1. NATURAL RESOURCES, Libya
Date Posted: 16-Mar-2005
Jane's Sentinel Security Assessment - North Africa
NATURAL RESOURCES
MAJOR NATURAL RESOURCES TOP
Natural
Resources
Oil and Gas Reserves TOP
OIL RESERVES
Proven Oil Reserves 39 billion barrels
GAS RESERVES
Natural Gas Reserves 52 trillion cubic feet (Tcf)
Oil TOP
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2. Oil exploration in Libya began in 1955, with the first strikes in 1959 and exports
commencing in 1961. Since 1968, Libya's oil industry has been run by the state-owned
National Oil Corporation (NOC), along with a number of smaller subsidiary companies,
including the Arabian Gulf Oil Company (Agoco), the Waha Oil Company (WOC) and the
Sirte Oil Company (SOC).
Several international oil companies currently are engaged in exploration/production
agreements with NOC. The leading foreign oil producer in Libya is Italy's Agip-ENI, which
has been operating in the country since 1959, and US oil interests have been spectacularly
revived since 2004 after nearly two decades of embargo on their activity in Libya.
Currently, Libya has 12 oil fields with reserves of 1 billion barrels or more, and two others
with reserves of 500 million to 1 billion barrels. Libya's onshore oil is found mainly in three
geological trends of the Sirte Basin:
· The western fairway, which includes several large oil fields (Samah, Beida, Raguba,
Dahra-Hofra, and Bahi);
· The north-centre of the country, which contains the giant Defa-Waha and Nasser fields,
as well as the large Hateiba gas field;
· An easterly trend, which has such giant fields as Sarir, Messla, Gialo, Bu Attifel, Intisar,
Nafoora-Augila, and Amal.
Offshore, Libya has a relatively narrow continental shelf and slope in the Mediterranean and
Gulf of Sirte, which widens in the west in the Gulf of Gabs. The northern part of the Gulf of
Gabs, also known as the November Seventh concession, lies on the Libyan-Tunisian border
and is rich in oil and gas. The Libyan side of the zone contains the Omar structure, which is
estimated to contain more than 65 per cent of the zone's total oil and gas reserves.
Libya's oilfields are connected to Mediterranean terminals by an extensive network of
pipelines. Libya's main crude oil pipelines are: Sarir-Marsa el-Hariga; Messla-Ras Lanuf;
Waha-Es Sider; Hammada el-Hamra-Az Zawiyah; Amal-Ras Lanuf; Intisar-Az Zuwaytinah;
Nasser (Zelten)-Marsa el-Burayqah.
Production and exports TOP
Libya produces extremely high-quality, low-sulphur crude oil at very low cost (less than
US$2.50 per barrel at NOC fields). During 2004, Libyan oil production was estimated at
nearly 1.6 million barrels per day (bbl/d) with consumption at 237,000 bbl/d and net exports
of around 1.34 million bbl/d. About 90 per cent of Libya's oil exports are sold to European
countries like Italy (545,000 bbl/d in Jan-Oct 2004), Germany (274,000 bbl/d), France
(94,000 bbl/d), Spain and Greece.
Libya would like to boost production, and the lifting of UN and US sanctions, along with a
possible change in its hydrocarbons legislation to include more favourable terms for foreign
oil companies operating in Libya, means that foreign investment in Libya's oil sector is now
more promising than it has been in years. Sanctions had caused delays in a number of field
development and enhanced oil recovery (EOR) projects and deterred foreign capital
investment. Lifting of sanctions means that Libya has resumed purchases of oil industry
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3. equipment and has access to the technical expertise it desperately needs.
Foreign investment and licensing TOP
Libya depends heavily for its oil production on foreign companies and workers. Major
foreign companies include Italy's ENI-Agip, Austria's OMV, Germany's Wintershall and
Veba, France's Total, and Spain's Repsol. Other operators include Canadian Occidental,
China National Petroleum Corporation, Husky Oil (Canada), Liwa (UAE), Medco Energy
(Indonesia), Naftogaz Ukrainy (Ukraine), Nimr Petroleum (Saudi Arabia), Norsk Hydro
(Norway), ONGC (India), Pedco (South Korea), Petrobras (Brazil), PetroCanada, Petronas
(Malaysia), Red Sea Oil Corp (Canada), and Verenex (Canada)
US oil companies have only began to return to Libya in 2004 after the repeal of unilateral
trade sanctions by Washington. Two US oil companies (Exxon and Mobil) withdrew from
Libya in 1982, following a US trade embargo begun in 1981. Five other US companies
(Amerada Hess, Conoco, Grace Petroleum, Marathon, and Occidental) remained in Libya
until 1986, when President Reagan ordered them all to cease activities there. Negotiations
between the Libyan government and the companies to resume operations faltered after 1992,
when the international community joined in imposing sanctions against Libya. UN sanctions
against Libya were suspended on 6 April 1999, and formally repealed in September 2003.
The lifting of US sanctions in September 2004 opened the way for these American companies
to return to the country. They did well in the long-awaited and much-hyped EPSA IV
licensing round, the results of which were announced in January 2005. The round, which was
carried out in an open competitive bidding process, offered 15 exploration areas for auction
and 104 bids were submitted in total. Occidental Petroleum did particularly well, winning
acreage in nine areas. ChevronTexaco and Amerada Hess were also awarded acreage as were
a number of non-US companies including the Indian Oil Corporation, Sonatrach (Algeria)
and Woodside (Australia). To their frustration, European companies were not awarded any
licenses in this round.
