The new Libyan licensing round could prove to be something of a damp squib - with operators eyeing the country's E&P opportunities faced with TOO MUCH choice.

At a time when fresh exploration possibilities are continuing to emerge from several different regions of the world, companies looking into the opportunities lying both on and offshore Libya have a total of more than 90 blocks available to consider.
The acreage, which includes 12 offshore quadrants, could in fact prove to be too extensive for the industry's needs. The areas available contain 40% more acreage than the areas currently licensed in the country, despite the fact that the Kufra Basin (where only two wells have ever been drilled) remains untouched.
However, it is likely that they won't all be given away, but rather it is a move by the state oil company to make sure there is enough of a take-up by international operators whom they may be afraid are tempted to spend their money in other highly prospective regions such as West Africa.
"It is unlikely that all the blocks will be licensed in the short-to-medium term, which is essentially due to the large number of blocks on offer," said analysts Wood Mackenzie in their latest North Africa Upstream Report, adding: "It is thought that NOC has offered this amount of acreage not to license every block but to offer the greatest choice to potential bidders."
WoodMac believes the bid round announcement reflects NOC's stated strategy to stimulate activity in remote areas and around basin margins.
However there is an extreme lack of digital data over the acreage and negotiations remain protracted and difficult. Larger companies or those with experience of the latest exploration techniques may though have a distinct advantage during negotiations, as the NOC desperately needs to increase both investment and expertise in the country.
The blocks that may prove to be of most interest include many in the oil-prone Sirte Basin, and WoodMac believes many companies may be willing to drill the deeper untested prospects.
There are only a few blocks available in the Ghadames Basin, which in Libya has so far been relatively unsuccessful compared to its counterpart - the Berkine Basin - in Algeria. The block that may prove of most interest, NC100, is currently licensed but may be available soon. It is held by Bulgarian oil company BOCO which made more than a dozen discoveries in the 1980s - but these have remained undeveloped due to a simple lack of finance.

Developing infrastructure
The acreage open in the Murzuk Basin contains land neighbouring Repsol's El Sharara and LASMO's Elephant fields where significant infrastructure already is being developed.
The offshore blocks now include all the Libyan coastal area. A third of the acreage is in water depths of less than 500m (1,630ft) and the remainder in depths of up to 2,000m (6,522ft).
Libyan territorial waters extend into water depths of more than 3,500m (11,413ft) so there is considerable scope for ultra-deepwater licensing in future.
The licensing round will shortly also be accompanied by new fiscal terms as the current laws are 40 years old. Oil Minister Abdalla Salem El-Badri has gone on record already as saying the legal system would be changed in an attempt to halt the country's decline in oil output.
There is little doubt that Libya needs western help to reverse the decline in its domestic oil industry, but current companies already working in it such as Repsol, Agip, Elf, TotalFina, Saga Petroleum, Veba Oil and Wintershall are convinced that the country will eventually rise again to international oil prominence.
Others, such as Hyundai, also recognize the country's E&P potential. A spokesman said: "Libya has enormous potential as a worldwide oil producing country once the sanctions are scrapped. We want to get a slice of an economic boom in Libya." The company already has an 8.3% slice of the NC174 onshore block which lies 750km south of Tripoli.
Lindsay Davidson, exploration manager of LASMO Grand Maghreb, told Hart's E&P recently that "compared to some others it's not a bad place to be. There is fiscal stability and security of contract along with a low crime rate and good personal security. There are good business ethics."
He added however: "There are no US service companies and we could do with more competition. The cost of imported goods is high. The contracts are firm but fair and we will make a very reasonable return though not an excessive one."
With such comments being made by companies already involved in Libya, the likelihood is that the country's licensing round will achieve the goals the country needs by bringing in enough new foreign blood to ensure that its E&P activities continue to rise in a gradual - but not too dramatic - manner.
Steady progress such as this means E&A opportunities will continue to surface on a regular and timely basis - but only for those players who commit themselves to the cause early on in the process.