Eni and NOC Establish the Foundations For Future Joint Oil & Gas Development in Libya

Wednesday, October 17, 2007

Eni and NOC have signed a wide-ranging agreement, which represents a further step in the consolidation of their long-lasting strategic partnership which began in 1959.

This agreement will boost Eni’s growth in gas and oil production in Libya, ensuring greater energy security for Italy and enabling Eni to develop some of Libya’s most prolific basins in the long term. The agreement also confirms Eni as the leading foreign operator in the country and further consolidates the good relationship between Italy and Libya.

In a highly competitive framework, NOC and Eni agreed to convert the existing petroleum contracts to the most recent contractual model (EPSA IV), with a renewed duration of 25 years from January 2008, well beyond the present expiry dates. The new expiry dates set by the agreement are 2042 for production of oil and 2047 for gas.

Having recently completed two major hydrocarbon developments in the country, El Feel (Elephant) and Western Libya Gas Project, Eni and NOC have now defined a new plan of strategic initiatives aimed at exploiting the significant oil and gas potential in Libya.

In particular, the parties will focus their efforts on maximising the recovery of their existing oil fields through enhanced programs by applying the most advanced technology for the assisted recovery of hydrocarbons (Co2 injection and water alternate gas). They will also implement a new drilling campaign at nearby fields.

NOC and Eni will continue to explore the prolific NC41 offshore area, and strengthen the hub of Mellitah by expanding gas export capacity from 8 to 16 billion cubic meters/year. The expansion will be achieved through the upgrading of the Greenstream export line by 3 billion cubic meters/year, which will increase export capacity to Italy, and by the construction of a new LNG plant of 5 billion cubic meters/year for worldwide marketing. Further additional gas production will be made available for industrial use in Libya.

The overall investment associated with the agreed work programs is in the range of US$28 billion over 10 years.

Eni has been present in Libya since 1959 and is currently the major foreign operator in the country, with total average daily operated production in excess of 550,000 boepd (Eni equity of around 250,000 boepd). Eni is operator in some of the country’s biggest fields: the oil fields of Abu-Attifel, El Feel and Bouri, and the gas and condensate fields of Bahr Essalam and Wafa which supply the Mellitah treatment plant and the Greenstream export line.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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