The unstable security situation in Libya and the continued bickering between rival governments have kept international oil companies from resuming exploration activities in the civil war-torn North African oil producer. Without exploration, Libya can never hope to exploit its significant oil reserves - the largest on the entire continent.
The latest sign that the deteriorating situation is dampening the investment climate in the oil and gas sector comes from two oil majors, BP and Eni, which have shelved plans to install rigs and start exploration in Libya, the Petroleum Economist reports.
Eni and BP signed a deal in October 2018 to resume exploration in Libya, aiming to resume activities in 2019. Eni, BP, and Libya’s National Oil Corporation (NOC) signed a letter of intent under which Eni would buy a 42.5-percent stake in BP’s Exploration and Production Sharing Agreement (EPSA) in Libya.
“This is an important milestone that will help to unlock Libyan exploration potential by resuming EPSA operations that have remained suspended since 2014. It contributes towards creating an attractive investment environment in the country, aimed at restoring Libya’s production levels and reserve base by optimizing the use of existing Libyan infrastructure”, Eni’s chief executive Claudio Descalzi said one year ago.
BP’s CEO Bob Dudley said in October 2018 that the companies would begin exploration drilling in Libya in the first quarter of 2019.
However, the worsening security situation in the country has ruined the plans for those two international majors to restart exploration activities. Related: The U.S. Smashes Another Oil Export Record
On top of the tribal clashes and civil war in various regions of Libya, the oil industry is also continuously plagued by discord between rival governments and rival oil companies, threatening to break up the unity of the NOC.
Bickering over budget allocations is also threatening Libya’s oil production.
At the beginning of this month, NOC also warned that Libya’s oil production “may fall precipitously over the next nine months if the government continues to withhold already approved budgets.”
“If the corporation’s allocations are not released without delay, Libyan oil production will be hundreds of thousands of barrels per day lower than it should be,” NOC’s chairman Mustafa Sanalla said in a statement on October 2.
ADVERTISEMENT
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Russia Predicts The Death Of U.S. Shale
- Oil Rebounds On Rare Market Optimism
- Trump Surrenders 2.5 Billion Barrels Of Oil
