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.
Wil Crisp
Related Articles
  • Facility E nears 25 July bid deadline

    19 July 2024


    The tender closing date of 25 July remains unchanged for the contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    At least one developer team is highly likely to submit a proposal to develop the gas-fired plant, sources close to the project tell MEED.

    Qatar state utility General Electricity & Water Corporation (Kahramaa) had previously extended the tender closing date for the contract in response to developers’ requests, as MEED reported.

    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 (MIGD).

    “We hear that at least one consortium is being formed … others are preparing proposals, but appear unsure if they will ultimately submit them or not,” a source close to the project told MEED in November last year. 

    Kahramaa initially expected to receive bids on 14 December 2023.

    The contract to develop the Facility E IWPP was first tendered in 2019. The three teams that submitted bids for the contract in August 2020 were:   

    • Engie (France) / Mitsui (Japan) / Yonden (Shikoku Electric, Japan)
    • Sumitomo / Kansai Electric (Japan)
    • Marubeni / Kyushu Electric (Japan)

    The original plan was for the Facility E IWPP to have a power generation capacity of about 2,300MW and a desalination component of 100MIGD once fully operational.

    However, the project owner revised the power plant’s design capacity to 2,600MW and sought alternative prices from bidders. 

    Kahramaa eventually cancelled and reissued the tender in September 2023. The current tender entails a power generation plant with the same capacity as initially tendered in 2019.

    MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2027. 

    The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.

    Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.

    Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea's Samsung C&T was the engineering, procurement and construction contractor.
    Jennifer Aguinaldo
  • Masdar’s second bond issue raises $1bn

    19 July 2024

    Abu Dhabi Future Energy Company (Masdar) has raised $1bn through its second bond issuance under its Green Finance Framework.

    The announcement comes one year after the company’s first successful issuance of $750m on the International Securities Market of the London Stock Exchange.

    Masdar said the issuance comprises dual tranches of $500m each, with tenors of five and 10 years and coupons of 4.875% and 5.25%, respectively.

    It said there was strong appetite from regional and international investors, with the order book peaking at $4.6bn – 4.6 times oversubscribed.

    The company finalised the allocation with an average split of 70% to international investors and 30% to Middle East and North Africa investors.

    The $1bn proceeds from the issuance will be deployed to fund Masdar’s equity commitments on new greenfield projects, including several in developing economies, as the company pursues a target portfolio capacity of 100GW by 2030.

    In line with Masdar’s corporate credit ratings, the second issuance was rated AA- by Fitch and A2 by Moody’s.

    First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Citibank, HSBC, Standard Chartered, Credit Agricole CIB, Natixis and MUFG were the lead managers and bookrunners on the issuance.
    Jennifer Aguinaldo
  • Firms seek to prequalify for 12 Saudi water projects

    18 July 2024


    Local and international utility developers have submitted their statements of qualifications (SOQs) for the contracts to develop and operate 12 water public-private partnership (PPP) projects in Saudi Arabia. 

    State-backed offtaker Saudi Water Partnership Company (SWPC) received separate responses from companies for five independent water projects (IWPs) and seven independent sewage treatment plant (ISTP) projects by 4 July, industry sources tell MEED.

    Local and regional companies, in addition to Japanese, Spanish, French and Chinese utility developers, are understood to have sought to prequalify to bid for the contracts, which are set to be tendered in 2024-26. 

    SWPC's shift from a single-project to a multiple-project prequalification process saves time and resources, according to one of the companies that submitted an SOQ.

    "This is particularly true for international developers, which need to allocate resources across various geographies," the source said.

    Another source said he believes SWPC will prequalify companies for lead and technical roles, among others, and then allow these companies to form teams at a later stage.  

    The client previously said that the programme "will provide the opportunity to local and international developers to obtain pre-qualification approval and receive the request for proposal documents for its future projects … without the need to submit a separate qualification application for each project".

    The five IWP schemes have a total combined capacity of 1.7 million cubic metres a day (cm/d). The seven ISTP projects have a total combined capacity of 700,000 cm/d.

