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Interview

Jadalla Al Awakly – Member of the Board of Directors for Processing, Planning, IT & Communication, National Oil Corporation (NOC), Libya

02.03.2017 / Energyboardroom

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Jadalla Al Awakly, board member of Libya’s National Oil Corporation (NOC), highlights Libya’s renewed potential as the African country with the largest crude reserves, the main priority of restoring production to pre-conflict levels of 1.7 million barrels per day (bpd), NOC’s broader strategy, and his strong invitation to the international community to explore the opportunities, both upstream and downstream, within the Libyan petroleum sector.

Firstly, Mr. Al Awakly, can you please give our international audience an introduction to yourself?

“Even though the overall situation is still fragile in Libya, it is important to emphasize that NOC has managed to secure and regain control over the country’s oil resources despite the political climate and decline in foreign investment.”

In 1985, I graduated from the Tripoli Faculty of Petroleum as a petroleum engineer, after which I joined Sirte Oil Company (SOC), one of the subsidiaries under National Oil Corporation (NOC), as a junior petroleum engineer. I had a successful career and progressed through the ranks to eventually become general manager after having gained expertise in the various aspects of upstream activity. In 2011, I became a member of the SOC Management Board and in May 2014, I was selected as a board member of the parent company NOC itself.

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It was a very interesting opportunity because Libya was undergoing very rough times then. It is still not the best time for the country but there has been some improvement and I hope things will improve further.

I now oversee the downstream activities for the oil and gas sector in general – as NOC is the umbrella of all the subsidiary companies – as well as planning and telecommunications. As my background was previously in upstream, it was a very refreshing change but my 28 years of experience has equipped me well to handle this challenge.

We are meeting you in the context of the Egypt Petroleum Show (EGYPS) 2017 and you were a speaker on the panel discussing the North African potential for exploration and production. What is the significance of your presence here?

I am here for the same reason you are! It is an extremely important event not just for Egypt but for individual companies as a platform to share ideas with the IOCs and NOCs operating within the region and to meet with our international partners face-to-face.

My mission was to meet with the heads of IOCs and top executives that are attending and to convey the message that Libya has good opportunities for the future. We want to attract investors and IOCs back to Libya. Even though the overall situation is still fragile in Libya, it is important to emphasize that NOC has managed to secure and regain control over the country’s oil resources despite the political climate and decline in foreign investment. We are also pleased that the support from our partners and IOCs have been maintained and we meet them regularly outside of Libya.

Realistically, we understand that investors will not invest in a risky country. It is not just about the security – insecurity in Libya has now been contained to a few localized areas. For instance, Eni and Total are operating their offshore platforms from their Maltese offices. Schlumberger is accessing the Sirte Basin using the Al Abraq airport.

The security you can always manage; the real issue is stability. If there is no government to make the sort of guarantees that investors are seeking, they will not invest. We are hoping fervently – along with the international community – that there will be some sort of unity in the government soon, which is why we are taking the first steps to prepare ourselves and invite foreign investors.

What is the current state of NOC’s operations in Libya at the moment?

Management of the oil industry is not the issue. The problem is security and this is something we cannot provide as NOC. The Board of Directors of NOC is technical and we distance ourselves from politics, but we see the need to secure the sector and to maintain production as our sole duty. For now, the Libyan National Army (LNA) in the East Side has helped NOC to kick out the militias from those terminals and fields so that we can resume production and shipments from them.

The priority now for NOC is really to go back to the pre-conflict production levels of 1.7 million barrels. To do that, we need more money and time. In fact, time is the bigger issue. Many of the terminals and fields have been damaged by the militias and the Islamic State, some to the extent that they have been lost and we need to start from scratch. For some, we cannot even send our technical teams to do the initial damage assessments. For these, we will need extra funds, but even if we obtain the funding, some of the equipment need to be manufactured to particular specifications and the long-lead items may take up to three years.

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Even so, on our own, we have tripled our daily oil production to over 700,000 barrels per day (bpd) and we expect to reach, with some maintenance efforts, 1.2 million bpd by August 2017. To get back to 1.7 million though will require some major efforts, but we reckon that this is attainable by mid-2018. But we need investment.

As for our broader strategy, we have set a strategy since before 2011. The plan then was to reach 2 million by 2017 by developing more fields and doing more exploration. Only 55 percent of Libyan land has been explored so far so there is huge potential here. For the downstream side, we have eight petrochemical manufacturing facilities and five refineries with capacity of 380 thousand bpd of various fuel products – and we have plans to increase this, as we currently import over 75 percent of our domestic needs, which is not sustainable.

Again, we are just waiting for the political stability and the arrival of a unified government with the authority to approve the budget for such a large project.

What sort of timeline is realistic for NOC in terms of achieving these goals?

I would say tomorrow – if you gave me stability in the country today! The paramount obstacle to our objectives is the instability of the broader sociopolitical context. Libya has sustained a significant amount of damage, with major cities like Sirte and Benghazi and other key infrastructure almost completely destroyed.

Another concern is that, because Libya as a country has suffered in the past few years, with the low oil price and the fact that oil is Libya’s only source of income, the country may not prioritize additional funding for NOC. The Libyan people may not necessarily have the patience to wait for NOC to start new projects and generate revenues. That said, there are always alternative sources of funding, be it from international banks or other partners, so we are ultimately realistic that we will be able to increase production and execute our longer-term strategy.

With Egypt now developing its oil and gas sector in earnest, what opportunities do you see for collaboration between Libya and its neighbors?

Both the Chairman of NOC Mostafa Sanallah and I have had a number of very productive meetings with various oil and gas stakeholders in Egypt from Minister of Petroleum Tarek El Molla and Chairman of Egyptian General Petroleum Corporation (EGPC), to name just a few, and the consensus is that it makes a lot of sense for them to be one of the first investors in Libya once the situation improves. We will give them priority as a neighboring country and their proximity will mean that logistics is not going to be a headache. Beyond that, they have the knowhow and experience.

For instance, as I mentioned, we have a strategic plan to expand our refineries. We currently face a shortage of feedstock. We have discussed with Egypt the possibility of supplying crude to their refineries, paying tariffs on that, and obtaining the petroleum products in return. This is a promising area of cooperation.

We also discussed with them – Libya for domestic house gas use, we still use the old cylinder style. Cairo now has more than five companies very specialized in the making of gas pipe and distribution to the houses and they have the experience. That would also be good – using these companies to do such projects in Libya. Many opportunities for cooperation. This is why I am here.

Do you have a final message?

Ultimately, every country in North Africa harbors the hope of becoming an energy hub. Libya has this target too and in fact, we possess a number of characteristics that give us a bit of an edge. For instance, we are geographically very close to Europe, especially to Italy and Malta and we already have the Greenstream pipeline carrying natural gas from Mellitah in Libya to Sicily in Italy. The proximity keeps transportation costs low whether you consider shipping or pipeline. Additionally, most of the refineries in Europe, especially those in Italy and Spain, have been designed to use the Libyan crude, which is very advantageous because it is light sweet crude of very high quality. Once political stability is achieved in Libya, I think it is clear that Europe would like Libya to assume a stronger role in the regional petroleum sector.

My final message is the main message: I want to invite the entire international petroleum community to come to Libya and explore the abundant opportunities here. This is why NOC will be present at OTC 2017 in Houston, Texas, for two full days of workshops where we will communicate to potential and current investors the full scope of opportunities present in Libya. It will also be a chance for us to brainstorm ideas regarding the situation in Libya and to discuss how we can achieve our strategy of increasing production and petroleum activity in general in the country.

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