Mustafa Sanalla, Chairman of the National Oil Corporation (NOC), said Libya plans to raise its oil production level from 1.25 million barrels a day now to 2.1 million bpd by 2024.
Sanalla revealed the ambitious production target at a one-day conference organised by the Libyan British Business Council (LBBC) in Tunis and said that British companies would continue to be “vital partners” for the Libyan oil and gas sector.
Asked by Libya Business News what British companies had to offer Libya to reach the 2024 target, Sanalla replied:
“British companies are our vital partners for over 40 years and yesterday we had many meetings with British colleagues. British technology is amazing, and this is the right environment for British companies to come and to expand in Libya.”
After his speech, the NOC and LBBC signed a joint Statement of Intent on cooperation in the oil and gas sector. They will meet again in London in 2020 to review progress.
“The relationship between Aberdeen, the heart of the UK’s oil and gas industry, and Libya goes back decades and our ambition in the LBBC is to see that relationship developed,” said Sir Vincent Fean, chairman of LBBC and a former British ambassador to Libya.
Sanalla informed LBBC delegates that the 2.1 million barrel target would be reached by new projects to increase production (455,000 bpd), the reinstatement of damaged fields (120,000 bpd), the reactivation of shut-in wells (150,000 bpd) and power generation increases (125,000 bpd).
Increasing Libya’s oil output to 2.1 mbd and its gas output to 3.5 billion cubic feet per day would require an investment of $60 billion (£46.5 billion), Sanalla told the LBBC conference, which he said would be “handled transparently through the NOC’s Houston offices”.
Commenting on the NOC targets, Fean urged support and pointed out that given the difficult operating environment in Libya, increased oil production from 150,000 bd at its lowest level to 1.25 mbd today, was already “nothing short of miraculous”.
Key to Sanalla’s plan to increase production in Libya is a holistic security package, labelled “4-D security”, which includes a revised NOC Charter; bolstering support for oil-hosting communities by providing better services and economic opportunities; the removal of fuel subsidies to eliminate revenue sources for criminal militias and an overhaul of the Petroleum Facilities Guard (PFG).
The Libyan Government spent about $4.2 billion on fuel imports in 2018 of which around $3.7 was subsidised. Sanalla told the LBBC conference that fuel subsidies create huge opportunities for smugglers and had “propelled some communities into criminality”.
“We have a solution that would allow subsidies to be delivered directly to the consumer, rather than through the fuel,” Sanalla told LBBC delegates. “The fuel would be sold at world-market prices, eliminating the profit margin enjoyed by fuel smugglers.”
Sanalla pointed out that oil-hosting communities were the “first line of our security” in Libya and unveiled proposals for a NOC fund endowment directly linked to oil production volume that he said has already been approved in principle by the Presidential Council of Libya.
The NOC funds would be distributed to provide finance for entrepreneurs on oil-hosting communities; bolster local healthcare services; provide university scholarships and would contribute to a Communities Prize for “local heroes”. Sanalla said the NOC was finalising governance plans with international partners.
The PFG has caused problems for Libya in the past, notably when its former commander Ibrahim Jadhran seized the Libyan oil ports Ras Lanuf and Al Sidra in 2018, creating an economic and political crisis that cost Libya more than $1.4 billion in revenue and set back efforts to promote political progress and stability in Libya.
Last week, Sanalla said the force was now better led and trained. “Working with international partners, we are reforming the PFG,” Sanalla said. He added that new technologies such as drones were being used by the PFG to monitor oil facilities and pipelines against attacks but that their work remained challenging.