Can Libya Become A Global Oil And Gas Power Once Again?


Given the delicate supply and demand balance at play in the oil market, which, as analyzed in-depth in my new book on the global oil markets, is likely to remain for some time, even relatively incremental additions to that supply on the margin can be significant. Last week, the country’s Minister of Gas and Oil, Mohamed Aoun, stated that it plans to increase oil production to 2.1 million barrels per day (bpd) and natural gas production to about 4 million cubic feet per day over the next five years. Such an increase is entirely achievable, particularly considering recent deals and related developments, notably Waha.

Last week Libya’s Government of National Unity (GNU) approved the sale of the 8.16 percent stake in the country’s giant Waha oil concessions held by the U.S.’s Hess Corporation to the remaining stakeholders. These are France’s TotalEnergies (with a 16.3 percent share), and ConocoPhillips (also 16.3 percent), each of which, according to legal sources close to the deal exclusively spoken to last week by, will be offered half of Hess’s stake.

Short-term, there may be a drop-off in output from Waha of up to 90,000 bpd, as it is in the process of completing pipeline maintenance operations, and after that, another 100,000 bpd may be lost due to ongoing difficulties at the Es Sider port storage facilities. Longer-term, though, the Waha concessions are expected to return to their previous 286,000 bpd crude oil output levels, according to Libya’s National Oil Company (NOC), and the deeper involvement of TotalEnergies, and other foreign firms, in Libya presage a further output increase from there.

There has been ongoing political in-fighting in Libya’s hydrocarbons sector since an agreement was signed on 18 September 2020 between Khalifa Haftar, the commander of the rebel LNA, and elements of Tripoli’s U.N.-recognised GNA to lift the blockade of Libya’s energy infrastructure. However, TotalEnergies in particular has remained committed to its presence in the country. The French company’s chief executive officer, Patrick Pouyanne, has stated repeatedly that it will continue with its efforts to increase oil production from the giant Waha, Sharara, Mabruk, and Al Jurf oil fields by at least 175,000 bpd. TotalEnergies has also agreed to make the development of the Waha-concession North Gialo and NC-98 oil fields a priority, according to the NOC, and these particular concessions have the capacity to produce at least 350,000 bpd together.

As it stands, Libya is producing around 1.2 million bpd, compared to around 70,000 bpd at the time that the September 2020 blockade was still in force. However, there is ample scope to increase this to the 2.1 million bpd target and to hit the informal interim targets of 1.45 million bpd by the end of 2022, and 1.6 million bpd by the end of 2023. It should be remembered that Libya has around 48 billion barrels of proved crude oil reserves – the largest in Africa – and that before the removal of long-time leader, Muammar Gaddafi, in 2011, the country had been easily able to produce around 1.65 million bpd of mostly high-quality light, sweet crude oil. This comprised most notably the Es Sider and Sharara export crudes that are particularly in demand in the Mediterranean and Northwest Europe for their gasoline and middle distillate yields.

Moreover, production had been on a rising production trajectory, up from about 1.4 million bpd in 2000, albeit well below the peak levels of more than 3 million bpd achieved in the late 1960s. This said, the NOC had plans in place before 2011 to roll out enhanced oil recovery (EOR) techniques to increase crude oil production at maturing oil fields. As such, the NOC’s predictions of being able to increase capacity by around 775,000 bpd through EOR at existing oil fields looked well-founded.

In terms of broader policy, the oil and gas ministry recently sent a series of proposals to the GNU aimed at improving the sector’s organisation in order to attract more investment from foreign companies. Although the ministry did not publically release the details of these proposals, the legal sources spoken to by last week highlighted that they are broadly in line with the original ideas underpinning the September 2020 agreement. These were aimed in large part at clarifying how oil revenues would be paid and dispersed. Part of this process would be the creation of technical committees with representatives drawn from all sides of the civil conflict. These separate committees would deal with field awards, in tandem with the oil and gas ministry, and the dispersal of oil and gas revenues, in tandem with the ministry and the Central Bank of Libya (in which the revenues are physically held).

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