The EIA has reported an…
Libya has done the unthinkable:…
Since the fall of Muammar Gaddafi in 2011 Libya has suffered political and civil unrest, culminating in strikes at oil and gas terminals across the country, and a serious reduction in production and exports.
Worried by the continued unrest, investors have been attempting to reduce their exposure to this risk and exit the country, but Tripoli is not about to let that happen without a fight.
In July Marathon Oil announced its desire to sell its stake in the Waha Oil Company, one of Libya’s largest producers, but the Libyan government has moved to block any such efforts, forcing Marathon to remain in the country for the time being.
After making their intentions to sell clear earlier in the year, Libyan Oil Minister Abdelbari Arusi, suggested that the country’s National Oil Corp. (NOC) might buy the stake in the 350,000 barrel a day company.
Related article: Libyan Oil Production Struggles to Restart
Libyan oil contracts state that any foreign oil companies seeking to sell their stakes must first secure approval from the NOC, and give the company first refusal on the offer. Having officially discussed their plans with the NOC this week, a senior Libyan official told Reuters that Marathon decided to retract its offer to sell.
The source said that “the company has changed its mind. Marathon as a partner indicated its desire to sell its shares. It had talks with the NOC and before receiving approval, I believe things changed for the company. The last I heard the deal was off.”
A different source involved in the situation, told Reuters that the NOC had explained to Marathon that it would block any deal to sell by making use of its first refusal rights and submitting a bid far below market prices, ensuring that Marathon would make a huge loss if it continued with its plan to leave the country.
The source stated that “the NOC did not like the idea of Marathon pulling out. They thought it would send bad signals given the political climate.”
In 2009, Verenex, a Canadian oil explorer, tried to sell their Libyan assets to CNPC. In the end they were forced to sell to a Libyan sovereign wealth fund for $300 million, far less than CNPC were offering.
Marathon is likely to find it difficult to attract buyers for the exact same reasons that it wants to leave Libya. The instability throughout the country is massively affecting the oil industry, and companies involved there; the contract terms that the Libyan government offers are unfavourable, and the Waha assets require investment.
Last month ExxonMobil managed to offload its assets in Libya, as it looked to distance itself from the difficult security situation, and last year Shell abandoned two of its blocks due to poor results.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…