Drivers

Libya’s offshore production has played a limited role in the country’s hydrocarbons sector to date. However, gas production and exports increased in 2003, with the development of offshore fields and the opening of the 370-mile Greenstream pipeline to Europe in 2004.

Libya’s waters have only been lightly explored. Before the outbreak of civil war in 2011, state-owned National Oil Corporation’s (NOC’s) exploration masterplan for 2005-15 aimed to raise oil output to 3.5 million barrels a day (b/d) by 2020, from 1.8 million b/d in 2005, by increasing exploration in offshore and frontier areas.

This figure has been revised down by the new interim governments that have taken over from the Gaddafi regime, but oil will remain key to Libya’s economic growth. Production has been restored to near pre-war levels of 1.6 million b/d, from a low of just 400,000 b/d during the conflict.

The National Transitional Council (NTC), which ran Libya until the July elections, began planning to raise oil production to 2.2 million b/d by 2015, with the possibility of raising production further to 3 million b/d by 2020.

The offshore portion of this production is expected to grow, but security will be a concern as long as the numerous armed militias remain frustrated with the pace of change achieved by the new government.

Current operations

The offshore Pelagian basin sits to the northwest of Tripoli and contains seven oil and gas concessions. Production from the basin is dominated by the Bouri field, which sits within the NC-41 concession. It is jointly operated by Italy’s Eni and NOC, through the Mellitah Oil & Gas venture. In 2010, maximum production capacity was about 45,000 b/d.

The Mellitah facilities are dedicated to processing and exporting oil and gas from the onshore Wafa and offshore Bouri and Bahr Essalam fields. The complex is made up of two plants: the Wafa coastal plant, which treats the oil and condensates produced at Wafa, and the Mellitah plant, which processes the gas and condensates produced at Bahr Essalam.

Prior to 2011, NOC announced its intention to significantly increase Libya’s natural gas production as a feedstock for power generation, freeing up oil for export. Plans included the expansion of Mellitah’s Bouri field. In September, Mellitah Oil & Gas invited firms to prequalify for a contract to design an offshore platform and onshore gas processing facilities at the NC-41 concession, about 75 kilometres off the coast in waters with depths of 93-145 metres.

The offshore platform will include gas separation and dehydration facilities, which will process 160 million cubic feet a day (cf/d) of gas. Once processed, the dehydrated gas and partially stabilised condensate will be exported to the onshore Mellitah complex in the northwest through two dedicated subsea pipelines for final treatment. Gas from the Mellitah complex is transported to the Greenstream gas compression facilities, based at the same site.

Another major contributor to offshore production is Mabruk Oil Operations, a joint venture of NOC and France’s Total, operating the Al-Jawf field. Mabruk was the first of the foreign consortia to restart work as the Libyan civil war entered its final phase in the autumn of 2011. The offshore field has a capacity of 45,000 b/d.

Exploration by the UK’s BP, UK/Dutch Shell Group and other international oil firms was slow to get under way and the Libyan uprising brought operations in the country to a chaotic standstill 18 months ago. In May, BP lifted its declaration of force majeure on exploration activities in the Mediterranean with NOC. Force majeure had been in place since 21 February 2011, when civil war broke out. BP had signed an exploration and production sharing agreement (EPSA) in 2007 with NOC for an offshore block in the Sirte basin.

In 2010, the company said it was committed to spending $900m on exploring the block by 2015. Depending on the level of success upstream, development plans have been drafted for a downstream investment of up to $25bn. This includes pipelines, processing facilities and up to four liquefied natural gas trains.

So far, BP has acquired more than 31,000 square kilometres of three-dimensional seismic data, but drilling operations are yet to commence. The EPSA contract includes a commitment to five offshore wells.