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larg234TRIPOLI: Libya aims to raise its oil production to 1.8 million barrels per day (bpd) next year, overtaking the output before last year's war, as it banks on the return of foreign companies even though security in the country remains precarious.

But no new exploration and production contracts are expected for at least a year before a clearer landscape emerges in the North African producer's democratic transition after the war that ousted ruler Muammar Gaddafi.

Oil output has returned close to pre-war levels of around 1.6 million bpd from a virtual standstill during the fighting.

About 70 percent of Libya's crude oil production is currently exported, while the rest is processed in its refineries, all of which are now back in operation.

"The challenge is to maintain and increase this production," Oil Minister Abdulrahman Ben Yazza told the CWC Libya Summit conference in Tripoli.

National Oil Corporation (NOC) Chairman Nuri Berruien said Libya hoped to increase production by the end of the year.

"We're targeting 1.8 (million bpd) next year but we're still not quite sure, but it's a target for us next year," he said.

Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), has Africa's largest reserves and a further target of producing 2 million bpd by end-2015.

The country's most senior oil officials have repeatedly said there would be no new contracts for a good while yet, while it studies lessons to be drawn from its four past exploration and production sharing agreement programmes.

"We have to come up right now with the right model, we want to evaluate the four rounds," Berruien said. "We have to make it attractive to everybody, we have to look at it."

Asked about a timeframe for a next round of deals, NOC Exploration Manager Bashir Garea said: "Being very optimistic, I would say in one year's time."

"We would like to have more investors to the country."A new government, in which Ben Yazza may stay on as oil minister, will be named shortly to take over from the interim administration. Even the incoming government will be transitional until elections after a constitution is drafted next year.

"IS IT SAFE?"

Foreign companies have been returning to Libya, despite concerns over security. Safety was a theme discussed among the foreign oil sector delegates at the plush central Tripoli hotel where the conference was held.

Making continued tensions clear to the visitors, their hotel was targeted by a protest involving dozens of former rebel fighters angry over health compensation issues.

Security fears have heightened after the Sept. 11 attack on the US consulate in the eastern city of Benghazi in which the ambassador and three other Americans were killed.

"All producing IOCs (international oil companies) are back since a long time ago, foreign expats who work in the field are back a long time ago," Berruien said, adding though he welcomed the return of service firms.

Outbursts of violence have deterred foreign firms from bringing back all their expatriates and the sector needs the foreign investment and expertise to increase production.

"International companies have an important role to play in consolidating Libyan oil production," one foreign delegate said.

"But question of 'Is it safe?' remains."

One of the last firms to announce its return to Libya was BP which said in May it would resume exploration activities in Libya. NOC officials said the British company expected to resume drilling next year.

Libya's gas production is still at around two-thirds of pre-war volumes, Berruien said.

Copyright Reuters, 2012