[img align=right width=200]http://af.reuters.com/resources/r/?m=02&d=20090925&t=2&i=11726441&w=192&r=2009-09-25T153051Z_01_AJOE58O173H00_RTROPTP_0_OZATP-ENERGY-LIBYA-20090925[/img]

Sep 25, 2009

RABAT (Reuters) - The resignation of Libya's top energy official is a setback for foreign oil companies that saw him as an ally in an insular, unpredictable north African country whose leader once threatened full-scale nationalisation.

Yet such a move remains unlikely as Libya is just beginning to reap the benefits of foreign investment and expertise that it spent years trying to lure, analysts say.

Mystery over the timing and the reasons for Shokri Ghanem's departure from National Oil Corporation (NOC) only underlined the opaque decision-making process that made him so useful to international oil companies (IOCs).

As if to underline the risks, Libya scuppered the sale of Canadian oil exploration firm Verenex to China National Petroleum Corp. (CNPC) by blocking the deal and forcing its own purchase of Verenex at a lower price.

Verenex put itself up for sale after striking oil in the desert country's concession Block 47. NOC had been contractually obliged to match CNPC's offer and analysts said the Verenex debacle probably helped to trigger Ghanem's resignation.

"While overseeing the progressive tightening of IOCs' terms, Ghanem attempted to insulate the oil sector from political pressure and establish a predictable environment for IOCs," said Wolfram Lacher of Control Risks Group. "His departure raises the risk of further damaging decisions at NOC."

Others warned against over-estimating the impact of Ghanem's departure.

"At the end of the day, Libya wants to leverage its oil wells for positive economic benefits. While the specific details of that process might change, the overall framework is fairly consistent," said Robert Tashima, regional editor at Oxford Business Group.