NOC announced that it was planning to offer a further 40 licenses in March 2005, although in
light of the repeated delays in the EPSA IV round, it seemed that this date would be pushed
back.
Downstream sector TOP
Tripoli has announced that it would like to increase it oil refining capabilities. Libya currently
has five domestic refineries with a total capacity of around 380,000 bbl/d, including at Ras
Lanuf in the Gulf of Sirte (220,000 bbl/d capacity); Az Zawiyah in northwest Libya (120,000
bbl/d); Tubruq (20,000 bbl/d); Brega near Tubruq (10,000 bbl/d); and Sarir (10,000 bbl/d).
The country's refining capacity was limited by the international sanctions and now that these
have been lifted the regime is keen to upgrade its refining system and to increase the output
of the two large complexes. Libya also has refining operations in Europe, including in Italy,
Switzerland and Germany.
Gas TOP
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4. Libya's proven natural gas reserves in January 2005 were estimated at 52 trillion cubic feet
(Tcf), but the country's actual gas reserves may be up to 70 Tcf. In recent years large new
discoveries have been made in the Ghadamis and el-Bouri fields, as well as in the Sirte basin.
Continued expansion of gas production remains a high priority for two main reasons. First,
Libya has aimed (with limited success) to use gas instead of oil domestically, freeing up more
oil for export. Second, Libya has vast gas reserves and is looking to increase its gas exports,
particularly to Europe. To expand its gas production, marketing, and distribution, Libya is
looking to foreign participation and investment.
Libyan gas exports to Europe have increased thanks to the inauguration in October 2004 of
the Western Libyan Gas Project trans-Mediterranean pipeline that brings natural gas from the
Libyan coast to Sicily. The US$6.6 billion project is a joint venture between the Italian
company ENI and NOC that was initially agreed in 1999. Starting in 2005, approximately 1
trillion cubic feet per year of natural gas will be transported via the 600 km pipeline. From
Sicily the gas will be transported onto the rest of Italy, where much of it will be used for
power generation, and to other European countries.
In 1971, Libya became the second country in the world (after Algeria in 1964) to export
liquefied natural gas (LNG). Since then, Libya's LNG exports have generally languished,
largely due to technical limitations which do not allow Libya to extract liquefied petroleum
gas (LPG) from the LNG, thereby forcing the buyer to do so. Libya produces a small amount
of LPG, most of which is consumed by domestic refineries.
Libya's LNG plant, at Marsa el-Burayqah, was built in the late 1960s by Esso and has a
capacity of 124 billion cubic feet per year, but due to technical limitations only about one-
third of this is available for export, mainly to Enagas of Spain. Work to refurbish and upgrade
the Marsa el-Burayqah LNG plant in order to deal with the LPG separation problem has been
delayed since 1992. However, in March 2004, Shell signed an agreement with NOC to
develop Libyan oil and gas resources that reportedly included the possibility of upgrading
Marsa el-Burayqah.
Minerals TOP
Gypsum is exploited in some quantity; in the early 1980s production was about 200,000
tonnes per year. Deposits of uranium are believed to have been found in the south. There are
also deposits of iron ore, potassium, magnesium, sulphur and phosphate.
Water Supply TOP
Water is in great demand in this dry country, both for irrigation and public consumption. The
Great Man-Made River (GMR), construction of which began in 1984, aims to irrigate 750
km2 of land in the north and to increase water supply to the urban conurbations of the coastal
strip. Because Tripoli will not benefit from the advantages provided by the GMR for some
years to come, however, the government has made plans for a new desalination plant to be
built - the Tripoli Reverse Osmosis (RO) project. It will have a 250,000 m3 per day capacity
to alleviate the deficit in water supply until GMR has been completed. The cost of the project
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5. is believed to be over US$600 million and its construction has attracted widespread
international interest.
Land Use TOP
Most of Libya is desert.
Land Use
Food Supply TOP
Except in the Jebel el-Akhdar, food production is severely limited by Libya's desert
environment, something that the GMR project has sought to overcome via irrigation of
coastal lowlands. Agriculture accounts for barely five per cent of Libya's GDP and 70 per
cent of food must be imported. Food prices are subsidised, although Secretary of the General
People's Committee Shukri Ghanem has repeatedly stressed his desire to cut subsidies on
basic foods.
Energy TOP
Libya's electric power production capacity in 2005 stood at around 4.6 GW, all from thermal
power stations burning locally produced hydrocarbons. Demand is growing rapidly and
forecasters expect it to reach 5.8 GW in 2010. With an average consumption of about 3,500
kWh per capita, Libya already has Africa's second highest consumption per capita (after
South Africa).
Libya suffered from widespread blackouts in the summer of 2004 as demand outstripped
supply. In order to deal with the problem the General Electricity Company of Libya
(GECOL) announced increased spending plans to upgrade the system by building eight new
power plants, However, by the start of 2005, work had only started on one plant and GECOL
was suffering from liquidity problems and general inefficiency.
GECOL also has a US$1 billion deal to upgrade and expand Libya's power transmission grid.
However this plan has also been beset with delays. There are proposals to link the Libyan
grid with Egypt and Tunisia and thence to a pan-Mediterranean supply network.
UPDATED
2005 Jane's Information Group
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