Libya’s oil production was severely affected by a blockade of major fields and ports that began at the end of August, cutting output by nearly half. However, following the end of the shutdown on October 3, production has rebounded to approximately 1.2 million barrels per day (bpd). The National Oil Corporation (NOC) has announced plans to significantly increase crude production moving forward.
Before the fall of long-time leader Muammar Gaddafi in 2011, Libya produced around 1.65 million bpd of high-quality light crude oil. At that time, production was on the rise, up from about 1.4 million bpd in 2000, and the country boasted approximately 48 billion barrels of proven crude oil reserves, the largest in Africa. While this level was below the peak of over 3 million bpd reached in the late 1960s, the NOC had initiated plans for enhanced oil recovery (EOR) techniques to boost production from aging fields. These plans were put on hold due to increased sectarian conflict, but they have been revived with the establishment of a new Strategic Programs Office (SPO) aimed at raising production capacity to 2 million bpd within the next three to five years.
During Gaddafi’s 42-year rule, numerous international oil companies (IOCs) operated in Libya. Some, like Italy’s ENI, have maintained a presence since his removal and the onset of civil war among various factions fighting for control of the country’s primary revenue source: its oil and gas sector. ENI recently signed an agreement with the NOC to invest about $8 billion to produce approximately 850 million cubic feet of gas per day from two offshore fields in the Mediterranean. The company continues to produce gas from its Wafa and Bahr Essalam fields, managed through a joint venture with the NOC. Gas is exported to Italy via the Green Stream pipeline, which is 520 kilometers long and transports 8 billion cubic meters of gas annually.
ENI is also involved in ongoing negotiations with the NOC for several major renewable energy projects. Like France’s TotalEnergies and the UK’s BP and Shell, ENI is focused on developing alternative energy supplies for Europe, especially in light of reduced Russian gas supplies since the invasion of Ukraine on February 24, 2022. The Italian government has committed to eliminating all Russian gas from its energy mix by 2025.
In addition, ENI and BP participated in a 2018 exploration and production sharing agreement (EPSA) aimed at resuming exploration activities in Libya. This agreement covers three areas, two onshore in the Ghadames basin and one offshore in the Sirt basin, totaling around 54,000 square kilometers.
Before the recent shutdown, the NOC had planned a series of offshore and onshore drilling programs, led by TotalEnergies. In April 2021, TotalEnergies’ CEO Patrick Pouyanne and the then-NOC chairman Mustafa Sanalla agreed to boost oil production from key fields, including Waha, Sharara, Mabruk, and Al Jurf, by at least 175,000 bpd. They prioritized developing the North Gialo and NC-98 oil fields, which together can produce at least 350,000 bpd. TotalEnergies is also expected to assist in maintaining aging equipment and upgrading crude oil transport lines.
Despite these efforts, Libya’s ability to sustain increased oil production is hindered by its complex political landscape. The ongoing conflict between rival factions has prevented the establishment of a fair revenue-sharing system for oil and gas resources. A significant date is September 18, 2020, when a deal was reached to lift a nine-month oil blockade. This deal, however, hinged on agreeing how to fairly distribute oil revenues among the competing factions.
The arrangement proposed forming a joint technical committee to oversee oil revenues and ensure equitable distribution. This committee aimed to create a unified budget that addressed the needs of all parties and required timely payments from the Central Bank of Libya in Tripoli. However, due to various disruptive elements, both domestic and international, this plan has never been fully implemented.
In the months leading up to the August/September shutdown, smaller disruptions occurred, including one triggered by the arrest of Saddam Haftar, the son of General Khalifa Haftar. He was detained at Naples airport due to an EU arrest warrant related to alleged weapons smuggling. Concerns about Libya becoming a “mafia state” dominated by gangs involved in smuggling operations have also been raised. Additionally, General Haftar’s discussions with Russian President Vladimir Putin, who supports LNA forces in Libya, further complicate the situation. Early July saw Italian authorities intercept two Chinese-made military drones en route to Libya, disguised as wind turbine parts.
As Libya seeks to recover its oil production, the path forward remains fraught with challenges rooted in its fractured political landscape and the ongoing struggles for power among competing factions.
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