meed-logo

line1 line2 line3
SIGN IN / REGISTER

Libya has potential for energy project surge

6 July 2023

MEED's August 2023 report on Libya also includes:

> Libyan pipeline contract awarded
> Libyan oil company in pipeline procurement talks
> Libya’s Waha Oil plans water plant
> Halliburton in talks for $1bn Libya oil project
> Eni signs gas deal in Libya

 

After a string of major energy project announcements in the country, Libya will likely be on course for a surge in project activity as long as it can maintain political stability and security.

However, the current period of stability is looking increasingly fragile amid threats from the military leader General Khalifa Haftar, who has warned of military action unless oil revenues are divided fairly within the next two months.

Eastern politicians claim the Central Bank distributes the bulk of oil revenues to the rival UN-recognised government based in Tripoli, even though the oil is produced in fields largely based in the east of the country.

The US special envoy to Libya, Richard Norland – eager to keep oil production flowing – had urged the east not to disrupt production.

The heightened political tensions come after a promising period of increased business activity within Libya that many believe could still pave the way for a boom in the country’s energy sector – if conflict can be avoided.

Recent announcements include a partnership between Libya’s National Oil Corporation (NOC) and Italy's Eni to develop two regions containing expected gas reserves of 6 trillion cubic feet.

The upstream Mellitah complex integrated expansion is meanwhile estimated to be worth $8bn. It is anticipated to have a production capacity of 750 million cubic feet a day (cf/d) of gas for a period of 25 years.

The deal between Eni and NPC for the expansion project was announced in January, but in April MEED revealed that the project still needed board approval before tenders for the main contracts could be issued.

It is possible that stakeholders in this project, like many other major projects in the country, are taking their time before finalising the contract to better gauge the political and security environment before they commit to large-scale investment.

Security company licensing system overhauled in Libya

Political instability

Libya has been plagued by frequent outbreaks of conflict for more than a decade since the removal of Muammar Gaddafi during the Arab Spring in 2011.

Since his removal, rival factions have continually vied for power and the country has failed to create a unified government.

At the moment, the country has two rival governments. The Tripoli-based Government of National Unity (GNU) exerts control over territory in the west of the country, and the Tobruk-based House of Representatives controls territory in the east.

Elections planned for 24 December 2021 were expected to unify the country under a single government, but they never occurred and many of the contested issues that derailed the democratic process in 2021 remain unresolved.

Key problematic issues include the eligibility criteria for presidential candidates and how candidates with military affiliations should be treated.

It has been reported that both sides have agreed that candidates with military affiliations must automatically resign from their military posts if they become candidates, but debate remains over whether provisions should be in place to stop them from resuming their positions once the electoral process has concluded.

Additionally, both sides have agreed that dual nationals that want to stand as president should give up the citizenship of the second country, but no mechanism has been decided on to verify compliance.

While it is clear that undisputed elections and the formation of a single unified government are the best-case scenario, it is possible that the country’s business community and energy sector will prosper without this in place.

UK foreign office asked to relax Libya travel advice

Conflict cooldown

Since the June 2020 conclusion of Operation Flood of Dignity, a year-long campaign in which Tobruk-aligned military forces tried to capture Tripoli, Libya has seen a significant improvement in its security situation and an uptick in energy sector activity.

The increase in business activity since then has shown that the country can attract international businesses for multibillion-dollar projects without a single unified government in place.

Other business deals that have been announced include the signing of a contract between NOC and US-based Honeywell for engineering work on the planned South Refinery project in Libya.

The project is expected to be carried out in two phases and is anticipated to cost between $500m and $600m.

Additionally, Libya’s Waha Oil Company is in advanced talks with US-based Halliburton over a $1bn project to rehabilitate the country’s Al-Dhara oil field.

On top of the series of announcements regarding major projects with international companies, there has also been an uptick in small-scale energy project activity, according to contractors active in the country.

All this points to the future looking promising for the country’s energy sector, as long as stability and security can be maintained. However, keeping the peace is unlikely to be easy, given the precarious nature of the political situation.

Sudan situation

The ongoing conflict in Libya’s neighbour, Sudan, has sparked an influx of refugees into Libya and rising uncertainty about future stability.

Analysts have warned that increased arms trafficking could be part of the fallout from the ongoing war in Sudan as control over the country’s arms storage facilities and borders is reduced.

Further flows of arms into the south of Libya could potentially embolden militias in the region and erode security.

Additionally, before the conflict in Sudan, the African Union and Arab League played significant roles in mediating the unresolved issues between Libya’s two rival governments.

