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Oil-rich Libya, which has long-held the largest reserves in Africa, is ushering in a new era of peace and cooperation, whereby the government is committed to implementing key measures necessary to boost oil production and associated state revenues. According to recent statements from the Governor of the Central Bank of Libya, Sadiq Al-Kabir, Libya needs to raise oil production by 40% from current levels to meet its expenditures and revamp its economy. The North African nation currently produces 1.3 million barrels per day (bpd), which is expected to generate $25 billion in revenues in 2021.
Now, the country is targeting output levels of 1.8 million bpd by 2022, which is expected to generate $35 billion if barrel prices average around $60. This accelerates earlier targets set forth by the Ministry of Oil & Gas that aimed to produce 1.6 million bpd by 2023 and 2.1 million bpd by 2025.
Several factors will be decisive in achieving aggressive production targets and accelerating an aggressive reform process: namely, sustained political cooperation, the approval of a national budget and continued exemption from OPEC-led production quotas. In addition, Libya is relying on foreign direct investment from energy majors, coupled with oil and gas and energy conferences including the U.S.-Africa Energy Forum taking place on December 9-10, 2021, in Houston, Texas and the Libya Energy & Economic Summit 2021, taking place on November 22-23 in Tripoli, organized by Energy Capital & Power and its partners.
Enhanced Government Cooperation
For the first time in over a decade, Libya is home to a unified government, following long-standing conflict between eastern and western rival factions. In March, the country inaugurated its interim unity government, with H.E. Abdul Hamid Dbeibah sworn-in as Prime Minister, and re-established its Ministry of Oil and Gas, appointing H.E. Dr. Mohamed Oun as Minister. Since then, the Libyan Government has re-opened domestic highways and transportation infrastructure; triggered the re-opening of the embassies of France, Spain and Bosnia and Herzegovina in Tripoli; cleaned up its sovereign wealth fund, the Libyan Investment Authority; and participated in ongoing peace talks at the Second International Conference on Libya. On the back of heightened political stability, the transitional government has pledged to support foreign investors entering and operating in both energy and non-energy sectors, with a view to unlocking its abundant national resource wealth.
Approval of a National Budget
The country is currently in the midst of ongoing negotiations to approve its first national budget in seven years that would provide for the allocation of funds for development, of which a sizable share would be directed to the oil industry. Libya has long-faced production losses due to aging and damaged infrastructure, including a leaking pipeline that has reduced output by 70,000 bpd starting in August. In April, H.E. Minister Oun announced that the Ministry of Oil & Gas had requested $1.5 billion for projects to develop the oil sector, but less than half had been earmarked in the draft budget. The NOC has been vocal about the urgent need to approve and release funds to not only meet targeted production increases, but also maintain existing output.
Exemption from OPEC Supply Cuts
In December, the NOC announced that OPEC had exempted Libya from production cuts due to the country’s urgent need to increase production rates and overcome adverse economic conditions. As a result, Libya has not participated in ongoing supply cuts that removed up to 9.7 million bpd from the market in May 2020 and have since remained in effect, to a lesser degree. Going forward, if Libya can remain exempt from caps on production, then it has a chance of meeting phased production increases that target over two million barrels a day and would cement the country’s status as the top oil producer on the continent.
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.libyaenergysummit.com or contact James Chester at email@example.com.