The recovery of Libya crude oil production in the past three months, which is mainly due to the lifting of port seizures and blockades and the June interim deal with Germany’s Wintershall to immediately resume production in concession areas and related fields, has brought back the output to over a million barrels per day for the first time in four years. Libya surpassed one million bpd of crude oil output for the first time since 2013, bringing up hopes that the country’s oil production recovery is set on a proper path.
Libya’s production averaged 390,000 bpd throughout 2016 and 404,000 bpd in 2015, according to OPEC’s secondary sources. In the fourth quarter last year, output increased slightly to an average of 574,000 bpd, which is significantly lower that the country’s capacities. According to Mustafa Sanalla, the Chairman of Libya’s National Oil Corporation, Libya is aiming to produce 1.25 million bpd by the end of 2017 and 1.5 million bpd by the end of 2018, with plans to reach an output of 2.2 million bpd by 2023, through a three-phase development plan. However, the output will be significantly influenced by the political, humanitarian and economic situation in the country, as well as infrastructural investments and the availability of expertise of the Western oil companies.
The several years of neglect and attacks on oil infrastructure facilities have damaged the output capacity, and significant infrastructure investments are needed if the country is to return to the output level of 1.6 million bpd, produced before the 2011 revolution, and achieve its target of 2.2 million bpd by 2023.
The blockade of nearly all of Libya’s main oil ports in the period between 2013 and September 2016 has cost the country over US$120 billion in lost revenues and most of its financial reserves.
Africa’s largest oil reserves
Libya has Africa’s largest oil reserves, and its high-quality light crude is in demand around the world. The country is currently ranked 26 in the world in terms of total petroleum and other liquids production by the U.S. Energy Information Administration, but its ranking is expected to increase along with the predicted increase in oil output. In 2012, the country ranked among the 10 biggest producers on global level, as well as among the top 10 countries with largest crude oil reserves. The country is also the fifth-largest holder of Africa’s proved natural gas reserves.
Libya typically exports most of its crude oil to European countries, with Italy being the leading recipient.
National Oil Corporation
The National Oil Corporation (NOC) was established in 1970 to assume the responsibility of Libya’s oil sector operations from its predecessor, the general Libyan Petroleum Corporation. It was later reorganized to undertake the realization of the objectives of the development plan in the areas of petroleum, supporting the national economy through increasing, developing and exploiting the oil reserves and operating and investing in those reserves, to realize optimum returns. In carrying out its activities, NOC may enter into participation agreements with other companies and corporations carrying out similar activities.
Therefore, NOC is carrying out exploration and production operation through its own affiliated companies, or in participation with other companies under service contracts or any other kind of petroleum investment agreements, as well as marketing operations of oil and gas, locally and abroad. For this purpose, NOC has its own fully owned companies which carry out exploration, development and production operations, in addition to local and international marketing companies. NOC also has participation agreements with specialized international companies, which have developed into exploration and production sharing agreements, in accordance with the development of the international oil and gas industry, as well as international petroleum marketing.
NOC owns refining, and oil and gas processing companies, operating refineries such as Zawia and Ras Lanuf refineries, ammonia, urea and methanol plants, the Ras Lanuf petrochemical complex and the gas processing plan. To establish petrochemical industries, another stage of development of the ethylene plant has been completed, as well as the low and high density linear polyethylene plants. NOC also owns national service companies which carry out oil well drilling and work over operations, provide all drilling material and equipment, lay and maintain oil and gas pipelines, build and maintain oil and gas storage tanks and carry out related technical and economic studies. They also provide the sector with other services, such as catering, procurement of materials and equipment, training and employment of foreign employees.
Furthermore, affiliated to NOC is a petroleum research centre, which carries out research and technical studies related to the oil industry, conducts technical analysis and tests for the various stages of exploration and production of oil and petroleum products, performs quality control tests and issues certificates in this respect. It also evaluates patents and licenses of exploitation and the fees and forms related to oil operations and petroleum products. It publishes the studies carried out by the centre in the publication of the centre, as well as the local and international scientific publications.
In the area of manpower development, NOC provides the oil industry with qualified nationals within a well-planned scheme founded on a base of educational and training institutions, for training and developing qualified manpower in such professions as engineering, accounting and administration. Training outside Libya is limited to those technical specializations which are not available locally, to cope with the rapid development of the industry. Technical training is being carried out at the training centres and institutions belonging to NOC, to develop specialized technicians for the operation and maintenance of industrial facilities and plants.
Companies fully owned by NOC are: Sirte Oil Company; Arabian Gulf Oil Company; Ras LanufOil and Gas Processing Company; Zawia Oil Refining Company; Brega Petroleum Marketing Company; National Oil Wells Drilling and Work over Company; Jowfe Oil Technology Company; National Oil Fieldsand Terminals CateringCompany; North Africa GeophysicalExploration Company; Taknia Libya Engineering Company; Petro Air Company.
Joint ventures include: Zueitina Oil Company; Mellita Oil & GasCompany; WAHA Oil Company; Mabruk Oil Operation Company; Harouge Oil Operation Company; Akakus Oil Operation Company; Nafusah Oil Operation Company; Epsa; Eni North Africa Company; Amerada Hess Company; India oil Company; Total E&P Company; Petro Canada Company; Polish Oil & Gas Company; OMV Company; OXY Company; BP Exploration Libya Limited Company; STATOIL Company; Gazprom Company; Repsol Murzuq Company; Petrobras Company; Chevron Libya LTD Company; Shell Company; RWE Company; Sonatrach Company; Turkish Petroleum Corporation; Medco Energy Company; Exxon Mobil Company; ONGC Limited Company; Tatneft Company; and Wintershall AG Company.
Centres and institutes under NOC are: the Oil Clinic; the Petroleum Training and Qualifying Institute; the Specific Training Centre of Petroleum Industrial (Zawia); and the Libyan Petroleum Institute.