Libya Analysis Brief• Libya is a member of the Organization of Petroleum Exporting Countries (OPEC) and the country’s economy relies heavily on oil exports. • Libya has the largest proven oil reserves in Africa but most analysts agree that the country is still underexplored. • Libyan natural gas production and exports have increased considerably since the opening of the “Greenstream” pipeline to Europe in late 2004.OverviewThe Libyan economy is heavily dependent on the hydrocarbon industry which, according to the International Monetary Fund (IMF), accounted for over 95 percent of export earnings; an estimated 85-90 percent of fiscal revenues; and over 70 percent of the country’s gross domestic product (GDP) in 2008. According to the Oil and Gas Journal (OGJ), Libya holds close to 44 billion barrels of oil reserves, the largest in Africa. EIA data indicate that 2008 total oil production (crude plus liquids) was approximately 1.88 million barrels per day (bbl/d).The Libyan government plans to increase its oil reserves, production capacity, and further develop the natural gas sector in the medium-term as the country continues to recover from over a decade of U.S. and international sanctions. The United Nations and the United States lifted sanctions on Libya in 2003 and 2004, respectively. Since then, international oil companies have stepped up investments in hydrocarbon exploration and production. Libya’s energy consumption mix has remained relatively constant throughout the decade, with approximately 70 percent of energy demand being met by oil and 30 percent by natural gas. However, with electricity demand on the rise, the government is planning to expand the use of natural gas to meet domestic needs while also exploiting solar and wind potential in more rural areas.OilLibya holds the largest proven oil reserves in Africa, followed by Nigeria and Algeria. According to Oil and Gas Journal (OGJ), Libya had total proven oil reserves of 43.7 billion barrels as of January 2009, up from 41.5 billion barrels in 2008. About 80 percent of Libya’s proven oil reserves are located in the Sirte basin, which is responsible for 90 percent of the country’s oil output. Libya hopes to increase oil reserve estimates with incentives for additional exploration in both established oil producing areas as well as more remote parts of the country. Production Libyan oil production peaked at over 3 million bbl/d in the late 1960s and has since been in decline. The National Oil Company (NOC) would like to raise oil production capacity to 2.3 million bbl/d by 2013. While this is a significant increase from EIA’s 2008 production estimates of 1.88 million bbl/d of total oil (and crude capacity estimates of 1.75) this represents a downward revision for the NOC whose earlier target for the period was 3 million bbl/d. Most of the short-term oil production increases are expected to come from enhanced oil recovery (EOR) processes. Any major new production in Libya will require additional pipeline capacity.ExportsWith domestic consumption of 273,000 bbl/d in 2008, Libya had estimated net exports (including all liquids) of 1.6 million bbl/d. According to 2008 official trade data as reported to the Global Trade Atlas, the vast majority of Libyan oil exports are sold to European countries like Italy (523,000 bbl/d), Germany (210,000 bbl/d), Spain (104,000) bbl/d and France (137,000 bbl/d). With the lifting of sanctions against Libya in 2004, the United States has increased its imports of Libyan oil. According to EIA estimates, the United States imported an average of 102,000 bbl/d from Libya in 2008, up from 56,000 bbl/d in 2005. 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 26o – 44o. While the lighter, sweeter grades are generally sold to Europe, the heavier crude oils are often exported to Asian markets.Refining and DownstreamLibya has five domestic refineries, with a combined capacity of 378,000 bbl/d. Libya's refineries include: 1) the Ras Lanuf export refinery, completed in 1984 and located on the Gulf of Sirte, with a crude oil refining capacity of 220,000 bbl/d; 2) the Az Zawiya refinery, completed in 1974 and located in northwestern Libya, with crude processing capacity of 120,000 bbl/d; 3) the Tobruk refinery, with crude capacity of 20,000 bbl/d; 4) Brega, the oldest refinery in Libya, located near Tobruk with crude capacity of 10,000 bbl/d; and 5) Sarir, a topping facility with 8,000 bbl/d of capacity. Sector OrganizationLibya's oil industry is run by the state-owned National Oil Corporation (NOC). The NOC is responsible for implementing the Exploration and Production Sharing Agreements (EPSA) with international oil companies (IOCs), field development and improvements and downstream activities. Gas NaturalExpansion of natural gas production remains a high priority for Libya for two main reasons. Libya aims to use natural gas instead of oil domestically for power generation, freeing up more oil for export. Second, Libya has vast natural gas reserves and is looking to increase its natural gas exports, particularly to Europe. Libya's proven natural gas reserves as of January 1, 2009 were estimated at 54.4 trillion cubic feet (Tcf ) by OGJ –but the Libyan government estimates have been cited as being more than twice that volume. Major producing fields include Attahadi, Defa-Waha, Hatiba, Zelten, Sahl, and Assumud.ProductionLibya’s natural gas production has grown substantially in the last few years. According to EIA, Libya produced about 562 billion cubic feet (Bcf) in 2008, while consuming just under 194 Bcf. Despite plans to increase natural gas consumption for electricity generation, project delays and infrastructure limitations have kept domestic consumption 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 percent if planned pipelines and gas-fired plants come online. ExportsIn 2008, Libya exported 368 Bcf of natural gas to Europe, of this, 348.5 Bcf was exported by pipeline and the remaining 19.5 Bcf was in the form of Liquefied Natural Gas (LNG). Natural gas exports to Europe have grown considerably over the past five years through both the Western Libyan Gas Project (WLGP) and the 370-mile "Greenstream" underwater natural gas pipeline. Previously, the only customer for Libyan natural gas was Spain's Enagas. The Greenstream pipeline came online in October 2004 and transports natural gas from Melitah, on the Libyan coast, to Sicily. From Sicily, the natural gas flows to the Italian mainland, and then onwards to the rest of Europe. Greenstream is 75 percent owned by Eni, with first flows coming from the Wafa onshore field near the Algerian border and the Bahr es Salam offshore field near Tripoli. Throughput on the Greenstream line reportedly can be boosted to 385 Bcf per year. The WLGP -- a 50/50 joint venture between Eni and NOC -- has now expanded exports to Italy and beyond. Liquefied Natural Gas (LNG)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 which do not allow Libya to extract liquefied petroleum gas (LPG) from the natural gas. Libya's LNG plant, at Marsa El Brega, was built in the late 1960s by Esso and has a nominal capacity of about 125 Bcf per year. Electrical Libya currently has electric power production capacity of about 4.6-4.7 gigawatts (GW), with peak load of around 3.3 GW. Most of Libya's existing power stations are oil-fired, though several have been converted to natural gas. Libya's power demand is growing rapidly (around 6%-8% annually), and is expected to reach 5.8 GW in 2010 and 8 GW in 2020. To prevent such blackouts in the future and to meet surging power consumption, Libya's state-owned General Electricity Company (GECOL) has plans to spend $3.5 billion through 2010 building eight new combined cycle and steam cycle power plants.
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