Libya Says Oil Sector Open Again for Business

By Benoit Faucon 

LONDON--Libya intends to reopen its oil sector to new foreign investments, its state-run oil company's chief said Tuesday, a move that would give oil companies the opportunity to develop the largest petroleum reserves in Africa for the first time in five years.

Libya froze all new foreign investment in 2011 after the civil war that toppled strongman Moammar Gadhafi. International oil companies such as Total SA of France and ConocoPhillips have long had operations in Libya, and Eni SpA of Italy has found ways to keep pumping even as clashes among warring militias and Islamic State damaged the country's oil infrastructure.

Libyan National Oil Co. Chairman, Mustafa Sanallah, told a London energy conference Tuesday that he had been waiting for a "legitimate government with a mandate from the people to come to power" before allowing foreign investment again. But that hasn't happened.

"We cannot stand back and do nothing while the state disintegrates," Mr. Sanallah said in a speech at Chatham House, a think tank.

Libya's U.N.-backed unity government in Tripoli has struggled to assert control over the sprawling North African country. Militias still control Libya's most important infrastructure, and a separate government claims power in the country's eastern regions.

In an interview, Mr. Sanallah also said his company plans to bring its crude-oil output to 1 million barrels a day by April and to 1.25 million barrels a day at year end. If executed, that level of production would represent a remarkable turnaround in a place where violence and the lack of a working government resulted in output falling below 200,000 barrels a day in 2016.

Libya has been on the cusp of an oil-production rebound before, only to have it fizzle. This time would be different, Mr. Sanallah said, because Libya's political factions have agreed that oil flows are necessary.

The most recent ramp up has come after breakthroughs that included a U.S.-led route of Islamic State from its Libyan strongholds and the agreements among several militias to allow oil ports and fields to reopen.

While new foreign investment likely won't come fast enough to help with the production ramp up this year, Mr. Sanallah said it would help revive the long-term future of the country's oil industry.

Mr. Sanallah said he was in talks to rehabilitate a field partly owned by Total and a terminal where ConocoPhillips is a partner.

He said U.S., Chinese and South Korean companies have also approached Libya to invest billions of dollars in new oil and gas fields, refineries and petrochemical plants. He said he would meet some of the companies, which he didn't name, on Thursday during a London summit to promote investment in Libya.

Mr. Sanallah said studies before the civil war had estimated Libya's oil industry needed investment of $100 billion to $120 billion. He said he wants to return Libya to its prewar production level of 1.6 million barrels a day by 2022.

Write to Benoit Faucon at [e-mail]

(END) Dow Jones Newswires

January 24, 2017 09:54 ET (14:54 GMT)

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