Canadian oil company Petro-Canada (PCZ) will "very soon" be the fourth oil company to sign a revised oil contract for its Libyan assets, the company's assistant general manager in Libya has been reported saying.
The revised contract, like the ones signed recently with the U.S.'s Occidental Petroleum Corp.(OXY), Austria's OMV AG (OMV.VI) and Italy's Eni SpA (E) will reflect the current environment of oil prices that are higher than when the deals were done, as Libya joins other countries in restructuring contracts so they get a greater share of the revenues.
Petro-Canada's Tarek Hassan-Beck told reporters on the sidelines of an energy conference in London, that they expect to sign a heads of agreement very, very soon, and that all the existing contracts have to be converted to the new conditions.
Hassan-Beck added that negotiations on revising oil contracts began over the summer after the Libyan government said they wanted to streamline all contracts so they conformed with the terms set out in the exploration and production sharing agreement-4 formula, or EPSA-4.
The EPSA-4 formula is the most recent framework contract Libya has devised. It gives the country the best returns.
Hassan-Beck, who previously held a senior position in Libya's National Oil Corporation (NOC), said:
"The rate of return improved tremendously with the high oil prices and the host country ( Libya) wanted to share in that."
Other contracts that are being revised include those with France's Total SA ( TOT), Spain's Repsol YPF SA (REP) and Germany's Wintershall AG, who signed agreements with Libya under EPSA-3 terms.
Libya's contract with the Waha Group, which was previously known as Oasis and includes ConocoPhilips (COP), Marathon Oil Corp. (MRO) and Amerada Hess (HES), is also being revised. The Waha Group acquired exploration and production rights in Libya in the mid 1950s.
Hassan-Beck said Repsol, Wintershall, Total and the Waha Group are also expected to sign revised contracts by January.
Libya is reportedly hoping to use foreign investment and expertise almost to double crude production to 3 million barrels a day by around 2015 from about 1.7 million barrels a day now according to Dow Jones.
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