May 21, 2024
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OIL & GAS

Libya’s Oil and Gas Rebound at Risk After Devastating Storm

Storm Daniel, which hit Libya, on 10 September, killed more than 3,000 and over 9,000 people still missing in a historic storm that ravaged the oil-rich Northern African state.

Humanitarian organisations estimated that tens of millions of dollars will be required to help those affected by the storm with the death toll expected to continue increasing.

The International Organisation for Migration estimates that around 40,000 people have been internally displaced because of the storm, according to OilPrice.com.

The hurricane was uncommon for the Mediterranean region, destroying dams in Libya’s eastern port cities of Derna, Soussa, Benghazi, and Albayda and causing flash flooding and heavy rainfall that destroyed much of the country’s infrastructure. The storm also affected Greece, Turkey, and Bulgaria, as well as other parts of North Africa.

In addition to deeper financial and humanitarian implications, Libya’s oil and gas industry once again came under threat.

Libya holds the biggest oil reserves in Africa, at 48 billion barrels, representing 39 per cent of the continent’s total reserves becoming a major source of revenue for the North African country.

After several years of instability, the industry has begun to rebound thanks to greater international investment over the last year. Initial terminal closures because of the storm have so far not affected Libya’s crude output, but Libya will likely need financial support from the IMF to help it recover.

However, in the days following the devastating storm, global oil prices shot up almost 2 per cent, to over $92 a barrel, as the energy market prepared for supply disruptions. That’s the highest price since November 2022. However, Libya has managed to maintain its 1.2 million barrels-per-day output during the disaster, suggesting that despite the crisis the country’s oil output may continue unaffected.

Libya, an Oil-rich African State has been fighting to get its oil industry back on track over the last decade, since the Arab Spring and subsequent political instability.

Following the failed presidential elections of 2021, it finally appeared that Libya’s oil and gas industry was getting back on track. More foreign investment was coming in and several discoveries showed great promise for the country’s oil fields.

But the recent devastating storm has plunged into a humanitarian crisis, meaning its energy revenues and international support will be vital for its recovery.

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