Likely, at least some of the resources that would previously have been used to try to strengthen stability in Libya will now have to be used to deal with the escalating crisis in Sudan.

Maintaining peace and finding common ground between Libya’s rival governments is likely to be critical to the future growth of the country’s energy sector and the broader economy.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10983464/main1954.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Saudi Arabia picks Ras Mohaisen preferred bidder

    18 October 2024

    A team comprising the local firms Acwa Power, Haji Abdullah Alireza & Partners Company and AlKifah Holding has emerged as the preferred bidder for a contract to develop the Ras Mohaisen independent water project (IWP) in Saudi Arabia.

    The state water offtaker received two bids for the contract in April this year.

    The only other company that submitted a proposal for the contract, Spain’s Acciona, is the reserved bidder, according to Saudi Water Partnership Company (SWPC).

    The Ras Mohaisen IWP will have the capacity to treat 300,000 cubic metres of seawater a day (cm/d) using reverse osmosis technology.

    It will also include storage tanks with a capacity of 600,000 cubic metres, equivalent to two operating days, and an electrical substation.

    The project is expected to reach commercial operation by the second quarter of 2028.

    It is initially expected that the SWRO plant will reach commercial operation by the third quarter of 2026.

    Ras Mohaisen is about 300 kilometres south of Mecca, on the Red Sea coast in Saudi Arabia’s Western Region.

    SWPC has appointed Netherlands-headquartered KPMG as the financial adviser, with UK-based Eversheds Sutherland acting as the legal adviser for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12753083/main.gif
    Jennifer Aguinaldo
  • Chinese and Saudi partners set up Hithium Manat

    17 October 2024

    Register for MEED's 14-day trial access 

    Chinese energy storage solutions firm Hithium Energy Storage Technology Company (Hithium) and the local Nabilah AlTunisi have formed a joint venture that will manufacture battery energy storage systems (bess) in Saudi Arabia.

    The joint venture is called Hithium Manat. The planned manufacturing facility has an annual production capacity target of 5 gigawatt-hours (GWh), according to an official statement.

    Hithium launched energy storage solutions designed for the region's harsh environment during a solar and storage conference held in Riyadh.

    According to Hithium, "These systems feature advanced sandstorm protection and robust high and low-temperature designs, supporting ultra-long discharge cycles of 12+ hours."

    It added that the new product line is "customised to meet the unique demands of the Middle East and Africa region".

    Nabilah AlTunisi is the founder and owner of Hithium Manat's local partner.

    "This strategic alliance will not only provide access to world-class energy storage technology but also generate local employment opportunities, stimulate technological innovation and actively contribute to realising the kingdom's Vision 2030 objectives," AlTunisi said.

    Battery energy storage market

    In August, National Grid Saudi Arabia, a subsidiary of state utility Saudi Electricity Company, awarded the engineering, procurement and construction (EPC) contracts for three energy storage systems to Riyadh-based investment group Algihaz Holding. The estimated $800m projects are located in Najran, Madaya and Khamis Mushait.

    National Grid also recently tendered contracts for the construction of five battery energy storage systems with a total combined capacity of 2,500MW across the kingdom.

    The planned facilities, each with a capacity of 500MW or roughly 2,000 megawatt-hours, are located in or within proximity of the following key cities and load centres:

    • Riyadh
    • Qaisumah
    • Dawadmi
    • Al-Jouf
    • Rabigh

    Every utility in the region is procuring or planning to procure bess capacity in light of growing intermittent renewable power in their grids. 

    The overall capacity of deployed bess globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, a GlobalData report issued in June said.

    The report cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    Related read: Battery storage gains foothold

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742375/main.jpg
    Jennifer Aguinaldo
  • Kahramaa invites Ras Laffan substation bids

    17 October 2024

    Qatar state utility General Electricity & Water Corporation (Kahramaa) has tendered a contract to upgrade the Ras Laffan C substation.

    The scope of work covers the upgrade of existing 220-kilovolt (kV) and 400kV substations and the addition of 220kV gas-insulated switchgear bays and an 800-megavolt amps transformer.

    Kahramaa issued the tender on 15 October and expects to receive bids by 28 November.

    The project bid bond is valued at QR1.5m ($410,000).

    Separately, Kahramaa invited firms to submit their proposals for a contract to supply and install power transmission and distribution equipment, including providing and connecting substation main earth and equipment earthing, commissioning fitted substations and pre-commissioning protection testing for 11kV switchgear panels.

    Kahramaa expects to receive bids for this contract, with a bid bond of QR3m, by 14 November.

