent cease-fire in 1997. In 2005, the group renounced violence.

Libyan Reserves
BP consultant Mark Allen, a former agent in MI6, the U.K. intelligence agency, discussed the prisoner transfer agreement between the U.K. and Libya with British Justice Secretary Jack Straw in late 2007, the London Times reported Sept. 4. Allen made two phone calls to Straw on Oct. 15 and Nov. 9 that year, the Times said. BP’s Nicholas declined to confirm the specific phone calls, or comment on them.

More than 40 foreign oil companies were working in Libya as of September last year, including Irving, Texas-based Exxon Mobil Corp., Los Angeles-based Occidental Petroleum Corp. and Royal Dutch Shell Plc. Austrian OMV AG and Italy’s Eni SpA also won licenses after international sanctions were lifted in 2004.

The country, holder of the largest African oil reserves, was removed from the U.S. list of states sponsoring terrorism in 2006 after Qaddafi agreed to give up chemical weapons and compensate Lockerbie victims.

BP’s exploration agreement allows it to explore 54,000 square kilometers (21,000 square miles) of the onshore Ghadames and offshore Sirt basins. The U.K. explorer said at the time of the May 2007 announcement that it planned to drill 17 exploration wells and potentially as many as 20 appraisal wells.

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Related Categories: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 

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