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After years of underinvestment in the energy infrastructure of North Africa, major international oil and gas companies, including Halliburton Co., Chevron Corp., and Eni SpA, are expanding their presence in the area as demand from Europe rises.
Executives in the sector are wagering it is worth drilling again in some of the hardest areas to conduct business in the globe as Europe increasingly turns to other sources for its energy requirements after boycotting its primary supply, Russia, following the invasion of Ukraine.
Many European officials have traveled to the area in recent months to further discussions over prospective supply agreements.
Report By Farhat Bengdara
According to Farhat Bengdara, Chairman of the state-owned company, Halliburton and Honeywell International Inc. are negotiating $1.4 billion worth of contracts to build an oil field and refinery with National Oil Corporation in Libya, which has the biggest known oil reserves in Africa.Â
Eni of Italy intends to make investments that will allow it to switch to gas from Algeria from roughly half of the gas it previously imported from Russia.
Western oil executives claim they observe a more stable political environment in North Africa, particularly in nations like Libya where, after almost a decade of civil conflict, fighting between local militias has subsided recently.
Many American businesses had left the area because they believed it to be politically too risky, choosing instead to concentrate on domestic shale production.
They assert that conducting business in the area is worthwhile despite the danger due to the region’s closeness to Europe and vast reserves, with Algeria owning the third-largest recoverable shale resource in the world.
State-owned businesses in the North African area, however, have been ready to sign contracts as they perceive a chance to fill the void left by Russia and profit from rising commodity prices globally.Â
Some nations, like Egypt, are keen to increase their earnings through the sale of energy since their economies are struggling due to rising import expenses, notably for food. The conflict in Ukraine has halted shipments and increased the price of commodities globally.
Report By Mr. Bengdara
According to Mr. Bengdara, the Libyan state-owned business will soon sign a $1 billion contract with Halliburton that would enable the American company to restore the al-Dhara oil field. ConocoPhillips and TotalEnergies SE are now in charge of the oil field in central Libya that Islamic State fighters damaged in 2015, according to Mr. Bengdara.Â
It would be one of the largest contracts that the American oil services firm has recently secured in the Middle East and North Africa.
Requests for comment from Total and Halliburton went unanswered. ConocoPhillips opted not to respond.
According to Mr. Bengdara and a spokeswoman for the American company Honeywell, a contract for the building of a refinery in southern Libya is about to be announced. The first agreement, which is anticipated to be revealed this weekend, is for the design of the facility, according to the spokesperson. This will be followed by a $400 million agreement for the construction of the full plant.
Although it has struggled for years to convert its crude into motor fuel, keeping it primarily dependent on pricey gasoline imports, Libya depends significantly on its oil resources for cash.
A rival prime minister took over the country’s east last year, leaving the North African nation’s capital city of Tripoli under the leadership of Abdul Hamid Dbeibeh, who had been nominated as prime minister by the United Nations.
Following the failure of preparations in 2021, the nation is seeking to have presidential and legislative elections this year.
Since last summer, there haven’t been any major conflicts, and in recent months, the eastern administration of the country has released some of the funds required for the state oil business to reach agreements with foreign corporations.
The United States is actively seeking to re-establish an embassy in Libya, Secretary of State Antony Blinken said on Wednesday, in part so that it can better support the possibility of Libyan elections. Following deadly fighting between militias in 2014, the United States closed its consulate in Tripoli.
It had been reported last month that the United States also put pressure on a senior Libyan commander in mid-January to deport Russia’s paramilitary Wagner Group over concerns the group may access the nation’s oil wealth.
After increasing the receiving regas capacity, Eni plans to begin exporting three billion cubic meters of liquefied natural gas from Egypt to Italy this year. In contrast, almost 1 billion cubic meters were shipped the previous year.
Due to the country’s over 100 million people’s increasing demand for power, Egypt’s capacity to export gas is constrained.Â
There are no pipelines connecting it to Europe. The nation still aspires to become a hub for the distribution of energy in the Mediterranean, increasing its imports of gas from Israel and increasing its exports of liquefied gas to Italy via ships.
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