Oil Exploration and Production
The majority of Libya’s oil and gas is found onshore in three geological trends of the Sirte Basin. The western fairway with the fields Samah, Beida, Raguba, Dahra-Hofra and Bahi; the north-centre of the country with the giant oilfields of Defa-Waha and Nasser and also the large Hateiba gas field and an easterly trend containing Sarir, Messla, Gialo, Bu Attifel, Intisar, Nafoora-Augila and Amal.
The priority for exploration onshore includes new areas in the Ghadames, the Sirte and Murzuq basins and also underexplored areas such as Kufra and Cyrenaica. Libya will also concentrate on enhanced oil recovery for those fields which are already producing. The largest known onshore fields are the Amal Field and the Gialo field both with reserves of over 4 billion barrels of oil.
Offshore the El Bouri field discovered by Agip-ENI in 1976 is central to Libya’s plans. It is the largest offshore field with recoverable reserves of 2 billion barrels of oil and 2.5 Tcf of gas. Its first phase was completed in 1990 with production of 150,000 bpd in 1995 and 60,000 bpd in 1998. Libya hopes to turn this decline around by increased investment, access to oil industry equipment and enhanced oil recovery.
In 1998, Agip-ENI discovered the Murzuk Basin in the Sahara south of Tripoli. Murzuk has an output of sweet 44·API oil of 80,000 bpd. This is much lower than the expected output of 200,000 bpd but problems with the pipeline to Az Zawiya refinery held up the target. It is believed that by removing sanctions recoverable reserves will be extended by 30-50%.
Agip-ENI has been the most active foreign producer. It has been operating in Libya since 1960 and it produces about 16% of total output. About 60% of this output comes from the Bu Attifel field.
Other foreign operators include Wintershall, Veba, OMV, Repsol, Total and Saga. In 1997, the Lasmo led consortium of Agip and five South Korean firms discovered a field called Elephant with reserves confirmed as over 500 million barrels of oil. Production from Elephant is expected to begin in 2000. Development of this field will utilise the pipeline to the north. Expected production is 50,000 bpd by 2002 and 150,000 bpd by 2004.
Other discoveries include that by Lundin Oil and Red Sea Oil of Canada who discovered an 100 million barrel field at En Naga North on NC-177 in the Sirte Basin with an expected production in 2001 of 30,000 bpd and the Total Mabruk field which is producing around 20,000 bpd. TotalFina also has a 30% interest in the NC-115 Block which contains the El-Sharara field. This field produces 150,000 bpd of high quality oil. In 2000, it is expected to produce 200,000 bpd. Mean while Canadian Occidental controls but has not developed a potential 200 million barrel field in Block NC-101.
New operators who have spudded wells in Libya in 2000 include Ranger Oil, Energy Africa and PanCanadian who are evaluating onshore blocks NC 184 and NC 185. Here two exploration wells targeting the Cretaceous age carbonate/clastic reservoirs were drilled. Neither have intersected hydrocrabon bearing intervals. A third well is to be drilled in 2001.
In 1999, following the lifting of sanctions by the UN, the United States gave permission to US companies to visit Libya to investigate the assets that they left behind during the embargo. Libya has stated that it still recognises the oil companies’ rights to the fields that they left behind.
Libya has vast gas reserves, proven at 46.4 Tcf although its reserves are largely unexploited and unexplored and could be as much as 70 Tcf. Libya has as one of its priorities, the expansion of the gas sector. It has tried to increase the domestic consumption of gas so that more oil can be exported and it also aims to increase its gas exports to Europe. Although the potential is huge, at present, its only customer, however, is Spain’s Enagas and Italy’s Edison Gas.
There have been new discoveries in the Ghadames, the El-Bouri Fields and in the Sirte Basin. The natural gas projects include As-Sarah and Nahoora, Faregh, Wafa, offshore Block NC-041, Abu Attifel, Intisar, and Block NC-098.
