Tuesday, 25 September 2012

Libya: Oil sector news

This week, prominence has been given to a speech made at an oil conference in early September by OMV's Senior Vice President Dr David Latin. He indicated that the Libyan oil industry was capable of making a rapid recovery and suggested that the replacement of damaged plant and equipment had been achieved with extreme success. He quoted official Libyan sources in showing that oil production had recovered very rapidly to over 1.5 million b/d and had stabilised at virtually pre-war levels.

At the same time, however, with the political environment still evolving after the Arab Spring in a number of countries including Libya, Tunisia and Egypt, newly appointed officials are still finding their feet. Dr Latin stressed the importance of rapid decision-making by the governments as being one of the key challenges faced by OMV and other IOCs in the midst of all the ambiguity. In addition, he also stressed that security has to be managed particularly carefully in Libya and Tunisia. Libya is currently unable to take best advantage of market conditions because it lacks the underpinning of technical and financial strength.

Latin looked forward to a pick-up in business in the next six months and foresaw offshore oil and gas becoming of increasing interest to foreign companies. Offshore exploration obviously has less of the security and stakeholder issues that affect onshore operations. So far, however, Libya's new offshore exploration has, with the exception of Hess' gas discovery, been both extremely expensive and singularly unsuccessful in recent years.

As noted last week, on 4 September there was a gas leak and minor fire at the Amal oilfield in the eastern Sirte basin. Harouge Oil – the joint venture between NOC and Suncor Energy's Petro-Canada subsidiary – operates the field. The fire injured four people but was quickly extinguished, although crude output was disrupted.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2012 Menas Associates

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