By Takeo Kumagai & Eklavya Gupte
Libya’s state-owned National Oil Corporation has set aside a budget of around $50 billion for 2019 to develop its oil and gas sector.
The Oil sector strives to reach a pre-2011 output level of around 1.6 million b/d by the end of this year, a senior Libyan industry official told S&P Global Platts.
“Fifty billion dollars is the budget for this year to improve oil and gas production and to improve downstream [operations] but most of this is for crude oil,” Chairman of Ras Lanuf Oil & Gas Processing Co. Shaaban Bsebsu, said in an interview on the sidelines of the 37th JCCP International Symposium in Tokyo last week.
Bsebsu added that Libya was currently producing around 1 million b/d of crude but that it aimed to boost its output to around 1.6 million b/d this year after overcoming technical and security challenges.
“[We] try to do this but we have a lot of security problems we face, and we try to sort out conditions [to] be better,” Bsebsu said. “[We] have a plan to reach more than 2 million [b/d] in 2020,” he added.
Ras Lanuf Oil & Gas Processing Co. is a subsidiary of NOC. NOC receives its budget from the Central Bank of Libya, which is authorized by the internationally recognized government in Tripoli.
NOC chairman Mustafa Sanalla has previously complained that it has not always received the entire capital spending allocation from Tripoli in the last two years.
SECURITY WOES, TECHNICAL CHALLENGES
Libyan crude output has risen sharply in the past two years, but security and political challenges continue to impede the oil sector.
Despite expectations that production will average just over 1 million b/d this year, the risk of conflict is unlikely to fall anytime soon.
Areas like the southwest of the country where the Sharara and El Feel oil fields are located remain particularly prone to outages caused by chronic fuel shortages and security problems.
Production averaged 948,333 b/d last year, its highest annual average since 2012 when it produced 1.40 million b/d, according to Platts OPEC Survey data. Before the civil war that started in 2011, the country could produce some 1.6 million b/d.
Libya’s largest field, the 350,000 b/d Sharara in the southwest, remains shut-in since early-December, after armed groups occupied the site.
The situation is expected to remain tense as forces loyal to Libya National Army led by General Khalifa Haftar are on their way to secure the field.
“We have a lot of challenge from the technical side point of view, and we need more investment to upgrade the older system,” Bsebsu said. “We have many issues — this is security side” to raise oil production, Bsebsu added.
Last week, Sanalla reaffirmed that NOC would remain independent and wanted to detach itself from “political or military bargaining.”
“Efforts to politicize our work are not in the interest of the Libyan people. NOC reaffirms its call for the immediate and unconditional restoration of security at Sharara. We reject any type of blackmail and intimidation, as we work to improve the lives of every Libyan,” he said in a statement.
Regions such as the southwest where the Sharara and El Feel oil fields are located remain particularly prone to outages caused by chronic fuel shortages and security problems.
With presidential and legislative elections due this year, various groups will increasingly focus on controlling the oil infrastructure. That means a very high risk of an armed attack on key pipelines and production facilities.
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S & P Global
