Libya opens its oil wealth to the West

Libya is inviting Western oil companies to exploit the north African country's massive energy wealth. Among the bidders will be the first American investors in the country since the easing of US sanctions last month.

The National Oil Company of Libya will hold an auction this summer for licences to operate eight oil and gas blocks. US oil groups Occidental Petroleum, Marathon Oil and ConocoPhilips are among those interested.

Investment in the Libyan oil industry has been limited since the imposition of US and UN sanctions 18 years ago.

British companies are also taking advantage of the thaw in relations between the West and Colonel Gaddafi's regime cemented by Tony Blair's visit to Libya in March.

UK Trade and Investment, which is part of the department of trade and industry, led a trade mission to Libya with overseas infrastructure consultancy, the BCCB yesterday.

Engineering group WS Atkins, which has signed a contract to help develop a luxury coastal resort in Libya, security firm Olive Securities, consultancy firm Control Risk Group and water group Hyder are among the 17 UK firms taking part.

BCCB chairman Colin Adams said the fact-finding mission, which lasts until Wednesday, will focus on how to help Libya develop its tourist industry, ports and roads. The potential for the tourist industry was huge, he said, but added: "It needs a jolt of a few 1,000 volts to get it up and running."

Libyan ministers are keen to establish joint ventures between domestic companies and Western firms.

At the end of next month, UK Trade and Investment is also organising a separate trade mission to Libya for the oil and gas industry. So far, 24 British companies have signed up, but not the big players such as BG.

According to British government figures, bilateral trade with Libya in 2003 stood at £443m, with the UK a net exporter, mostly of oil related products. A UK Trade and Investment spokesman said: "There is huge promise for UK companies doing business in Libya over the long term. The UK has a role to play in warming up relations between Libya and the rest of the world."

Libya has an estimated 35 billion barrels of oil reserves, but only a quarter of the country has been explored for oil. Officials from the National Oil Company of Libya estimated last week that the country would need around $30bn (£17bn) of investment over the next decade to modernise the sector.

Italian oil group Eni has built a gas pipeline linking Libya to Sicily, which will begin exporting gas in September.