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THE NEW YORK TIMES: Shell, Libya Reach Gas Exploration Deal ( 4 May 05




LONDON (AP) -- The Royal Dutch/Shell Group of Cos. said Tuesday it has reached a long-term agreement for a major gas exploration and development deal with Libya's National Oil Corp.


Shell said the agreement covers the rejuvenation and upgrade of the existing liquefied natural gas plant at Marsa Al-Brega on the Libyan coast and the exploration and development of five areas located in the heart of Libya's major oil and gas producing Sirte Basin.


Shell's return to Libya -- where it was active from the 1950s until 1974 and where it conducted exploration in the late 1980s -- has been aided by the country's improved ties with the West following its announcement in December 2003 that it would dismantle its chemical, nuclear and biological programs.


A preliminary agreement between Shell and the National Oil Corp. was announced in Tripoli in March 2004 during a visit by British Prime Minister Tony Blair that included talks with Libyan leader Moammar Gadhafi. Blair was the first British leader to visit Libya since Prime Minister Winston Churchill was there in 1943 during World War II.


The United States, which has been more cautious, ended a broad trade embargo on Libya in September.


''We are delighted to be back in Libya,'' said Malcolm Brinded, Shell's Executive Director for Exploration and Production. ''Libya's integrated gas industry has enormous potential, based on its large gas resources and favorable geographic location.''


Under the agreement, Shell will rejuvenate and upgrade the Marsa Al-Brega liquid natural gas plant at a cost of $105 million to $450 million. The upgrade will eventually increase the plant output from 0.7 tons per year to around 3.2 million tons per annum.


Depending on gas availability, the companies will also develop a new liquid natural gas facility -- Marsa Al-Brega is currently the only one.


The agreement also grants Shell gas exploration rights in five areas that cover around 8,000 square miles at a minimum commitment cost of $187 million. The exploration program will start immediately, Shell said.


Shell shares closed 0.3 percent higher at 471 pence ($8.91) on the London Stock Exchange.


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