Petroleum Africa
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Monday, May 15, 2017
Libya’s production continues its upward trajectory, exceeding 800,000 bpd for the first time in almost three years. According to the state-run firm NOC, there are no “technical obstacles to meeting production targets” but a dispute with foreign operator Wintershall is holding up the country achieving the million barrel mark.
“This is a very serious matter,” said NOC chairman Mustafa Sanalla. “We would be producing almost 1 million bpd if it were not for Wintershall’s refusal to implement terms it agreed to in 2010. Resolution 270 was written to allow Wintershall to evade its obligations. I have asked the Presidency Council to withdraw Resolution 270 for this reason and because it oversteps their authority. It has declined, and has instead sided with Wintershall against NOC.”
“There are no technical reasons for the loss of production,” said Sanalla. “Apart from the Wintershall shut-in, we lost a significant amount of production in April from the Sharara and El-Feel fields, which were blockaded by units of the Petroleum Facilities Guards.”
“We are able produce an average of 1.1 milion-1.2 million bpd over the rest of this year, but for this to happen our oil must flow freely. A national effort is required,” he said. The country has the potential to produce even more and has plans to make that happen.
Speaking at the Offshore Technology Conference (OTC) that took place in Houston during the first week of May, Sanalla said Libya’s full potential remains largely unrealized. “We possess extensive acreage with discovered deposits in the Ghadames and Murzuq Basins which are not covered by agreements with oil companies and are still awaiting proper assessment,” he told delegates. “Our specialized teams are already reviewing the exploration and production sharing agreement terms, including contracting strategies to encourage investment in Libya by IOCs. We are preparing for our next bid rounds to be organized as soon as the country’s political stability permits.
During OTC the delegation from the state-run firm revealed plans for three development phases to return to being one of the continent’s production powerhouses. The first phase would raise production to 1.32 million bpd by the end of 2017, at a cost of $550 million.
The second would raise production slowly to 1.5 million bpd by the end of 2018, at a further cost of $1.8 billion, mainly directed at the Bahr Essalam offshore development with Italy’s ENI, but also envisioning a further approximately $1.2 billion investment in tank and pipeline replacement and maintenance; while a third phase would raise production gradually to 2.2 million bpd by 2023, requiring investment of approximately $18 billion.
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