Libya’s state energy firm said it expects to sign more deals with foreign companies after Eni SpA agreed to invest $8 billion to extract natural gas in the North African country.
(Bloomberg) — Libya’s state energy firm said it expects to sign more deals with foreign companies after Eni SpA agreed to invest $8 billion to extract natural gas in the North African country.
“The energy sector has not witnessed an investment of this magnitude for more than a quarter of a century,” Farhat Bengdara, the chairman of Libya’s National Oil Corp., said to Bloomberg. It’s “a clear message to the international business community that the Libyan state has passed the stage of political risks.”
The NOC is negotiating investments in reservoirs and in energy infrastructure such as oil pipelines with other firms, he said.
Eni and the NOC are set to sign an agreement on Saturday in Tripoli that will lead to the development of two gas fields off Libya’s western coast.
Italian Prime Minister Giorgia Meloni may attend the event. She visited Algeria earlier this week as part of her efforts to boost petroleum supplies from North Africa and help Italy wean off those from Russia following its attack on Ukraine.
Libya’s abundance of oil and gas reserves — among the largest in Africa — and its proximity to Europe could make it a key energy supplier to the continent. Yet its exports have been held back by political chaos for most of the period since the downfall of dictator Moammar Qaddafi in 2011.
Oil’s More Stable
The two fields Eni will invest in will take about 3-1/2 years to develop, Bengdara said. They have estimated reserves of 6 trillion cubic feet and should be able to pump at a rate of 850 million cubic feet a day for 25 years, he said.
Eni will take 38% of the gas sales until $8 billion is recovered, which is expected within 15 years. After that, Eni will take 30% until the end of the agreement — approximately 25 years — after which ownership will fully return to Libya.
The OPEC member’s oil sector has been more stable since a lull in fighting in mid-2020. Crude output’s averaged about 1.2 million barrels a day since September.
The NOC hopes to raise output to 2 million barrels a day in three to five years, which will require substantial investment.
The frequent closures of oil fields and ports by warring militias — some of which are serious enough to push up global prices — have ended, according to Bengdara.
“We believe that everyone is now convinced that there is no benefit from the closure process,” he said. “Most of the oil-service companies have returned to the fields, and the security situation is stable in the fields.”
The country still doesn’t have a unified government. Two administrations claim power. One, headed by Abdul Hamid Dbeibah, is based in Tripoli in the west, while Fathi Bashagha leads another in the central city of Sirte. In addition, hundreds of foreign mercenaries are thought to remain in the country.
–With assistance from Alberto Brambilla.
(Updates with details on revenue sharing in eighth paragraph.)
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