By Libya Herald reporters.
Tripoli, 30 July 2015:
BP which suspended its operations in Libya in 2014 has taken a $600 million write . . .[restrict]down on its assets in the country.
Second only to the Macondo oil spill in the Gulf of Mexico, which has cost BP $18.7 billion, Libya has been its biggest problem. The oilco returned to exploration and production in Libya in 2012, quietly mocking the pessimism of Royal Dutch Shell which mothballed its operations at almost the same time. It is now clear that Shell made the right call.
Shell however, besides reported problems over renegotiating its Exploration and Production Sharing Agreement (EPSA) also shied away from commitments to invest at least $105 million in the upgrading of the gas plant at Brega.
BP returned to Libya with planned exploration and production in investments in 17 wells of some $2 billion. Yet within months it too was reconsidering its position.
BP withdrew its international staff from Libya in May 2013. It refuted reports in the Libya Herald the following November that it was withdrawing completely. However, it is clear then, that along with all foreign oil companies, deteriorating security, coupled with tough production sharing terms being driven by the National Oil Corporation, made this country a less than attractive proposition.
In the view of an oil analyst last summer, even if NOC had offered more generous deals, the insecurity at oil fields, along with the regular disruption at oil export terminals, was going to drive foreign oil companies away. Despite Libya’s high-value sweet crude, with its cheaper refining cost, the risk to personnel as well as consistent production was too great to bear.
BP’s hopes for Libya’s hydrocarbon future has just cost its investors $600 million. [/restrict]