The world’s major energy companies are moving back into Libya in search of new oil and gas reserves, almost fifteen years after the fall of Muammer Gaddafi plunged the nation into prolonged political turmoil.
A delegation from Libya’s Tripoli-based government has spent the week in Washington promoting the country’s first oil exploration licensing auction in 18 years, Financial Times reported.
Oil majors including Shell, Chevron, TotalEnergies, Eni and Repsol have all been pre-qualified to participate, following Exxon’s agreement in August to begin gas exploration off Libya’s coast.
“We look forward to working with the Libya National Oil Corporation (NOC) to fully evaluate Libya’s potential and leverage ExxonMobil’s leading capabilities to jointly explore for new resources” Exxon told the Financial Times.
Momentum among international oil companies began building again in July when Shell and BP confirmed they had signed agreements with the NOC to assess opportunities.
The renewed attention comes despite Libya remaining split between rival governments and their associated armed factions.
Energy companies are seeking to expand their reserves amid forecasts suggesting oil demand will remain robust for longer than previously expected due to a slower global shift toward clean energy.
“They’re searching for more reserves and they’re returning to tried-and-tested basins,” a senior energy banker said, noting that major companies are accustomed to operating in politically unstable regions.
Tripoli’s government, which controls western Libya, aims to raise national production from 1.4mn barrels per day to 2mn by 2030 and hopes new production-sharing agreements will incentivize foreign investment.
Chevron chief executive Mike Wirth acknowledged ongoing conversations during an investor day last week, saying, “We’ve had discussions under way that have been reported in the media. So I can acknowledge this in Libya.
Terms are more attractive today than historically they have been.” The UN recognizes the Tripoli government, but many of Libya’s key oil assets are located in the east, an area controlled by renegade general Khalifa Haftar.
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During meetings in Washington, the Libyan delegation sought to persuade U.S. officials that Libya could become a major supplier of oil and gas, and argued that U.S. support was necessary to push Russian forces out of the country and help unify Libya’s political and economic structures.
Regional analysts have warned that Russia’s military presence has been increasing in the east and south, with corruption affecting multiple sectors. Moscow has long backed Haftar.
“We have a problem,” said Mahmoud Ahmed Alfiste, a senior Libyan official accompanying the delegation. He noted that while the international community “recognises the NOC” as the sole legitimate body responsible for producing and exporting Libya’s oil, “Haftar and his sons are controlling” parts of the country that hold vital reserves.
Ibrahim Sahed, another member of the delegation and a representative of Libya’s High Council of State, told the Financial Times, “The US and western countries are trying to prevent Russia from selling its oil and its energy.
That would bring a shortage in the energy market and Libya can be an alternative.” He added that Libya depends on western technology to improve output from its oilfields, saying, “Nobody has technology like the US.”
Alfiste said the petroleum ministry and the NOC have already signed a memorandum of understanding with Chevron and are in talks with ConocoPhillips.
Tim Eaton, a Libya expert at Chatham House in London, said a visit earlier this year by a newly appointed U.S. envoy had helped spark broader interest.
“If those companies are able to invest and build the oil sector, this can be a kind of rising tide that lifts all boats,” he said. However, he warned that increased investment could reinforce existing political and economic dysfunctions.
“The risk is that these kinds of deals brokered via Libyan elites are going to solidify the status quo rather than provide an opportunity to transform it,” he said.
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Libya Reopens Oil Sector To Global Exploration In First Licensing Round In Nearly 20 Years
Image Credit: The Financial Times Ltd
