CAIRO: US-based Bronco Drilling Co. has signed an agreement to invest in a company run by a Libyan family to provide drilling services in the oil-rich former pariah country.
The move is another sign that Libya is emerging from its international isolation after it agreed to scrap its secret nuclear weapons program and compensate victims of terrorist attacks.
Hatem Fakhr, CEO of the Libyan company Challenger Ltd., said Friday that the deal had been in the works for a number of months.
The subscription agreement will give Bronco Drilling, which is based in Oklahoma City and provides oil and gas drilling services, a 25 percent equity interest in Challenger, whose headquarters are based in Cairo but which operates mainly in neighboring Libya.
As part of the agreement, signed late Thursday in the Egyptian capital, Bronco Drilling will provide several rigs and training expertise to Challenger, which currently operates 23 rigs in Libya.
The agreement is the first time Bronco Drilling has ventured outside the United States, where it operates rigs in seven states. CEO Frank Harrison said the company had been looking to enter the Middle East market and believes Libya – despite being a former US enemy – has great potential.
The relationship (between the US and Libya) was damaged over the years, and we ll see if it will be repaired. We think it will, Harrison said in Cairo on Thursday.
Fakhr said the agreement was beneficial to both – providing Bronco Drilling with a new edge as it ventures outside the US, while also putting Challenger in a position in which it will benefit from advanced standards and policies, for example in environment protection.
While major international oil companies – including US firms like Chevron Corp. – have rushed to sign exploration deals with Libya since it shed its rogue state status in 2004, it is still unusual for a medium-sized US-based drilling company to operate there, company officials said.
Libya provides tremendous opportunity for growth – especially with oil trading at nearly $100 a barrel, company officials said.
Libya s proven oil reserves are the ninth largest in the world and about 70 percent of Libya remains unexplored. The country wants to increase production from 1.7 million to 2.5 million barrels a day in the next couple years, Challenger said.
Challenger also hopes its deal with Bronco will help boost safety and environmental standards in Libya.
We saw an opportunity for an American company to invest in a company in Libya. We have a lot to learn from them, said Yalmez Tatanaki, director of Challenger. Associated Press