BP could spend as much as $25 billion (£12.5 billion) developing oil and gasfields in Libya after clinching a deal last week to return to the country after more than 30 years.

Executives from the British group signed a deal with Libya’s National Oil Corporation during a visit there by Tony Blair. The deal provides for a minimum commitment of $900m.

But a senior BP executive has told the Middle East Economic Digest (MEED), a financial magazine, that the ultimate commitment could be many times that figure, depending on the success of exploration efforts.

“We are optimistic about the potential,” said the executive. “There is a lot of unexplored territory in the Sirte basin, where there is potential for a number of gasfields. We believe that it will be a significant addition to the country’s gas reserves,” he said.

The seven-year exploration and production agreement, which includes an option for extension, covers 17 exploration wells, and the acquisition of 30,000 square kilometres of territory for survey.

“Our intention is to spend well over the minimum commitment. We are planning a further 20 appraisal wells,” the executive told MEED last week.

American and British energy companies have been scrambling to get back into Libya over the past two years to secure a share of the country’s largely unexplored gas and oil reserves.

Their return follows the lifting of sanctions after Tripoli abandoned development of weapons of mass destruction and resolved the crisis over the 1988 Lockerbie bombing.

The development plan involves investment in gas processing, transport and liquefaction for the export market.

“If the project is as successful as we hope, we are looking at multiple LNG [liquefied natural gas] facilities to supply clean energy to Europe,” said the BP executive.

Options include a single LNG terminal at Marsa el-Brega or Ras Lanuf in the northeast, or a terminal at Melitah in the northwest to process gas from Ghad-ames, and a second terminal for the liquefaction of gas from the Sirte region.

BP is the operator and majority stakeholder in the project, with Tripoli’s investment vehicle Libyan Investment Corporation holding the rest.

Meanwhile, Russia has postponed a decision on stripping TNK-BP, BP’s Russian joint venture, of its licence to develop a major gasfield until after the G8 meeting. A committee of Ros-nedra, the oil and gas licensing authority, was due to decide on the Kovykta field licence last Friday, but put back its meeting by a fortnight. The G8 summit is to be held this week in Germany.

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