Libya's state-owned National Oil Company plans to offer local private firms upstream licences to develop several discovered "marginal" oil fields as part of efforts to boost crude production capacity to 2mn b/d.
The initiative promises a significant shift in Libya's six decades-old oil and gas sector which is dominated by western IOCs such as Eni and TotalEnergies, as well state-owned operators such as Agoco and Sirte Oil Company.
NOC told Argus that it is now preparing a licensing round for local private upstream firms, which would include two types of contracts — a services contract and a production sharing contract. This would most likely lead to the creation of joint ventures, it added.
The fields in question are located in the Sirte, Murzuq and Ghadames basins, and probably include licences abandoned by IOCs. NOC did not say what sort of production capacity it expected from development of the fields, but said output would depend on several factors such as the number of wells drilled.
An ongoing project by NOC subsidiary Zallaf Oil Company could give an indication as to the potential size of the fields. Zallaf started up the Erawin field — abandoned by Spain's Repsol in 2013 — at an initial rate of 3,000 b/d in March and is currently working to boost this to a plateau of 16,000 b/d.
NOC in May said it planned to increase its crude oil production capacity by 100,000 b/d to 1.3mn b/d by the end of the year. If achieved, this would bring output to a level not seen since 2012 when Libya produced 1.39mn b/d, according to Argus data. Crude production stood at 1.14mn b/d in July, according to Argus.
NOC has set up a strategic planning office in a $16.9bn bid to raise capacity to 2mn b/d within a three-five year timeframe. The plan includes 45 greenfield and brownfield oil and gas projects along with huge maintenance programmes across the upstream and midstream. NOC also plans to hold its first international licensing round since 2007 next year.
The success of these plans will ultimately depend on Libya's future political trajectory. The country has been unable to move on from the chaotic political transition following the overthrow of long-time leader Muammar Gaddafi in 2011. Several civil wars and continued political divisions since then have sapped the lifeblood out of the country's upstream sector.
A brief politically motivated shutdown of around 350,000 b/d of the country's production capacity last month illustrates the difficulties faced by NOC in its attempt to reach its targets.
Despite the uncertainties and political divisions, the 3 August announcement by Eni that it had lifted force majeure on three large exploration licences is a huge boost for the country's upstream hopes. The declaration clears the way for Eni and its partner BP to commence exploration drilling on the blocks.