    Kahramaa is expanding its power generation capacity. Negotiations are under way with the sole bidder led by Japan's Sumitomo Corporation for a contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day.

    Earlier this month, Qatar Electricity & Water Company announced plans to develop a 500MW peak power unit in Qatar's Ras Abu Fontas area.

    Construction is also under way for two solar farms with a total combined capacity of 875MW in Mesaieed and Ras Laffan.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742343/main.jpg
    Jennifer Aguinaldo
  • Neom starts Tabuk highway prequalifications

    17 October 2024

     

    Saudi Arabian gigaproject developer Neom expects firms to submit their prequalification applications for a project to build a mountain road near Tabuk later this month.

    The 11.5-kilometre (km) Tabuk mountain road project comprises a 4km tunnel and 7.5km dualisation of an existing road, according to an industry source.

    Neom expects to receive statements of qualifications from interested engineering, procurement and construction contractors by 29 October.

    The tender proceedings for Neom's transport infrastructure projects are gathering momentum.

    Neom received expressions of interest for a contract to build a coastal highway and infrastructure project catering to the Magna development on the Gulf of Aqaba on 15 October.

    The project, called Magna Infrastructure Packages, is split into three. Package one is 13km, package two is 42km and package three is 41km. The packages cater to the development’s north, central and south areas.

    The design-and-build project covers utilities for water, power, mobility, sewer, buildings and highways, in addition to the coastal highway. The project is expected to be completed by 2027.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12738632/main.gif
    Jennifer Aguinaldo
  • Adnoc completes Fertiglobe stake acquisition

    16 October 2024

    Register for MEED's 14-day trial access 

    Abu Dhabi National Oil Company (Adnoc) has completed the transaction to acquire a majority stake in UAE-headquartered Fertiglobe, the largest nitrogen-based fertiliser producer in the Middle East and North Africa region.

    Adnoc has increased its shareholding in Fertiglobe to 86.2% through the acquisition of 50% + 1 share held by Netherlands-based OCI Global, which is backed by Egyptian billionaire Nassef Sawiris. The Abu Dhabi energy giant previously held a 36.2% stake in Fertiglobe.

    The remaining 13.8% of Fertiglobe’s shares trade on the Abu Dhabi Securities Exchange following the company's stock listing in October 2022.

    Adnoc announced the transaction to become the majority shareholder in Fertiglobe last December. Fertiglobe’s shares were priced at AED3.2 ($0.87) a share, valuing the deal at $3.62bn.

    Following the completion of the majority acquisition, “Fertiglobe’s current management team will stay in place”, including Ahmed El-Hoshy in his role as CEO, Adnoc said in a statement on 15 October.

    “Ahmed El-Hoshy spent 15 years growing OCI’s US and European business in ammonia and methanol via greenfields, brownfields and acquisitions, generating significant value for shareholders by leading recent divestments,” Adnoc said.

    Growing chemicals business

    Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, exporting to 53 countries with a collective market share of about 10% of global trade in these products.

    “The acquisition represents … the expansion of Adnoc’s low-carbon fuels business, and supports its goal to become a top-five global chemicals player,” Adnoc said.

    “Fertiglobe will become the platform for Adnoc’s growth in fertiliser and low-carbon ammonia,” Adnoc said in its statement.

    Adnoc added it will transfer its stakes in existing and future low-carbon ammonia projects to Fertiglobe “at cost and when ready for startup”, including its two projects in Abu Dhabi and other projects in its global portfolio. Adnoc has yet to specify the low-carbon ammonia and blue ammonia production projects.

    MEED understands that the first Abu Dhabi project in question is the blue ammonia facility in the Taziz Industrial Chemicals Zone in Ruwais. Fertiglobe has partnered with South Korea’s GS Energy Corporation and Japanese investment firm Mitsui & Company to build the complex, which will have a production capacity of 1 million tonnes a year (t/y).

    In February last year, the joint venture awarded Italian firm Tecnimont the main contract for executing the engineering, procurement and construction works on the Taziz blue ammonia project.

    The second Abu Dhabi blue ammonia project that Adnoc could be referring to in its statement is a proposed scheme for which it signed a joint feasibility study agreement with British energy producer BP in May 2022.

    Adnoc further said that the two projects in Abu Dhabi will add 2 million t/y of output potential, more than doubling Fertiglobe’s current commercial ammonia capacity of 1.6 million t/y and increasing its total sellable capacity to 8.6 million t/y of net ammonia and urea combined, in addition to other announced global projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12735570/main1542.jpg
    Indrajit Sen