Eni, BP drilling for oil onshore Libya after 10-year hiatus

European energy majors Eni and BP have resumed onshore exploration activities in Libya after a 10-year hiatus, the country's National Oil Corporation said, as the key sector continues to strengthen following a recent shutdown.

"Italian company Eni and British company BP have resumed their exploration activities in Libya after stopping drilling operations in the onshore area since 2014," the state-owned company said in a statement on X on Oct. 26.

"The Spanish company Repsol is also preparing to resume drilling operations in the Murzuq Basin, while the Austrian company OMV will begin its activities in the Sirte Basin area in the coming weeks."

The NOC added that Eni had begun drilling for oil in Area B in the Ghadames Basin through the Italian company's A1-96/3 exploration well, which is testing "a series of promising geological formations... expected to contain oil and gas."

Alongside BP and the Libyan Investment Authority, Eni is the operator of the key acreage in western Libya, which sits just 35 km away from the 37,000 b/d Wafa oil field. The well is being drilled to a depth of more than 3,000 meters.

Representatives from Eni confirmed to S&P Global Commodity Insights that "exploration activities have begun in Libya", offering no further comment. BP directed questions to operator Eni.

Repsol and OMV did not immediately respond to requests for comment.

News of the IOCs' resumption of exploration activity -- a central tenet of the NOC's efforts to boost oil production from 1.15 million b/d today to 2 million b/d within five years -- comes alongside a production boost of 10,000 b/d by joint venture Akakus, NOC said.

"Akakus Oil Operations Company has increased its daily oil production rate by 10,000 barrels, as part of the implementation of the National Oil Corporation's strategic plan to increase production," the company said on social media on Oct. 27. "Thus, the production rate in the company's Sharara field reached 284,616 b/d."

The Sharara field, Libya's largest, is operated by a joint venture including NOC, Spain's Repsol, France's TotalEnergies, OMV and Norway's Equinor.

The development, alongside nearby El-Feel, which both supply light sweet crude to Europe, have been frequent targets for armed groups and political actors since the fall of Moammar Qadhafi in 2011 plunged the North African country into chaos.

Shutdown over

Increased exploration activity and production highlights an improved outlook for the Libyan oil sector following a devastating shutdown in September.

In late August, the country's eastern faction closed oil fields, ports and installations in response to efforts by the western government to replace the head of the country's central bank, which receives and hands out oil revenues that underpin some 93% of government spending.

Libyan output fell to 580,000 b/d in September as a result, according to the Platts OPEC Survey from S&P Global Commodity Insights.

The crisis was finally brought to an end after Naji Essa was appointed as the new central bank governor on Oct. 3, later receiving formal approval from chambers in the east and west.

Commodity Insights reported that production could now surge past pre-shutdown levels with companies having used the crisis as an opportunity to carry out maintenance, as well as new drilling by NOC and its partners.

El-Feel, operated by Eni and NOC, was producing at close to record levels of just under 90,000 b/d after coming back online in October, according to sources with knowledge of the matter.

In its most recent production update on Oct. 20, the NOC said production had reached 1,327,646 b/d of crude and condensate and 193,690 boe/d of natural gas.

However, experts note that healthy crude production still remains vulnerable to the whims of key political actors and armed groups.

Libya's flagship export grade Es Sider was last assessed by Platts at a $2.20/b discount to Dated Brent on Oct. 25 -- a 19-month low -- after having climbed to a $1/b premium during the shutdown.