Libya has signed a production-sharing contract with Chevron for a major onshore exploration block after months of negotiations. The deal supports Libya’s plan to attract more investment and increase oil production to 2 million barrels per day by 2030.
Libya’s state-owned National Oil Corporation (NOC) signed the production-sharing contract (PSC) with the US energy company for Area 106, according to Libyan Express on Monday, August 24. The 7,437-square-kilometer onshore block sits in the Sirte Basin, Libya’s largest oil-producing region.
The agreement moves the project from preliminary discussions to a formal legal arrangement. The two sides began talks on January 24, when Chevron signed a memorandum of understanding in Tripoli to assess oil exploration opportunities in Libya.
On February 11, Libya selected Chevron to develop Area 106, also known as S4, after the country held its first licensing round in 17 years. Libya awarded only five of the 20 blocks on offer, even though 37 companies qualified to participate. The companies included Shell, Eni, TotalEnergies, ExxonMobil, and QatarEnergy.
The cooperation between Libya and Chevron expanded in the following months. In March, they agreed to study offshore Block NC 146. In April, they began a joint study of unconventional oil and gas resources, including shale, across three sedimentary basins. The August 24 agreement now gives their work on Area 106 a formal contractual structure.
NOC Chairman Masoud Suleiman said the agreement will support the exploration and development of Libya’s oil and gas resources while strengthening cooperation with international energy companies.
The contract follows Libya’s EPSA-V model, the fifth generation of its production-sharing framework for international oil companies. Libyan authorities say the model sets a fixed cost-recovery rate and allows companies to share profits sooner than under the previous system. International companies will still cover the full cost of exploration.
source: www.ecofinagency.com
African Energy Council