RIYADH, Oct 7: Despite crude markets losing significant ground over the past few weeks, the issue of enough resources available to quench the global energy thirst remains a major issue within the global energy fraternity.

And in these circumstances, any incremental resource is still a welcome addition to the already stretched global energy balance. The unusual activity these days in the Libyan energy sector, undergoing a major transformation, is thus a matter of great interest.

Libyan oil industry is currently at the centre of phenomenal changes. And this is now being recognised within the industry too. The nomination of Dr Shokri Ghanem, chairman of Libya’s National Oil Corp (NOC) for the 2006 Petroleum Executive of the Year Award is a testimonial to the changing times.

Ghanem, a former prime minister of the country, became the head of the state oil company NOC in March this year.

Years of neglect, officialdom, sanctions and lack of investments have had disastrous impact on the Libyan energy sector. In the early 70’s Libya was producing somewhere around 3.2 million barrels per day. In 2005, Libyan production was trembling at 1.7 million barrels per day.

With infrastructure crumbling, virtually no major investments for decades, decadent technology and major fields beginning to age, it is no wonder Libyan crude output has been on a downward slope ever since.

Things are now beginning to change. When the sanctions against Libya were lifted and the country emerged out from the status of a pariah state, it has witnessed a beeline of Western industry executives landing at Benghazi airport, in an effort to get a foot inside the lucrative Libyan energy sector.

In times, when not much lucrative acreage is available in the region to the oil majors – constantly clamouring of entry barriers in the upstream energy sector all around this energy rich region - the opening of the Libyan fields are regarded as a God gifted opportunity.

With world keen on bringing to fore new sources, the opening presented an interesting prospect. Libya remains deeply under explored and induction of new technology could help boost the flagging production of the oil rich African state, every one in the industry agrees. Yet huge injection of capital and technology was required for both - to boost recoveries from the aging fields and to find newer fields. Libya has set itself interesting production targets. Dr Shukri Ghanem says, Libya would be able to achieve the production of two million barrels per day by mid next year. This in itself is a daunting task, in view of the challenges ahead. However, in the longer run Libya intends to achieve production output of three million bpd over the next five to seven years.

Although the targeted output is still less than the peak attained in mid 70s, yet it presents a major challenge to the Libyan industry managers. Apparently it cannot be achieved without the direct participation of international oil companies (IOCs).

An investment of more than $3.500 billion per annum is required for next few years in order to achieve the above stated targets. This figure is roughly double the current Libyan budget for capital and operating expenditure. IOCs are thus the key to these objectives, one has to concede and Dr Ghanem seems alive to this fact.

The NOC is already targeting to boost oil reserves of the country to 60 billion barrels by 2015. Currently Libya boasts of an estimated oil reserve of more than 39.5 billion barrels. Some NOC officials however, recently claimed that country’s reserves could be as high as 144 billion barrels – a tall claim indeed, by any means.

In order to achieve its objectives, the NOC is offering blocks for exploration and development to the IOCs. Over the coming years, the NOC plans to hold two rounds a year, covering exploration licenses for at least 104 areas, containing 364 blocks.

The Libyan National Oil Company is reportedly also in direct negotiations with a number of oil majors on integrated exploration and development agreements.

Since the lifting of the sanctions in 2004, the NOC has already held two highly successful bidding rounds. These rounds have resulted in awarding of 38 licenses to oil majors from Europe, Asia and the US. A third licensing round originally planned for the spring of 2006, is expected now to take place by early 2007.

Despite some major challenges still hindering the process, things are already starting to brighten up. Libya’s oil sector is definitely undergoing a massive uplift and when Dr Shokri Ghanem was selected by the executives of the world’s top energy companies as the Petroleum Executive of the year, there were indeed reasons for that.

Referring to the interesting phase the Libyan oil industry was passing through, the Aramco CEO Abdullah Jum’ah while presenting the award at the Energy Intelligence Oil and Money Conference in London, emphasised that the Libyan crude output was at its highest level in two decades now. “Responding to the world’s energy needs, the Libyan oil industry has recently surpassed a number of key milestones,” he highlighted.

“Foreign investment is also in full swing with a series of highly successful exploration bids that garnered widespread interest by international companies,” Jum’ah said, noting these developments come during an ambitious programme aimed at encouraging foreign investments, developing a competitive private sector and expanding the country’s financial infrastructure.

The entire world today has a stake in the developments taking place in Libya and eyes are focussed on it for the time being.