Libya faces multiple challenges in its efforts to boost oil production, despite the vital importance of this strategic sector to its struggling economy.
Contradictory Numbers
A stark contradiction has emerged between the production figures announced by Prime Minister Abdul Hamid Dbeibeh and the data provided by the National Oil Corporation (NOC), led by Farhat Bengdara.
In the latest cabinet meeting on Monday, Dbeibeh claimed production had risen to over 1.5 million barrels per day (bpd) in June, reaffirming the government’s goal to reach 2 million bpd by the end of 2025. Surprisingly, NOC data indicated only 1.25 million bpd of crude oil production, along with additional quantities of condensates and natural gas.
Stagnant Progress
This wide discrepancy in figures, possibly due to differing statistical bases between the two entities, adds to the uncertainty surrounding the oil sector’s actual state. It also reveals a lack of coordination among relevant government institutions, raising serious questions about the existence of a genuine plan to increase production, which has hovered around 1.2 million bpd.
Despite repeated statements about raising production to 1.5 million bpd by the end of 2025 and 2 million bpd within three years, the oil sector grapples with various challenges. Security disturbances, frequent field and port closures, aging infrastructure, and a lack of investment and funding are all real obstacles to increasing production and developing facilities.
Economic Lifeline
Oil is the lifeblood of Libya’s economy, accounting for about 95% of state revenues. Therefore, increasing production and stabilizing this vital sector is crucial for bolstering the national economy and driving development efforts to provide services to citizens.
Political Leverage
Oil in Libya has become a political pressure card. Amid the division, conflicting parties seek control over this strategic sector, while international and Libyan parties call for its neutralization from political conflict to ensure its stability and sustainability.
Challenges to Increase
The oil sector received an exceptional budget from the Central Bank to increase production rates. In 2023, it received approximately 17.5 billion dinars, and during the first five months of 2024, the Central Bank announced the disbursement of an additional 4 billion dinars from the exceptional budget. However, production rates remain at their previous levels.
The NC7 Field
The Energy Council recently halted an agreement that the NOC intended to sign with a consortium of foreign companies (Italian Eni, French Total, Emirati ADNOC, and Turkish Energy Company) to develop the Hamada NC7 field. This was due to widespread rejection from several official bodies, as the agreement would relinquish a large percentage of the production share.
The NOC’s vision for signing the agreement was based on the state’s inability to finance the project, discovered in 1959, and its potential to contribute to increasing production to nearly 2 million bpd of crude oil and significant quantities of gas.
Corruption
State sectors have suffered for decades from corruption, which has spread during the last decade, affecting all sectors. Corruption has been a barrier to increasing production in general, with the oil sector being the biggest loser as it is the state’s primary source of financial resources.
The question remains: Will institutions succeed in devising and implementing a clear plan to increase oil production?