Libya’s NOC Pushes for Refining and Downstream Revival by Uniting Large-Scale Production with Frontier Potential

Home to the largest recoverable resources in Africa, and with a strategic position on the Mediterranean, the oil-rich country of Libya’s National Oil Corporation (NOC), in recent years, has navigated a series of daunting challenges. Following the October 2020 signing of a comprehensive ceasefire agreement between the country’s two opposing political factions, and effectively lifting the force majeure on crude exports from key terminals, the NOC has enabled the country to return to a production level of up to one million barrels of oil per day following the resumption of activities at four of the country’s oilfields, as well as through the reopening of ports. In 2022, the NOC is focusing on expanding the downstream sector via its newly proposed hydrocarbon law, as well as a series of regulatory reviews regarding the structure and management of the country’s hydrocarbons industry.

Handling the final processing, marketing, production, and distribution of natural resources, Libya’s downstream sector is managed by its NOC, which owns and operates several refining and oil and gas processing facilities. Accounting for approximately 70% of its domestic oil output, Libya’s NOC dominates the country’s oil industry, contributing to the majority of government revenue, and playing a key role in maintaining ownership of domestic natural resources. In order to meet its ambitious production targets of 1.8 million bpd by 2022, the NOC has been outspoken in the need to approve and release funds to repair its damaged oil infrastructure, most recently and notably, a leaking pipeline that has resulted in a reduced output target by up to 200,00 bpd.

In a bid to increase and optimize production at its existing assets, which have seen long-faced production losses due to aging and damaged infrastructure, the company is seeking to boost the presence of International Oil Companies (IOCs) operating within the country, including TotalEnergies, Eni, ConocoPhillips, OMW, and Repsol, in order to use an influx of investment to carry out the much-needed repairs, upgrades, and maintenance works on its mid- and downstream infrastructure.

Responsible for the implementation of Exploration and Production Sharing Agreements with IOCs, as well as the development of oil fields and downstream activities, Libya’s NOC’s newly proposed hydrocarbon law, as well as a series of regulatory reviews regarding the structure and management of the country’s hydrocarbons industry, has focused on expanding the downstream sector. With the country having experienced over a decade of conflict, Libya’s energy sector has recently seen a period of revitalization, with all of the country’s oil fields having come back online.

While Libya’s oil sector undergoes a period of revitalization, the country’s Ministry of Oil and Gas, in conjunction with its Ministry of Economy and Trade, have been exploring the prospect of developing refineries in several strategic locations throughout the country, namely within the Tobruk and Ubari regions, which would be financed by local and international investments in the form of Public Private Partnerships, and would significantly increase the domestic production of fuel and conversion of natural gas into high quality diesel in conjunction with its five major refineries, namely the Ras Lanuf, Zawiyah, Tobruk, Brega, and Sarir refineries. Libya’s NOC has also announced plans to construct a refinery in Sebha, to be operated by the company’s subsidiary, Zallaf, and which would produce petroleum products such as cooking gas and jet fuels, as well as natural gas products, such as ammonia, urea, and methanol.

Meanwhile, in close proximity to European markets, Libya has ensured the development of strategically linked export port terminals on its northern coast and maintenance of an extensive pipeline network. This is crucial infrastructure for an optimized crude oil and gas export industry. Currently, the country exports its crude from six major ports: the Es Sider, Marsa El Brega, Ras Lanuf, Tobruk, Zuetina, and Zawiyah terminals. Vast natural gas reserves within the Ghadames Basin have also enabled Libya to become a major exporter of gas to Europe through its Greenstream Pipeline, spanning 540km and being supplied gas by the Bahr Essalam, Bouri, and Wafa fields, with exports being directed exclusively to the Mediterranean nation of Italy, averaging 530 million cubic feet per day, and representing approximately 8% of Italy’s total gas consumption.