Libyan Oil Production Could Get Major Boost

Libya’s oil production could rise by several hundred thousand barrels daily when BP (NYSE:BP)and Eni resume production at a shared field, the head of the country’s state oil company told Bloomberg.

Mustafa Sanalla said Libya’s current oil production was more than 1 million bpd “despite local security challenges” adding that BP and Eni planned to restart their exploratory drilling operations at a field near the Libyan border with Tunisia in the first quarter of next year. They could then fast-track production, Sanalla said.

The two majors’ decision about Libya is an indication of a relative confidence in the ability of the local authorities to keep disruptions under control, it seems. After all, just last month armed gunmen attacked the headquarters of the National Oil Corporation, killing two and injuring 25 people. Later, Islamic State claimed responsibility for the attack.

Separately, field, pipeline and export terminal blockades have turned Libya into one of the market swingers in oil: its regular production rate is high enough and so is the degree of uncertainty regarding outages that could affect OPEC’s total. In fact, Libyan production outages were among the reasons OPEC could not live up to its promise to raise combined oil production by 1 million bpd in response to buyers’ calls for reining in prices by boosting production.

Despite this uncertainty, NOC is holding talks with international oil companies that could result in increased investment and production in Libya’s oil industry, if security across the country improves, Sanalla recently told S&P Global Platts. The country still has plans to raise its oil production to 2 million bpd and more by 2022, the official said. That would be higher than the production rate from before the civil war that resulted in the ousting of Muammar Gadaffi. Prior to the 2011 conflict, the Northern African country pumped some 1.6 million bpd.

By Irina Slav for Oilprice.com