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Libya


Topics

  1. Overview

  2. Oil

  3. Natural Gas

  4. Political Situation

  5. References


Overview

The Libyan economy is heavily dependent on the hydrocarbon industry which, according to the International Monetary Fund (IMF), accounted for over 95% of export earnings in 2010. According to the Oil and Gas Journal (OGJ), Libya holds around 46.4 billion barrels of oil reserves, the largest in Africa, and close to 55 trillion cubic feet (Tcf) of natural gas reserves. In 2010, total oil production (crude plus liquids) was close to 1.8 million barrels per day (B/D).

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Oil

Libya is a member of the Organization of Petroleum Exporting Countries (OPEC) and holds the largest proven oil reserves in Africa.  As of January 2011, Libya's 46.4 billion barrels are the largest proven oil reserves in Africa.  Nearly 80% of Libya's proven oil reserves are located in the Sirte basin. In the ten  years from 1999-2009, oil reserves grew from 29.5 billion barrels to 44.3 billion barrels.  However, during the same period, oil output rose from 1,425 MB/D to 1,652 MB/D.  At the end of 2009, Libya had a reserve lifetime of 73.4 years.  The reserves were equal to 3.3% of the world total.  In comparison, United States reserves were equal to 2.1% and Saudi Arabia 19.8%.   

Libya's hopes of increasing oil reserves have been dealt a severe blow by the current civil war.  Even before the rebellion, foreign investment began to slow as a result of uncertainties stemming from OPEC quotas, infrastructure constraints, and contract renegotiations.

Despite Libya's oil reserves, oil production peaked at over 3,357 MB/D in 1970 and has since been in decline. The National Oil Corporation (NOC) would like to return oil production capacity back to 3,000 MB/D by 2017. 

Crude oil production in 2010 was approximately 1,650 MB/D, about 150 MB/D below capacity.  Libyan output was higher than the voluntary production quota of 1,470 set by OPEC.   According to Wood Mackenzie, about two-thirds of Libyan oil production comes from the Sirte Basin, with about 25%  also coming from the Murzuq basin and most of the remainder coming from the offshore Pelagian Shelf Basin near Tripoli. Any the short-term oil production increases are expected to come from enhanced oil recovery (EOR) processes and any major new production in Libya will require additional pipeline capacity for exports.  Libyan production was equivalent to 2% of world supply and 5% of OPEC output in 2009.

Domestic consumption was around 270 MB/D in 2010.  Libya's net liquids exports were slightly over 1.5 million B/D.  According to the International Energy Agency (IEA), around 85% of Libyan oil exports are sold to European countries namely Italy, Germany, France, and Spain. Following the lifting of sanctions against Libya in 2004, the United States has increased its imports of Libyan oil. According to EIA January through November estimates, the United States imported an average of 71 MB/D from Libya in 2010 (of which, 44 MB/D was crude), up from 56 MB/D in 2005 but a decline from 2007 high of 117 MB/D. 

Libyan Exports (January -November 2010)

Destination Percent of Exports
Italy 28
France 15
China 11
Germany 10
Spain 10
Greece 5
United Kingdom 4
United States 3
Other 14

Libyan oil is generally light (high API gravity) and sweet (low sulfur content). The country's nine export grades have API gravities that range from 26.0 - 43.3.  The lighter, sweeter grades are generally sold to Europe, and the heavier crude oils are exported to Asian markets.

The Center for Strategic & International Studies (CSIS) reported on March 9, 2011 reported that "estimates of current shut in production vary from a low of 500,000 barrels/day (b/d) to over 1 million, from a total production of 1.6 million barrels/day (mmb/d). Company withdrawal of expatriate production workers appears to be a major contributing cause of the production decline, not damage to producing fields, although other factors are in play."  J.P. Morgan said that U.N. sanctions have effectively imposed an embargo on Libyan exports. Based on the experience in Iraq, we continue to emphasize Libyan production will remain low and volatile for many years.

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Natural Gas

Libya's proven natural gas reserves as of January 1, 2011 were estimated at 54.7 trillion cubic feet (Tcf) according to the Oil and Gas Journal. Recent new discoveries and investments in natural gas exploration are expected to raise these estimates in the near-term. The Libyan government plans to significantly increase the country's natural gas production in order to expand the use of natural gas in the power sector in order to free up more oil for export while maintaining and expanding existing pipeline and LNG exports. These objectives will be met by further promoting the development of existing and new discoveries, while at the same time reducing the volumes of flared natural gas (estimated at 125 Bcf in 2009).

Natural gas currently accounts for 45% of generated electricity. Despite plans to increase natural gas use for electricity generation, project delays and infrastructure limitations have kept consumption in this sector relatively stable over the past decade. However, the International Energy Agency (IEA) is estimating that by 2012, domestic consumption could increase by as much as 50% if planned pipelines and gas-fired power plants come online.

In 2009, Libya consumed 212 Bcf and exported 349 Bcf of natural gas to Europe. The vast majority of this was exported by pipeline, with a small volume exported in the form of liquefied natural gas (LNG). Natural gas is piped from the Wafa concession and the offshore Bahr es Salam fields to Melitah, where it is treated for export.

Natural gas exports to Europe have grown considerably over the past several years through the 370-mile "Greenstream" underwater natural gas pipeline from Melitah to Gela in Sicily. From Sicily, the natural gas flows to the Italian mainland. The Greenstream pipeline came online in October 2004 and is operated by ENI in partnership with NOC.

In 1971, Libya became the second country in the world (after Algeria in 1964) to export LNG. Since then, Libya's LNG exports have remained low, largely due to technical limitations. Libya's LNG plant, at Marsa El Brega, was built in the late 1960s by Esso and has a nameplate capacity of about 125 Bcf per year. However, U.S. sanctions prevented Libya from obtaining necessary technology to separate the natural gas liquids (including LPG) from the natural gas, thereby limiting the plant's output by over half of capacity. In 2009, LNG exports increased slightly to 24.4 Bcf, all of which was exported to Spain

Libya had 1.54 Tcf at the end of 2009 which was 0.8% of world reserves. Natural gas production was 1.5 Bcf in 2009 or 0.5% of world output. Virtually all Libyan gaseous exports went to Italy with a small amount of LNG shipped to Spain.

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Political Situation

The political situation is changing daily as the battle between rebels and Khadafy forces. For the latest news, please consult the following news services:

CNN

CBS

ABC

MSNBC

Please see Libyan supply disruption may have both direct and indirect effects, for the latest on the impact of the political situation on oil and gas supplies


References

For more information about natural gas processing, check out the following references:

Libya - EIA

Libya - CIA World Fact Book

Libya Country Profile - BBC

Libya - Country Specific Information - U.S. Department of State

Libya - Protests and Revolt - The New York Times

Center for Strategic & International Studies

Libya oil faces steep hurdles before return to global markets

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