As the African nation with by far the greatest proven and potential hydrocarbon reserves, Libya would, under normal circumstances, be a preferred destination for international petroleum investment. That this is currently not the case stems from the country’s political isolation, arising from disputes with Western nations over international terrorism. These culminated with the tightening of United National sanctions against Libya in 1993. However, the effectiveness of these edicts is somewhat undermined by the dependence of European (Italy, Spain, France) and Mediterranean countries on Libyan crude oil supplies. The Libyan economy is dominated by the hydrocarbons sector, which accounts for around 30% of national output (compared to 60% in the 1970’s). Oil and gas generates more than 95% of total foreign exchange earnings, and is critical to Libya’s economic stability.
In addition to sanctions, the United States government prohibited all American-controlled oil companies from operating in Libya. This action has created a void that European and other international oil companies have been eager to fill. They benefit not only from the reduced competition for prime exploration and development opportunities, but also because it forces the Libyan government to deal more reasonably with the remaining group of potential investors.
In 1990, Libya raised its own official estimates of proven remaining recoverable reserves to 45-50 billion barrels from 22.8 billion barrels, based on an estimated 130 billion barrels of oil-in-place, and an average 35% primary recovery. Gas reserves are estimated to be 45.8 TCF. Fourteen fields containing more than one billion barrels of oil have been discovered. All are in the Sirte Basin, except for the Bouri Field in the offshore Pelagian Basin. Over one-third of Libya’s 46 fields contain more than 500 MMBBLS of recoverable oil. Libya’s oil production during 1993 was 1.38 MMBBL/d, marginally below its OPEC quota, and gas production was 1.3 BCF/d. These figures yield a reserves life index of 75 years for oil and 96 years for gas.
More than 1,500 exploration wells have been drilled in Libya – a drilling density of one well per 733 km2, compared to a drilling density of one well per 18 km2 in the Western Canada Sedimentary Basin. Although significant exploration has taken place in all of Libya’s producing basins, there remains excellent potential for adding major reserves. This is particularly true for the Sirte Basin, where the wide range of reservoirs and play types, as well as the field size distribution pattern, suggests that numerous fields in the 100 million to 1 billion barrel range remain to be discovered. Even the presently non-productive basins have considerable potential, particularly the Murzuq Basin, where limited exploration has led to the discovery of over two billion barrels of oil. This reserves threshold is sufficient to justify building a 400 km pipeline to the Assawiya refinery and export terminal on the Mediterranean coast.
There is also immense potential for increased reserves by secondary recovery, up to 21 billions barrels in the Sirte Basin alone. A waterflood in the Sarir Field is expected to increase production rates from 200,000 BOPD to 600,000 BOPD, and greatly increase recoverable reserves of the field from its present 7.5 billion barrels. Unlike neighboring Algeria, Tunisia and Egypt, Libya’s hydrocarbon endowment is not heavily skewed towards gas. It is thus a priority to develop gas reserves to replace and conserve more valuable oil production.
Libya’s principal markets for oil are Italy, Spain, France, Greece, and other Mediterranean countries. The principal market for Libyan LNG exports is Italy, with the remainder going to Spain.
American trade sanctions have created difficulties in obtaining replacement parts for refineries and oilfield installations. However, Libya has been quite successful in replacing American equipment and expertise using European suppliers. Of late, Asian investors have also become a significant factor in the Libyan petroleum sector.
Libya’s immense oil and gas reserves and future potential guarantee a high level of interest from the international investment community. Relatively favorable economics and the exclusion of U.S.-controlled companies add to the attractiveness for European, Canadian and Asian investors. Opportunities are present in all phases of the upstream sector from frontier exploration to exploration, development and secondary recovery in the Sirte and Ghadames basins. The economic threshold field size of 50 MMBBLS is quite small in relation to the range of field sizes remaining to be found in the Sirte Basin.For more information contact:
Petrel Robertson Consulting Ltd.
500, 736- 8th Avenue S.W.
Phone: (403) 218-1618
Fax: (403) 262-9135
This summary, part of Petrel Robertson’s 1995 summary of exploration and development opportunities in 31 countries around the world, has not been updated. Some of the information, particularly relating to political and economic issues, is thus out of date. It is included, however, to demonstrate the breadth and depth of Petrel’s work in each of these nations.