The Libyan energy sector remains divided between two authorities, the National Oil Corporation (NOC) and the Petroleum Facilities Guard, and three governments, namely the House of Representatives in Tobruk, the General National Congress and the Presidential Council in Tripoli. Failure to hold fair and speedy elections at the end of December 2021 is expected to prolong the division of Libya’s oil wealth between East and West. This would cement the presence of foreign powers and mercenaries in and around Libyan oil and gas installations.
The country’s oil and gas reserves are estimated at around 48 billion barrels of crude oil and 52 trillion cubic feet of gas. Libya’s oil production averaged 1.3 million barrels per day (bpd) throughout 2020, with plans for oil production to reach up to 2 million bpd over the next five years .
These plans, however, may prove futile due to militant attacks on oil and gas facilities, increased number of leaks due to lack of infrastructure maintenance, and the possibility of further blockades lasting several months on energy installations. The December closure of the Shahara field, Libya’s largest oil field in the southwest of the country, by militants resulted in a temporary reduction in oil production of around 350,000 bpd. This means that overall oil production has easily declined to around 700,000 bpd, constituting Libya’s lowest production level in a one-year period.
In addition, months-old blockades on energy installations over the past few years have caused a significant part of exports to stop. According to Tripoli’s central bank, oil and gas revenues for 2020 fell to $652 million from around $7 billion in 2019, a nearly 92% decline.
Overall, militant attacks and blockades prevent oil exports and deprive Libya of revenue that could otherwise be channeled into its reconstruction. It should also be noted that the NOC’s underfunding due to the failure to adopt a national budget deprived it of economic resources, preventing the modernization of aging or damaged oil infrastructure and limiting the production of oil. oil and gas.
Flows of foreign energy investment
Despite the challenges, foreign investment plans continue unabated. The French company Total, through its subsidiary Total Energies, plans to implement a 2 billion dollar investment plan to increase the production capacity of the North Gialo and NC-98 oil fields.
At the same time, Total Energies is joining forces with the American exploration and production company ConocoPhilips to acquire American Hess Corporation’s 8.16% stake in the six Waha oil concessions located in the Sirte basin, in the ‘is of Libya. The commercial agreement will increase the French company’s stake in the concessions to 20.4% against 16.3% currently, thus strengthening France’s energy footprint in Libya.
At the same time, Royal Dutch Shell announced its intention not only to redevelop aging fields like Block NC-174 in the Murzuq Basin, but also to develop new fields offshore the Cyrenaica Basin and onshore the Ghadames Basin and of Sirte. Shell’s investment plans signal its return to Libya after a decade-long absence attributed to the first Libyan civil war in 2011.
Attracting substantial international investment in Libya’s energy sector, however, remains dependent on improved security and a stable and united government resulting from elections.
Russia and Turkey at the forefront of actions
In the meantime, foreign powers persist in their battle for control of Libya’s energy wealth, with Russia and Turkey at the forefront of the evolving process of domination. Russian security contractors and Russian-aligned mercenaries are stationed in Libya to protect critical energy assets operated by Russian oil companies like Gazprom and Rosneft. Moscow wants to export Libyan oil to Europe in accordance with the relevant provisions of a memorandum of understanding signed between the Russian major Rosneft and NOC which provides for the sale of Libyan crude oil to third markets and the signing of additional energy contracts which will allow Moscow to maintain its position as Europe’s leading energy supplier.
Moscow also seems keen to get a slice of the reconstruction pie in Libya with the renewal of a $2.6 billion contract for a railway that will link the city of Sirte to Benghazi, and with the execution of other infrastructure projects. On top of that, Moscow maintains military interests in Libya and persistently pursues its bid to secure a permanent naval facility on Libya’s 1,900 kilometer coast that will serve as Russia’s gateway to Africa.
For its part, Turkey appears keen to collect Gaddafi-era debt owed to Turkish companies, participate in $50 billion in reconstruction contracts and establish a Turkey-Libya axis that would disrupt the alignment between Greece , Israel, Cyprus , and Egypt. This was precisely the objective of the Turkey-Libya memorandum of understanding on the demarcation of maritime borders, which is however invalid for two reasons: on the one hand, it has not been ratified by the Libyan Parliament and, on the other hand, on the other hand, it was not unanimously approved by the members of the Presidential Council. Council in violation of Libya’s UN-sponsored political agreement.
Alarming bells have started ringing in Western capitals over the alleged close cooperation between Russia and Turkey on the grounds that they have practically divided Libya, modeled on Syria, into separate spheres of influence between them . There are fears that Libya is being divided along Islamic lines backed by Turkey. Turkish support for Islamic militias with military equipment would be used to damage critical Libyan energy infrastructure. Turkey’s ultimate goal is to control much of Libya’s offshore gas, disrupt the unhindered flow of energy, and thereby control a significant portion of Libya’s energy reserves.
To avoid a breakdown in security and a new series of civil conflicts that will negatively impact the development and production of energy resources in Libya, a new definitive date for the elections must be declared. The UN can serve as a valuable vehicle in this direction by ensuring that Libya’s presidential and legislative elections are held as soon as possible, while allowing for the resolution of the outstanding issues that postponed them in the first place. Failure to meet a new election deadline would trigger a constitutional crisis, undermine the legitimacy of the political system, create an opening for domestic troublemakers and provide a pretext for foreign powers to maintain their malevolent military presence in Libya.
Obviously, time is running out. Nevertheless, there is a window of opportunity for Libya to escape the vicious cycle of instability and uncertainty that is preventing the realization of its full energy potential. There is no doubt that the international community can play a constructive role to that end.