New investment terms and an ambition to raise output to two million barrels a day
Libya – An analytical report published by the Gulf Arab Business Vision website said the return of US energy company Chevron to Libya again highlights the country’s oil potential, at a time when Gulf Arab conflicts increase the strategic value of drawing on oil producers from outside the region.
Raising output and attracting global firms
The report, which Al-Marsad followed and translated in outline from the English-language Gulf site, said Libya aims to raise crude output from 1.5 million to two million barrels a day, requiring investment in existing fields and the development of new resources.
It considered the exploration and production-sharing agreement signed with Chevron in August part of a broader policy to bring international companies back into exploration, production and upstream activity after years of underinvestment and unrest.
It added that making use of reserves and Libya’s geographic advantage requires continuous government efforts to strengthen political certainty and predictability in a sector that has faced severe security challenges since the bloody overthrow of the late Colonel Gaddafi, as the report put it.
From the 2004 entry to the return
The report noted that Chevron first entered Libya in 2004 after sanctions were lifted, then relinquished its licences in 2010 after drilling that did not succeed.
It said signs of a return began last year with talks with the National Oil Corporation in Tripoli on exploration and production opportunities, advancing in January with the signing of a memorandum of understanding to assess onshore opportunities.
Block in the Sirte Basin and production-sharing terms
According to the report, the company secured Block “S4” in the Sirte Basin — which it described as Libya’s most important oil-producing region — in February, covering about 7,400 square kilometres.
It said the agreement places the full cost of exploration on Chevron in return for 25% of the profits from developing any commercially viable resources, describing the terms as more attractive than the previous licensing system in which companies bore the full exploration risk and sometimes received as little as 12% of production.
It saw these terms as reflecting the competitive strength the corporation now offers to attract capital.
Stability as a condition for investment
The report linked investment to stability, stressing that oil remains the backbone of the economy and that raising and stabilising output matters for government revenues and Libya’s standing as a major oil exporter, while actual investment and higher productivity depend on the ability of divided political institutions to provide stability.
