Libya NOC representatives traveled to China today to discuss China’s interest in helping to restore Libya’s oil industry that has suffered through years of civil unrest, according to the Libya Observer.
While there, the Libyan delegation met with CNPC and other companies to discuss “cooperation in Libyan exploration and development, oilfield services, and trading of Libyan crude, with parties potentially cementing future relations through the signature of a memorandum of understanding (MoU) at their next meeting,” NOC’s statement read.
“With a more stable security environment, we could easily add between 300-400,000 barrels to daily production and grow oil revenue receipts. Our long-term strategy is to produce 2.1 million bpd by 2023. China can help us on that journey,” NOC Chairman Mustafa Sanallah said.
That “more stable security environment” has proved rather elusive for Libya, with unrest disrupting oil production and exports on a semi-regular basis. The last such disruption resulted in a force majeure after an unidentified group closed a pipeline valve that halted production in the El Sharara oilfield. The disruption cascaded into the Port of Az Zawiyah, which was closed.
Libya managed in Q2 to increase its oil production over Q1, but lower oil prices in 2019 hurt Libya’s oil revenues, which for the first six months of 2019 lagged H1 2018 by 11.2 percent, coming in at $10.2 billion. This revenue is critical to Libya, relying on oil almost completely for its revenue. In H1, 92.8 percent of Libya’s total income was from oil.
Continued lower prices and further production disruptions, particularly of Libya’s largest oilfield, may seek to dissuade foreign investments into its oil industry, even eager ones such as China.
Libya’s proven oil reserves stand at nearly 50 billion barrels, according to OPEC.