The new Libyan Transitional
Council is unlikely to refrain
from using foreign oil
company operations like this
 
London, England — ESI-AFRICA.COM — 05 September 2011 – The Libyan National Transitional Council is expected to undoubtedly favour companies from those countries that supported it, and French and British companies could do particularly well during the country’s economic reconstruction.  

This is according to Charles Gurdon, managing director of Menas Associates risk consultancy. Gurdon does not, however, think that the new Libyan government will refrain from doing business with countries that failed to support the rebels, such as Russia and China, but that: “the NTC will undoubtedly reward its closest allies.”

“One would think that Britain and France, as principle supporters, would have priority.  But they have also made it clear that they will honour their existing commitments, just as all oil companies are also expected to honour their prior commitments and complete their work programmes,” he added.  

Gurdon is part of a high-level oil and gas industry expert line-up for the North Africa Oil & Gas Summit in Madrid next month when, for the first time since the crisis in North Africa, new leaders of regional national oil companies (NOCs) will meet to take stock of the industry in the region.   

Some 350 oil and gas industry experts are expected to gather for the event, and the agenda includes discussions on new investment potential, the future of LNG exports, and upcoming licensing rounds in the post-Arab spring period.

According to Gurdon, several IOCs had already pulled out of Libya before the Arab spring because it was already less commercially attractive than other areas, partly because very little new oil has been found since 2005, and the NOC’s were squeezing the IOCs in terms of financial terms and conditions and local content requirements”.  

“The shale gas revolution in the US has fundamentally changed the international gas market, with both gas demand and spot prices falling very sharply. The North African governments are now operating in a much more competitive environment than they were a few years ago.” He pointed out.

At the same time the recession has hit oil demand in Europe. While Egypt and Tunisia have recognised this, and have adopted a much more flexible approach, others such as Algeria and Libya have not. They will be unable to re-attract foreign investors unless their make the commercial terms and conditions far more attractive. If they don’t the herd will move elsewhere,” Gurdon declared.