Libyan Oil Sector: Between the Hammer and the Nail

Amongst Libya’s medium to long term plans is to develop its natural gas resources.

“The gas industry in Libya will witness a new era of development. Until recently and because of economical reasons the use of gas was limited to partially meeting the local demand for power generation and limited industrial uses,” he said, adding that more attention will be given to exploration for gas, including unconventional gas. “We will be developing existing gas discoveries, onshore and offshore, in order to meet current and future industrial and export commitments hoping to become a major producer in the region. Our proximity to the European market enhances our opportunities,” he said.

NOC plans to proceed next year with Libya's fourth licensing round, known as the Exploration Production and Sharing Agreement (EPSA), Berruien said without providing details.

While the opportunities are huge, decision makers in the country need to ensure that security and stability are restored in the country, as it is the only parameter that may deter company from investing in the country.

Regionalism Fears

The biggest risk for the oil and gas industry may be the worsening relations between the country’s two halves – western Libya, where the capital Tripoli is located, and the oil-producing regions in the east.

Many of the protests that disrupted oil production in the east were led by federalists seeking a greater share of oil revenue for the region, according to Arabian Oil’s Mayuf. The east is also where U.S. Ambassador Chris Stevens and three colleagues were killed in Benghazi in September.

In early June, Libyan government ordered the NOC to move to Benghazi. A cabinet notice issued instructs the Ministry of Oil and Gas to take “the necessary measures, in coordination with the relevant authorities” to facilitate the transfer.