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Eni will reduce its oil production in Libya to 200,000 bpd in 2021 from the current 320,000 bpd, Claudio Descalzi, chief executive of the Italian oil major, said at the presentation of the group’s 2018-2021 business plan.
Eni has maintained production in Libya over the past eight years, but during that time it was not possible to launch new projects, Descalzi said, noting that despite the cutback, Eni will remain in Libya.
Eni has been operating in Libya since 1959, and its exploration and production activities in the country are regulated by six Exploration and Production Sharing contracts (EPSA). The licenses of Eni’s assets in Libya expire in 2042 and 2047 for oil and gas, respectively. In 2016, Eni’s production in Libya averaged 346,000 bpd—the highest level since the outbreak of the civil war, according to the company, which also noted that the Libyan upstream oil accounted for around 20 percent of its total production for the year.
Eni’s 2018-2021 strategy unveiled on Friday includes finally lifting the dividend after it was cut three years ago, and places a key focus on exploration and oil and gas production growth. The firm expects its total oil and gas production to grow by 3.5 percent annually by 2021, thanks to the ramp-up and start-up of new projects, which are expected to contribute about 700,000 boepd in 2021.
However, the weight of Eni’s upstream business in North Africa, including in Libya, is expected to decrease to 33 percent in 2021, from 39 percent last year.
Libya has managed to sustain its oil production at around 1 million bpd over the past couple of months and has started to raise its oil exports to Europe and the United States.
Related: Russia Will Stick To The OPEC Deal
Libya was initially exempt from the OPEC production cuts together with Nigeria because of the violence in the two countries that had substantially reduced their oil production. At the meeting at which OPEC extended the pact until the end of 2018, however, Libya and Nigeria agreed to stick to an unofficial collective cap of 2.8 million bpd of oil production.
Analysts still think that Libyan oil production will remain unstable as the risk of labor disputes and terminals blockades persists, but Libya also offers a low-cost oil resource that France’s Total sees as valuable as it recently expanded its upstream Libyan operations by acquiring the 16.33-percent stake of the Waha oil concessions held by U.S. Marathon Oil Corporation.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.