Heritage Oil, the FTSE 250 oil and gas explorer, has made a push into Libya in the hope of winning oil and gas licences when they are distributed by the new regime.
The group on Tuesday announced that it had bought a 51 per cent stake in a small Libyan oilfield service provider called Sahara Oil Services Holdings, which is based in Benghazi.
Paul Atherton, chief finance officer at Heritage, described the deal as the company’s “entrée into Libya”. He added: “When everybody else fled in February, we moved in and saw an opportunity. We cemented relationships and entered into discussions with the National Transitional Council.”
Heritage, which is exploring for oil and gas in the Kurdistan region of Iraq and the Democratic Republic of Congo, said it wanted to “play a significant role in the future development of the oil and gas industry in Libya”.
Phil Corbett, analyst at RBS, welcomed the deal though he noted that “field rehabilitation, particularly on a large scale, is not part of Heritage’s current skill set”. Richard Griffith at Evolution described the deal as a “toe hold” in Libya which, though valued at less than $20m, “is effectively option money that could prove to be a very shrewd investment”.
Foreign oil companies have moved back into Libya recently after the civil war brought operations in the country to a near standstill. Italy’s ENI and France’s Total have increased production after disruption caused by the hostilities.
Heritage has paid $19.5m in cash for the stake in the business but did not say from which individuals it was ultimately buying the shares.
Mr Atherton conceded the value of the deal was small. But he argued that it left Heritage well positioned to work alongside Libya’s state-owned oil industry as well as foreign oil majors in “rehabilitating” the country’s oilfields.
“There’s also the prospect for future discoveries and targeting those fields, said Mr Atherton. Sahara Oil Services has the right to bid for oil and gas exploration and production licences.
(Source: Financial Times)