Libya is among the most attractive exploration prospects globally. It holds the largest proven oil reserves in Africa, accounting for more than a third of the region’s total. Around 80% of Libya’s proven reserves are located in the Sirte Basin, which is responsible for 90% of the country’s oil output. The remainder of the country is considered under-explored and has the potential to hold substantial reserves.
Upstream exploration in Libya is hindered by the volatile security situation and poor fiscal and licensing terms. It is expected that spending will focus on brownfield assets such as the Waha Concession rather than in exploration activities or Greenfield developments.
In July, Field Marshal Khalifa Haftar’s handed over oil facilities to the internationally recognised National Oil Company (NOC) which may aid in the diffusion of political tension in the short term. However, a lasting solution to the wider conflict still appears far off, as rival eastern and western factions remain unwilling to compromise in negotiations over power-sharing. This will result in further disruptions to oil production and exports as a result of attacks.
Oil infrastructure which is very important in the country might be a major target for the militia, which may result in inconsistent production in coming recent years. Production in Libya has been more consistent since August 2017, delivering almost 1.0mn b/d over a six-month period. This consistency in production might be unsustainable in coming months as a result of the potential election looming in 2019.
Despite pervasive security threats and increased targeting of oil & gas infrastructure by extremist militia, opportunities exist for hydrocarbons in Libya due to the presence of significant under-explored acreage especially in offshore location and proposed reform of fiscal and licensing regimes.