UK major BP has agreed a letter of intent whereby Italy's Eni will acquire half of BP's 85% share in a Libyan exploration and production sharing agreement (EPSA), both firms said October 8. 

Activity on the EPSA which sub-divides into three contract areas - two in the onshore Ghadames basin and one in the offshore Sirt basin - has been shelved since 2014. The three areas cover a total area of around 54,000 km² (see map below).  When the deal, agreed with the participation of the National Oil Company (NOC), is completed, Italian Eni will take over as operator, with the Libyan Investment Authority holding the remaining 15%. No financial terms were disclosed.

Eni said in its statement that BP’s EPSA will benefit from significant synergies with Eni–NOC existing facilities and Mellitah Oil & Gas Co operational resources, applying Eni’s fast-track delivery model to accelerate production. This will further support NOC to meet its domestic energy supply needs and promote the development of Libyan capability through training and social investment. The companies intend to finalise and complete all agreements by the end of this year, with a target of resuming exploration activities in 2019.

NOC chairman Mustafa Sanalla commented: “This agreement is a clear signal and recognition by the market of the opportunities Libya has to offer and will only serve to strengthen our production outlook. The agreement’s social development guarantee is an important sign of our joint commitment to our staff and the communities in which we work. This initiative will hopefully drive further inward investment and facilitate higher production levels.”

BP CEO Bob Dudley said: “This is an important step towards returning to our work in Libya. We believe that working closely together with Eni and with Libya will allow us to bring forward restarting exploration in these promising areas.”

Eni CEO Claudio Descalzi said: “This is an important milestone that will help to unlock Libyan exploration potential by resuming EPSA operations that have remained suspended since 2014. It contributes towards creating an attractive investment environment in the country, aimed at restoring Libya’s production levels and reserve base by optimising the use of existing Libyan infrastructure.”

Eni has been an active investor offshore Libya: in July 2018 it started up phase 2 of the major offshore Bahr Essalam gas field, just three years after final investment decision (FID) for that phase. 

Banner photo shows BP CEO Bob Dudley (left), Libyan NOC chairman Mustafa Sanalla (centre) and Eni CEO Claudio Descalzi signing the agreements (Photo credit: Eni)

Areas to be explored jointly