The Libyan National Oil Corporation announced its ambition to boost production capacity to two million barrels per day within the next three to five years. Additionally, the corporation plans to issue bids for exploration areas by the end of 2024. Emphasising its commitment, the company targets a 100,000 barrels per day increase in oil production by the conclusion of 2024, supplementing the existing 1.3 million barrels per day. Furthermore, the corporation aims to achieve an 83% reduction in the burning of associated gas by 2030.
Libya is also getting ready to hold an oil and gas licencing round next year, which will be the first event of its kind in nearly two decades. This move is intended to support the country’s production target of 2 million barrels per day over the next three years.
Despite facing political instability, unscheduled elections, and clashes between dual governments, Libya’s crude oil production capacity is expected to reach 1.8 million barrels per day by 2024, according to a report by the African Energy Chamber.
However, in comparison to the year 2022, when global oil prices reached their highest level in 15 years, Libya was unable to tap into 3% of the world’s oil and gas reserves and 39% of Africa’s reserves. The reasons for this were political, specifically the suspension of production for several months as oil came under the control of two governments: internationally recognised Prime Minister Abdelhamid Dabaiba, head of the National Unity Government, and Fathi Bashagha, the parliament-appointed Prime Minister of the Government of National Stability. The plan was to remove Dabaiba from office by blockading oil fields and ports and deploying armed militias loyal to Khalifa Haftar. Within days, they were able to shut down several key operations and facilities, including the giant El Feel and El Sharara oil fields, as well as the ports of Brega and Zueitina. As a result, the Libyan National Oil Corporation had to declare its inability to fulfil its contractual obligations.
The impact on the National Oil Corporation was devastating, with a loss in production of 333,000 barrels per day, costing approximately $34.69 million per day. In recent years, oil and gas revenues have accounted for between 96% and 98% of Tripoli’s income, making Libya one of the countries with the highest GDP in Africa. The blockade imposed on export terminals and pipelines in 2020 led to a 31% decrease in GDP after crude oil and condensate exports dropped from 1.1 million barrels in 2019 to 350,000 barrels. However, things are improving in the Libyan energy sector in 2023.
Compared to 2022, production reached less than 600,000 barrels per day during the first half of the year, a 50% decrease. However, with the replacement of the head of the National Oil Corporation, the country is expected to gain more control over oil revenues, leading to an increase in production. In response, the National Oil Corporation raised crude oil production closer to pre-blockade levels of 1.164 million barrels per day and stated that production in 2023 should average 1.2 million barrels per day. The National Oil Corporation is on track to achieve the average target of two million barrels per day if this number can be reached using the country’s current infrastructure, which is one of the reasons why the National Unity Government is working to attract additional foreign investment.
Political instability in Libya has persisted for over two decades, making it challenging to attract international oil companies to invest in the country. Despite the presence of multinational companies such as France’s Total Energy, Italy’s Eni, Britain’s Shell, and America’s ConocoPhillips, which have been operating in Libya for nearly 70 years, the launch of new projects has been limited. The announcement of Eni’s partnership with the National Oil Corporation on an $8 billion offshore gas development project in January marked the first new project in Libya in over 20 years. This highlights the difficulty of convincing foreign entities that Libya is a secure and stable environment for conducting business.
The National Oil Corporation in Libya has unveiled a strategic plan aimed at increasing transparency in its financial statements, signalling the initial phase of a grand vision to position Libya as a leading global energy producer once again. This ambitious vision, articulated by Ben Qaddara, aims to restore Libya’s former status as a major player in the global energy arena. Recent developments, such as Eni’s new project and Total Energy’s expansion of interests in various fields, demonstrate a growing commitment to supporting Libya’s National Oil Corporation in boosting oil production and reducing gas flaring. TotalEnergies has also shown interest in potential solar energy projects to supply electricity to production sites, highlighting a multifaceted approach to energy development.
Furthermore, Libya’s National Oil Corporation has reported significant progress, with the Erawan oil field achieving a production rate of 92,000 barrels per day within just five weeks, comfortably aligning with its annual target of 100,000 barrels per day. As Europe searches for alternative energy sources and reduces reliance on Russian energy, Libya is well-positioned to become a pivotal export hub for oil and gas. Despite past political volatility, the current outlook suggests a more stable and promising future for Libya’s energy sector. Additionally, Libya has taken proactive steps to bolster its gas production, including securing a substantial offshore gas deal with Eni and planning exploratory drilling in key basins. The potential development of an LNG liquefaction plant and a gas pipeline further underscores the country’s commitment to expanding its energy infrastructure, paving the way for future growth and investment in the sector.
In conclusion, the National Oil Corporation of Libya has presented an ambitious plan to enhance the production of oil and gas, minimise gas flaring, and improve transparency in financial reports. Despite previous difficulties and political instability, recent advancements indicate a more secure and promising future for Libya’s energy sector.
The upcoming 2024 oil and gas licencing round, along with the commitment of multinational corporations to invest in Libya, signal optimistic prospects for the country’s energy industry. As Libya endeavours to reclaim a prominent role as a global energy producer, the potential for significant growth and investment in the sector is considerable.
