BP to resume Libyan oil production

Oil giant BP is returning to Libya's oil and gas fields for the first time in more than 30 years.

BP has not operated in Libya since 1974, when the oil industry was nationalised. Two years ago, rival Royal Dutch Shell announced its return to the country.

"There is a natural gas exploration deal worth $900 million (£453 million)," Shokri Ghanem, the chairman of state owned National Oil Corporation (NOC), said.

Earlier, a spokesman for Prime Minister Tony Blair, who is on a five-day trip to Africa, said: "We are now beginning to develop an economic relationship with Libya which is hugely important.

"That's why companies such as BP can begin to go back into the country today."

Libya produces high quality "sweet" crude oil at low costs and has plentiful reserves of both gas and oil.

The country's first oil fields were discovered in the late 1950s and Libya became a major producer in the 1970s before nationalisation and introduction of United Nations and US sanctions.

State-owned company National Oil Corporation (NOC) now runs the country's oil industry, but is now actively drawing up agreements with oil majors, such as Shell, which signed a long-term strategic partnership with NOC in March 2004.

A BP spokeswoman said: "We have been in talks with the Libyan government for a couple of years and we're hopeful of reaching an agreement."

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