Canadian Oil and Gas Trade Mission to Libya

Oil and Gas Sectors - Profile - Libya

1. Sector Overview

The Libyan economy is dominated by the energy sector. Libya’s oil and natural gas exports accounted for as much as 95% of total foreign currency, as well as accounting for 70% of government revenues in 2007.

Libya is a member of the Organization of Petroleum Exporting Countries (OPEC) and holds the largest proven oil reserves in Africa at 41.5%, followed by Nigeria (36.2%) and Algeria (12.3%). Libya had total proven oil reserves of 41.5 billion barrels as of January 2007. About 80% of Libya’s proven oil reserves are located in the Sirte basin, which is responsible for 90% of the country’s oil output.

Libyan oil is generally light (high API gravity) and sweet (low sulfur content), but can also be thick and waxy. The lighter, sweeter grades are usually sold to Europe with the heavier crude oils exported to Asia.

The Government of Libya expects to see oil production capacity increase by 40% from 1.8 million barrels per day (bbl/d) to 3 million bbl/d by 2012-2013. A total investment of $30 billion is planned in development and refurbishment projects in the next 10 years.

In an effort to boost foreign investment in developing Libya’s gas reserves, the NOC held its first-ever gas bid round in December 2007. Thirty-five companies competed for a total of 41 gas blocks divided into 12 separate contracts covering almost 30,000 square miles of territory. The response from foreign companies was disappointing as several contracts received no bids and turnout overall was low.

Libya's proven natural gas reserves as of January 1, 2007 were estimated at 52.7 trillion cubic feet (Tcf); potential reserves are as high as 70-100 Tcf. Until relatively recently Libya did little with its considerable gas reserves. However, Libya intends to double its production of natural gas over the next few years. With the expanding international market for natural gas, Libya is seeking to both export more gas and to increase its use to satisfy domestic energy needs (thereby freeing up additional oil for export).

Exports

Domestic consumption of oil was 284,000 bbl/d in 2006, with estimated net exports (including all liquids) of 1.525 million bbl/d. The vast majority of Libyan oil exports are sold to European countries including Italy, Germany, Spain and France. With the lifting of sanctions in 2004, the United States increased its oil imports of Libyan oil to 85,500 bbl/d in 2006, up from 56,000 bbl/d in 2005.

In 2006, Libya produced 985 billion cubic feet (Bcf) of natural gas, more than twice the amount produced in 2005. About 474 Bcf was exported to Italy and Spain, via pipeline and liquefied natural gas (LNG) respectively, 385 Bcf was used in oilfield recovery projects, and the remaining 146 Bcf was used in the generation of electricity in Libya.

2. Midstream and Downstream

Pipelines

A major pipeline project has increased Libyan natural gas exports to Europe; the Greenstream Pipeline is a $6.6 billion, 32-inch, 370-mile underwater natural gas pipeline, inaugurated in October 2004. The Western Libya Gas Project (WLGP) sources gas from the desert near the Southern Libyan border with Algeria, and an offshore platform 110 kilometers North of Tripoli; the resulting gas flows to Melitah (80 km West of Tripoli) where it is collected, then pumped by the Greenstream to Sicily and mainland Italy. Libya reportedly plans to double the throughput of the Greenstream pipeline over the next several years which can be boosted to 385 Bcf per year.

Liquefied Natural Gas (LNG)

Libya produces a small amount of liquefied natural gas (LNG). The Esso-built Marsa el-Brega LNG plant has been operating for many years at half-capacity, due to technical problems, and has a nominal capacity of approximately 125 Bcf per year. With considerable investment, Libya has the potential to produce more LNG per year than Malaysia, Algeria or Indonesia. Shell's 2005 deal with the NOC includes work on Libya's LNG infrastructure, including upgrading the Brega LNG plant. As of early 2008, there were also reports that a new LNG plant may be constructed at Ras Lanuf.