In 1971, Libya became only the second country in the world to export liquefied natural gas (LNG). However due largely to technical problems, the LNG exports have stagnated. Libya is not able to extract LPG from the LNG, and thus forcing the buyer to do so. Libya’s NLG plant which was built in the late 1960’s has a capacity of 124 Bcf/year but only one third of this is available for export, mainly to Spain. There are plans to refurbish and upgrade the El Brega LNG plant in order to enable LPG separation. Should this be successful, Libyan LNG exports could triple with likely customers including Spain, Turkey and Italy.
In 2000, ENI, through Agip North Africa BV signed a contract to supply 4 billion cubic metres per year of Libyan natural gas to Edison Gas in Italy. The agreement covers a 24 year period beginning in July 2002. Gas will be transported through the pipeline linking the Libyan coast to Sicily. This pipeline is in the planning stage and will be built by a joint company of Agip (75%) and NOC (25%). This is part of the $5 billion West Libyan Development Project. Agip-ENI also promoted the idea of linking the reserves of both Egypt and Libya with Italy by pipeline. An agreement to link Egypt and Libya’s grids was reached in 1997 but the plan is still under study.
There is also a proposal to build a 1,500 km (900 mile) pipeline from North Africa to South Europe. The pipeline could transport gas from Egypt, Libya, Tunisia, Algeria via Morocco and through the existing pipeline into Spain.
In 1955 the Petroleum Law was passed which allowed foreigners to explore for oil in Libya and in 1959 commercial oil discoveries were made at Amal and Zelten (now Nasser) and oil exports began in 1961. In 1962, Libya joined OPEC. The current structure for oil exploitation in Libya was set up at the time of the Libyan revolution. In 1970, the state owned National Oil Company (NOC) was founded and all foreign owned participation agreements were nationalised with NOC receiving a 51% stake in all licences. Whereas Shell, Exxon, Mobil, Texaco and Standard refused this deal, BP, ENI, Occidental, Marathon, Conoco and Amerada Hess accepted the terms. After nationalisation all agreements were converted into production sharing agreements.
In 1979-1980 Shell, Demines, Elf and the Oasis Group (Conoco, Marathon, Amerada Hess) signed new agreements with NOC. In 1986, the US companies that were still in Libya were ordered to leave by President Reagan in terms of the United States sanctions and embargo.
In 1988 the third round of exploration and production sharing agreements were signed (EPSA-III) with Lasmo, Shell, Petrofina, Bula, Repsol, INA-Naftaplin and Agip. In the 1995 bidding round contracts were signed with Bula Resources and Pan Canadian Petroleum.
In November 1999, NOC designated 80 onshore and offshore blocks as open areas for international oil companies under EPSA III. An additional 15 blocks in Murzuk and Sirte are under negotiation and NOC has awarded a new block, M4, in the northern region of the Murzuk oil basin to the European consortium, Repsol (32%) (the operator during the exploration phase), OMV (23%), Total Fina (24%) and Saga (20%).
The Licensing authority is the Secretariat of Petroleum Affairs. Since 1973, petroleum rights have been granted under a series of production sharing agreements. Decision number 10 of 1979 allowed NOC to enter into agreements with foreign companies. There have been three exploration and production sharing agreements issued. EPSA-111 remains the model contract in use at the end of 1999. Libya is considering changing the 40-year hydrocarbon legislation to improve terms for foreign investment. The amendments that they are considering will include: access to exploration acreage; small field development; large field incremental production opportunities; increased transparency; and adoption of international competitive bidding practices. In November 1999, in the latest bidding round the acreage was offered under conditions of EPSA-111.
Energy Africa Ltd
Energy Africa has a 20% interest in Blocks NC184 and NC185 in the onshore Sirte Basin, Libya.
Eni, through Agip North Africa has an established exploration and production portfolio onshore and offshore.
Energy Africa is an upstream oil company which is active in oil exploration in a number of African countries.