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Sonatrach Pulls Out Of Libya

Algeria oil gas

Algeria’s state oil and gas company has pulled out of Libya citing deteriorating security conditions, Libyan media report, adding the company had first evacuated its personnel from its neighbor and has now transported production equipment across the border.

Sonatrach had partnered with the Libyan National Oil Corporation on drilling seven oil wells in its eastern neighbor.

The Algerian company returned to Libya relatively soon after the 2011 civil war to explore for oil in the Ghadmes basin, in block 65, where Sonatrach held a 25-percent stake that was awarded to it back in 2005.

Earlier this year, Sonatrach and NOC signed a deal for the joint exploration of two fields, one on the Algerian side and one on the Libyan side, which may turn out to be one single field. “If it was proved that the two fields are in fact one field, they will be run and managed jointly by the two countries,” a source told Turkey’s Anadolu Agency at the time.

Interestingly, Sonatrach is leaving as the situation in Libya creeps closer to normalization. Although a lot more time will need to pass before normal returns for real, there have been fewer field outages in the last three to four months and oil production has been growing steadily.

The latest sign yet that things in Libya may be on the mend was the October announcement by BP and Eni that they will start drilling at a field they share in early 2019. BP won two exploration licenses in Libya back in 2007, but the 2011 civil war interrupted its plans for the country. Eni agreed to buy a 42.5-percent interest in BP’s exploration and production sharing agreement with NOC earlier this month, and they are now ready to start drilling in the offshore block.

Despite continued political instability and a deep economic crisis, Libya’s National Oil Corporation has ambitious goals: by the end of 2019, its chairman Mustafa Sanalla told Bloomberg last month, NOC plans to pump 1.6 million bpd of crude, the level of production from the times before the 2011 civil war.

By Irina Slav for Oilprice.com

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