Libya puts hope for LNG exports on new finds

ROME // Libya is banking on future discoveries, not its reserves, to back plans for expanding its gas exports. That includes at least one liquefied natural gas (LNG) project that is already progressing rapidly towards construction. Sirte Oil, a joint venture between the Libyan state-owned National Oil Company (NOC) and Royal Dutch Shell, will seek bidders for a contract to refurbish Libya's 40-year-old Brega LNG plant in the fourth quarter of this year, Abdelsalam Hussein, the manager of the project, said yesterday at the Libya Gas Conference in Rome.

The project was predicated on gas discoveries by Shell in its Sirte basin offshore concession area. It was intended to minimise the time required to bring anticipated new gas supplies to market. "We are confident of finding sufficient reserves in the Sirte basin to support the Brega project," Mr Hussein said. "I believe Libya is poised to return to the global energy market as one of the top 10 LNG producers in the world," he added. "We have been in the LNG business for 40 years and would like to continue to be in it for the future."

But Aman Amanpour, the managing director of the Dubai energy consultancy Amanpour Consult, advised against such a strategy. He noted that some other Arab states were now facing gas shortages after developing export capacity that had not been backed by proved reserves. When Oman developed its LNG facilities in the 1990s, it was expecting larger discoveries than those that later materialised. The sultanate now imports gas amid rising concerns about domestic supply shortages while continuing to export LNG under long-term contracts.

Egypt and Abu Dhabi are in similar positions. "Libya needs government input for a gas master plan," Mr Amanpour said. "Libya doesn't need to go through what has happened in Egypt and Oman." Fuad Krekshi, the deputy manager of the Libyan operations of Canada's Suncor Energy, said the north African nation would soon need all its established gas production to supply increasing domestic demand. "Libya will be facing a gas shortage if it wishes to fulfil its export obligations," he said. "If we are talking about exports, we have to talk about exploring and finding new gas.

"NOC has to offer competitive contractual terms for gas and ensure [gas sales are] indexed to international prices. It will also have to ensure that infrastructure is replenished." Libya's most important gas transportation system, its coastal pipeline, was already "saturated", and would need to be expanded to accommodate any additional gas production from the Sirte basin, Mr Krekshi said. On Tuesday, Shokri Ghanem, the chairman of NOC, said Libya was setting the domestic market as its top priority for new gas supplies, but still expected to have some for export.

tcarlisle@thenational.ae