Algiers — Libya's crude oil production has hit a five-year high, bringing badly needed revenue to the violence-wracked country, but further gains will depend on stabilizing security and attracting foreign investment, the chairman of state-owned National Oil Corporation told S&P Global Platts.
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Libya is pumping 1.28 million b/d, its most since August 2013, and still harbors ambitions of boosting output beyond 2 million b/d by 2022, Mustafa Sanalla said in an interview after attending Sunday's OPEC/non-OPEC monitoring committee meeting in Algiers.
"If the security situation improves, our production outlook is very good," he said.
Talks with several international oil companies regarding increasing production, staffing, and investment across the country were progressing, he added. The chairman said he recently visited Spain to meet officials at Repsol, a key partner in the 340,000 b/d Sharara field, Libya's largest oil field.
"We stand ready to welcome new international partners to Libya and restart operations with those that were forced to leave due to the conflict," Sanalla said.
He noted Libya's proximity to Europe and low production costs.
Some of Sanalla's efforts are already paying off. French oil major Total said in March it would increase its presence in Libya by taking a 16.33% stake in the Waha concessions from Marathon Petroleum for $450 million.
But final approval for the deal is still outstanding amid concerns the price was too low and speculation that NOC wants to make a counteroffer according to various news reports.
Sanalla however, said the delay had been forced by an escalation of violence and instability in Tripoli followed by an attack on NOC's headquarters two weeks ago by a militia, which killed two employees.
"A committee meeting was held last week on this issue," he said of the Total-Waha deal. "The commercial evaluation of the deal has been completed. The Presidency Council should receive communication on this issue next month."
This transaction would give Total access to reserves and resources in excess of 500 million barrels of oil equivalent, with immediate production of around 50,000 boe/d from the Waha concessions. Production from the Waha concessions is 300,000 boe/d, which is expected to rise to 400,000 boe/d by 2020.
Sanalla has also pinned hopes on NOC increasing its presence in the US with the launch of an office in Houston which he said will "facilitate a multi-billion dollar investment in infrastructure, equipment and knowledge transfer necessary" for the Libya's oil sector.
BARRELS AT RISK
The country also faces national elections planned for December which add to the unpredictability and uncertainty of Libya's beleaguered oil sector.
Libyan crude production stood at 940,000 b/d in August, according to the latest Platts survey of OPEC output. So far in 2018, it has averaged 900,000 b/d, though output has ranged from a low of 670,000 b/d in July to a high of 1.03 million b/d in February, Platts data shows.
Analysts at Rapidan Energy have said that up to 700,000 b/d of Libyan output still remains at risk for the next few months but that these outages will only last days to weeks as stable oil production is a key requisite for a political solution in Libya.
"The reshuffling of alliances around Tripoli in the past few weeks may lead to temporary and occasional blockades and armed clashes around oil infrastructure, but it will not be jarring enough" to stop output averaging at levels of around 1 million b/d, Rapidan said in a recent report.
Due to the unrest, Libya was exempted from production cuts that OPEC and 10 allies implemented beginning in January 2017, though for 2018 it was given a loose cap of 1 million b/d, its estimated maximum sustainable production capacity at the time.
The OPEC/non-OPEC coalition is now unwinding its cuts to prevent a market squeeze when US sanctions on Iran take effect in November and Venezuela's economic crisis causes its oil production to further contract.
Sanalla said Libya is ready to help the coalition bring more barrels to the market, if its security environment improves.
"The current supply shortfall is likely to place upward pressure on oil prices and require OPEC members to fill the void," he said. "Libya is able to meet some of that additional market demand if security is maintained."
-- Staff, firstname.lastname@example.org
-- Edited by Irene Tang, email@example.com