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Libya - Natural resources 2005

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  • 1. NATURAL RESOURCES, Libya Date Posted: 16-Mar-2005 Janes Sentinel Security Assessment - North Africa NATURAL RESOURCESMAJOR NATURAL RESOURCES TOP Natural ResourcesOil and Gas Reserves TOPOIL RESERVESProven Oil Reserves 39 billion barrelsGAS RESERVESNatural Gas Reserves 52 trillion cubic feet (Tcf)Oil TOPThis page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?
  • 2. Oil exploration in Libya began in 1955, with the first strikes in 1959 and exportscommencing in 1961. Since 1968, Libyas oil industry has been run by the state-ownedNational Oil Corporation (NOC), along with a number of smaller subsidiary companies,including the Arabian Gulf Oil Company (Agoco), the Waha Oil Company (WOC) and theSirte Oil Company (SOC).Several international oil companies currently are engaged in exploration/productionagreements with NOC. The leading foreign oil producer in Libya is Italys Agip-ENI, whichhas been operating in the country since 1959, and US oil interests have been spectacularlyrevived since 2004 after nearly two decades of embargo on their activity in Libya.Currently, Libya has 12 oil fields with reserves of 1 billion barrels or more, and two otherswith reserves of 500 million to 1 billion barrels. Libyas onshore oil is found mainly in threegeological trends of the Sirte Basin:· The western fairway, which includes several large oil fields (Samah, Beida, Raguba, Dahra-Hofra, and Bahi);· The north-centre of the country, which contains the giant Defa-Waha and Nasser fields, as well as the large Hateiba gas field;· An easterly trend, which has such giant fields as Sarir, Messla, Gialo, Bu Attifel, Intisar, Nafoora-Augila, and Amal.Offshore, Libya has a relatively narrow continental shelf and slope in the Mediterranean andGulf of Sirte, which widens in the west in the Gulf of Gabs. The northern part of the Gulf ofGabs, also known as the November Seventh concession, lies on the Libyan-Tunisian borderand is rich in oil and gas. The Libyan side of the zone contains the Omar structure, which isestimated to contain more than 65 per cent of the zones total oil and gas reserves.Libyas oilfields are connected to Mediterranean terminals by an extensive network ofpipelines. Libyas main crude oil pipelines are: Sarir-Marsa el-Hariga; Messla-Ras Lanuf;Waha-Es Sider; Hammada el-Hamra-Az Zawiyah; Amal-Ras Lanuf; Intisar-Az Zuwaytinah;Nasser (Zelten)-Marsa el-Burayqah. Production and exports TOPLibya produces extremely high-quality, low-sulphur crude oil at very low cost (less thanUS$2.50 per barrel at NOC fields). During 2004, Libyan oil production was estimated atnearly 1.6 million barrels per day (bbl/d) with consumption at 237,000 bbl/d and net exportsof around 1.34 million bbl/d. About 90 per cent of Libyas oil exports are sold to Europeancountries like Italy (545,000 bbl/d in Jan-Oct 2004), Germany (274,000 bbl/d), France(94,000 bbl/d), Spain and Greece.Libya would like to boost production, and the lifting of UN and US sanctions, along with apossible change in its hydrocarbons legislation to include more favourable terms for foreignoil companies operating in Libya, means that foreign investment in Libyas oil sector is nowmore promising than it has been in years. Sanctions had caused delays in a number of fielddevelopment and enhanced oil recovery (EOR) projects and deterred foreign capitalinvestment. Lifting of sanctions means that Libya has resumed purchases of oil industryThis page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?
  • 3. equipment and has access to the technical expertise it desperately needs.Foreign investment and licensing TOPLibya depends heavily for its oil production on foreign companies and workers. Majorforeign companies include Italys ENI-Agip, Austrias OMV, Germanys Wintershall andVeba, Frances Total, and Spains Repsol. Other operators include Canadian Occidental,China National Petroleum Corporation, Husky Oil (Canada), Liwa (UAE), Medco Energy(Indonesia), Naftogaz Ukrainy (Ukraine), Nimr Petroleum (Saudi Arabia), Norsk Hydro(Norway), ONGC (India), Pedco (South Korea), Petrobras (Brazil), PetroCanada, Petronas(Malaysia), Red Sea Oil Corp (Canada), and Verenex (Canada)US oil companies have only began to return to Libya in 2004 after the repeal of unilateraltrade sanctions by Washington. Two US oil companies (Exxon and Mobil) withdrew fromLibya in 1982, following a US trade embargo begun in 1981. Five other US companies(Amerada Hess, Conoco, Grace Petroleum, Marathon, and Occidental) remained in Libyauntil 1986, when President Reagan ordered them all to cease activities there. Negotiationsbetween the Libyan government and the companies to resume operations faltered after 1992,when the international community joined in imposing sanctions against Libya. UN sanctionsagainst Libya were suspended on 6 April 1999, and formally repealed in September 2003.The lifting of US sanctions in September 2004 opened the way for these American companiesto return to the country. They did well in the long-awaited and much-hyped EPSA IVlicensing round, the results of which were announced in January 2005. The round, which wascarried out in an open competitive bidding process, offered 15 exploration areas for auctionand 104 bids were submitted in total. Occidental Petroleum did particularly well, winningacreage in nine areas. ChevronTexaco and Amerada Hess were also awarded acreage as werea number of non-US companies including the Indian Oil Corporation, Sonatrach (Algeria)and Woodside (Australia). To their frustration, European companies were not awarded anylicenses in this round.NOC announced that it was planning to offer a further 40 licenses in March 2005, although inlight of the repeated delays in the EPSA IV round, it seemed that this date would be pushedback.Downstream sector TOPTripoli has announced that it would like to increase it oil refining capabilities. Libya currentlyhas five domestic refineries with a total capacity of around 380,000 bbl/d, including at RasLanuf in the Gulf of Sirte (220,000 bbl/d capacity); Az Zawiyah in northwest Libya (120,000bbl/d); Tubruq (20,000 bbl/d); Brega near Tubruq (10,000 bbl/d); and Sarir (10,000 bbl/d).The countrys refining capacity was limited by the international sanctions and now that thesehave been lifted the regime is keen to upgrade its refining system and to increase the outputof the two large complexes. Libya also has refining operations in Europe, including in Italy,Switzerland and Germany.Gas TOPThis page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?
