Libya Security Environment Still 'Deeply Fractured'

Libya Security Environment Still 'Deeply Fractured'
Investment uptick in Libya is unlikely until more substantial political progress is made, analysts say.

Total S.A.’s recent acquisition of Marathon Oil Libya Limited is a sign of gradual improvement in investor sentiment towards Libya, but a larger uptick in investment is unlikely until more substantial political progress is made.

That is the view of oil and gas analysts at BMI Research, who highlighted in a brief research note that the security environment in the country is still ‘deeply fractured’ and risks remain high.

“Various groups looking to gain leverage on the government have repeatedly targeted oil and gas infrastructure,” the analysts stated. “Substantial damage has been inflicted on production facilities, storage units and pipelines and supply disruptions are a recurrent feature of the market,” they added.

The analysts said they expect to see progress on the domestic political front but warned that this would be gradual.

“Steps are being taken to pave the way for presidential and legislative elections, although the 2018 deadline is, in our view, likely to be missed,” the analysts said.

“The political space is highly fragmented and consensus-building between the various factions is hard to achieve. The broader peace process remains challenging and it will be a number of years before stability can be re-established on the ground,” they added.

Marathon Oil Libya Limited holds a 16.33 percent stake in the Waha concessions in Libya. These concessions currently produce around 300,000 barrels of oil equivalent per day (boepd), and output is expected to exceed 400,000 boepd by the end of the decade, Total confirmed.

“This acquisition is in line with Total’s strategy to reinforce its portfolio with high quality and low-technical cost assets whilst bolstering our historic strength in the Middle East and North Africa region,” Patrick Pouyanné, chairman and CEO of Total, said in a company statement following the purchase of Marathon Oil Libya Limited.

“It builds on the group’s long-term presence in Libya, a country with very large oil and gas resources, and demonstrates our commitment to continue supporting the recovering oil and gas industry of the country,” he added.



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Charles Gurdon  |  March 06, 2018
There is no doubt that, like Humpy-Dumpty, putting libya back together again is taking a lot longer than most analysts had expected. One could equally use Golda Meir's famous quote about the Palestinians for the Libyans - 'they never miss an opportunity to miss an opportunity'. Having said that, however, at around 1.2 million b/d total production is only 400,000 b/d less than Libya's pre-2011 OPC quota. NOC's chairman Mustafa Sanalla is determined that the various factions and militias should stay out of the oil sector and has been largely successful.. Marathon has been one of the US' more risk-averse IOCs for a long time and Libya offers major opportunities for others. The days of the previous 47 foreign IOCs in Libya will probably never return but fortune favours the brave and oil companies should be doing their homework and looking at Libya again. Menas Associates has been working on Libya (and many other difficult countries) for over 25 years. Check out our website for details and our 14-15 regular reprots.


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