On Wednesday, the chairperson of Libya’s National Oil Corporation (NOC) visited Cairo to meet with Minister of Petroleum Tarek El Molla to discuss mutual cooperation opportunities between the two countries in the oil and gas sector. The visit comes after the announcement of new gains in Libya’s oil production this week.
Despite Egypt’s abundance in hydrocarbons, it had always been a challenge for the Egyptian state to ensure reliable and affordable energy sources. This is even more after the country turned from being an exporter in the field to becoming an importer just to be able to meet domestic demand. The currently frozen agreement between Egypt and Aramco entails importing 700,000 tonnes of petroleum products monthly to Egypt for five years.
The NOC announced on Tuesday that it reopened the pipelines connecting the Sharara oil field to the Zawya refinery, and El-Feel oil field to the Mellitah complex, which had been blocked since November 2014. The combined production capacity for the two fields is 420,000 barrels per day (bpd).
Moreover in September, leader of the Libyan National Army (LNA) Khalifa Haftar—who is backed by Egypt and the United Arab Emirates—seized Libya’s oil crescent ports (Ras Lanuf, Al-Sidra, Zueitina, and Brega), which in turn led to the NOC’s immediate resumption of exports of stored crude oil.
Since the LNA gained control over the oil ports, according to OPEC, Libya has reached a production level of 600,000 bpd. This is still less than half of its post-2011 production levels of 1.6m bpd. However, since Libya is free from OPEC restrictions, it is targeting an output of 900,000 bpd by the start of 2017.
Haftar’s legal advisor and member of Libya’s house of representatives Abdullah Al-Thani, as well as several political figures from Libya’s east, stated earlier this year that Libya would export oil to Egypt for free in order to help Egypt recover from the halt of Aramco’s oil supplies. If true, this could greatly ease the pressure on the Egyptian government in the wake of rising petroleum prices and the current rift between Egypt and Saudi Arabia.
