Libya is considering a reward-and-penalties system for oil companies in order to motivate them to meet production targets.
Per a report by Bloomberg, the plan includes introducing new contracts for private companies, under which the companies will stand to receive bonus payments if they meet their targets and be penalized if they fail to do so.
The ultimate goal is to boost the country's crude oil production to 1.4 million bpd by the middle of next year. According to oil minister Mohamed Oun, this production level will be possible to achieve if parliament passes the national budget that will provide financing for the oil sector for next year.
In case Libya fails to pass a national budget with enough money for the oil industry, it would use oil service agreements with private local and international companies to try and boost its production, the official also said.
Libya is currently producing 1.25-1.3 million bpd, the country's oil minister told Bloomberg, adding that "If the state is stabilized through elections or the forming of a government, we hope to reach 2.1 million barrels within two or three years."
The troubled North African country has struggled with a challenging political situation that has affected its oil sector, but it has managed to boost production to over 1 million bpd from a few hundred thousand bpd in a relatively short time. The latest political trouble has come from a spat between the National Oil Corporation and the new government, which led to the suspension of NOC's chairman, Mustafa Sanalla, from his post not once, but twice.
Before the last suspension, in October, Sanalla boasted a revenue windfall thanks to the oil price rally, saying, "Everyone is happy. Production rates are wonderful, and the price boom is an important and encouraging sign. We expect a significant reduction in the deficit that the public budget has suffered for the last years, and we are optimistic that financial stability will contribute to creating an investment environment, especially in the infrastructure of the national oil sector."
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Cities Around The World Are Trying To Cut Out Natural Gas
- Tight U.S. Oil Inventories Prop Up Oil Prices
- Are Oil Markets Already Oversupplied?