Refineries and Petrochemical Plants

Libya has five domestic refineries, with a combined capacity of 380,000 bbl/d. These include Ras Lanuf (Gulf of Sirte) with a capacity of 220,000 bbl/d, Azzawia (120,000 bbl/d), Sarir (10,000 bbl/d), Tobruq (20,000 bbl/d), and Brega (10,000 bbl/d). Libya exports production exceeding domestic demand (approximately 93,000 bbl/d). Libya’s refining sector is seeking a comprehensive upgrade to its entire refining system, with a emphasis on gasoline and other light products (i.e. jet fuel).

Libya has a number of petrochemical plants that are owned by the NOC. Several joint ventures and contracts have been signed with foreign international companies in 2007 and 2008 to upgrade these facilities. Libya has also announced plans to jointly develop a refinery with Tunisia with the help of international investors.

Main Local Stakeholders

Libya's oil industry is controlled by the state-owned National Oil Corporation (NOC), which in turn runs NOC subsidiary operating companies: Waha Oil Company, Arabian Gulf Oil Company (Agoco), Zueitina Oil Company (ZOC), and Sirte Oil Company (SOC).

Oil exploration and development of the NOC subsidiaries continued throughout the period of sanctions (1986-2004). Many projects were put on hold during this period and minimal maintenance was performed to keep equipment running.

3. Major Players

The market is highly competitive, with more than 45 foreign companies, including most international majors, active in Libya. In addition to the NOC’s subsidiaries, a number of international oil companies are engaged in exploration and production in Libya including Repsol YPF (Spain), Eni (Italy), OMV (Austria), Total (France) and Canada’s Petro-Canada and Verenex.

As of February 2008, the NOC signed contracts with Occidental (U.S.), RWE (Germany), Shell (Netherlands/UK), Gazprom (Russia), Sonatrach (Algeria) and PGNIG (Poland) as a result of a natural gas bidding process in December of 2007.

Petro Canada signed its contract in May 2008 and others have followed, including ENI and Repsol. The NOC has also concluded sweeping gas exploration and development agreements with Shell (2005), Eni (2007) and BP (2007).

4. Market and Sector Challenges (Strengths and Weaknesses)

While there are a number of opportunities in this market, there are also major challenges that need to be managed. Libya’s legal structure is multi-layered, and its banking infrastructure primitive. Libya’s physical infrastructure requires upgrading, and telecommunications services are inadequate. Office space is limited, and the few Western-class hotels are often filled to capacity. Canadian companies wishing to send representatives to Libya are advised to expect considerable delays in obtaining Libyan visas.

Libya is a diverse and challenging market requiring adaptability and persistence. Careful planning and patience are the prerequisites for success in this emerging market. Canadian firms that are willing to invest time to develop market presence should expect to reap rewards in the long-term.

5. Contacts

Canadian Companies interested in Libya’s oil and gas market should contact the Canadian Embassy Trade Section in Libya.

Government of Canada Contacts:

Canadian Embassy Trade Office
Al-Fateh Tower - 7th Floor
P.O. Box: 93392
Tripoli, Libya
Tel.: +218 21 335 1633
Fax: +218 21 335 1630

Foreign Affairs and International Trade Canada
125 Sussex Dr.
Ottawa, ON K1A 1K3

Export Development Canada
151O’Connor Street
Ottawa, ON K1A 1K3

Libyan Contacts

National Oil Corporation
Tel.: +218 (21) 4446181 /87
Tel2: +218 (21) 3337151 /56
Fax: +218 (21) 3331930
Gazwat Alkhandag Square, PO Box 2655
Tripoli - Libya

Libyan Businessmen’s Council
Tel.: +218 (21) 335-0213 /4
Fax: +218 (21) 335-0374
Email: info@lybc.org
Address: Dat el-Emad Complex
Tower #5, 1st Floor
PO Box 91491
Tripoli- Libya

Tripoli Chamber of Commerce (In Arabic Only)
Tel.: +218 21 333 3807
Tel2: +218 21 334 2917
Fax: +218 21 333 2655