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Libya Plans First Oil Exploration Tender Since 2011 Civil War

Refining towers and fuel storage tanks at the Zawiya oil refinery near Tripoli, Libya. Photographer: Shawn Baldwin/Bloomberg (Shawn Baldwin/Bloomberg)

(Bloomberg) -- Libya is planning its first tender for energy exploration contracts since 2011’s civil war, as the OPEC member looks to bring back oil majors spooked by years of instability and production shutdowns.

Authorities will offer onshore and offshore blocks in a bid round either at the end of this year or in early 2025, Oil Minister Khalifa Abdul Sadeq said Tuesday in an interview at the Adipec energy conference in Abu Dhabi.

Locations will include the Sirte, Murzuq and Ghadames basins, he said. The North African nation that’s home to the continent’s largest oil reserves last held a tender in 2007, four years before an uprising against veteran strongman Moammar Al Qaddafi sparked a decade of upheaval.

The plans signal fresh momentum for Libya’s oil industry after the resolution in late September of a feud between the country’s rival eastern and western governments that had slashed output and stoked fears of renewed war. All the same, ongoing uncertainty and unresolved political tensions still risk hindering new investments.

Production has now recovered to more than 1.3 million barrels a day, the highest in years, according to Abdul Sadeq. Development of already-appraised fields may raise that figure to 1.6 million by the end of 2025, he said.

The country is also in talks with five international oil companies that have “shown interest in returning to work in Libya” next year, the minister said, declining to identify them.

Italy’s Eni Spa and BP Plc resumed drilling last month, ending a pause in place since 2014. Spain’s Repsol SA is readying to restart similar operations in the Murzuq basin, while OMV will do so in the Sirte basin within weeks, Abdul Sadeq said.

“We’re working with Suncor, TotalEnergies, Wintershall and others to resume their exploration activities in the country,” he said. Meanwhile, Algeria’s Sonatrach SpA is “going to start drilling sometime this year or early next year.”

Aged Infrastructure

Libya’s energy infrastructure has borne the brunt of many of the country’s power struggles, with various factions and militias periodically forcing production halts to forces their demands. Persistent uncertainty has meant pipelines and storage tanks see little maintenance.

“Oil blockades are a nightmare for us,” Abdul Sadeq said. “When you shut, the water settles down, causing corrosion and weakening the infrastructure.”

Maintaining even current production, let alone increasing, needs an upgrade in facilities, he said. “Every time we push to increase production, we get faced with all these leakages and things.”

Authorities plan $17 billion worth of projects in the coming years to update and build new infrastructure, and develop fields that have been appraised and may be able to produce as many as 300,000 barrels per day, the minister said. 

He said Libya targets producing 1.4 million barrels by the end of this year, 1.7 million by the close of 2027 and 2 million a year later.

Surviving Closures

“We’re trying to upgrade or replace the infrastructure in such a way that it can survive any sudden closures to keep the operation running,” he said.

Responsibility for Libya’s oil sector is split between the ministry and the state-run National Oil Corp., a division that has sparked frictions in the past.

Abdul Sadeq said joint appointments are maFieking the two institutions cooperate more closely, giving greater clarity for investors and oil companies.

“We’re in the same boat,” he said. “I’m a board member of the NOC and at the same time I’m working in the ministry — so we work shoulder to shoulder.”

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