Major firms circle Libya as Gaddafi regime's grip weakens

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The Independent Online

As Libya's new rulers consolidate their grip on the country, the big oil majors are circling the nearly liberated, petroleum-rich country. Italy's ENI and France's Total have long histories of operating in the country and are leading the charge, while UK giants BP and Royal Dutch Shell are further back in the queue, being at the stage of exploring for oil there rather than producing it.

Vallares, the company headed by former BP chief executive Tony Hayward, which has about $2.1bn (£1.3bn) of cash to spend, has also said it could be interested in Libya.

Oil companies are anxious that agreements made with Muammar Gaddafi's government after Tony Blair smoothed the way will still stand under the interim Transitional National Council (TNC) set up by the rebel forces.

BP began drilling its first exploration well in February but was shortly afterwards forced to suspend operations and evacuate its staff. A spokesman said: "We have the contract and we haven't seen anything that says we are not welcome. But we need to build a relationship with the new government. We will return when it is safe and appropriate to do so."

Shell said it has had "a modest exploration interest in Libya" in recent years and also evacuated its staff when the uprising began. A Shell spokesman said the company has "had engagements with representatives of the TNC regarding our existing business and future co-operation".

Analysts said British, French and Italian companies would be looked on favourably by the TNC for offering the rebels their support, while India, China and Russia would suffer for opposing air strikes.

Most analysts believe Libya's oil output will not return to its pre-war level of 1.6 million barrels a day – which represented about 2 per cent of global output and made it the world's 17th largest producer – for two to three years. However, recent production levels of about 50,000 barrels a day could jump fairly quickly and significantly.