Algeria terrorist attack puts BP's Libya drilling on hold

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Plans for BP (LSE: BP.L - news) to begin drilling for oil and gas in Libya are in serious doubt in the aftermath of the terrorist attack on its gas production plant in neighbouring Algeria.

The company is to launch a review into drilling in the country amid serious concerns over security in the region.

BP signed a $900m (£569m) exploration and production agreement with Libya’s National Oil Corporation in 2007 but suspended the contract in February 2011 because of the civil war that eventually led to the overthrow of Colonel Muammar Gaddafi.

BP subsequently announced a resumption of exploratory drilling due to begin in September but has put that on hold following the murder of Westerners working at the Tigantourine facility in the Saharan desert in Algeria. Four BP employees were among 37 foreign hostages who died in the siege.

BP’s problems in the region are compounded by a Foreign Office warning last week of a “specific, imminent threat to Westerners” in the Libyan city of Benghazi. The Foreign Office urged British nationals to leave the city immediately.

A BP spokesman told The Sunday Telegraph: “We were due to drill in the second half of this year but we are now reviewing that as a result of the situations in Algeria and in Benghazi.

“What has happened in Algeria is absolutely tragic.

“We are committed to returning to Algeria and obviously we are heavily involved in Libya as well but it is only natural we review security and take a look at what we are doing.”