To be publicly censured once by the National Oil Corporation (NOC) of the Great Socialist People's Libyan Arab Jamahirya is embarrassing for an oil company; to be apparently admonished for a second time in 12 months left Bula Resources feeling pretty sore last Monday.

A report carried in the reputable Middle East Economic Survey (MEES) sent the share price tumbling from €0.36 (£0.28) for a block of 10 shares to €0.26, before staging a recovery. The well-regarded, Cyprus-based publication quoted a fax it received on Christmas Day from the NOC concerning Bula.

"It has been circulated in the media that the Irish company, Bula Resources Holdings plc, has commenced negotiations with NOC on certain areas referred to in the news as packages one and two. NOC now finds itself obliged for the second time this year to categorically deny this information, which has no foundation. NOC would like to confirm that it has neither started discussions with Bula on any of the open blocks nor finalised procedures on the selection and negotiation process with all bidders."

The previous denial referred to was made last January, when the NOC issued a statement following speculation that Bula had found oil in Libya. The speculation sparked a 26 per cent jump in Bula shares in a single day.

Bula says it is mystified by the latest statement. The company's new chief executive, Mr John Hogan, was hesitant to comment until he had spoken with his contacts at the NOC. Sources close to the company said preliminary inquiries indicated the fax was not an offical statement and Bula was seeking further clarification from Libya. The Irish Times was unable to contact the Tripoli-based NOC but has seen a copy of the fax. MEES yesterday said it was standing over its story.

The source of the information circulating in the media that the NOC referred to in the disputed fax is unclear. Bula's most recent comments on the Libyan situation were made in an update for shareholders posted on Bula's Internet site on December 18th. In his statement, Mr Hogan was careful not to use the word negotiations - which the Libyan's appear to take exception to - when describing the company's activities. He talked instead of "discussions" and Bula's expression of interest in a number of blocks of exploration acreage.

Another part of the website did talk about "negotiations" with the NOC and the areas that Bula was interested in acquiring exploration rights. It made no reference to "packages one and two". Bula has also featured on a number of Internet bulletin boards on which investors swop information.

The NOC is seeking bids from foreign oil companies for something in the region of 150 exploration concessions. The packages referred to in the contested fax are presumed to refer to the first part of this process under which the NOC has put some of the 150 concessions together to create three packages. A deadline of mid-January has been set for international companies to declare their interests and negotiations will then commence with a view to agreements being reached by the middle of the year.

Bula has decided not to bid for any of the three packages, according to Mr Hogan. The company has expressed an interest in a number of other blocks but has not been invited to start negotiations with the NOC. Bula already has two production-sharing agreements in Libya that were negotiated in the mid-1990s, but they have not been ratified by the Libyan parliament. The company hopes that they will be approved once it has succeeded in bringing in some larger partners.

The situation regarding the remaining exploration licences is confused. There are conflicting reports that some deals have already been done. Shell has said that it is in negotiation for a number of blocks, and does not appear to have incurred the wrath of the NOC by saying so.

Bula's chances of success are hard to predict. The head of the NOC, Mr Ahmed Abdulkarim Ahmed, is reported as saying the organisation does not welcome speculative offers from small operators such as Bula and wants to do business with the larger players.

Bula has reorganised its Libyan operations in recent months to try to push the process along. Mr Bill Griffin who advised the company for several years on its dealings with Libya and Iraq, has left the company. In addition, Mr Hogan has decided to end the company's business relationship with its long-standing local representative and deal directly with the NOC. Mr Hogan claims this is the preference of the Libyan organisation.

Like all small exploration companies, Bula walks the fine line between being upbeat about its prospects and creating false expectations among shareholders. Mr Hogan admits the company has strayed over the line on several occasions, but says that, since his appointment in August, he has worked hard to ensure this does not happen again.

Bula ran foul of the NOC last year, shortly after it raised £1.75 million (€2.2 million) from the market on January 4th to fund its activities in North Africa and the Middle East. On January 12th, the shares jumped after it was reported in the Daily Mirror that Bula had found oil in Libya. Six days later the NOC issued a statement saying Bula does "not own nor hold any interests in blocks or concessions in Libyan territory".

The Libyan controversy followed the misleading of investors by a previous Bula chief executive, Mr Jim Stanley, in connection with its Russian operations in the late 1990s.

Mr Hogan accepts there might be some lingering doubts about Bula in Libya, but is adamant that nothing has happened in recent weeks "that would crystallise any unhappiness".

The apparent decision by someone in the NOC to single out Bula from all the other oil companies talking up their prospects in Libya for public censure has led to speculation that there might be another agenda at work. "Someone at NOC could have a personal grudge against Bula, or else they have done something to upset somebody at the NOC," according to one Middle East-based analyst.

MEES has declined to tell Bula the name of the official who sent the fax in order to protect their source. However, it confirmed to The Irish Times that the source is highly placed in the organisation, known to them, and credible. The periodical added that it would not have printed the piece if it felt that the author had any hidden motives.