Libya’s National Oil Corporation (NOC) has approved Total’s acquisition of Marathon Oil Libya Limited (MOLL)’s 16.33% stake in the Waha concessions.
“When Total announced the purchase of MOLL’s stake in the Waha concessions through the acquisition of MOLL for a price of $450mn, NOC withheld its approval until it had the opportunity to scrutinise the deal in all its legal, contractual, financial, and investment aspects,” said NOC chairman Mustafa Sanalla. “In addition, NOC considered the feasibility of NOC or other Libyan entities acquiring that stake, versus what Total could bring to the concessions on a technical level and to the regions adjacent to them through social development. NOC also sought the government approvals necessary to complete the deal.”
In a press statement NOC noted key reasons for its approval: Total’s planned investment of $650mn into the Waha concessions, and its plan to increase production by 180,000 barrels per day through the North Gialo and NC 98 projects; and a review found that if NOC acquired MOLL’s stake, it would increase revenues but would also entail significant financial obligations to maintain and further develop production.
“The imperative to make funds available in the specified time would impact the net profit and the payback period, as well as conflicting with other government priorities in spending and other investment opportunities available to NOC,” Sanalla noted, continuing to say that no local partner has the means of Total to further develop the concession.
NOC also secured a $150mn signature bonus to be allocated for corporate social responsibility, which NOC will supervise. “Total has demonstrated good faith and real commitment by agreeing to this request,” Sanalla said. “I will have further announcements on this in due course as we develop our plans for these programmes and projects.”
The funds for corporate social responsibility and sustainable development programmes and projects will be paid by Total as non-refundable expenses in phases relating to the development of the concessions. The first $70mn will be paid at the outset, $30mn after 21 days of continuous production in the North Gialo “6 J Area” project, another $30mn after 21 days of continuous production in the NC98 project, and up to a further $20mn over the next four years. Further details will follow after the signing of a detailed agreement within three months.
The NOC (59.18%), Total (16.33%), ConocoPhillips (16.33%) and Hess (8.16%) jointly own the Waha Concessions. The Waha Oil Company, a 100% NOC owned entity, operates the asset.
