Eni will acquire 42.5 per cent of BP’s 85 per cent stake and take on operatorship of the major exploration and production sharing agreement.
The two companies and the National Oil Corporation of Libya signed a letter of intent on Monday about the restarting of exploration work.
The Libyan Investment Authority holds the remaining 15 per cent interest in the contract which oversees three areas — two in the onshore Ghadames basin and one in the offshore Sirt basin — originally awarded in 2007.
Eni, the most active of the major energy operators in Libya, already has existing exploration and production activities and infrastructure nearby in the Ghadames basin. The company’s 2018 oil and gas output is estimated to stand at 250,000 barrels of oil equivalent a day, according to energy consultancy Wood Mackenzie.
BP withdrew personnel in 2011 and suspended exploration work in 2014 after security concerns following an uprising. The deal is expected to be completed by the end of 2018, with exploration estimated to restart next year.
Since 2011, when Muammer Gaddafi was toppled, the country’s oil industry has been caught in the middle of rival factions who have made financial and political demands often holding energy infrastructure hostage.
With power split between east and west, oilfields and ports were used as bargaining chips — production was disrupted, worker protests halted operations and blockades became commonplace in recent years.
A period of lower oil prices since 2014 only hindered further the industry that is the lifeblood of the Libyan economy.
Confidence in the war-torn country has since picked up and production has surpassed 1.2m barrels a day.
But the situation remains highly uncertain. Just last month gunmen stormed NOC’s headquarters in Tripoli, killing two employees and injuring dozens.
Although NOC chairman Mustafa Sanalla hailed the deal as a sign of optimism about Libya’s future and “further inward investment” to come, for BP the sale is a climb down after its high-profile re-entry into the country more than a decade ago.
The deal in 2007 was a sign of the restoration of diplomatic relations between the UK and Libya, with former prime minister Tony Blair present at a major signing that also intended to mark Mr Gaddafi’s re-entry into the global community
Still, BP chief Bob Dudley said the deal was “an important step” towards resuming work in Libya.
Eni chief executive Claudio Descalzi said he hoped to restart activity that “aimed at restoring Libya’s production levels and reserve base.”
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