According to BP statistics, as of the end of 2017, Libya has proven oil reserves of approximately 48.4 billion barrels, making it the world’s tenth largest oil reserve.
Since 2013, there have been no new oil reserves in the country. Based on production in August 2018, the country’s storage-to-production ratio is about 137 years.
Looking at the history of oil production in Libya, it can be found that its oil production is often fluctuated by external factors. In the 1960s, Libya entered the golden decade due to the release of oil exports, and its output reached a historical peak in 1970, with an average daily production of 3.32 million barrels. Libya joined OPEC in 1962.
The blazing period of the development of the Libyan oil industry is also accompanied by frequent wars in the Middle East. In 1973, the fourth war broke out in the Middle East, and Libyan oil production plummeted to half a million to 1.52 million barrels per day. Subsequently, Libyan oil production entered a relatively stable period.
In 2011, Libya’s civil war broke out, and oil production fell from nearly 1.6 million barrels per day at the end of 2010 to 100,000 barrels per day in September 2011, a cumulative decline of nearly 94%, and production activities almost all stopped. With the fall of Gaddafi and the calming of the civil war, Libya’s oil industry has a short-lived breathing opportunity, and production has quickly returned to pre-war levels. However, due to the unstable political situation in the country and social unrest, oil production fell sharply again in 2013. .
Up to now, although the overall oil production in Libya has improved significantly, the internal disturbances continue to interfere intermittently with production activities. From 2017 to 2018, the peak output is basically at the level of 1 million barrels per day.
In view of the social unrest in Libya and the complex and unstable political situation, OPEC did not restrict Libyan oil production in the production reduction agreement reached at the end of 2016. The exempted countries that reduced production also include Nigeria. By the end of 2017, with the recovery of Libya’s output, OPEC unanimously decided to call on Libya and Nigeria to control the total output below 2.8 million barrels per day, including 1 million barrels per day in Libya and 1.8 million barrels per day in Nigeria, but not made hard limit.
B resource reserves are huge
Libya’s current distribution of petroleum resources can be broadly divided into east and west regions. The eastern area is located in the inland area south of the Sirte Bay. The overall characteristics are east-west distribution. The oil fields are mainly concentrated in the three provinces of Ajdabiya, Jufra and Sirte; the western part is distributed in the north-south direction, and the oil fields are mainly concentrated in Obari and Gaelyan provinces.
In addition, in addition to the onshore oilfield, Libya has two offshore oil producing areas in the offshore waters of the northwest, namely Al Jurf and Bouri. The oil produced in the above two producing areas is mainly medium quality, of which Bouri has a high sulfur content of about 1.79%; Al Jurf has a low sulfur content of about 0.19%. Al Jurf, which is also a medium crude oil, is lighter than Bouri and has a lower sulfur content, so it is also higher in value than Bouri.
In general, the quality of oil produced in the onshore oilfield is better than that of offshore offshore oilfields. Except for the petroleum produced by Messla, which is light sulfur, the rest of the oil produced is light and low sulfur, and the API degree is between 36.1 and 60. The sulfur content is between 0.04 and 0.4, including ultra-light Mellitah condensate.
Among the major oil fields in Libya, except for the Nakhla and As Sarah fields, which are operated by BASF’s subsidiary Wintershall, the remaining oil fields are managed by the Libyan National Oil Company (NOC). The Saari, Messla and Hamad fields in the west are fully managed by AGOCO. AGOCO is a wholly-owned subsidiary of NOC, and Waha, Harouje, Akakus, Mellitah, and Mabruk are joint venture subsidiaries of NOC. The El Sharara field is the largest single oil field in Libya with a capacity of approximately 300,000 barrels per day.
There are mainly seven key oil export ports in Libya, the largest of which is Es-Sider, with a daily export capacity of 337,000 barrels, followed by Ras Lanuf, Zawiya and Zueita, with an average daily throughput of 220,000 barrels and 200,000 respectively. Bucket, 200,000 barrels.
C export volume is highly correlated with production activity
Libya’s domestic demand for oil is relatively small, and it is basically self-sufficient and therefore a net exporting country.
