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Monday, June 25, 2007

Gazprom & Odex Compete for Libyan Oil Development

Originally Posted in October of 05, but of note today


The successful Mitsubishi-Teikoku bid for two concessions in Ghadamès basin Area 82, offering production shares of 7.5 per cent and $6 million signature bonuses, frustrated another relatively aggressive bidder.

Russia's state-owned gas giant Gazprom narrowly missed all three of the Ghadamès basin licences it bid for, in what was overall a bad result for the Russians, Tatneft excepted. It had been hoping to use EPSA-IV as a means of substantially increasing the reach of its overseas E&P.

Gazprom had been very keen on acquiring Libyan acreage, and is likely to pursue other options as a result of its failure in this round, such as an asset swap with Libya's Oilinvest. Gazprom's banking arm is a shareholder in Odex, a subsidiary of Oilinvest established three years ago with UK-based Soco International, and negotiations for Libyan-Russian asset swaps between the three parties are reportedly underway.

Soco's interest in Libya arose through the relationships between some of its non-executive directors and larger shareholders such as Pontoil Intertrade, owned by the family of Mario Contini, which has an Italian refinery among its other interests. Pontoil has a 20.55 per cent interest in Soco and Ettore Contini is a non-executive director. Mario Contini, chairman Patrick Maugein and another non-executive director, Rui de Sousa, all have a background in the downstream sector and were instrumental in bringing Soco into Libya. Gazprombank now has 20 per cent of Odex, alongside Oilinvest (46 per cent) and Soco (34 per cent).

So far, Odex has not found either upstream or downstream opportunity, partly because the government has been focused on open bidding rounds. According to Soco's Roger Cagle, "We can't compete at the levels bid in the last bid round." Rather, "our intention is to partner with Libyan companies and look for some sort of exploitation/development project. [But] with the government focusing on open bid rounds this concept takes a back seat."

Menas Associates 27-Oct-05

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