By Fawzia Sheikh, www.oilprice.com

After nearly 40 years, BP is returning to Libya amid widespread controversy about an alleged link to the Lockerbie bomber’s release and fears about a potential oil disaster in the Mediterranean Sea.

Yet despite the oil giant’s enthusiasm, its future in Libya – a country boasting the largest crude oil reserves on the continent — may end up as murky as competitors that have ventured there.

Three years ago, BP signed a $900-million exploration and production deal with Libya, decades after Muammar Gaddafi’s government nationalized 100 percent of the oil company’s holdings. BP, which has not been involved in the country since 1971, announced in late July that it would begin drilling in the western part of Libya and in the deep waters off the coast in a matter of weeks.

Although BP presumably believes the agreement will be good for business, Libya’s terms of attracting foreign investment is “so convoluted and corrupt, I don’t think anybody gets a real advantage,” said Ronald Bruce St John, an analyst for Foreign Policy in Focus, a Washington-based think tank.

http://oilprice.com/Geo-Politics/Middle-East/An-Uncertain-Homecoming-BPs-Return-To-Libya-Decades-After-Gaddafis-Revolution.html

An Uncertain Homecoming: BP’s Return To Libya Decades After Gaddafi’s Revolution is news story from: News and Stories from Energy Editor

Ownership of Offshore Israel Gas Deposits Speculative Without Further Drilling

by Fawzia Sheikh, OilPrice.com

While offshore natural gas discoveries have spurred Lebanese and Israeli saber-rattling in a region widely viewed as rich in energy resources, a London analyst said it is too early to make categorical claims about the size and ownership of the potential reservoirs.

In the last several months, Noble Energy Inc., based in Houston, Tex., and Israeli companies have announced two offshore gas discoveries known as Tamar and Leviathan that they say may hold about 24 trillion cubic feet of gas.

Yet, it is “really too early to say” which country has the valid claim over the underwater resources in dispute, as they “may well extend into Lebanese waters,” Catherine Hunter, a senior analyst on the energy team at IHS Global Insight in London, told OilPrice.com. Without further surveys and drilling, the situation is still unclear, she said.

There is a chance of a “really large-scale discovery,” Hunter said, but the blocks are located within recognized Israeli waters and exploration would not have occurred outside of this area. “It will take a few years to figure out where exactly it is,” and until then “it’s all quite speculative,” she argued.

http://oilprice.com/Energy/Energy-General/Ownership-of-Offshore-Israel-Gas-Deposits-Speculative-Without-Further-Drilling.html

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* No change to output targets seen at this week’s meeting

* Price levels within OPEC expectations

* Libya says market oversupplied, to call for compliance

* Demand should rise in second half, Gulf OPEC delegate says

(releads with Algerian minister comments)

By Alejandro Barbajosa and Simon Webb

VIENNA, March 15 (Reuters) – OPEC does not need to respond to rising oil demand as economies recover until later in the year, Algeria’s energy minister said as he arrived for a meeting which looked set to keep the lid on output from the group.

Asked how OPEC would deal with the demands of a recovering economy, Algerian Energy and Mines Minister Chakib Khelil replied: “We wait until the second and third quarters.”

OPEC also has a further meeting scheduled in September.

“The economy is looking like it is recovering,” he added. “I expect prices to hold pretty well until the end of this year despite the surplus in supply,” he told reporters.

Benchmark U.S. crude futures were trading just shy of $80 per barrel CLc1 on Monday, down from Friday’s $81.24 settlement, pressured by a strengthening dollar and expectations China might tighten credit again. [O/R]

Saudi Arabia has named $70-80 as a fair price for producers and consumers and Libya’s delegate to the meeting, Shokri Ghanem, said in an interview with Reuters on Sunday he thought prices would be between $80-90 this year.

“I don’t think there is any need for any change,” Ghanem said on arrival here. “The market is oversupplied, we are going to call for compliance for everyone,” he added.

COMPLIANCE QUESTION

OPEC last agreed to cut output in December 2008, slashing a record 4.2 million barrels per day (bpd) from production to 24.84 million bpd as the world reeled into recession.

In the past year, rising prices and a hesitant global recovery have encouraged OPEC members to add supply to the market, however.

In February, OPEC delivered just 53 percent of pledged output curbs it agreed in late 2008 — down from 81 percent a year ago.

Ministers are emphasising the need to support existing supply curbs and the issue will be on the agenda this week, even though demand could rise in the second half.

“We need very strong compliance,” Attiyah said. “If we say rollover, it means with existing targets.”

Forecasts from OPEC as well as the International Energy Agency (IEA) and the U.S. government all suggest demand has been better than expected and could continue to rise this year. [ID:nLDE62B127]

Global growth could be 4 to 4.5 percent this year instead of the 3.4 percent predicted in November, the head of the Organisation of Economic Cooperation and Development (OECD) told Reuters in an interview on Monday. [ID:nATH005280]

“The reason why the global economy is going to grow faster is because China and India are pulling very hard,” OECD secretary general Angel Gurria said.

The question for OPEC is whether that growth translates into enough demand to mop up the crude its members are pumping.

One OPEC delegate said current output from the 12-member group was meeting demand.

“If you take the average forecast for OPEC demand, you’re looking at 29.2 million bpd, which is in line with production. That’s an indication that things will be the same until the end of the year,” the delegate said.

OPEC, including Iraq which does not have a quota, pumped 29.28 million bpd in February, a 14-month high, according to a Reuters survey. [OPEC/O]

A senior Gulf OPEC delegate said demand should pick up in the second half.

“The market is well balanced,” the delegate said. “Stocks started going down in the last 2 months,” he added.

Developed countries have shown little appetite for more oil as their economies emerge from recession, leaving oil producers to fight for market share in developing giant China.

For a graphic showing the relationship between OPEC output cuts and the oil price, please see:

here

(additional reporting by Alex Lawler, Alejandro Barbarosa, Joe Brock in Vienna, Rania el Gamal in Baghdad and Ali Shuaib in Tripoli; editing by William Hardy)

http://uk.reuters.com/article/idUKLDE62E1MV20100315?sp=true

OPEC can wait to raise supply – Algeria is news story from: News and Stories from Energy Editor