Rome- Libya, Italy and several parties are preparing to organize the third edition of the “Libya Energy and Economy Summit” on January 18 and 19 in Rome, amid ambitions driven by the North African country’s vast wealth and security and political challenges that hinder its exploitation.
The Italian company “Saipem” took the lead at the beginning of this week during the roundtable between Libya and Italy, in preparation for the summit, after it demonstrated its readiness to implement major projects in Libyan territory.
During the roundtable held in Rome, Saipem’s CEO for East North Africa and Cyprus, Djerviou Elia, announced his company’s preliminary qualification to carry out the engineering, procurement, construction and installation works for the “E” production platform, which is part of the $8 billion “E” and “I” structures development project.
This project aims to boost gas production in Libya, to supply the domestic market and meet Europe’s growing energy needs.
Available opportunities
The oil production infrastructure development project is led by Mellitah Oil & Gas, a joint venture between the Italian multinational Eni and the Libyan National Oil Company, and aims to increase gas production to supply the Libyan domestic market and export gas to Europe. It also aims to reach a production of 750 million cubic feet of gas per day by 2026.
“We have completed the initial qualification of the production platform that will give Libya one of the largest production platforms in the Mediterranean. It will be a challenge, as it is a platform weighing more than 60,000 tons, with one of the largest steel structures in the sector,” said Djerviu Elia.
The roundtable in Rome reviewed the prospects for oil exploration and development in Libya, in addition to the current oil production structures development project. Eni focused on some gas-related projects under development, including the gas exploitation project in the Bouri field., Supported by a carbon capture facility and another 100 million cubic feet per day gas production project, which is expected to come on stream in 2025.
Despite Libya’s vast energy opportunities, economic and political challenges are hampering the country’s oil and gas production, according to Italian media outlets that reported on the matter days before the roundtable in Rome.
Mustafa Al-Zaitrawi, a researcher in political and social geography and visiting professor at the University of Turin, points out that Libya has enormous potential to develop renewable energy thanks to its area and favorable climate.
Al-Zaitrawi told Al Jazeera Net that Libya, with its distinguished geographical location near Europe and its abundant oil resources, represents a vital partner for Europe, especially Italy, which seeks to ensure stable energy sources.
Al-Zaitrawi stressed the importance of the role played by Italy as a mediator in developing the Libyan energy sector, noting that its investments could ensure the sustainability of the partnership in the long term, and that improving Libyan energy production could contribute to achieving economic and social stability in the country by providing job opportunities and increasing revenues.
Challenges
Regarding Italy’s commitments regarding energy production in light of the current Libyan situation, Martina Opizzi, President of the North Africa and Levant region at Eni, said: “We are committed to supplying Libya with a sufficient quantity of gas to meet internal needs and continue exports, while reducing our carbon footprint,” adding that the operating company, Saipem, has “already signed some contracts for all projects.”
In addition to marketing gas, Libya is prioritizing the recovery of mature oil fields and old assets, as stated in the presentation of the roundtable in Rome, which indicated that Tripoli is looking for international partners in the private sector to apply advanced technologies and carry out modernization and maintenance works to increase recovery rates and stabilize production.
In this context, the CEO of Wazen Oil Services Company, Ibrahim Al-Majrisi, confirmed that “there is huge potential in maintenance work in Libya, whether it is related to an investor who wants to provide products or a service or engineering company.”
In the longer term, challenges related to financial, political and contractual stability remain for Libya, which continues to face long project implementation times, hampering foreign investment and the timely completion of ongoing projects. For example, the Italian engineering and general contracting company Renco was awarded a contract to build a 36 MW power plant in the Sarir field in eastern Libya in 2013, but it only became operational in June of this year due to geopolitical instability and delayed payments.
In this context, Alessandro Galli, Director of the Industrial Facilities Division at Renco, says, “We need to start projects with guarantees, letters of credit, and financial instruments that provide support and create certainty from the banking system.”
Financial challenges
On the other hand, the Chairman of the Board of Directors of the Libyan Foreign Bank, Ahmed Al-Darrat, issued a warning about the devastating impact of the financial crisis on the cost of living in Libya, saying, “The prices of consumer goods have risen dramatically, with increases of up to 300% for some products.”
Al-Darrat pointed out that the Libyan currency has lost a large part of its value, stressing that the crisis is severely affecting commercial activities in the country.
“Traders and economic actors are facing difficulties: they cannot conduct their business or cannot manage their operations efficiently,” he added, explaining that uncertainty about the governance of the Central Bank of Libya and the lack of trust in financial transactions have paralyzed the economic system.
“Every day that passes without a solution worsens the situation, making the problem more difficult to solve,” he continued.
Al-Darrat stressed that the continuation of the financial crisis is pushing the country towards economic collapse, warning that “every day of this crisis is equivalent to months of efforts to solve problems and clean up the resulting chaos.”
“Change must happen as soon as possible, otherwise the situation will become unsustainable,” he concluded, expressing hope that a solution will be found before the situation deteriorates further.
Politics fluctuations
Researcher Mustafa Al-Zaitrawi told Al Jazeera Net that the political and security challenges facing Libya, such as political division and security fragility, make oil supplies vulnerable to political fluctuations. This was recently highlighted during the crisis at the Central Bank of Libya, which led to the closure of oil fields and a reduction in the country’s exports by up to 80%.
He stated that Libya’s current production capacity is 1.2 million barrels per day, with the possibility of increasing it to 3 million barrels, which means there are great opportunities for Italy and Libya’s partners to increase investments in this field.
Investment Portal
Al-Zaitrawi explained that stable policies and institutional legitimacy are two essential keys to attracting investments in the traditional and renewable energy sectors. Therefore, Italy, as one of the largest investors in Libya, must play a more active role in ending the political crisis, as this will lead to a sustainable and fruitful economic and investment partnership.
