Libya sets oil target of 2.1 million barrels a day by 2024

MEED    3 December 2019 (Last Updated December 6th, 2019 11:14)

National Oil Corporation is on track for revenues of $20bn for 2019.

Libya sets oil target of 2.1 million barrels a day by 2024

The chairman of Libya’s National Oil Corporation (NOC), Mustafa Sanalla, has announced that his country is targeting 2.1 million barrels a day (b/d) of oil production by 2024.

This target is less ambitious than the 2.1 million b/d by 2021 target announced by NOC in January.

Libya’s gas production goal is 3.5 billion standard cubic feet a day (cf/d) by 2024.

Speaking in Tunisia, Sanalla said NOC was on track to generate $20bn in revenue over 2019.

He also outlined a new security strategy and project plans for the future.

Sanalla said that Libya’s NOC would implement a “4D security plan” based on transparency, community engagement, and restricting criminal armed groups’ ability to carry out fuel smuggling and other possible revenue-raising sources.

Sanalla proposed an endowment fund for oil-hosting communities that would be directly linked to oil production volume, designed to promote a more diversified economy and improve community services.

The fund would support new businesses, boost healthcare through more clinics and hospitals, promote education through scholarships for university, and sponsor a special “communities prize”, which would be awarded to those who do the most to bring about positive change each year.

Boosting production

NOC plans to increase oil production to 1.5 million b/d in 2020, adding 350,000 b/d, and allowing for a natural decline rate of 7-8 per cent.

Sanalla said this would be achieved through a combination of workovers on existing wells, infill drilling, improved artificial lift capabilities, new power generation projects, repair of damaged tanks, maintenance and replacement of pipelines, and reinstating damaged fields.

Sanalla said the overall cost of boosting production in 2020 would be $1.2bn.

The 2024 targets of raising oil production to 2.1 million b/d and gas production to 3.5 billion cf/d will cost $60bn to implement, according to Sanalla. Some LD15bn ($10.7bn) will come from state budgets and the remainder from investors.

In order to attract contractors and investment, NOC plans to implement a new procurement system, known as the Libya Procurement and Investment System (LyPIS).

NOC is planning to start using LyPIS in its office in Houston during the first quarter of 2020.

Four drivers

Sanalla said the four main elements that will drive the push to hit the 2024 targets are:

  • Projects to increase the production plateau, which will add nearly 460,000 b/d. The main projects are the development of Libya’s A and E structures, North Gialo block development, development of the NC-98 A&F structures, development of NC 47, and development of the Erawin and Sinawin fields.
  • Reinstatement of damaged fields, which will add 120,000 b/d. Bringing back into production the Mabruk, Ghani, Dahra and Bahi fields alone will add 100,000 b/d.
  • Reactivation of shut-in wells, which will add 150,000 b/d.
  • An increase in power generation in some fields, which will add 125,000 b/d.
  • Libya is heavily reliant on oil exports for government revenues.

The country has seen significant export volatility since the uprising in 2011, which toppled dictator Muammar Gaddafi.

The latest phase of the conflict in the country started on 7 April with an attack on Tripoli by forces loyal to General Khalifa Haftar, who controls the east of the country.

The battle to control Libya’s capital city has become a protracted conflict, creating an uncertain business environment for oil and gas companies.

MEED
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