Libya holds Africa's largest proven oil reserves at 36 billion barrels and gas reserves of an estimated 46 trillion cubic feet. The country has 12 oil fields with reserves of more than one billion barrels each. Many foreign oil company interests in Libya were nationalized in the 1970's. Others pulled out when the United States imposed sanctions in 1986, but the country has attracted considerable interest from international oil companies since 2004, when the United States and European Union eased sanctions following Libya's agreement not to pursue nuclear, chemical and biological weapons.
Libya relies on oil and natural gas to satisfy energy consumption demand. Economic growth in Libya is dependent on the hydrocarbon industry. According to the World Bank, the country’s hydrocarbon exports account for over 95 percent of total merchandize exports and revenues from the oil and natural gas sectors amount to over half of the country’s gross domestic product (GDP). Since the United Nations and the United States lifted sanctions over Libya in 2003 and 2004, respectively, oil majors have stepped up exploration efforts for oil and natural gas in the country. Likewise, companies have tried using enhanced oil recovery (EOR) techniques to increase production at maturing fields. Over the next six years, Libya would like to see oil production capacity increase by 40 percent from 1.8 million barrels per day (bbl/d) to 3 million bbl/d by 2013.
Libya, a member of the Organization of Petroleum Exporting Countries (OPEC), holds the largest proven oil reserves in Africa, followed by Nigeria and Algeria. According to Oil and Gas Journal (OGJ), Libya had total proven oil reserves of 41.5 billion barrels as of January 2007, up from 39.1 billion barrels in 2006. About 80 percent of Libya’s proven oil reserves are located in the Sirte basin, which is responsible for 90 percent of the country’s oil output. Libya remains "highly unexplored" according to reports by Wood Mackenzie, and only around 25 percent of Libya is covered by exploration agreements with oil companies. The under-exploration of Libya reflects the impact of former sanctions and also stringent fiscal terms imposed by Libya on foreign oil companies.
- Oil production: 1.72 million bbl/day (2006 est.)
- Oil exports: 1.34 million bbl/day (2004)
- Oil proved reserves: 42 billion bbl (2006 est.)
- Natural gas production: 8.06 billion cu m (2004 est.)
- Natural gas exports: 2.13 billion cu m (2004 est.)
- Natural gas proved reserves: 1.472 trillion cu m (1 January 2005 est.)
- According to the International Crude Oil Market Handbook, Libya’s National Oil Corporation (NOC) would like to raise oil production from 1.80 million bbl/d in 2006 to 2 million bbl/d by 2008 and to 3 million bbl/d by 2010-2013. In large part, NOC’s production goals depend on its ability to finance its share of development costs. Future foreign investment into the oil sector is likely, especially with the improved investment climate that stems from the United Nations and United States lifting sanctions. Previously, sanctions had caused delays in a number of field development and EOR projects and had deterred foreign capital investment. Overall, Libya is considered a highly attractive oil province due to its low cost of oil recovery (as low as $1 per barrel at some fields), the high quality of its oil, and its proximity to European markets.
With state-operated oil fields undergoing a 7-8 percent natural decline rate, Libya's challenge is maintaining production at mature fields, while finding new oil and developing new discoveries.
- In November 2005, Repsol YPF (operator) announced that it had discovered a significant new oil deposit of light, sweet crude that extends over two licenses in the Murzuq Basin. Industry experts believe the discovery to be one of the biggest made in Libya for several years. The discovery is partly located in license NC-186, which currently produces around 60,000 bbl/d. Production on the license is expected to increase over the next 4-year period (2007-2011) by 100,000 – 150,000 bbl/d as oil from the discovery comes online. Repsol YPF is joined by a consortium of partners that includes OMV Aktiengesellschaft, Total and Norsk Hydro.
- Also located in Murzuq Basin is Eni’s Elephant field. In October 1997, an international consortium led by British company Lasmo plc, along with Eni and a group of five South Korean companies, announced that it had discovered large recoverable crude reserves (around 700 million barrels) at the NC-174 Block, 465 miles south of Tripoli. Lasmo, which was purchased by Eni in 2001, estimated that production from the field would cost around $1 per barrel. Elephant began production in February 2004 at around 10,000 bbl/d. In 2006, Eni indicated that Elephant was producing at around 125,000 bbl/d, and the company was hoping to see the field reach full capacity of 150,000 bbl/d by 2008.
- Waha Oil Company’s (WOC) Waha fields currently produce around 350,000 bbl/d, down from around 1 million bbl/d in 1969 and 400,000 bbl/d in 1986. However, WOC expects to increase Waha output by around 200,000 bbl/d over the next couple of years.
- In 2005, ConocoPhillips and co-venturers reached an agreement with NOC to both return to its operations in Libya and to extend the Waha concession by 25 years. ConocoPhillips operates the Waha fields with a 16.33 percent share in the project. NOC has the largest share of the Waha concession 59.17 percent, and additional partners include Marathon (16.33 percent), and Amerada Hess (8.17 percent).
- BP plc [NYSE:BP] negotiated an agreement with Libya to explore for natural gas in the north African country, the chairman of the state owned National Oil Corporation announced in May, 2007.