Gazprom Operations in Libya

=History=

Gazprom's activities in North Africa have been of some political significance, according to the Economist magazine. Of particular concern for gas-importing European nations have been reports of the spectre of a so-called 'gas OPEC' or 'gas cartel', following Russian courting of Algeria, Iran, and more recently Libya, as a means of gaining leverage over European states. However, this prospect was deemed unlikely by experts due to the regional nature of the gas markets and consumption, compared to the global nature of oil markets. This came on the back of talks between Gazprom CEO Miller and Muammar Gaddafi regarding Russian purchase of a significant portion of Libya's oil and gas exports.

According to industry lawyer Robert Amsterdam, evidence of the significance of Libyan gas to Russia (and consequently Gazprom) can be found in the reports of the Russian Government writing off US $4.5 billion of Libyan debt in 2008, reportedly in exchange for new contracts with Russian state-held firms.

In February 2011, due to the political unrest in Libya, Gazprom made the decision to halt all operations and evacuate foreign personnel from the country. The hostilities in Libya also caused the suspension of Gazprom's entry into the project at the Elephant oil field. Under the Farm-out agreement for the Elephant Production Sharing Agreement (PSA), Gazprom was to acquire 50 percent of Eni's stake in the consortium at the oil field, equating to 33.3 percent of the international consortium as a whole. Gazprom reported that the parties would resume negotiations once circumstance are more settled in Libya.

In March 2012 press reported that Gazprom had discussed the possibility of resuming joint oil and gas projects with the new Libyan government. http://english.ruvr.ru/2012_03_26/69658341/

=Activities and contracts=

In Libya, Gazprom operates through a special subsidiary company set up to represent the company's interests in the country, Gazprom Libya B.V. Over recent years Gazprom has been undertaking an aggressive exploration campaign in Libya.

Following tender procedures in Libya during 2006-7 and an Exploration and Production Sharing Agreement (EPSA) signed with the National Oil Corporation (NOC), Gazprom obtained the right to explore and develop hydrocarbons in the licensed blocks No. 19 (Mediterranean Sea offshore) and No. 64 (300km south of Tripoli). As of the beginning of 2011, seismic surveys had been completed and preparations for exploratory drilling had been completed for both projects. As a result of the the fourth EPSA bidding round (the first to focus on natural gas), Gazprom were one of the International Oil Companies (IOCs) to be awarded a lucrative contract for a block in the southern Ghadames basin, beating off competition from Gaz de France after agreeing to take a significantly smaller percentage of eventual production (9.8%).

=References=