Page 4 - AfrElec Week 02 2021

AfrElec COMMENTARY AfrElec

Libyan power plants still need gas

Despite the rapid recovery in oil production, the North African country is still working to
ensure fuel deliveries to GECOL

LIBYA MORE than two months have passed since the long argued that Libya’s southern and eastern
signing of a ceasefire agreement between war- regions receive an unfairly small share of total oil
WHAT: ring factions in Libya – namely, the UN-backed export earnings and have called for the revision
NOC and GECOL recently Government of National Accord (GNA) in Trip- of distribution arrangements.
discussed gas deliveries oli and the Libyan National Army (LNA) headed
to the latter company’s by Khalifa Haftar. So far, the ceasefire, which Threats to production
TPPs formalised the arrangements made between the When the ceasefire deal was signed, GNA and
parties in September, has held, and as a result the LNA agreed to work together to hammer out a
WHY: country’s oil and gas sector has made significant mutually acceptable solution to the matter. To
Fluctuations in oil progress. date, though, they have not done so. Nor have
production tend to affect That progress is evident in the success of they reformulated the payment mechanisms
gas deliveries to Libyan efforts by National Oil Corp. (NOC) to bring governing the Central Bank’s handling of oil
power stations coastal oil export terminals and onshore pro- export revenues.
duction facilities back online. It is also evident Consequently, the recovery of the Libyan oil
WHAT NEXT: in the fact that NOC and its subsidiaries have and gas industry is still somewhat precarious.
GECOL’s new agreement managed to reverse the steep decline in produc- Indeed, S&P Global Platts commented earlier
with Algeria’s Sonelgaz tion that followed LNA’s seizure of key oil and this week that the lack of a comprehensive rev-
may pave the way for gas infrastructure facilities in early 2020. Output enue-sharing agreement made the North Afri-
supply alternatives levels averaged 1.2mn barrels per day in Decem- can state vulnerable to dramatic fluctuations in
ber, more than 1mn bpd above the record lows production levels. As such, the news service said,
below 100,000 bpd registered earlier in the year. Libyan oil flows may be subject to more disrup-
Meanwhile, GNA and LNA have continued tion in 2021.
to work together to form a unity government. If this scenario comes to pass, there will be
Earlier this week, representatives of both sides disruption in other areas, such as domestic
gathered at the offices of the Sirte Oil Company power supplies. Locally produced crude oil and
(SOC) in Brega to discuss proposals for the natural gas are the main fuels for Libya’s electric-
reunification of the national budget. ity sector. This means that when hydrocarbon
These talks will, presumably, address a matter production goes down, the country’s thermal
that has been a sticking point for LNA – namely, power plants (TPPs) are less capable than usual
the sharing of oil revenues among the various of keeping customers adequately supplied. Lib-
parts of the country. Haftar and his allies have yans have been able to cover some of the gaps by

P4 www. NEWSBASE .com Week 02 14•January•2021