The National Oil Corp. of Libya (NOC) and Italian supermajor Eni have agreed to an $8-billion development of two offshore natural gas fields believed to hold 6 Tcf in reserves. The 25-year production-sharing agreement marks the largest investment in Libya’s upstream sector in more than 20 years.
As operator, Eni said in a weekend announcement that it intends to achieve first gas from the fields, called “A” and “E”, by 2026.
Development plans include building two main production platforms that will combine for a peak rate of 750 MMscf/D along with an onshore carbon capture and storage (CCS) project.
Without specifying its capacity, Eni said the CCS facility will result in a “significant reduction” of the project’s emissions footprint. Eni reported that it produced 1.6 Bcf/D in Libya last year, representing 80% of the country’s total gas output.
The joint venture will seek to revive Libya’s gas export capacity to Italy which has shrunk to its lowest rate in a decade. It also comes at a time when European markets are eyeing Mediterranean producers as long-term replacements to Russian imports of oil and gas. Eni notes on its website that it considers Libya to be “increasingly important on the energy safety front.”
A week ago, Eni announced other plans for its business in the region with Algerian national oil company Sonatrach. The two companies said they intend to work together on “energy supply” projects.
Emphasizing the geopolitical significance of the Libyan joint venture, the signing ceremony between Eni and NOC executives was joined by the Prime Minister of Italy, Giorgia Meloni, and the Prime Minister of the internationally recognized Libyan Government of National Unity, Abdul Hamid Al-Dbeibah.
Despite the gravitas, not everyone in the Libyan government is happy with the deal. Specifically, Libyan Oil Minister Mohammed Aoun, who issued a stinging rebuke of the deal that he said was “illegal,” according to regional media reports.
Aoun maintains that the oil ministry was not included in the talks leading up to the deal which he added has improperly inflated Eni’s revenue share from a previously agreed upon 30% to 37%.
The internal discord within Tripoli’s ruling government was accompanied by outright rejection of the deal by the rivaling provisional government in the eastern section of the country, the Government of National Stability, which is based in Sirte.
Control of Libya’s oil and gas sector has been a major element of the country’s political turmoil and civil war that ensued following the overthrow of former leader Muammar Gaddafi in 2011.
With a 2-year-old cease fire between the warring factions in place, Libya managed to produce 1.2 million B/D in 2022. However, the figure is still short of the 1.6 million B/D Libya produced prior to the events of 2011 and well shy of NOC’s stated goal of 2 million B/D.
