* Exxon mostly involved in offshore Libya drilling
* Not clear if it will abandon Libya blocks
* Shell suspended Libya drilling last year
By Lin Noueihed
LONDON, Sept 17 (Reuters) - ExxonMobil, the world’s largest publicly-traded energy company, said on Tuesday it would cut back its staff and operations in Libya as growing instability no longer justified a major presence.
While it is not a major investor in Libya’s oil and gas sector, Exxon’s move highlights growing concern among international oil companies that the returns on offer in Libya may not justify the security and political risks that have grown since the 2011 uprisings that swept the Middle East.
“The security and business situation means we can no longer justify maintaining a large office presence in Libya,” ExxonMobil spokesman Patrick McGinn told Reuters.
“We are not giving up on seeking to develop a business in Libya. There are many ways in which ExxonMobil could add value and we welcome discussion with Libya of any mutually beneficial investment opportunities that may arise once the security situation stabilizes.”
The U.S.-based oil firm, which is mostly involved in offshore exploration in Libya, declined to say how many staff would leave or to give more details about its decision.
Strikes by disgruntled workers, separatists and local militia have all but paralysed Libya’s oil exports over the past two months, pushing up global crude oil prices and costing Western companies such as Italy’s Eni and U.S. Marathon hundreds of millions of dollars in lost revenues.
ExxonMobil was one of several international oil companies that scrambled to return to Libya after United Nations sanctions imposed on Muammar Gaddafi’s government over the 1988 Lockerbie bombing were lifted in 2003.
In bidding rounds opening up territory that had been off limits for years, oil companies accepted some of the industry’s tightest exploration and production terms.
OPEC member Libya has reserves of over 40 billion barrels but analysts have warned that some of the toughest terms in the business, coupled with security concerns, could deter investors and the oil minister said last year the country was seeking to improve terms for foreign companies in the next round of bids.
Gaddafi was overthrown in 2011 following months of war and sanctions but Libya’s new rulers have struggled to impose their authority in a country awash with guns and local militia.
Royal Dutch Shell suspended drilling and abandoned exploration on two Libya blocks last year due to disappointing results and other firms have postponed exploration due to concerns about safety since the 2011 war.
Marathon is considering the sale of its stake in a key Libyan oil consortium, sources told Reuters in July.
It was not clear if Exxon would abandon the blocks it won in Libya as it scales back its presence in the country.
In 2005, ExxonMobil was awarded a license to explore Contract Area 44 offshore in the Cyrenaica Basin to the resource-rich east of Libya, returning to the North African country for the first time since the 1980s.
Two years later, ExxonMobil said it was planning to greatly expand its operations in Africa and named Libya as one of the promising new markets on the continent.
In 2007, it won licenses to explore in Contract Areas 20 and 21, in deep waters off the central Sirte Basin.
Deepwater drilling began in 2009 but the following year, Exxon announced that its well was not commercially viable.
Libya took the first steps towards restarting oil output from some Western fields on Monday but production in the east of the country remains largely offline.