BY KEITH BOYFIELD
Over the last decade Libya has been plagued by a damaging civil war which has served as a proxy conflict for competing international interests. The country is blessed with an abundance of hydrocarbon resources, so its future export capacity commands attention – not least from European policymakers, as well as leading figures in the oil and gas energy sector.
Fortunately, prospects now appear more promising as the country emerges from a fractious period in its long history. While still a divided country – split between the UN recognised Government of National Unity (GNA) centred in the capital city Tripoli – and the rebel Libyan National Army (LNA), led by General Khalifa Haftar, based in the eastern part of the country – there are clear signs that previous disruptions to oil and gas exports have been resolved. One such sign is the initiative by Libya’s National Oil Corporation (NOC) to create a specialist department to export more gas to Europe. Under a UN Security Council resolution, the only Libyan institution authorised to sell oil is the NOC. Russia’s folly in invading the Ukraine is turning out to be Libya’s opportunity when it comes to revitalising its energy industry.
The crucial point about Libya is that it remains rich in oil and natural gas resources. It has now edged up production to 1.2 million barrels a day; what promises to be a surge in the flow of oil and natural gas is likely to prove a pivotal influence on prices paid by European consumers. For their part, EU governments are keen to agree Libyan supplies of hydrocarbons, and particularly natural gas, to replace supplies from Russia. One of Libya’s advantages is that it is located much closer to the European market than other sources of supply. Indeed, it currently exports 8 million cubic metres a year to the EU via a pipeline to Italy. Libya is a crucible for hydrocarbon resources which have yet to be fully tapped.
Libya has a developed energy sector where investment has been channelled into both oil and gas infrastructure. The exciting opportunity is to develop this processing and refining capability. This is where international expertise and experience has so much to offer. Enhancing Libya’s oil and gas export capability is not only in the country’s interests, but also Europe’s, so it is a win-win opportunity. Foreign direct investment will provide greater security of supply for the EU’s consumers while boosting Libya’s GDP and providing the necessary funding to rebuild the country. Meanwhile, Libya’s citizens will benefit through more secure and sustainable livelihoods.
It is worth bearing in mind that Libya has been a hydrocarbon producer for many decades. Furthermore, its industry fully complies with internationally recognised regulations and standards. Legitimate foreign direct investment (FDI) can do a great deal to ensure regulatory standards, for example, in the field of environmental regulatory compliance, so this is not only maintained but measurably improved.
A good example of significant FDI is the recently agreed $8 bn deal between Italy’s ENI and the NOC to develop Libya’s offshore gas fields. This is likely to be a forerunner to a fresh wave of investment by experienced European players in a country that has tended to be overlooked. Yet Libya is located next door to Europe’s energy market, now more than ever on the lookout for secure sources of supply.
The overriding message is that opportunity beckons, so the onus is on players within the industry to show how they can assist Libya develop its capability across the energy sphere.
