Freighting Update – Libya Liquid gold – a reason for optimism


OIL and gas reserves are one of the reasons Libyans are optimistic about the future. There are estimated reserves of 46 billion barrels of oil, the largest in Africa, and around 54 trillion cubic feet of gas. Sirte basin holds 80% of these oil reserves. But an estimated 60-70%


of the country remains unexplored. In 2010 Libya was producing 1.8 million barrels of oil per day (bpd).


During the conflict only two oil fields were damaged since both sides believed they would control Libya. Oil production stopped during the rev- olution but Libya is already back up to the 600,000 barrel level, quicker than expected and without the presence of foreign expats working. Production is expected to reach 800,000 bpd by the end of the year which bodes well for cash flow. Addressing a London conference in November, Tarek Alwan,


Managing Director of SOC Libya, spoke of the great need for interna- tional operating companies (IOCs) to return to Libya, but added disagreements between IOCs and the National Oil Corporation (NOC) about security and maintenance were hindering this. “IOCs are demanding private security companies,” he explained. “The


NOC has its own security company that protects the fields but IOCs are not convinced they are up to standard, so the debate is now going on.” It is uncertain when production will reach pre-conflict levels. Sami


Zaptia, Managing Director of Know Libya, told the conference via web- cam from Tripoli that it was easier to reach the 500-700,000 bpd level but more difficult to get more mature fields into production to reach the million barrel mark. “They have started with easier wells. Once very mature wells are stopped they are more difficult to bring back to pro-


duction. One oil man told me some may never reach previous production lev- els.” Highl ighting


i m m e d i a t e opportunities for foreign business- es, Alwan cited an


urgent


requirements for equipment, tools, spare parts, cars and vehicles. In the short term there will be requirement for tank and pipeline cleaning, oilfield services, tur- bines and workover. To give and indication of the scale of opportunity, there are 7-8,000 oil fields in Libya and hundreds of turbines. Future opportunities cover installation, pipelines, refinery, tanks and storage. But a key question remains: where will Libya recruit its labour from?


Libyans are not interested in manual work. Before the revolution the labour force came from China, Egypt and India – at the time of the evac- uations up to 30,000 Chinese workers were in Libya. Zaptia believes it will be a political decision as to who will do the manual work. While the oil and gas sector together contribute between 85-90% of


Libya’s GDP, the oil sector employs a very small number of Libyans, and there is 30% unemployment.


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