Libyan oil stocks become next big pull for law firms

Ashurst, Baker Botts, Eversheds, Norton Rose gear up – but where is Clyde & Co?

With energy lawyers’ attention shifted away from Iraq in the wake of ongoing hostilities, focus is now turned to four basins in Libya: Murzuk, Ghademes, Sirte and Cyrenaica.

Exploration rights for the massive oil stocks in these basins are the subject of auctions hosted by Libya’s National Oil Corporation (NOC). The multimillion dollar contracts are being sold off in a tendering process codenamed EPSA IV, alongside similar exploration rights in Libya’s offshore gas fields.

Only three UK firms have made explicit attempts to target this work: Ashurst, Eversheds-Frere Cholmeley (Eversheds’ Paris office) and Norton Rose. Meanwhile, there are two US firms targeting the market, both Washington DC-based: Baker Botts and Butera & Andrews, plus a Reading-based consultant Irene Dallas.

At present, work is plentiful. By the time the ink is dry on the contracts sealing the EPSA IV tenders – expected to take place in January – a host of deals in other sectors, such as tourism, steel, water and telecommunications, are likely to have been signed. All these industries are in the throes of either being privatised or sold to new foreign ownership.

Baker Botts has been one of the quickest to pick up on Libya’s opportunities and is running much of the work from London. Its DC partner Jamie Baker, the son of the former US secretary of state James Baker III, spent part of May on a “fact-finding mission” in the region. For him, the key is winning Libyan energy work for the firm’s oil clients.

Other US firms, particularly those with energy practices, have Libya on their radar. So far, only one US law firm – Butera & Andrews – has been brave enough to establish a Libyan presence, forging an alliance with Libyan firm Abdulaziz Khalifa in May.

However, it is not just oil that Butera & Andrews is interested in. Butera & Andrews partner John McInespie said: “There is 1,000km of beach in Libya and we’ve been asked to act for several international hotel chains.”

While for many firms the lifting of US sanctions and the opening up of Libyan markets represents new opportunities, for others it is a step-up in what is otherwise business as usual in the north African desert state.

Irene Dallas, a sole practitioner at Reading-based Dallas & Co, is also a consultant at Pillsbury Winthrop. She has been heavily involved in Libya’s energy sector since she formed an alliance in 1999 with Libyan firm Bakhnug and Partners.

“Libya has been opening itself up for the last five or six years – ever since UN sanctions ended in 1999,” says Dallas.

For Eversheds-Frere Cholmeley, 2004 represents less of a series of great opportunities in Libya and more an end of an era. Its links date back to the 1970s when it began acting for ESPA IV’s hosts, Libya’s National Oil Corporation. That relationship, and also its links with the Libyan government, which it acted for on four boundary disputes before the International Court of Justice, have changed forever since the lifting of sanctions which have opened up Libya to the world. The opening up of Libya also coincides roughly with the winding down of the Lockerbie compensation battle in which, again, Eversheds’ Paris office acted for Libya.

Meanwhile, observers are waiting with bated breath to see whether Clyde & Co will match what it has done in Baghdad and Belgrade and forge an alliance or establish an office in Libya. With long-term links with Libya’s Oil and Steel Company and the country’s national shipping company – comprised of an ageing fleet crying out for a cash injection – plus recent instructions from a local bank at a time of proposed Libyan bank privatisation, Libya is clearly Clyde’s next stop.