Libya says may give oil deals to friendly nations

Shukri Ghanem, chairman of Libya's National Oil Corporation (NOC), holds a news conference in Tripoli March 19, 2011.

TRIPOLI (Reuters) - Libya is considering offering oil block contracts directly to China, India and other nations it sees as friends in its month-long conflict with rebels, Libya's top oil official said on Saturday.

Oil companies have pulled out staff and shut operations in the country, formerly Africa's third-largest producer, due to the uprising against Muammar Gaddafi's rule, leading to a sharp reduction in output.

National Oil Corporation Chairman Shukri Ghanem, speaking about future projects, said Libya was considering awarding contracts directly to new partners instead of using its more traditional open bidding process.

"We will be looking at giving direct block contracts to countries ready to come and work in the country, because we want to increase production," he said.

He said Libya would look into the possibility of working closer with partners such as India, China, Brazil and others in the future but gave no details.

Ghanem said, however, that the government would honour all existing contracts with Western firms and called on foreign workers to return to help restore output.

"It's not our intention to violate any of these agreements," he told reporters in Tripoli.

"Of course, as you know, production has declined drastically because of the dramatic events," he added.

He said crude production had fallen to less than 400,000 barrels per day from 1.6 million before the crisis. He warned that oil exports might halt altogether if output is not restored.

"We will be able to restore most fields but we need the foreign workforce to come back ... We call on them to send back their workers," he said.

Libyan leader Muammar Gaddafi has taken a tougher stance on Western oil companies. He said earlier this month that Germany was the only Western power that had a chance of doing business with Libyan oil in the future.

(Reporting by Maria Golovnina and Michael Georgy, editing by Jane Baird)