x Abu Dhabi, UAEWednesday 13 December 2017

Libya to open office in Houston as it looks to US support on oil

National Oil Company plans procurement facility amid $20bn push to restore crude output capabilities

An oil pier at Benghazi port, Libya. Esam Omran Al-Fetori/Reuters
An oil pier at Benghazi port, Libya. Esam Omran Al-Fetori/Reuters

Libya's National Oil Corp (NOC) plans to open a US procurement office, its first international facility since a 2011 revolt left the country in disarray, to expand suppliers and convince the Trump administration to support its oil sector.

Mustafa Sanalla, the chairman of the state-run energy company, said NOC and its partners will spend about US$20 billion over the next three years to restore output crippled by the nation's political divides. A Houston office will open to begin building its roster of US equipment and services suppliers, he said.

"It is very important to us," Mr Sanalla said in Washington. The procurement office "will be fully functional in January", he added.

NOC still faces significant hurdles to replace and repair ageing and damaged infrastructure. Production partners including Italy's ENI, Spain's Repsol and France's Total are financing expansion through oil-sharing contracts, he said. NOC also can borrow to finance the rebuilding.

"We hope to secure new investment. We hope a political solution will be reached," Mr Sanalla said while on a visit to Washington, where he is holding meetings with US officials. He said he hopes to meet on Thursday with US secretary of state Rex Tillerson to seek US support for the country's oil sector.

There are still hurdles to the energy effort. The United Nations-backed Government of National Accord in Tripoli lacks control in eastern areas, and has yet to enact a law governing petroleum production, although a draft is under way.

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The Opec-member country last month produced just under 1 million barrels per day (bpd) and earlier set a target to reach 1.25 million bpd this year, a goal thwarted by port and field blockades.

Mr Sanalla declined to say if that production target remains for the near term, calling the issue new investment. "We will be on a good track to achieve that," he said of expansion agreements.

Libya was producing 1.6 million bpd prior to the revolt that killed Muammar Gaddafi six years ago.

This year, US oilfield services supplier Schlumberger returned to the country after a three-year absence. The service arms of Total, ENI and others are working in the country's oilfields, Mr Sanalla said.

The new office "puts America's world-class equipment manufacturers and oilfield service providers at the centre of our procurement strategy", he said.

"Nobody should underestimate what an important strategic choice this is for us."