IEA Outlook: Slow Reforms May Stall Libya Oil Output Plans
LONDON, Nov 07, 2005 (Dow Jones Commodities News via Comtex)
Ambitious plans by Libya to significantly ramp up its oil output in the coming years could be hindered by sluggish economic reforms and undesirable investment terms, the International Energy Agency warned Monday.
After 20 years of under-investment and sanctions, the Libyan energy sector is experiencing a revival. U.S.-imposed sanctions have been lifted and foreign firms are eager to gain access to Libya's enormous hydrocarbon reserves.
But a lack of transparency and uncertain licensing terms have already caused delays in attracting much-needed foreign funds and technology into Libya, a member of the Organization of Petroleum Exporting Countries.
In its World Energy Outlook through 2030, the Paris-based IEA said Libyan forecasts that its crude production will rise by 1.4 million barrels a day to just over 3 million b/d in 2015 are unrealistic.
"We expect production to rise slightly less quickly than targeted, due to delays in implementing economic reforms and unattractive contract terms," the energy security watchdog for the world's wealthiest nations said.
The IEA estimates that it could take Libya another 15 years to reach its 3 million b/d oil output target. The IEA also said Libya will need to attract a massive $41 billion of investment up to 2030 if it is to push ahead with developing its oil sector.
Libya's gas prospects however, look more promising. The IEA predicted that marketed gas production will rise from 6 billion cubic meters in 2003 to 12 bcm in 2010 and surge to 57 bcm in 2030.
But if confusion about the country's investment terms persists and much-needed economic reforms don't get off the ground, the IEA said, the pace of investment in Libya's energy sector could be seriously delayed.
If this happens, the IEA estimated that Libya would only manage to achieve 2 million b/d of oil output by 2030 and a gas production level of 33 bcm.
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