Libya's Oil Ministry has rejected the huge $8-billion deal that the Italian energy giant signed with the Libyan National Oil Corporation (NOC) this weekend, saying that the agreement violated legislation and was not approved by the ministry prior to the signing.
Eni's chief executive Claudio Descalzi and the CEO of the National Oil Corporation of Libya, Farhat Bengdara, agreed on Saturday on the development of "Structures A&E", a strategic project aimed at increasing gas production to supply the Libyan domestic market as well as to ensure export to Europe. The agreement was signed in the presence of the Prime Minister of Italy, Giorgia Meloni, and the Prime Minister of the Libyan Government of National Unity, Abdul Hamid Al-Dbeibah.
Under the deal, the combined gas production from the two structures will start in 2026 and reach a plateau of 750 million standard gas cubic feet per day, Eni said in a statement. The overall investment is estimated at $8 billion, with a significant impact on the industry and the associated supply chain, allowing a significant contribution to the Libyan economy, the Italian group said.
However, Mohamed Aoun, Libya's Oil and Gas Minister in the Tripoli-based government led by Al-Dbeibah, rejected the deal because, he says, it bypassed his oil ministry and cabinet approval and changed a previous deal signed in 2008.
Aoun and his supporter Fathi Bashagha, the rival eastern-based prime minister appointed by Libya's Parliament, have now rejected the deal.
According to Aoun, the agreement is illegal and lacks equality between Libya and Italy, the oil minister said in a video recording seen by Libya Herald.
Libya's inner political struggle could delay the start of gas flows from the project from Libya to Europe, which has pinned its hopes-especially through Italy-on increased gas supply from North Africa and the Eastern Mediterranean.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, More