Just as it appeared that all hope for Libya’s struggling oil industry was lost, the country’s Energy Ministry has announced plans to open up the market to boost international investment. The Ministry hopes these plans will soon be approved by the government so they can be put in motion and Libya can boost its oil production year on year, finally developing its huge potential after years of delays. This week, Refaat al-Abbar, Libya’s Oil and Gas Ministry undersecretary, submitted plans to Prime Minister Abdul Hamid Dbeibah to increase the presence of international oil and gas firms in the Libyan market. This comes as Libya’s upstream operations have gained greater attention from international players, prompting Abbar to make this recommendation to enhance the country’s energy industry while demand for oil and gas remains high.
Abbar explained the "need for the presence of major international companies, investors and regional partners to support the Libyan oil and gas sector, such as TotalEnergies which will bring stability to Libya."
TotalEnergies has had a presence in Libya for around 60 years, with stakes in the Waha, Sharara, Mabruk and Al Jurf oilfields. Patrick Pouyanné, Chairman and CEO of TotalEnergies, is set to make a speech at the Libya Energy & Economic Summit 2021 this November, demonstrating the company’s ongoing commitment to Libyan oil. The energy event will be the first in around a decade aimed at boosting interest and foreign investment in the sector.
Eni, ConocoPhillips, OMV, Repsol are also present in Libya. However, there is space to attract greater international investment from oil supermajors such as BP, Shell, and ExxonMobil. The U.S. oil firm Hess Corporation is currently in talks with TotalEnergies about gaining a stake in Waha operations, with an agreement expected shortly.
Related: Oil Prices Slide On Fears Of Tighter Fed Policy Libya’s oil industry was thrown into chaos just last month when Refaat al-Abbar threatened to resign. Abbar is seen by international investors as a figure of stability in the country’s otherwise turbulent oil and gas industry. The Oil Ministry’s Deputy Minister’s threat of resignation was in response to the ongoing battle between the Benghazi-based Libyan National Army and the Tripoli-based Government of National Unity to gain control of the country. However, Abbar decided to remain in his position upon the request of Libyan oil minister Mohamed Oun, and is now pushing to further develop Libyan oil and gas.
At present, Libya produces around 1.2 million bpd of crude oil. It hopes to boost this production to 1.45 million bpd by the end of 2021, 1.6 million bpd by 2024, and to 2.1 million bpd within the next four years. However, Libya has, in recent years, been unable to accelerate the development of its oil industry due to political instability and the unwillingness of international players to invest, despite the country’s significant potential as home to Africa’s largest proven oil reserves.
In recent weeks, Libya's Zawiya oil refinery was damaged during an outbreak of skirmishes in the area. The National Oil Corporation (NOC) said the damages included eight storage tanks for petroleum products and crude oil, as well as an additional five tanks for base oils and chemical additives. There was further damage at the mineral oil mixing and filling plant, resulting in a significant leak from the storage base oil.
More bad news came as the production of Es Sider crude plummeted by 72 percent, a drop from 285 bpd to 77,000 bpd, following a pipeline leak. Aging infrastructure has plagued Libya’s oil industry, with the government showing little interest in greater investment in modernizing the country’s pipelines and plants. The pipeline leak was significant, causing it to be closed for maintenance and resulting in a loss of oil production for around 10 days.
NOC chairman Mustafa Sanalla stated, "We are counting on the government to give us priority to rebuild/rehabilitate the dilapidated infrastructure and pay off our debts that have accumulated for years,". "Reducing or postponing budgets has caused huge losses and preserving the country's oil capabilities is an absolute priority," he explained.
Yet there is still hope for Libya’s struggling oil industry following Abbar’s new plan as well as the recent commencement of construction on a new oil refinery in the south of the country, near the major Al-Charara oilfield, expected to cost between $500 million and $600 million. Operations at the refinery are planned to begin within three years with a projected annual income of $75 million. The development of the refinery comes after almost forty years of delays, following the revitalization of the plan in 2017.
While Libya’s political struggle continues, the future of the country’s huge oil potential is still uncertain. If infrastructure continues to age with little interest from the government in funding its improvement, and conflict halts operations further, this could drive international investors away. However, the recent announcement of a new refinery in the south, following decades of delays, as well as the plan to boost foreign investment in the sector, could see Libya’s oil industry survive long enough to thrive.
By Felicity Bradstock for Oilprice.com
More Top Reads From Oilprice.com:
- China Releases Fuel From Reserve To Stop Price Spike
- Pipeline Leak Disrupts Libya’s Oil Exports
- Who Will Win The Race For India’s Emerging EV Market?