Oil Energy Money

Gazprom has JUST announced an offer to purchase all of Libya’s future gas, oil and Liquified Natural Gas exports.

Gazprom only moved in to Libyan oil in April 2008 as this Oil Energy Money post reported, and fears of a monopoly were already circulating.  An OPEC-like gas cartel is the latest concern given Russia’s monopoly on Russian reserves and its expansion in to Algeria, a leading European gas provider.

Libya controls the third largest gas reserves in North Africa and the largest oil reserves, at 41.5bn barrels.  European countries like Germany and France are the biggest consumers of Libyan commodities.  For Libya, locking in contracts would provide stability to its economy and avoid the worst effects of any future commodity bubbles. 

Details on the ground about the deal are sketchy, and we will keep you updated.  For now, a Gazprom official told the Financial Times that ‘the offer to Libya was a “non-binding proposal” and that talks could go on for some time.’, AKA investors shouldn’t expect an agreement anytime within the next few months or even a year.  Given the emphatic removal of dependence on OPEC over the last three decades, perhaps regulators should take that time to consider the effects of a highly aggressive former super-power controlling an OPEC member with the largest oil reserves in Africa.