Libya’s upstream opportunities are very significant but hard to assess, given that most of the available onshore and offshore areas are still under-explored. With only 25 per cent of the country’s total area covered by E&P concession agreements, most of Libya’s potential is still based on general assessments by the Libyan National Oil Corporation (NOC), several international oil operators (Eni, Shell, Oasis Group) and various consultancies. At present, most analysis indicates that Libya’s proven oil reserves are around 39 billion barrels of crude oil. When one takes into account that Libya also has significant natural gas reserves – Oil & Gas Journal estimates these reserves at 52 trillion cubic feet (Tcf), while Libyan analysts give possible reserve volumes of around 100 Tcf – increasing production and exports are well in line with expectations.

According to the Energy Information Administration, the statistical arm of the US Department of Energy in Washington, Libya’s onshore oil has been found mainly in three geological trends of the Sirt Basin: the Western Fairway, which includes several large oil fields (Samah, Beida, Raguba, Dahra-Hofra, and Bahi); the north-centre of the country, which contains the giant Deffa-Waha and Nasser fields, as well as the large Hateiba gas field; and an easterly trend, which has large fields such as Sarir, Messla, Gialo, Bu Attifel, Intisar, Nafora-Augila, and Amal. Overall, Sirt contains approximately 80 per cent of Libya’s proven oil reserves and accounts for 90 per cent of production. These figures, however, may well be underestimates. Until now, the latter has been under-explored, while there have been limited attempts to target possible offshore natural gas reserves.

Experience in Egypt, Tunisia, Algeria and even Malta, has shown that offshore reserves would almost certainly be commercial in the Libyan areas.

New areas which have recently been put forward by NOC are largely situated within the Ghadames and Murzuq basins, such as Field A in Block NC- 186, Kufra in the south-eastern desert and Cyrenaica-  Batnan. According to the latest information available, the Ghadames basin is linked geologically with oil and gas structures in Algeria and Tunisia. Murzuq has been a successful area for oil and gas exploration in recent years, with new fields including the El Sharara and NC-174 (Elephant) fields. Offshore possibilities exist, but will be constrained by the fact that Libya has a relatively narrow continental shelf and slope in the Mediterranean and Gulf of Sirt, which widens in the west in the Gulf of Gabès. The northern part of the Gulf of Gabès, also known as the November Seventh concession, lies on the Libyan-Tunisian border. Since 1988, when Tunisia and Libya reached a settlement regarding the border area, the Libyan-Tunisian Joint Oil Company (JOC) has been exploring a potential 3.7 billion barrels of oil and nearly 12 Tcf of natural gas reserves in the area.

NOC is putting much emphasis on enhanced oil recovery (EOR) to counter on- going depletion of existing reserves and this process will also improve overall new production. Since 2002, several new projects have been put in place by NOC and its international affiliates. Government officials and international consultants have suspected that Libyan oil production levels have been under pressure, largely due to the fact that existing fields are undergoing a seven to eight per cent natural decline rate. According to EIA figures, Libya’s challenge is to maintain production at its mature fields (Sarir, Messla, Nafora, Deffa, Waha) while finding new oil and developing new discoveries. Analysts expect that with production at existing fields expected to fall by around 400,000 bpd by 2010, EOR techniques could increase existing production by around 250,000 bpd, but this still leaves work to be done if overall production levels are to increase.

Increased international cooperation and investment are needed if NOC is to reach the goals set by the overnment. First indications, however, are very optimistic. The first Libyan licensing programme since the 1980s, executed by NOC, has proven that international interest is immense. Of the 163 companies that registered to apply for oil and gas exploration permits under the first licensing bid round, 63 were given the green light to submit bids.