The National Oil Corporation (NOC) of Libya is struggling to achieve its ambitious goals for the oil and gas sector, the country’s lifeline, according to a report by MEES. Recent gains were made possible through a drilling partnership with multinational oilfield services company Schlumberger (SLB). However, the company is threatening to withdraw due to unpaid dues.
The 2M pbd Dream
On June 9, Farhat Bengdara, Chairman of the NOC, informed Abdul Hamid Dbeibeh, Prime Minister of the Government of National Unity, that the NOC is working towards its medium-term goal of gradually increasing oil production to over 2 million barrels per day (bpd) by the end of 2025, up from the current production level of 1.2 million bpd.
Daily production data showed an increase to 1.258 million bpd of crude oil (and 53,000 bpd of condensates) on June 10, a figure that, if sustained for a month, would be the highest since 2013. Additionally, Baker Hughes data indicated the sector achieved its highest level in 18 years with 21 drilling rigs in February.
Promising Successes
According to MEES, amidst a wave of well drilling, the NOC highlights a series of recent wellhead successes, with a list of at least 38 recent successes.
These include three wells producing a total of over 10,000 bpd in the Abu Attifel field, operated by Mellitah, a joint venture between Eni and the NOC, and three other wells producing a total of 15,000 bpd in the Mellitah-operated Elephant field.
In the Abu Attifel field, Schlumberger (SLB) conducted the drilling operations. Libya’s contracts featured prominently in Schlumberger’s Q4 2023 and Q1 2024 results, providing hope that the NOC’s target could be achieved.
Threatened Gains
These recent gains are now under threat following Schlumberger’s (SLB) warning of leaving Libya, according to the Middle East energy news site.
In a letter addressed to Bengdara on June 9, Mustafa Ajaj, General Manager of Schlumberger Libya, cited “financial difficulties faced by his company due to unpaid debts owed to Schlumberger companies in Libya, including Schlumberger Overseas, Dowell Schlumberger, and Anadrill International.”
Ajaj attached a schedule detailing debts amounting to $242 million, spread across 14 NOC affiliates and other foreign companies.
Accumulated Debts
Ajaj stated, “Due to the unprecedented levels of our accumulated debts with our partners in Libya, and after numerous attempts and efforts to collect our dues, we regret to inform you that our oilfield service operations will cease from next month (July 2024) until the debts and financial dues are settled.”
However, given the recent wave of major deals Schlumberger (SLB) has achieved in Libya, Ajaj expressed a desire for a “swift resolution” to the crisis.
Two Steps Backward
The debt crisis involving Schlumberger (SLB) threatens to set back Libya’s recent production gains at a time when the NOC is striving to meet its ambitious goals for the oil and gas sector, the country’s lifeline.
Will the NOC be able to overcome this hurdle and achieve its desired production increase despite Schlumberger’s (SLB) serious withdrawal threat and the magnitude of the outstanding debts? Or will the financial crisis continue to impede any significant increase in production?