22 September 2009

Libya fund deals for Canadian oil producer

The Libyan Investment Authority will pay $293.7 million ($314.1 million Canadian) for Canada-based oil producer Verenex Energy Inc.

Verenex first had a deal with the Chinese-owned CNPC International Ltd., but that deal fell through after months of negotiations.

In March, Libya’s state-run National Oil Corp. said it would exercise its right of first refusal, which gave it the right to block CNPC’s bid to buy the Canadian oil and gas firm. Verenex has operations in Libya’s Area-47, a region estimated to hold roughly 2.15 billion barrels in crude oil reserves.

Under the terms of the deal, the organizations will sign a definitive agreement on or before 20 October.

Verenex’s board of directors said it unanimously determined this transaction is the best alternative available to the company and its shareholders. The company said it has agreed to try to secure the agreement of its management and major shareholder, Vermilion Resources Ltd., which owns 45% of Verenex, to vote in favor of the deal.

The LIA started up in 2006 so it could manage Libya’s surplus oil revenues.

Foreign investment has been flowing into Libya over the past few years, after the United Nations and U.S. lifted their sanctions against the North African country.

For related information, go to www.isa.org/productivity.