Oil India to Resume Suspended Libya Block

State-owned Oil India Ltd is looking to resume its operations in the block Area 95/96 in Libya in the next financial year, an official source told FE. The company had suspended its operations in the block since May 2014 under force majeure clause, following the civil unrest in the African country. However, with the easing of the situation, Oil India expects to restart its operations in the block soon.

The company has a 25% participating interest (PI) in the block with another 25% with Indian Oil Corp and the remaining 50% with SIPEX (Sonatrach International Production and Exploration). SIPEX is also the operator of the block Area 95/96 in Libya.

The OIL-IOCL consortium had completed drilling of five wells against the minimum work programme (MWP) commitment of drilling eight wells after which the force majeure came into effect. All the five drilled wells struck hydrocarbons.

“In Libya, 5-6 wells have been drilled already. In all the wells there have been discoveries of oil and gas. But after that all these problems (force majeure) arised,” the source said.

The company is now hopeful to complete its one incomplete well and drill two exploratory wells that remain to accomplish its MWP commitment.

The consortium had signed an Interim Arrangement Agreement to continue the block till May 2018. Through an amendment in the same agreement later, the duration of Exploration & Production Sharing Agreement (EPSA) had further been extended following the continuation of force majeure condition between the parties concerned, i.e., NOC, Libya, SIPEX (Operator) and OIL-IOCL consortium.

The Exploration & Production Sharing Agreement will remain valid for the entire period of force majeure. The block has been under force majeure due to hostile law and order situation in Libya.

Moreover, Oil India is also exploring blocks in Bangladesh and Gabon and expects the drilling operations to commence in the next two or three months, the company’s director of finance Harish Madhav had earlier told FE.

The company also sees its annual production of oil growing to 4 million tonne in FY25. Oil India’s annual production growth rate has been increasing by 4.5-5% annually in the last few years.