While Libya saw a temporary halt in oil production for the first eight months of 2020 due to a blockade against coastal oil export terminals, the country still retains the largest oil deposits in Africa, with more than 48 billion barrels of estimated recoverable reserves. Moreover, Libya produces sweet, high-quality crude that is both relatively easy to extract and sold at a premium, enhanced by the country’s close proximity to European markets. While leading operators such as BP and Eni have exploited the country’s prolific Sirte Basin, the Murzuq, Ghadames, Kufra and Cyrenaica Basins, along with the offshore Gulf of Sirte, have been relatively under-explored and are estimated to hold extensive frontier potential. As a result, Libya offers attractive prospects in both mature and frontier basins, coupled with increasing domestic demand for the consumption of natural gas, petroleum and petroleum by-products.
Last October, following the signing of a comprehensive ceasefire agreement between opposing factions, Libya’s National Oil Corporation (NOC) lifted its force majeure on crude exports from key terminals, pointing to the gradual resumption of production towards pre-blockade levels. As soon as one month later, the North African producer had returned to pumping one million barrels per day (bpd), and currently produces 1.2 million bpd, as of June 2021. The speed of Libya’s recovery demonstrates the magnitude of its potential oil production if coupled with political and economic stability.
Plans for Increased Production
Before the suspension of oil exports, Libya’s production was on a steady growth trajectory, rising to 1.13 million bpd in December 2019 and planning to reach 1.5 million bpd in 2020 and 2.1 million bpd by 2023. Workovers on existing wells, infill drilling and resolution of technical and operational issues were to account for bringing 350,000 bpd of new output online in 2020. Now, the NOC has issued adjusted, long-term targets, aiming to produce 1.4 million bpd by the close of 2021; 1.6 million bpd by 2023; and 2.1 million bpd by 2025. The ability to reach ambitious production targets is contingent on sustained political stability, sufficient budget from the NOC to repair damaged oil infrastructure, and robust investment from the country’s leading International Oil Companies (IOCs) in ongoing exploration and production activities.
Prior to the blockade, several IOCs were gearing up to further develop Libya’s substantial oil deposits. In December 2019, Total and the NOC signed an agreement that gave the French major a minority stake in Libya’s Waha asset. According to the agreement, Total will help the NOC to develop the North Giaolo and NC 98 fields in the Waha concession, increasing production by 180,000 bpd and investing $650 million. In the same month, Russian oil company Tatneft resumed upstream activities in the Ghadames Basin after more than five years of delay. Throughout 2019, BP, Eni and Gazprom announced their intention to resume exploration activities in Libya, while OMV and Repsol planned to increase their upstream presence.
Since the lift of the force majeure, additional IOCs have restated their commitments to the country. In August, Shell met with the NOC to discuss resuming exploration in Libya, as well as marketing and refining activities, following the company’s nine-year halt in operations. Specifically, the meeting addressed potential cooperation across exploration and development, knowledge and technology transfer, development of human resources, refinery development and renewable energy projects, as well as assistance on projects to increase storage capacity of oil reservoirs. Meanwhile, Spain’s Repsol announced plans in the same month to resume oil exploration activities and carry out maintenance work on the surface equipment at the El Sharara oilfield – Libya’s largest oilfield that holds three billion barrels of recoverable reserves.
Organized by Energy Capital & Power with the endorsement of the Office of Prime Minister H.E. Abdul Hamid Dbeibeh, the Libya Energy & Economic Summit 2021 (November 22-23, Tripoli) will unite local and foreign investors, policymakers and financiers for two days of discussions and deal-making. To learn more about Libya’s sectoral revival and find out more information regarding speaker or sponsorship opportunities at the Libya Energy & Economic Summit 2021, please visit www.energycapitalpower.com or contact James Chester at email@example.com.