Oxy Lands 30-Year Oil Deal with Libya

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Occidental Petroleum Corp. said Monday that Libya’s national oil company has awarded it a 30-year contract to explore and develop a basin off the coast of the country.


Over the next five years, Oxy said it expects to invest about $5 billion to ramp up production in the area to more than 300,000 barrels per day from the current level of around 100,000 barrels per day.


Originally, the Los Angeles-based oil company and Austrian oil and gas company OMV AG will join the project by contributing about half of the developmental costs netting OMV about a 25 percent interest in the endeavor while Oxy retains the remaining 75 percent interest. Libyan National Oil Corp. will put up the rest of the money to finish the project, Occidental said. Occidental and OMV added that they will receive 10 to 12 percent of gross production from the project, down from a share of about 20 percent, according to reports.

However, the Libyan National Oil Corp. said later Monday that Occidental and OMV later agreed to take a smaller share and increase production from the project due to skyrocketing oil prices. Oxy began producing oil from Libya, which is Africa’s biggest oil producer, again in 2005 after sanctions dating back to 1986 were lifted. Oxy first began operations in Libya in 1965.


The new agreements cover fields with about 2.5 billion barrels of recoverable high-quality oil reserves, Oxy said in a statement.


“This new project establishes Libya as a core country for Oxy’s production and we believe it will open the door for us to add additional growth projects in a country with large oil and gas reserves,” Occidental’s Chief Executive Ray Irani said in a statement.


Shares in Oxy dipped 1.4 percent to $71.11 in morning trading Monday on the New York Stock Exchange.

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