Making Libya investable again

(Jonathan M. Winer – Middle East Institute) When ExxonMobil recently advised President Donald Trump that Venezuela remains “uninvestable,” the company was not making a political judgment. It was offering a commercial one. Despite some of the world’s largest proven oil reserves, Venezuela’s political fragmentation, economic mismanagement, sanctions exposure, and payment risk continue to outweigh the attraction of its geology. That assessment provides a useful frame for Libya today. Libya, like Venezuela, is a resource-rich country, producing a higher-quality oil that is light and sweet in comparison to the heavy “sour” oil that Venezuela produces. And in principle, Libya could produce far more than it does. Libya’s National Oil Corporation (NOC) has long cited an installed capacity of roughly 1.6 million barrels per day (bpd) and has periodically pointed to the potential for higher output with sustained investment. In practice, however, Libya’s post-2011 experience has demonstrated how hard it has been to translate Libya’s geological potential into successful new energy production involving even the most committed international oil companies (IOCs). That difficulty has not prevented renewed interest. Libya’s first exploration bid round in more than 17 years has drawn strong international attention, with the NOC offering 22 onshore and offshore areas under production-sharing terms and reporting interest from foreign companies. Several major operators have resumed or expanded upstream engagement: Eni has restarted offshore exploration drilling after a multi-year hiatus, BP and Shell have signed agreements with the NOC to study hydrocarbon potential at multiple oilfields, and a broad set of international firms, including BP, Chevron, ExxonMobil, Eni, OMV, Shell, Sonatrach, and TotalEnergies, are qualified to participate in the bid round. On January 24, Libya announced the signing of a 25-year development deal with TotalEnergies and Chevron that would see the French and American majors invest an estimated $20 billion in the North African country to boost oil production by as much as 850,000 bpd. Additional deals may be in the offing as well. Speaking during the Libya Energy & Economic Summit over the weekend, NOC Chairman Masoud Suleiman said the results of the new bid round would be announced on February 11. The question facing IOCs is not whether Libya has oil and gas to develop. It does. The question is whether the country’s current political, economic, and security conditions allow that potential to be converted into reliable returns — and whether near-term changes could alter that calculation.

Making Libya investable again – Middle East Institute