While Libya saw a temporary halt in oil production for the first eight months of 2020 due to a blockade against coastal oil export terminals, the country still retains the largest oil deposits in Africa, with more than 48 billion barrels of estimated recoverable reserves. Moreover, Libya produces sweet, high-quality crude that is both relatively easy to extract and sold at a premium, enhanced by the country’s close proximity to European markets. While leading operators such as BP and Eni have exploited the country’s prolific Sirte Basin, the Murzuq, Ghadames, Kufra and Cyrenaica Basins, along with the offshore Gulf of Sirte, have been relatively under-explored and are estimated to hold extensive frontier potential. As a result, Libya offers attractive prospects in both mature and frontier basins, coupled with increasing domestic demand for the consumption of natural gas, petroleum and petroleum by-products.
Last October, following the signing of a comprehensive ceasefire agreement between opposing factions, Libya’s National Oil Corporation (NOC) lifted its force majeure on crude exports from key terminals, pointing to the gradual resumption of production towards pre-blockade levels. As soon as one month later, the North African producer had returned to pumping one million barrels per day (bpd), and currently produces 1.2 million bpd, as of June 2021. The speed of Libya’s recovery demonstrates the magnitude of its potential oil production if coupled with political and economic stability.
PLANS FOR INCREASED PRODUCTION
Before the suspension of oil exports, Libya’s production was on a steady growth trajectory, rising to 1.13 million bpd in December 2019 and planning to reach 1.5 million bpd in 2020 and 2.1 million bpd by 2023. Workovers on existing wells, infill drilling and resolution of technical and operational issues were to account for bringing 350,000 bpd of new output online in 2020. Now, the NOC has issued adjusted, long-term targets, aiming to produce 1.4 million bpd by the close of 2021; 1.6 million bpd by 2023; and 2.1 million bpd by 2025. The ability to reach ambitious production targets is contingent on sustained political stability, sufficient budget from the NOC to repair damaged oil infrastructure, and robust investment from the country’s leading International Oil Companies (IOCs) in ongoing exploration and production activities.
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