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LONDON: Libya is considering offering lucrative long-term oil exploration concessions in a bid to attract international oil companies and boost crude output after years of economic sanctions.
Such a move, if agreed by the Tripoli government, would mark a rare return by an Opec producer to a concession system that collapsed in the mid-1970s.
Libya, which holds the largest oil reserves in Africa but trails Nigeria and Angola as a producer, is dangling the prospect of oil development and exploration rights at a time when oil companies around the world are battling to replenish dwindling oil reserves.
Analysts believe Libya hopes the concession arrangement will appeal to big foreign oil companies such as ExxonMobil and BP.
Fathi Ben Shatwan, Libya's energy minister, told the Financial Times that any new concessions would last for about 25 years rather than the 50 years granted to international oil companies when they first entered the Middle East in the 1930s.
He insisted "a new type of concession" would have to meet the requirements of the country as well as the oil companies. Under the concession system, Libya would receive taxes and royalties.
Two companies, PetroCanada and Germany's Wintershall, still operate in Libya under concessions awarded more than three years ago one of the very few instances of oil companies operating under a concession system in an Opec country.
Libya, which has estimated reserves to 36bn barrels, has started to open up its potentially rich oil and gas sector to greater foreign investment following the lifting of 18 years of US trade sanctions in 204.
In January it raised about $200m through the award of 15 exploration licences, mainly issued to US companies led by Occidental Petroleum and Amerada Hess. But foreign companies only account for about 20 per cent of the country's oil output.
Shatwan said Libya planned to issue another 100 exploration licences over the next 18 months in an effort to double oil output to 3.0m barrels a day by the end of the decade. It currently produces about 1.6m b/d of crude, less than half the peak of 3.3m b/d in 1970.
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