It is safe to say that the new Libya will not have a drastically different upstream oil and gas policy than the one pursued by the Al Qathafi regime. Most likely, under the new Libyan system of governance, oil and gas rights will continue to be granted through production sharing agreements.
There will also be new opportunities for those companies interested in service contracts for existing oil and gas production, mainly in the area of enhanced oil recovery.
However, the international oil and gas industry will most likely notice a substantial difference in the level of transparency and openness when dealing with the various government entities, such as the National Oil Company, NOC, or the Ministry of Energy.
Libya has for a long time offered very competitive production sharing agreements, and more than adequate oil and gas infrastructure for expediently monetizing any oil or gas discoveries.
In the event of a natural gas discovery, Libya offers a more than adequate domestic natural gas market that is steadily growing, with excess natural gas pipeline capacity.
It also offers natural gas export opportunities, as Libya enjoys the benefits of an LNG production plant and export terminal, as well as an export natural gas pipeline to Italy.
The current Libyan energy authority is more open to accommodating the oil and gas companies with favourable natural gas sales/purchase agreements. Libya enjoys a very positive cash flow, and can afford to fully pay its natural gas suppliers in a timely manner.
The existence of world class oil and gas infrastructure offers the oil and gas investor in Libya a more cost-effective environment. Currently, and in the foreseeable future, there would be no need for any major infrastructure investment on the part of the foreign oil and gas companies.
Most hydrocarbon-rich areas of the world, outside the industrialized world, do not even come close to offering this kind of oil and gas investment environment.
Although it is true that some of the infrastructure was damaged during the civil war, it does not amount to more than 10% of the entire oil and gas infrastructure. Furthermore, Libya has the ability to quickly make the necessary repairs to function normally.
In fact, Libya’s crude oil production has now reached 600,000 b/d from less than 100,000 b/d, during the height of the civil war in the summer of 2011. The country plans to increase its crude oil production to around 1.7 million b/d before the end of 2012, which is the pre-civil war level of production.
(Source: The Tripoli Post)