  • 4. Libyas proven natural gas reserves in January 2005 were estimated at 52 trillion cubic feet(Tcf), but the countrys actual gas reserves may be up to 70 Tcf. In recent years large newdiscoveries have been made in the Ghadamis and el-Bouri fields, as well as in the Sirte basin.Continued expansion of gas production remains a high priority for two main reasons. First,Libya has aimed (with limited success) to use gas instead of oil domestically, freeing up moreoil for export. Second, Libya has vast gas reserves and is looking to increase its gas exports,particularly to Europe. To expand its gas production, marketing, and distribution, Libya islooking to foreign participation and investment.Libyan gas exports to Europe have increased thanks to the inauguration in October 2004 ofthe Western Libyan Gas Project trans-Mediterranean pipeline that brings natural gas from theLibyan coast to Sicily. The US$6.6 billion project is a joint venture between the Italiancompany ENI and NOC that was initially agreed in 1999. Starting in 2005, approximately 1trillion cubic feet per year of natural gas will be transported via the 600 km pipeline. FromSicily the gas will be transported onto the rest of Italy, where much of it will be used forpower generation, and to other European countries.In 1971, Libya became the second country in the world (after Algeria in 1964) to exportliquefied natural gas (LNG). Since then, Libyas LNG exports have generally languished,largely due to technical limitations which do not allow Libya to extract liquefied petroleumgas (LPG) from the LNG, thereby forcing the buyer to do so. Libya produces a small amountof LPG, most of which is consumed by domestic refineries.Libyas LNG plant, at Marsa el-Burayqah, was built in the late 1960s by Esso and has acapacity of 124 billion cubic feet per year, but due to technical limitations only about one-third of this is available for export, mainly to Enagas of Spain. Work to refurbish and upgradethe Marsa el-Burayqah LNG plant in order to deal with the LPG separation problem has beendelayed since 1992. However, in March 2004, Shell signed an agreement with NOC todevelop Libyan oil and gas resources that reportedly included the possibility of upgradingMarsa el-Burayqah.Minerals TOPGypsum is exploited in some quantity; in the early 1980s production was about 200,000tonnes per year. Deposits of uranium are believed to have been found in the south. There arealso deposits of iron ore, potassium, magnesium, sulphur and phosphate.Water Supply TOPWater is in great demand in this dry country, both for irrigation and public consumption. TheGreat Man-Made River (GMR), construction of which began in 1984, aims to irrigate 750km2 of land in the north and to increase water supply to the urban conurbations of the coastalstrip. Because Tripoli will not benefit from the advantages provided by the GMR for someyears to come, however, the government has made plans for a new desalination plant to bebuilt - the Tripoli Reverse Osmosis (RO) project. It will have a 250,000 m3 per day capacityto alleviate the deficit in water supply until GMR has been completed. The cost of the projectThis page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?
  • 5. is believed to be over US$600 million and its construction has attracted widespreadinternational interest.Land Use TOPMost of Libya is desert. Land UseFood Supply TOPExcept in the Jebel el-Akhdar, food production is severely limited by Libyas desertenvironment, something that the GMR project has sought to overcome via irrigation ofcoastal lowlands. Agriculture accounts for barely five per cent of Libyas GDP and 70 percent of food must be imported. Food prices are subsidised, although Secretary of the GeneralPeoples Committee Shukri Ghanem has repeatedly stressed his desire to cut subsidies onbasic foods.Energy TOPLibyas electric power production capacity in 2005 stood at around 4.6 GW, all from thermalpower stations burning locally produced hydrocarbons. Demand is growing rapidly andforecasters expect it to reach 5.8 GW in 2010. With an average consumption of about 3,500kWh per capita, Libya already has Africas second highest consumption per capita (afterSouth Africa).Libya suffered from widespread blackouts in the summer of 2004 as demand outstrippedsupply. In order to deal with the problem the General Electricity Company of Libya(GECOL) announced increased spending plans to upgrade the system by building eight newpower plants, However, by the start of 2005, work had only started on one plant and GECOLwas suffering from liquidity problems and general inefficiency.GECOL also has a US$1 billion deal to upgrade and expand Libyas power transmission grid.However this plan has also been beset with delays. There are proposals to link the Libyangrid with Egypt and Tunisia and thence to a pan-Mediterranean supply network.UPDATED2005 Janes Information GroupThis page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?
  • 6. This page was saved from http://search.janes.com Did you know Janes Strategic Advisory Services can provide impartial, thoroughly researched market evaluation, providing© Janes Information Group, All rights reserved you with the same reliable insight you expect to find in our publications and online services?