Oil dividend could turn Libya into North Africa’s Norway
As Libyan oil production surges, the country has been noted for having some of the most important oil reserves in the world in terms of quality.
Middle East expert Fawaz Gerges, who is professor of international relations at the London School of Economics, told Arab News that the country had some of the most important oil reserves in the world in terms of quality, according to Arab News.
“There is nothing to prevent it from becoming the Norway of North Africa,” he said, referring to the wealthy Scandinavian country that far outstrips the rest of Europe — apart from Russia — in terms of oil production.
With Libyan oil production growing there are hopes that the country’s goal of producing 1.6 million barrels per day (mbd) can be achieved by the early 2020s. Production has topped 1.2 million barrels per day sometimes this year.
The target is technically possible, and it would restore production to levels before the revolution that toppled Col. Muammar Qaddafi in 2011. According to the International Energy Agency, Libya holds Africa’s largest reserves at 48.4 billion barrels.
The country still faces huge obstacles, not least civil strife and political instability. But even so Libya’s National Oil Corporation (NOC) recently disclosed that oil and gas revenue in the first half of 2018 had reached $13.6 billion, more than for the whole of 2017.
A significant factor behind this performance has been the rise in the oil price. But there is more than that to the Libyan oil story, experts said.
In an interview with Arab News, Nicholas Fitzroy, Middle East analyst at the London-based Economist Intelligence Unit (EIU) said NOC had managed to reopen key oilfields by forging security deals with militias. This has paved the way for a marked increase in production over the last 12 to 18 months.
“There has been a skewing of production data,” said Fitzroy.
“Early 2017 showed output of around 600,000 barrels per day against about 1 mbd in early 2018. The upswing follows the resumption of production from some of the country largest oilfields as accords with militias have taken hold.”
A recent EIU paper said: “The implications for Libya’s economy are wide-reaching, given the vital importance of oil exports to both the current and fiscal accounts — oil makes up more than 90 percent of both government and export revenue.
“Even though further security-related disruptions are likely to weigh on production, Libya’s oil sector has shown a capacity to recover in a short space of time.”
Fitzroy was doubtful that the NOC target to raise production beyond pre-revolution levels of 1.6 mbd, let alone to 2.2 mbd by 2023, would be possible. He added that investors and foreign investment were desperately needed.
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