Page 5 - AfrOil Week 14 2022

AfrOil COMMENTARY AfrOil

However, the pipeline has been mostly idle emphasised the political obstacles that are likely
since 2014, and until recently, there hasn’t been to slow efforts to boost Libyan gas exports. For
much of an incentive to bring it back up to its example, two experts interviewed last month
full capacity of more than 15bn cubic metres per by NewsBase – Hamish Kinnear, a Middle East
year in the absence of a political settlement in and North Africa (MENA) analyst for Verisk
Tripoli. Maplecroft, and Ross Cassidy, the vice president
That changed in the wake of Russia’s invasion of MENA research at Welligence Energy Ana-
of Ukraine in late February of this year, which lytics – identified political risk as a complicating
led Italy and the rest of the EU member states to factor in gas export initiatives.
start looking for alternatives to Russian gas sup- But on the other hand, some observers are
plies. Under these circumstances, Greenstream optimistic about NOC’s chances. Douglas
became a much more attractive supply route, not Rycroft, director at Gneiss Energy, told News-
least because it hinged on existing infrastructure Base earlier this week that he saw reason to hope
rather than new construction and could be filled for a new supply agreement between Rome and
by gas fields that were known to contain com- Tripoli.
mercial reserves rather than unexplored new “High-level talks between Italy and Libya
acreage. appear close to bearing fruit, with the Italian side
Even better, these fields were already assigned speaking of deals for extra gas supply through
to a European company, Italy’s Eni. Greenstream being signed off within weeks,” he
It’s no surprise, then, that Italian govern- said. “The pipeline has capacity to spare, with
ment officials have started talking to Libya 2021 volumes averaging 3.2 bcm, well below
about restarting gas supplies. On April 4, Italian the pipeline’s technical capacity of 15.3 bcm per
Ecological Transition Minister Roberto Cingo- year.”
lani claimed that Rome expected to sign new Rycroft also highlighted NOC’s upbeat
agreements soon with Algeria, Azerbaijan and approach on the upstream side, saying: “Libya’s
Libya to boost the volume of gas delivered to the NOC has certainly been talking up its pros-
Italian market. pects of ramping up gas output over the last few
“A series of talks are under way ... In the next months in response to EU requests for diver-
few weeks, we will close the first agreements,” he sified supplies. This comes despite warnings
was quoted as saying by Reuters. in September that gas output could decline to
These countries are on track to send an addi- 20mn cubic metres per day by 2023, compared
tional 10 bcm of gas to Italy this year and will to the 48 mcm per day of marketed gas produc-
see volumes double to 20 bcm by 2024, Cingo- tion in 2020.”
lani claimed. He did not specify how much each He continued: “NOC has held talks with Eni
country was likely to provide or when the extra and TotalEnergies, among others, and will seek
gas was slated to begin arriving in Italy. to reverse the downward trajectory by targeting
the capture of flare gas, particularly at the Shar-
EU’s expectations ara oilfield, as well as targeting increases in ‘free Sanalla has
In other words, Cingolani did not say exactly gas’ from on- and offshore fields, including the
how much more gas Italy hoped to receive from redevelopment of Mabrouk.” good reasons
Libya this year or how quickly volumes might
rise over the next two years. (Currently, the Ongoing feud to cultivate
North African country accounts for about 7% Both camps have a point. Sanalla has good rea-
of Italy’s total gas imports, or about 4-5 bcm per sons to cultivate relationships with major Euro- relationships
year.) pean energy companies at a time when the EU with European
Nor did he comment on Sanalla’s remarks in is urgently seeking alternatives to Russian gas
March about NOC’s strong interest in and read- supplies, and Rycroft is not wrong to note that companies, but
iness to increase its gas production in response NOC’s efforts are bearing fruit.
to strong global demand for this type of fuel. The At the same time, Oun has good reasons to Oun also has
NOC chief made statements to this effect last conclude that Libya currently lacks the capac-
month at a meeting with Patrick Pouyanné, the ity needed to shift Europe’s energy mix and good reasons to
CEO of TotalEnergies (France), and spoke sim- will need to work for several years to build up raise questions
ilarly to representatives of BP and Eni, according a more robust gas export network. Likewise,
to press reports. Cassidy and Kinnear are not wrong to suggest about Libya’s
By contrast, Oun has stressed NOC’s limita- that the country’s political situation should not
tions. In recent weeks, he has argued that Libya be ignored. export capacities
has little ability to make up for planned reduc- For the time being, one component of that
tions in Russian gas deliveries to Europe. The oil political situation will be the fight between Oun
minister has also asserted that NOC will need at and Sanalla, with the former taking a slower
least five years to develop the capacity to cover approach (and taking sides in political battles)
European gas demand in a meaningful way. while the latter strives to cultivate relationships
with foreign investors (and to remain neutral
Disagreement among observers amidst Libya’s civil strife).
There does not appear to be a consensus among The dispute is likely to continue at one level
industry analysts as to whether Oun or Sanalla or another as long as the country’s warring
is correct. factions remain at odds over elections, public
On the one hand, some observers have finances and other issues. ™

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