    The kingdom's water sector has been undergoing a restructuring programme, with the capacity procurement process linked to the National Water Strategy being undertaken by three other clients: Saline Water Conversion Company, which has been renamed Saudi Water Authority; Water Transmission & Technologies Company; and the National Water Company.
    Jennifer Aguinaldo
  • Nama appoints 2027-29 procurement advisers

    18 July 2024


    Oman's Nama Power & Water Procurement (Nama PWP) has appointed a transaction advisory team to support its 2027-29 power and water procurement strategy.

    According to an industry source, the team comprises UK-headquartered Deloitte as lead transaction and financial adviser, Canada-based engineering consultancy WSP as technical adviser, and US firm CMS as legal adviser.

    The scope of work won by the advisory team includes preparing the overall procurement strategy, extending existing contracts expiring between 2027 and 2029, and undertaking procurement for new-build plants.

    The contracts for three independent power projects (IPPs) in Oman with a total combined capacity of 3,518MW are expiring between 2028 and 2029, according to the state offtaker's latest Seven-Year Planning Statement, which covers the years 2023 to 2029.

    These gas-fired plants and their power generation capacities are:

    • Barka 3 IPP: 750MW (2028)
    • Sohar 3 IPP: 750MW (2028)
    • Sur IPP: 2,018MW (2029)

    Phoenix Power Company, the project company for the 2,018MW Sur IPP, comprises Japan's Marubeni Corporation and Jera and Qatar's Nebras Power. 

    Shinas Generating Company – owned by Saudi Arabia's Acwa Power, Japan's Mitsui and China's Didic – is the project company for Sohar 3.

    Al-Suwaidi Power is the project company for Barka 3. It comprises France's Engie, Japan's Shikoku Electric and the local Suhail Bahwan Group.
    Jennifer Aguinaldo
  • UAE keen to start next nuclear plant phase

    18 July 2024

    The UAE government could start the tendering process this year for the state's next nuclear power plant, located in Abu Dhabi, according to a Reuters report citing a senior UAE government official.

    According to the report, Hamad Alkaabi, the UAE's permanent representative to the Austria-based International Atomic Energy Agency, said: "The government is looking at this option. No final decision has been made in terms of the tender process but I can tell you that the government is actively exploring this option."

    The government has yet to budget for a second power plant or decide on the size or location of such a project, but Alkaabi said it is possible a tender could be issued this year, the report added.

    A significant increase in electricity use over the next decade, driven by population growth and an expanding industrial sector, underpins the plan to proceed with the next phase of the state's civilian nuclear power programme.

    Any new power plant would likely consist of two or four reactors, said Alkaabi, who also serves as the deputy chairman of the board of management of the UAE's Federal Authority for Nuclear Regulation.

    The next phase of the Barakah power plant, comprising reactors five to eight, has been in the planning stage since 2019, according to regional projects tracker MEED Projects.

    The UAE became the first Arab state to operate a nuclear power plant when the first of the four reactors at Abu Dhabi’s Barakah nuclear power plant became operational in 2021.

    Each of the four reactors at the Barakah nuclear power plant can produce 1,400MW of electricity.

    Three of the plant’s four reactors are operational. Emirates Nuclear Energy Corporation's operating and maintenance subsidiary, Nawah Energy Company, completed the loading of fuel assemblies into Unit 4 in December 2023. 

    Unit 4 will raise the Barakah plant’s total clean electricity generation capacity to 5,600MW, equivalent to 25% of the UAE’s electricity needs.

    Korea Power Corporation is the prime contractor for the $24.4bn first phase of the Barakah nuclear power plant.

    GlobalData expects nuclear power capacity in the Middle East and North Africa region to grow from zero in 2020 to an estimated 7.1GW by 2030, mainly thanks to Abu Dhabi’s Barakah nuclear energy plant and the first reactors of Egypt’s El-Dabaa nuclear power plant.

    The UAE is one of more than 20 countries that committed to tripling global nuclear energy capacity by 2050 at the UN climate change summit Cop28, which was held in Dubai in late 2023.
    Jennifer Aguinaldo