Libya Oil and Gas Report Q4 2012

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Dallas, TX -- (SBWIRE) -- 10/26/2012 -- We expect oil and gas production to bounce back strongly in 2012, despite the obvious political risks associated with Libya’s transition to a new democratic government. Over the longer term, both oil and gas volumes are likely to increase beyond pre-war levels as new investment flows into underexplored areas – especially the offshore Sirte Basin.

The key trends and developments in Libya’s oil & gas sector are:

- We forecast total liquids production of 1.62mn barrels per day (b/d) in 2012, rising to 1.77mn b/d in 2016 and 1.85mn b/d by 2021. Gas output is forecast to increase from 5.96bn cubic metres (bcm) in 2012 to 16.45bcm by 2016 and 19.26bcm by 2021.
- These forecasts are subject to upside risks depending on the level of upstream investment. The new democratic government has pledged to invest US$10bn raising oil and gas production capacity from existing fields and US$20bn on new exploration over the next 10 years, according to oil and gas minister, Abdurahman Benyezza. If that materialises, output could well increasebeyond our long-term projections.
- International investment is also a big unknown. Foreign suitors are likely to be attracted by Libya’s vast oil and gas reserves, which stood at an estimated at 44.1bn barrels (bbl) and 1.56trn cubic metres (tcm) respectively in 2011. However, clear political risks, the introduction of new production sharing contracts (PSC), and a revised hydrocarbons law are all likely to affect the country’s business environment.
- Before the civil war, there was some 378,000b/d of refining capacity in Libya (according to BMI’s Downstream Projects Database). Throughput has been well below this level in H112 because the country’s 220,000b/d Ras Lanuf facility remained shut-in until late August 2012. Our forecasts point to a gradual restoration of refinery utilisation, with a return to pre-war levels expected by end-2012.
- Oil and gas consumption is set to return to pre-war levels gradually because damage toinfrastructure is likely to lead to lower domestic demand from power generation. However, over the longer term, reconstruction efforts are likely to drive economic growth and oil demandhigher. At the time of writing, we forecast an OPEC basket oil price for 2012 of US$107.05/bbl, which we see falling to US$99.10/bbl in 2013. Global real GDP growth for 2012 is forecast to be 2.6%, down from 3.1% in 2011, reflecting a faltering recovery in the US and continuing concerns over the eurozone debt crisis.

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