BP and Eni to start drilling in Libya within months
BP and its Italian partner Eni are expected to start exploratory drilling in Libya early in the first quarter of 2019, according to the chairman of the country's National Oil Company.
"The first well will be drilled at the beginning of the first quarter," Mustafa Sanalla told the Telegraph.
"I'm optimistic. The Italians are courageous and have experience on the ground, but the return of BP is the most important thing.
"It sends a strong signal to other international oil companies that the Libyan market is promising."
The UK-listed oil company’s return to Libya comes seven years after its exploration programme was interrupted in 2011, when civil war broke out and it decided to withdraw personnel.
BP’s comeback was preceded by a deal to sell 42.5pc of its 85pc stake in the second party share of an exploration license that covers three areas — two onshore sites in the Ghadames basin and one offshore area in the Sirt basin — to Eni.
The deal was announced by the two oil companies on October 8.
Under the terms of the deal, the remaining 15pc stake in the second party share of the exploration license will remain in the hands of the Libyan Investment Authority.
The second party share of the exploration license makes up 22.3pc of the entire exploration and production sharing agreement. Libya's NOC holds the other 77.7pc stake.
Libya is hoping the new exploration will help it to boost future oil production.
The North African nation is aiming to produce two million barrels per day (bpd) of crude by 2022, up from the current level of around 1.3 million bpd.
Amid political instability, Libyan crude production has been volatile since the revolution in 2011, frequently surprising analysts and roiling international oil markets.
“We can hit the target - but the security environment has to improve,” said Sanalla. “If we have enough investment we can repair the infrastructure - especially the pipelines and storage tanks. If we focus on this we will add hundreds of thousands of barrels.”
In September, the headquarters of Libya’s NOC was attacked while Sanalla was in the building and two members of staff were killed. Islamic State claimed responsibility for the attack.
Richard Mallinson, an analyst from the consultancy Energy Aspects, believes that Libyan production is likely to remain problematic due to ongoing security problems.
“A restart of exploration drilling would be a positive sign but it certainly doesn’t mean Libya has turned a corner,” he said.
“The security situation remains deeply troubling and there’s little sign of progress on the many political problems.
“The oil sector is enjoying a couple of good months in terms of production and exports, but this follows serious disruptions earlier in the summer and could easily unravel.”
Libya has Africa’s largest oil reserves and produced 1.6 million bpd before the country’s revolution in 2011.