According to EIA data, the peak domestic demand appeared in 2009, with an average daily consumption of about 310,000 barrels. As of 2014, Libyan oil consumption was about 260,000 barrels per day, most of which was used in refinery raw materials. There are 5 refineries in Libya, all of which are state-run, with a total disposable processing capacity of 378,000 barrels per day. The El Brega refinery in the eastern part of Ras Lanuf has been shut down since April 2017 due to technical problems with the distillation tower. The repair time has not yet been determined.
Libya’s tiny domestic demand means that most of the production needs to be digested through exports. At the same time, the oil industry is the country’s largest pillar of GDP. According to OPEC data, the industry accounts for about 60% of the national GDP and is 80% of the source of export revenue.
Libya’s oil exports are highly correlated with its production activities. With the recovery of production, the country’s oil exports have increased significantly since 2016. The average daily export volume in 2017 was 725,000 barrels, an increase of 425,000 barrels per year, 2018. The average daily export volume is 890,000 barrels, an increase of 165,000 barrels.
By region, Europe is undoubtedly the most important export market in Libya. In 2018, Europe imported an average of 620,000 barrels of oil per day from Libya. Among them, southern Europe and Northwest Europe imported the most, with an average daily import of 466,000 barrels and 144,000 barrels. Asia is the second largest market, with an average daily import of 215,000 barrels, including an average daily import of 150,000 barrels in East Asia. In addition to Europe and Asia, the markets of North Africa, Latin America and North America are all traces of Zambian oil.
According to the country, Italy, Spain, China and France are the top four buyers of Libyan oil. Since 2018, they have imported 300,000 barrels per day, 126,000 barrels per day, 124,000 barrels per day, and 96,000 barrels per day. On the day, the proportion was 33.7%, 14.2%, 13.9%, and 10.7%, respectively. Italy has a certain degree of participation in the Libyan oil industry, and Eni Energy Group in the country has signed a production sharing agreement (PSA) in El Feel and Bouri to obtain a share of the oil supply of the above two fields. In addition, the group and Libya jointly built a submarine pipeline connecting the northwestern coast of Libya with Sicily, Italy, but this pipeline is only responsible for natural gas transportation.
Most of the oil exported from Libya is high-quality light and low-sulfur crude oil produced from onshore oil fields, and the remaining oil exports average only 64,000 barrels per day. Among them, medium-quality oils are mainly exported to Italy and Spain. China imports light crude oil from Libya, of which light high-sulfur crude oil accounts for only 1.9%, and the rest are all light and low-sulfur crude oil. Sinochem, Sinopec and PetroChina are major buyers, and CNOOC has a small amount of purchases.
D is less likely to increase steadily
Since the civil war in 2011, Libya has not achieved the peace in its own country. In fact, its political situation has become more complicated than ever. Not only have the domestic government split into two major factions, but also a large number of anti-government armed forces have emerged. These armed forces are also divided into various factions, each representing their own interests and goals, plus the horror of invasion from the southwest. The forces of the country have caused the country’s oil to fall into an extremely harsh production environment. Although it has nearly 50 billion barrels of natural oil resources, it is difficult to put into production in a planned and effective manner.
Due to the small amount of domestic consumption, most of the oil produced is exported to overseas for consumption, and oil exports have become the first pillar of the Libyan economy. Infrastructure, including pipelines and ports, has been able to meet the current industrial needs of nearly 1 million barrels per day. The most significant problem is the disruption or destruction of facilities caused by armed conflict.
Libya’s oil supply is mainly for the European market, so the impact of sudden factors on the price of Brent crude oil is more obvious. Under the influence of these factors, the price of WTI crude oil in the west is mainly due to the reasonable price difference between the arbitrage mechanism and Brent crude oil. In addition, since the country’s oil exports are mainly light, low-sulfur crude oil, when the supply is reduced or interrupted, the availability of related oils in the physical market is reduced, and the corresponding price will also rise.
In the short-term, due to the harsh production environment, Libya’s oil production is unlikely to increase steadily. Intermittent supply will be blocked. Superimposed OPEC limits on production, and its chances of continuing downward pressure on international oil prices are small. Fluctuation is the main line.