by Andreas Exarheas, Assistant European Editor
The Arabian Gulf Oil Company (AGOCO) is planning to drill 93 wells in its Libyan concession areas within the next decade, according to a presentation by the company’s chairman, Mohamed Ben Shitwan, at the 4th New Libya Oil & Gas Forum 2015 in London Oct. 19.
This is great news for Libya’s oil and gas industry, which has seen more than its fair share of security threats since the beginning of the revolution that ousted Muammar Gaddafi in 2011. AGOCO, which is a National Oil Company Libya subsidiary, has interests in eight fields in the country, with the main producers being Sarir, Messla, Nafoora, Beda and Hammada. The proposed new wells have a target potential in excess of 2.3 billion barrels of oil/condensate and 3.1 trillion cubic feet of natural gas, according to Shitwan’s presentation, which would significantly raise Libya’s current lowly production output.
Before the 2011 uprising, Libya produced around 1.6 million barrels of oil per day. However, in recent years, the country’s production has been radically reduced due to violent clashes and protests over jobs and salaries by local residents and workers. Reuters reported Oct. 5 that Libya’s oil production is currently as low as 300,000 barrels per day, which marks a decrease of 81.25 percent compared to output figures prior to 2011. The current security position of AGOCO is categorized as normal, according to Shitwan, and no security breaches or abnormalities have recently been recorded by the company, which gives credence to the feasibility of the energy firm’s ambitious future drilling campaign. Should any clashes take place around AGOCO’s assets during its 10-year project however, it’s safe to assume that operations would be halted, at least temporarily.
Eni S.p.A, one of the few international oil companies still operating in Libya, was forced to temporarily halt production at almost all of its Libyan facilities early in 2011, due to continued fighting in the region. The Italian energy firm has also been the subject of targeted attacks by militant groups, as well as worker strikes and abductions. Other international oil companies, such as Royal Dutch Shell plc, Exxon Mobil Corp, Total S.A. and BP plc have significantly scaled back upstream operations in the country since 2011 as a result of Libya’s political instability, which has seriously sapped exploration confidence in the region.
Despite the continued adversity Eni has faced in Libya, which has resulted in significant production decreases over the years, the company has exhibited its strength and adaptability by continuing to explore for oil and gas in the country. Its durability was rewarded twice this year, when it made two gas and condensate discoveries in Libya. The first, announced March 16, is located offshore in the Bahr Essalam South exploration prospect and, in a producing configuration, Eni has stated that it expects the find to deliver in excess of 50 million cubic feet per day and 1,000 barrels per day of condensate. Eni’s second discovery, announced May 26, is also located offshore in the Bouri North exploration prospect and is expected to eventually deliver in excess of 3,000 barrels of oil equivalent per day.
Although the crisis in Libya is continuing, AGOCO’s enormous drilling campaign, coupled with Eni’s resilience and exploration success in the country over the past year, might just provide the confidence boost needed to encourage other exploration and production companies to carry out further activity in Libya. If this did in fact prove to be the case, such a development would be likely to raise the country’s current production and put Libya on the long path to becoming one of the world’s major oil producers again. Should AGOCO and Eni fail in their risky quests for hydrocarbon exploration in one of the most volatile regions on the planet for whatever reason, however, other oil and gas explorers might see it as vindication to stay clear of the country, which could become an insurmountable setback for Libya’s upstream exploration sector.