Oil and Gas
Libya remains an oil based economy, despite aims to diversify its
economy and develop various other sectors, with oil and gas accounting
for over 90 per cent of the country's total exports. Global oil prices
were consistently high over the past two years and only began to
decline in the last quarter of 2001. Libya enjoyed increased economic
growth and rising prosperity allowing the population to experience a
rise in per capita income for the first time in a decade. In 2000,
Gross Domestic Product (GDP) grew by five per cent and the government
found increased revenues which could be put to good use reconstructing
the country's basic infrastructure.
Furthermore, both finances and know-how are being sought for
exploration and development. Partnership with foreign companies are in
great demand since vast stretches of the country with potentially huge
reserves remain unexplored. Rich rewards can be anticipated by any
investor fortunate enough to gain a firm hold on any projects. In a
bid to simplify the administrative structure overseeing the industry,
last year the National Oil Corporation (NOC) took over policy
responsibility from the Energy Ministry. As it stands, the NOC is
supervising the production of oil at a rate of approximately 1.4
million barrels a day (b/d) which is slightly above its present quota
of 1.3 million b/d agreed with OPEC.
However, by 2003, the NOC has set a target production level of 2
million b/d. Major oil companies from Europe undeterred by potential
penalties from the US have been making overtures to gain entry, deals
have been sealed with several leading firms and work is expanding.
Libya's new policy to win oil company investment in its oil and gas
sector has stimulated interest. The NOC has been drawing up terms for
opening up 139 blocks for exploration representing 70 per cent of the
country's total acreage. Negotiations for exploration and production
sharing agreements have been under way for over a year and deals on
three packages are being eagerly awaited. These three packages consist
of a combination of the 139 blocks in the Sirte and Murzuq basins and
unexplored Cyrenaica and Kufra basins. In the absence of US
competitors, the Europeans are keen to get to work on this area.
A remaining obstacle exists in the position of US companies in the
Oasis group which is prevented under sanctions from developing its
stakes in its lucrative prime acreage, mainly in Murzuq Basin and
could see Libya's oil production rise to three million b/d. The Oasis
group, Conoco, Amerada Hess, Marathon Oil and Occidental Oil, has been
unable to work its concessions all these years benefits no-one and it
means that Libya has to decide how to open up this area to exploration
without infringing the rights of Oasis, especially now that European
companies such as Germany's Wintershall are reportedly expressing
their interests. In early September Libya's Foreign Minister Muhammad
Abd al-Rahman Shalqam was quoted as indicating that US companies
holding concessions were now to be granted one year more to renew
their operations after which Libya would be reviewing the issue.
Elsewhere current activity includes Spanish firm Repsol which has
interests in parts of Murzuq and Sahara field. The development of the
Elephant Field also in Murzuq which has proven reserves of 600 million
barrels is attracting widespread interest. ENI from Italy, one of
Libya's leading foreign trading partners and an importer of over 30
per cent of Libya's oil, is responsible for operations in the field
and plans to offer tenders for development contracts in four separate
packages.
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